Peer review: Paul Plummer
Chief Executive, Rail Delivery Group
Britain’s railway plays a crucial role in people’s daily lives and the wider economy, so it is important that the industry continues to think about how best to harness the best aspects of competition to deliver even better services.
The Competition and Markets Authority’s focus on greater ‘on-track’ competition highlights a number of issues. Each needs to be considered as to whether the customer - the passenger or freight user - benefits from a different type of competition. It is best summed up by the two-pronged question: which alternatives to the current market design would preserve and enhance the significant improvements made to rail passenger services over the past 20 years, and which would harm their future development?
Since 1997, passenger numbers have more than doubled to 1.6 billion. Over the same period, the railway has gone from running at a £2 billion a year loss in terms of its day-to-day costs to today covering its running expenses. This means government support can instead focus on building a bigger, better railway for passengers.
The CMA’s report recognises the value delivered by the partnership between the public and private sectors in rail. The industry has also been successful in balancing the different uses of the railway and the distinct needs of different sectors, such as commercial, public service obligations and freight.
The CMA also suggests alternative ways of structuring that successful formula. Alongside central and devolved governments and the regulator, the discussion around the formula is one in which the rail industry is actively engaged. Its review of competition in the market for rail travel should therefore consider rail’s wider benefits to local communities, the economy and the environment. While on some routes there is competition between train companies, under the franchising system operators usually compete for the whole market for rail travel on a particular route.
The CMA’s work suggests four options to use competition to improve services by increasing the number of passengers who have a choice of operators when making their journey. The RDG response to the consultation said that the CMA should test each of them against how effectively they deliver service quality and capacity for passengers and freight. Each option also needs to promote efficiency and safety, and deliver those wider benefits. And how might they be practically implemented?
The RDG’s view is that the CMA should also take into account a number of potentially significant industry reviews that have been taking place recently, among them those of Network Rail Chairman Sir Peter Hendy on the enhancements programme, Dame Colette Bowe on how future investment programmes can be implemented better, and Nicola Shaw on the future structure of NR.
We would also suggest that the CMA considers other options in addition to those it has put forward, in order to allow the rail market to respond more flexibly to passenger needs. These include changing franchise contracts and improving the access process and charging structure between Network Rail and train operators.
If changes are made to the structure of Britain’s railway, the purpose of the changes needs to be clear and introduced in a consistent way. Not every aspect of the current system is straightforward, sometimes because the railway’s objectives aren’t clear or are ‘out of sync’ with one another.
