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Successful Destination for Britain's Rail System

The British rail system has been marred by a series of challenges, from strikes and engineering disruptions to subsidies and the need for improved customer experience.


In a recent article published in The Times, titled "How to Solve Britain's Rail Crisis? These Companies May Have the Answer," it is cited that open access operators may provide an answer to revitalising the railway industry.


We explore some of the challenges outlined in the article that are facing Britain's rail system and explore potential solutions through the lens of open access operators. By delving into issues such as collaboration, subsidies, customer experience, industrial relations, and competition, we consider what are the key takeaways.


Rail Strikes, Engineering Challenges, and the Need for Collaboration

Nearly a year has passed since the commencement of the railway strikes, and the scenes witnessed across the nation this week have unfortunately become all too familiar.


The disheartening sight of thousands of football supporters crammed into 120 coaches, specially arranged for the FA Cup final, while most of the rail network was at a complete standstill, speaks volumes about the prevailing state of affairs. Undoubtedly, the railway sector has become overly entrenched in politics, and the relentless exchange of rhetoric between the government and the unions has only exacerbated the situation.


Rather than facilitating an environment conducive to sincere and transparent dialogue, these verbal volleys have hindered any potential for a resolution. If I were Brene Brown I would be calling for a "rumble," a genuine engagement allowing for honest conversations and the exploration of common ground. Unfortunately, this seems sorely lacking at present. While the government may lay blame on the unions for the disruption in rail services, it is crucial to recognise that weekends often witness significant engineering work. A cursory online search reveals a notable incident involving Network Rail defending its decision to close the West Coast Main Line for substantial engineering undertakings during the weekend of the FA Cup semi-finals in 2022. The Football Association had been informed of these plans two years in advance. Nevertheless, a clash ensued, with a high-profile football match scheduled at Wembley Stadium on Easter Sunday, coinciding with the railway closure. Network Rail Chairman Sir Peter Hendy expressed bewilderment at this turn of events, emphasising that they had dutifully provided a comprehensive two-year notice to the FA regarding the impending closure. Regrettably, similar predicaments unfolded in 2023, during both the London Marathon and the FA Cup semi-final, where Southern and Thameslink were concurrently undertaking engineering work on the Brighton Mainline, among other areas. The crux of the issue lies in the fact that while Network Rail may proffer advice on closure dates, the FA, with their fixtures planned two years in advance, lack foresight into which teams will participate in these games. The inherent uncertainty surrounding the teams involved poses a significant challenge in coordinating schedules effectively. This predicament inevitably compels us to ponder the purpose of our railway system. Are railways primarily meant to serve the people of Britain, facilitating their work, leisure, and overall quality of life? If so, it becomes imperative to foster a more collaborative approach to scheduling engineering works, one that encourages all stakeholders to work harmoniously and arrive at mutually beneficial solutions. The current state of affairs within the rail industry is akin to sharing viewpoints without a genuine intent to act, relegating these perspectives to the ephemeral realm of public opinion. The persistence of the railway strikes, and the resulting consequences witnessed this week highlight the urgent need for a comprehensive and sincere revaluation of the prevailing situation. The divisive political climate and incessant rhetorical exchanges have proven counterproductive, impeding any possibility of resolving this long-standing issue. It is imperative that we encourage an environment where open and honest dialogue can flourish, leading to tangible solutions that serve the best interests of the nation's populace. Only through concerted efforts to “rumble” and a commitment to collaborative decision-making can we hope our railways deliver progress and connectivity. Rail Subsidies and the Open Access Conundrum £40 billion in subsidies from taxpayers has poured into the railway system since the start of the pandemic. The average subsidy per journey stands at £7.51, surpassing the average fare of £6.12. Yet, despite this hefty investment, our train system finds itself mired in crisis. Lumo, a daring venture that burst onto the scene in 2021 with a price tag of £100 million, alongside two other "open access operators," Hull Trains and Grand Central, defy the odds by thriving without a hint of subsidy. These operators seize opportunities in the official timetables, filling gaps and connecting cities that otherwise lack direct links to the capital. One must ponder the curious dichotomy. Pre-pandemic, rail passengers were thriving and promising lucrative returns for the Department for Transport. But fixating solely on the ongoing subsidies is a disingenuous sleight of hand. Rail, much like other industries, grapples with post-pandemic recovery and the consequences of