Comment: Rail competition faces tough barriers
Tuesday 09 September 1997
The Rail Regulator, John Swift QC, may be thinking this as he prepares to issue a consultation paper next week asking for views on how quickly the 25 train operating companies created through privatisation should start to lose their monopolies. When the previous government was fattening up the industry for sale the last thing it could afford was to allow competition on the same routes from day one, so each franchisee received a period of exclusivity.
However, all that is due to change in 1999 when open access, to use the dreadful regulese, arrives in a limited way. In theory, that will allow up to 20 per cent of rail services in each franchise area to be thrown open to competition with rival operators using the same track to offer competing services.
As things stand, there is already a modest degree of competition on the railways - partly by dint of the way the franchise map was drawn up. Passengers have a choice of three services from central London to Gatwick, there are two competing services to Birmingham and there is even limited competition for passengers travelling to Scotland between InterCity West Coast and Great North Eastern.
In practice, the amount of extra competition produced by open access is likely to be small. If Connex South Central could not make a go of its new Metro service into the capital in an area not well served by the Tube and with pounds 75m of subsidies a year, then who else is going to be tempted to have a go?
There will be some areas of the network where operators will be tempted to cherry pick. Richard Branson's Virgin, which already operates the west coast line, may try its hand at running services up the east coast, for instance, not least because it will have a shiny new pounds 750m fleet of tilting trains at its disposal.
But others will be less keen on competition. There are two barriers. One is practical - there are only so many trains that can use the same piece of track before disaster overtakes the network. The other is political. The new Government is more interested in promoting an integrated transport system answerable to passengers' needs than encouraging competition willy nilly. The last thing it wants is a repetition of the experience that befell the bus industry with predatory pricing and operators leapfrogging one another's services to gain a competitive edge.
The simplest way to increase rail services would be to impose higher minimum service levels on the operators. It was never satisfactory that they got away without even having to operate existing timetables when the franchises were let. Unfortunately, the only way to make this palatable would be either to extend the franchises or pump more subsidies into the network. All in all a tricky one for the rail regulator and his political overlord John Prescott.
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