A new report by Rail Partners shows that harnessing competition among train companies effectively will result in more customers, more services, newer trains, cheaper fares and reduced subsidies.

In the report titled Track to Growth: Creating a dynamic railway for Passengers and the Economy, although decision-makers face critical choices about Britain’s railway, what matters is what works for customers and the taxpayer.

Ideological battles must be put aside in order to bring more passengers back, restore hundreds of millions of pounds in lost revenue, and ultimately set up the industry to deliver wider economic growth and environmental benefits. If reform does not move forward, the railway faces a stunted recovery from the pandemic and, in the worst case, a permanently smaller railway

To get Britain’s railways back on track for growth, Rail Partners is calling for a reinvigorated public-private partnership. At the same time as European railways are liberalising and seeing signs of a renaissance, Britain’s railway risks being left behind and facing the same choice as in the 1990s – either set the railway up for managed decline or harness train companies to repeat their previous success of record passenger numbers and reducing rail subsidy.

In the report, Rail Partners sets out the many challenges facing the railway, including a blurring of responsibilities and accountabilities, prescriptive and no-longer-fit-for-purpose contracts, an outdated fares system, changed travel patterns resulting in millions of pounds lost in revenue, and drawn-out industrial action.

A response that often makes national headlines which offers a solution to these issues is to place the blame exclusively on train companies and a call for public ownership. However, today, public control is far greater than it was under British Rail, as the government micro-manages the smallest of commercial decisions. For the last few years, the system has needed reforming, whilst the pandemic compounded the problem and accelerated the need for drastic change.

In the report, analysis by economic consultants Oxera confirms the important role the private sector played in stopping the railway’s decline post-British Rail. An operational deficit was closed and taxpayer subsidy was reduced, which freed up money for improved infrastructure, and ultimately resulted in passenger numbers reaching record levels. Although franchising ultimately required reforming, harnessing train companies in delivering passenger services produced a step change for customers and the railway.

The study shows that there are significant benefits if there is competition for contracts and operators on the same route:

• a 15-50% reduction in subsidy through competing contracts instead of directly awarding them;
• operational efficiency gains of 20-50%;
• increased service levels on some routes by up to 60%;
• 40% more passengers on routes where operators compete;
• 15-50% reduction in fares on routes where there is competition.

Rail Partners’ chief executive, Andy Bagnall, said: “Today’s report is about getting back on track to growth. What matters is what works for customers and the taxpayer, so we should put aside ideological debates. The evidence shows that a reinvigorated public-private partnership is the best way to revitalise the railway.

“Train companies, domestically in the past and across the continent right now, have shown the skills needed to grow passenger numbers and reduce costs for the taxpayer.

“If reform continues to stall, the railway faces stunted recovery from the pandemic and worst case, a permanently smaller network. But with the right reforms, the railway can return to growth and act as a catalyst for a stronger, greener economy.

“As Westminster continues to debate how to meet the challenges we face, Rail Partners commissioned research by Arup and Frontier Economics to examine the experiences of our European neighbours and how train companies on the continent have boosted passenger numbers and have created better experiences and outcomes for customers.

“The European Union has sought to tackle the inefficiency of public monopoly operators who have been slow to innovate and adapt for European passengers. They have done this by allowing new operators to compete both ‘for the market’ through bidding for contracts and ‘on rail’ through direct competition on the same routes through open access competition.”

“This is one of the most wide-ranging studies on the emerging impacts of rail liberalisation in the EU to date. We can draw on the experience of managed competition across Europe to deliver benefits here in Britain.

“The evidence from European railways clearly shows that, if we get reform right, and train companies are harnessed in the right way, competition will deliver significant benefits for the customer, and ultimately reduces subsidy, bringing public spending down.”