Brexit. Let us not forget the myriad sectors that receive government support or subsidies. The "Eat Out to Help Out" initiative devoured a hefty £849 million, while SMEs were bolstered with a staggering £21 billion. Money flowed freely, benefiting one and all. How much was spent on Covid-19 measures? Estimates soar to a jaw-dropping £310 billion to £410 billion, equivalent to a staggering £4,600 to £6,100 per person in the UK. Yet, these expenditures were hailed as necessary and beneficial for our economy. The real crux of the matter lies not in the subsidies, but in the flawed model itself. No corner of the globe has unearthed the perfect solution for railway investment. However, we do know that competition breeds excellence, and open access operators embody this truth. Their success can be attributed to their autonomy, navigating the pandemic landscape without relying on subsidies. Indeed, their very existence teetered on the precipice, saved only by the suspension of services, the benevolence of their parent companies, and LNER who filled the void. However, when times are prosperous, the open access operators find themselves on an uneven playing field. While franchise operators bear the weight of complex agreements with the Department for Transport, fixed routes, and hefty costs payable to Network Rail, open access operators only pay for the trains they run according to the timetable, thus reducing their overall burden. One cannot deny that this arrangement, though not a direct subsidy, confers a form of subsidy upon them, as they evade an equal share of the cost to keep the railway running smoothly. Perhaps it is high time to level the playing field. Just as we embrace fair pricing and invest in critical infrastructure for other vital services, we should extend this ethos to the railways. If we truly aspire to achieve our net-zero goals and safeguard our future, we must cease treating railways as subsidy and recognise it as a valuable investment in the foundation of our nation. The pandemic and its accompanying costs shall forever remain as a blip in history. Instead of futilely engaging in comparisons and clamouring for financial recompense, Government should be focused on an improved and resilient rail service for all. The Beacon of Customer Experience and the Hope of Competition Lumo's allure sets it apart as a harbinger of a revitalised rail experience with their fully electric trains, passengers experience an atmosphere reminiscent of an aircraft cabin. Seats recline but have airline-like restrictions on luggage. Three decades since John Major's rail privatisation, a pressing question arises: can competition among operators reignite the network's post-Covid vitality? With its nimble teams and ten daily journeys, it accommodes one million passengers per year – minor in comparison to some operators. Being small, its industrial relations have remained untroubled, and it has been able to drive efficiencies in working practices with the task of opening and closing train doors to the drivers, while "customer experience ambassadors" can concentrate on the passenger. Lumo has crafted a model that magnetises the "Ryanair" generation, offering bona fide competition. With fares commencing at a mere £25 for the Edinburgh to London route, Lumo mounts a formidable challenge to franchised operators, outshining them in terms of affordability. Nevertheless, it behoves us to recognise that Lumo's one-class seating and spatial limitations may not suit every traveller’s palate. In this pivotal moment, focus must lie in enhancing the travel experience and enticing more individuals to embark on rail journeys. Lumo has seized upon some fundamental principles, prompting us to ponder: could their blueprint be the key to rail’s future? Industrial Relations, Smallness, and Culture: A Tale of Two Rail Operations In the realm of railway operations, a distinction emerges between the open access operators and their franchise counterparts. This stark contrast is intricately woven through the fabric of industrial relations, the influence of being small, and the prevailing culture within these entities. Open access operators, exemplified by Lumo and Grand Central, whose drivers have embraced a different path. Rather than resorting to strikes, the drivers have demonstrated their mettle by accepting a modest 5 percent pay rise in April. Meanwhile, Aslef, the train drivers' union, held out for an 8 percent increment over two years, rejecting the offer tendered by the Rail Delivery Group on behalf of the frachise train operators. This divergence sets the stage for a tale of contrasting fortunes. The allure of open access lies not only in the economic realm but also in the realm of culture - Martijn Gilbert declares, "Small is beautiful," encapsulating the essence of their ethos. The size of their operations engenders a distinctive atmosphere, one characterised by a different set of attitudes and a culture with remarkably short chains of command. Lumo's resilience shines through on days plagued by Aslef-only strikes or RMT on-train crew strikes, as they deliver an unblemished 100 percent service. The thing about Lumo is that it was conceived in an optimal state, wherein all stakeholders ardently yearn to be part of this grand endeavour. Consequently, resolving pay disputes becomes a comparatively straightforward endeavour. In September, Hull Trains' staff accepted a 5 percent deal, a sum that aggregates to 10 percent over two years, accompanied by a commitment to initiate talks on productivity. Such outcomes