Open access operators and government plans for rail reform

Approximate read time: 13 minutes

On 13 March 2025, the House of Lords is due to consider the following question for short debate:

Lord Young of Cookham (Conservative) to ask His Majesty’s Government what plans they have for open access operators following the creation of Great British Railways.

1. What are open access operators?

1.1 Open access and franchised operators

‘Open access’ in the rail market in Great Britain allows independent train operators to run services on the national rail network.^[1] These open access operators account for a small proportion of passenger train services. Most passenger train services are currently provided by franchised operators that hold contracts with the government to run services.^[2] The government has already taken over the running of several franchises from private operators and is planning to bring passenger train operations into the public sector as existing contracts expire—this is covered further in section 2 below.

1.2 Approval process

Open access operators’ services are often in competition with services provided by franchised operators.^[3] The Office of Rail and Road (ORR), the independent safety and economic regulator for railways in Great Britain, takes the effects of such competition into account when it is deciding on applications from open access operators for access to the rail network.^[4] All operators that want to run trains on the network must seek the ORR’s approval of a track access agreement with Network Rail, the body that currently owns and operates most of the national rail infrastructure. A track access agreement sets out where and how often the operator intends to run trains. The ORR considers track access applications in accordance with its statutory duties, including to:

• protect the interests of users of railway services
• promote the use of the network for passengers and freight
• promote improvements in railway service performance

The ORR says that to do this, it looks at “what the fair and efficient use of network capacity is and what impact extra services could have on the performance of existing services, especially on busy parts of the network”.^[5] If there are competing applications for limited network capacity, the ORR assesses the costs and benefits of the available options.

For open access applications, the ORR also considers its statutory duties to:

• promote competition for the benefit of rail users
• take into account the secretary of state for transport’s funds and guidance

In doing this, the ORR seeks to balance “the benefits that open access operators can bring through increased competition (eg through lower fares or innovation) against the potential costs to incumbent operators and to the secretary of state through lower franchise values”.^[6] The ORR applies a “not primarily abstractive” test which looks at whether the new services would generate sufficient new revenue, not just take it from existing operators. If a new open access service would compete with franchised or other publicly funded services and so impact on the public sector funder’s budget, the ORR says it would not expect to approve the application unless the new service would generate at least 30p of new revenue for every £1 of revenue abstracted from existing operators.^[7]

Other factors the ORR takes into account in deciding open access applications include the applicant’s ability to operate services punctually and reliably; the financial viability of the proposal; statutory guidance issued by the secretary of state; and wider costs and benefits around social, economic, environmental factors and indirect tax transfers.^[8] Information about the approval process is set out in the ORR’s ‘Open access guidance: Making a track access application and ORR decision-making’ (31 January 2025).

1.3 Current and proposed open access operators

The following open access operators have approved rights to operate services:^[9]

• Hull Trains (part of First Group) operates services between London King’s Cross and Hull
• Lumo (part of First Group) operates services between London King’s Cross and Edinburgh
• Grand Central (part of Arriva) operates services between London King’s Cross and Sunderland and between London King’s Cross and Bradford
• Heathrow Express operates services between London Paddington and Heathrow Airport
• Eurostar operates international services from St Pancras International

Additionally, Grand Union Trains was approved in December 2022 to provide services between London Paddington and Carmarthen and in March 2024 to provide services between London Euston and Stirling.^[10] First Group acquired these rights in 2024 and intends to start operating Euston-Stirling services from June 2025 and Paddington-Carmarthen services from December 2027 under its Lumo brand.^[11] Go-Op, a cooperatively owned train company, was approved in November 2024 to run services between Taunton and Weston-super-Mare, Westbury and Swindon, and between Frome and Westbury from December 2025.^[12]

The ORR said in July 2024 that “the open market is seeing interest from a number of new potential entrants”.^[13] In addition to the application from Go-Op that was subsequently approved, it was also considering applications from Alliance Rail, Grand Central, Hull Trains, Lumo, Virgin Group and Wrexham Shropshire Midlands Railway. As of January 2025, the ORR was considering 13 applications from open access operators.^[14]

