Risk of British Railways revisiting past errors looms large

Risk of British Railways revisiting past errors looms large

The Great British Railways (GBR), set to take over fully in 2025, is facing criticism over its proposed role as both operator and regulator. This structure, reminiscent of the nationalised British Rail, raises concerns about conflicts of interest that could potentially undermine accountability, competition, and innovation in the rail sector.

Key among these concerns is the reduced independent regulation. GBR's plan to strip the Office of Rail and Road (ORR) of its economic and competition powers, concentrating regulatory authority within GBR itself, could lead to a situation where GBR regulates its own operations without impartial checks and balances. This scenario, unprecedented in other British regulated industries, has raised eyebrows.

Critics warn that this structure could lead to a repeat of past failures, with inefficiencies, stagnation, and poor service quality. Without urgent reforms, GBR risks "morphing into the ghost of British Rail" with diminished accountability and stifled innovation.

The concentration of operational and regulatory power in one monopolistic entity could also lead to less competitive pressure. This contrasts sharply with prior systems where competition helped incentivize performance improvements. The potential for monopolistic control could result in low growth, higher costs, and poorer outcomes for passengers.

Balancing GBR's aim to maximize social and economic benefits while acting as market operator and regulator simultaneously might complicate decision-making, prioritization, and responsiveness to regional and passenger needs.

Advocates for reform recommend reinstating robust public interest regulation focused strictly on safety, accessibility, and passenger rights, while leaving economic and competition functions to independent bodies. They also call for stronger legal frameworks to ensure GBR operates transparently and accounts for socioeconomic value rather than monopolistic self-interest.

The Centre for Policy Studies (CPS) suggests that GBR should not be its own regulator to prevent conflicts of interest. The CPS warns that the potential watering down of the ORR could result in no organization having independent scrutiny.

The CPS also advocates for expanding open access operations, which have delivered lower fares and better services on certain routes. They want 10 per cent of long-distance routes to be served by open access operators by 2030.

As GBR takes over from Sir Andrew Haines in October, it faces pressure to be more efficient than the system it replaces and avoid the pitfalls that plagued British Rail. The stakes are high, with rail subsidies hitting £12.5bn last year, and the Department for Transport (DfT) committed to "a simpler, more efficient railway that works for passengers and taxpayers."

Jeremy Westlake, CFO at Network Rail, was named GBR's first permanent chief executive this month. The structure of GBR could stifle innovation, reduce accountability, and discourage competition unless counterbalanced by urgent reforms ensuring truly independent regulation and clear social objectives.

Countries like Italy and Sweden have used a similar model to reduce fares by up to 60 per cent and boost passenger numbers. As GBR embarks on this new journey, it will be interesting to see if it can learn from these successes and avoid the pitfalls of the past.

1. The structure of Great British Railways (GBR) as both operator and regulator, similar to the nationalized British Rail, has sparked concerns about reduced independent regulation and potential conflicts of interest in the transport industry.
2. Critics argue that GBR's plan to concentrate regulatory authority within itself could lead to a lack of impartial checks and balances, possibly resulting in inefficiencies, stagnation, and poor service quality reminiscent of past failures.
3. Advocates for reform, such as the Centre for Policy Studies (CPS), propose reinstating robust public interest regulation focused on safety, accessibility, and passenger rights while leaving economic and competition functions to independent bodies to prevent conflicts of interest and promote competition in the rail sector.

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