are a testament to the unique dynamics fostered by the open access model. In contrast, the franchise operators find themselves entangled in a web of challenges. The last year witnessed fruitful negotiations for Aslef, as they reached 14 pay deals with various entities, including Transport for Wales, ScotRail, freight companies, and open access operators. However, a dispute continues with 15 train companies, all of them passenger operators primarily based in England. The franchise operators, enmeshed within a climate of uncertainty, confront a micro-management conundrum orchestrated by the Department for Transport. The spectre of GBR looms large, casting shadows of ambiguity over their futures. Faced with intense competition for funds against a multitude of departments vying for pay increases, these operators find themselves navigating treacherous political waters. Rail, tragically reduced to a mere subsidy in the eyes of the ruling government, becomes a contentious battleground where unions are met with reluctant engagement. It is imperative that we grasp the true essence of the rail industry, one that extends beyond financial considerations and infrastructure. At its core lies the people—the steadfast individuals who tirelessly deliver, manage, and use its services. However, amidst the multitude of perspectives, it begs the question: do we truly understand the desires and requirements of each group? This puzzle presents a significant hurdle, as the intricate dynamics of industrial relations, small-scale operations, and cultural nuances within the railway sector remain cloaked in ambiguity. Franchise Operators being held back at the expense to its people and political dogma Whispers of cutting services on the most loss-making routes have stirred the imaginations of industry insiders. In this scenario, proponents argue that nimble, free-market operators could swiftly fill the void left by mainstream operators. The Department of Transport may consider discontinuing certain services or exploring the market for fresh open access opportunities. A stark contrast emerges when examining Lumo and its owners, First Group. Recently, First Group suffered a severe blow as the TransPennine Express franchise was stripped away by Transport Secretary Mark Harper and, only a meagre six-month extension was granted for their majority-owned Avanti West Coast franchise. In stark contrast, Lumo epitomises the essence of success, thriving solely upon the patronage of discerning customers who choose to board their trains. With Grand Union, a new open access operator, has been granted approval by the Office of Road and Rail. From 2024, they will offer five additional daily services, knitting together the bustling hubs of London, Bristol, Cardiff, and Carmarthen. This would certainly feel that it is the age of the open access operator with their ability to reimagine traditional business practices and embracing a forward-looking approach, unshackled by the constraints of a bygone era. Amidst the intricate web of challenges entangling Britain's rail system, a glimmer of hope emerges in GBR and claims in a report by Rail Partners that franchise operators could generate £550 million annually and ease the burden on taxpayers if we moved from the current impasse. However, it would appear that “politics” is preventing franchise operators from delivering and allowing open access “full steam” ahead so it is more and more important that the Government delivers on its promises for the railway. Conclusion The challenges facing Britain's rail system require a balanced approach that goes beyond the sole reliance on open access operators. While open access operators have showcased their potential and brought innovation to the industry, it is clear that a more comprehensive solution in the form of the recommendations in the Williams-Shapps Rail Plan is needed. A successful railway system requires a delicate balance of free market operations, collaboration, and government support. Micro-managing by the government has hindered progress and strained industrial relations, highlighting the need for a greater level of trust and autonomy for rail operators. To move forward, it is crucial for all stakeholders, including the government, industry leaders, railway employees, and customers, to come together and define a universally successful destination for the rail system. This requires open and honest dialogue, where the desires and requirements of each group are understood and considered. Trust in the system can only be established when there is a shared vision and commitment to delivering a resilient and customer-centric railway network. The government must recognise the importance of letting the rail industry and its people deliver, freeing them from excessive micromanagement and bureaucracy. By creating an environment of trust and support, the government can empower rail operators to drive progress, enhance customer experience, and find innovative solutions to the challenges at hand. In conclusion, while open access operators have provided valuable lessons and ideas, they are not the sole answer to Britain's rail crisis. A successful future for the railway system lies in finding the right balance between free market operations, collaboration, and government support. By joining forces and working towards a universally successful destination, we can build a resilient, efficient, and customer-oriented rail network that serves the best interests of the nation and its people.

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