1.4 Customer experience

The ORR published a monitoring report on open access passenger services in Great Britain in July 2024. Comparing customer experience of open access services and contracted services, the ORR found:^[15]

• Punctuality for both open access and contracted operators was at a similar level and both fell slightly on the previous year.
• Open access services saw fewer service cancellations.
• The number of complaints per journey fell for both open access and contracted operators although there were more complaints per journey for open access.
• Satisfaction with complaint handling was at similar levels for open access and contracted operators (and little changed from the previous year).
• Punctuality and reliability were the primary driver of complaints.
• Rolling stock used by open access operators had a relatively low average age, reflecting in part the newness of their operations.
• Open access operators saw on average a higher post-pandemic recovery in rail passenger usage than contracted services.

2. What are the government’s plans for rail reform?

The Labour Party’s manifesto ahead of the 2024 general election included a commitment to reform the railways and bring them into public ownership.^[16] It said this would be done as franchise contracts with existing operators expired or were broken so that taxpayers would not have to pay compensation to contract-holders. The manifesto said that Great British Railways (GBR) would “deliver a unified system that focuses on reliable, affordable, high-quality and efficient services”. GBR would be responsible for investment, day-to-day operational delivery and innovations and improvements for passengers, working with publicly owned rail operators in Wales and Scotland.

The first piece of legislation to implement these commitments has already been passed. The Passenger Railways Services (Public Ownership) Act 2024 received royal assent in November 2024. It removed the presumption in favour of private sector operation of franchised passenger services to facilitate the government’s commitment to bring such train operations back into public ownership as the existing franchise contracts end.^[17]

As well as this initial legislation, the government also announced as part of the King’s Speech in July 2024 that it intended to introduce a Railways Bill to bring management of the network and the delivery of passenger services together into a single public body, Great British Railways (GBR).^[18] The government argued that a “unified and simplified rail system that relentlessly focuses on improving services for passengers” would deliver “better value for money for taxpayers” and end “years of fragmentation and waste”. The government has since said that GBR will “bring track and train together under one directing mind” and that “most passengers will travel on GBR trains, running on GBR tracks, and arrive at GBR stations—all delivered in line with the clear strategic direction set by government”.^[19]

The bill has not yet been introduced but the government has already taken steps to begin setting up Great British Railways in shadow form.^[20]

3. What might this mean for open access operators?

While the government’s policy is to bring the railways into public ownership, it has said there will continue to be a place for open access operators where the benefits are not outweighed by costs to taxpayers or impacts on network performance.^[21] Labour said in its manifesto that “open access operators are an important part of the rail system and will have an ongoing role”.^[22] Announcing the Railways Bill in the King’s Speech, the government said open access had “a proven track record in driving competition and better passenger outcomes”.^[23] It added that “wherever there is a case that open access operators can add value and capacity to the network, as assessed by the Office of Road and Rail, they will be able to”.

Transport Secretary Heidi Alexander set out the government’s expectations for how open access would operate alongside a publicly owned railway in a letter to the ORR in January 2025.^[24] Ms Alexander said she recognised that both existing and new open access operators could “open up new markets, drive innovation and offer choice to passengers”. However, she argued there was a balance to be struck to ensure such benefits “outweigh the impacts they have on taxpayers and the ability to operate the network efficiently”. She said there was a need to be “mindful” of the level of revenue that open access operators could abstract from contracted services and the impacts this could have on passengers and taxpayers. Ms Alexander also highlighted “additional pressures new services can create on already constrained network capacity and their impact on the value secured from public investment in infrastructure”. She noted that although open access operators pay variable access charges to Network Rail to cover the direct costs of running their trains on the network, unlike government-contracted operators, they do not fully cover the costs of fixed track access charges that go towards long-term maintenance of the network and central support costs. Ms Alexander argued this left taxpayers to cover the shortfall.

