February 2025
Why open access rail is incompatible with the Government’s rail policy Summary •
In her December 2024 announcement regarding the first train operating companies to come into public ownership, the Secretary of State for Transport, Heidi Alexander MP, highlighted the benefits that this would bring in terms of putting an end to profiteering and fragmentation, stating the Government’s plans would: “Save up to £150 million a year in fees alone by ensuring every penny is spent on services rather than private shareholders, all while coming at no additional cost to the taxpayer”1 and that the Passenger Railway Services (Public Ownership) Act is a “crucial first step towards fundamental rail reform. Challenges remain in a system that is fragmented, complicated and provides little accountability”2.
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Open access rail services are run by private operators outside of any contractual relationship with the Government. They fail the Government’s test of ensuring that ‘every penny’ is spent on services because their sole intention is to make profits.
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Because they are not accountable to the Government, open access operators are able to ‘cherry pick’ routes that are likely to be profitable, and benefit from a significant indirect subsidy in the form of low to no fixed track access charges, meaning they do not fully contribute towards the long-term maintenance of the rail network unlike the Government contracted operators. At the same time, they are able to abstract large amounts of revenue from the Government contracted, and publicly funded, operators.
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In the past decade, the three existing long-distance open access operators (Lumo, Hull Trains and Grand Central) have paid out nearly £55m in dividends between them. This includes a £14.5m dividend paid out in 2024 by First Group owned Lumo. To put that into context that is higher than the dividends paid out by two of First Group’s jointly owned rail franchises that year. South Western Railway paid out £11.8m and Avanti paid £8.1m.
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The fat cat bosses who own the companies that operate open access rail services (as well as rail franchises and bus services) are continuing to profit from the railway. The latest accounts show that Hull Trains and Lumo owner First Group’s CEO’s total remuneration increased by 17% from the year before to £1.4m. At
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https://www.gov.uk/government/news/first-train-services-to-return-to-public-ownership-revealed https://hansard.parliament.uk/commons/2024-12-04/debates/24120429000008/PassengerRailwayServicesPublicOwnership