Ms Alexander said her priority was to “see the network move to a financially sustainable model which maximises benefits and value for passengers and taxpayers while delivering improved performance as we move towards public ownership”. She stated her expectation that the ORR would “give due consideration to the priorities” she had set out in the letter, whilst respecting its statutory duties. Ms Alexander acknowledged that the letter itself “holds no formal legal standing”, but said she would consider amendments to her formal secretary of state guidance to the ORR, building on both the policy position set out in the letter and wider consideration of how a reformed railway sector would provide better value for passengers and taxpayers.

Simon Lightwood, parliamentary under secretary of state at the Department for Transport, noted in early February 2025 that there had been speculation following the passage of the Passenger Railway Services (Public Ownership) Act 2024 that the government would look to bring open access operators into public ownership when their existing access rights expired.^[25]. Mr Lightwood said he could “categorically” confirm the government had no intention to remove open access operators from the network.

The government launched a consultation on 18 February 2025, seeking views on policies to be included in the forthcoming Railways Bill.^[26] It is due to close on 15 April 2025.

The consultation document contained a proposal to change the ORR’s role in access decisions. It proposed that GBR would take access decisions on the best use of its network. The ORR’s function would be “to ensure fair access to the GBR-managed network through a robust and independent appeals function, set out in legislation”.^[27] The ORR appeals process would be available to any railway undertaking or other body that considered it had been disadvantaged or discriminated against. The ORR would evaluate whether GBR had acted rationally and fairly in line with its legal duties and contractual obligations.^[28] The ORR would be able to recommend and in certain circumstances direct remedies where it found GBR’s decision-making had been discriminatory and had not followed its own processes. In exceptional circumstances, the ORR would be able to direct GBR to change a decision, as long as in doing so it did not overturn previously established or contracted access allocations. The consultation is seeking views on whether this proposed role for ORR would “provide sufficient reassurances to operators such as freight and open access wishing to access the GBR-managed network”.^[29]

The consultation document also set out proposals on fares and ticketing. It said that GBR would take over from train operators as the organisation responsible for setting fares, but open access operators would remain responsible for setting fares on their own services.^[30] The government argued that given the current fragmentation of fares and ticketing, there was “clear value in consolidating current train operator apps and websites into a single GBR retail offer over time”.^[31] It said legislation would therefore enable GBR to provide ticketing services directly to customers through both online and physical retail (for example ticket offices, ticket vending machines and on trains). GBR’s website and apps would retail alongside, and in competition with, third-party retailers. Currently, third-party retailers are licensed by the Rail Delivery Group. The government said it was considering where this responsibility should sit in future. Options included GBR, the ORR or another body. If licensing were to sit in GBR in future, the government said it would need to ensure a competitive and fair market was maintained for third party retailers and for the retail offers from other train operators, including open access operators.^[32]

Before the consultation document was published, the Conservatives said they would “strongly oppose” any move to transfer decisions on open access from the ORR to GBR.^[33]

Rail Partners, a group representing independent train operating companies, described Heidi Alexander’s letter to the ORR as a “worrying signal” that “the bar for new open access applications is being made harder to clear”.^[34] Andy Bagnall, the group’s chief executive, said it was “unclear whether the new government is a champion of open access operators, or it is simply tolerating them as part of the system that is too costly to nationalise”. Mr Bagnall called on the government to recognise the creation of GBR “as a near-monopoly provider of track and train could pose a threat to the future growth of open access”.^[35] Following publication of the consultation document, Rail Partners said the forthcoming Railways Bill must create the conditions to ensure GBR “treats other operators fairly, including freight and open access operators”.^[36]

4. Read more

• House of Commons Library, ‘Open access operators for rail services’, 4 February 2025
• Debate on ‘Rail services: Open access operators’, HC Hansard, 6 February 2025, cols 407–24WH
• Office of Rail and Road, ‘Monitoring open access: 2024 update’, 31 July 2024
• House of Lords Library, ‘Passenger Railway Services (Public Ownership) Bill’, 27 September 2024
• House of Commons Library, ‘When will my local train operator be nationalised?’, 8 January 2025

---

Cover image by Pete Owen on Unsplash