2 December 2024
We consulted on draft open access guidance between 12 September and Friday 1 November. We welcomed any comments on the proposed guidance, and specifically views on:
- our proposed approach to monetising the costs and benefits of open access applications on a more routine basis
- the removal of the benchmarking stage of the not primarily abstractive test (NPA)
- the explanations we provided of ORR decision making
We were pleased to receive responses to our consultation from:
- First Group Rail
- Grand Central
- Heathrow Airport Ltd
- Heathrow Express Operating Company (HEOC)
- London TravelWatch
- Network Rail
- Rail Partners
- RMT
- Transport for Greater Manchester (TfGM)
- West Yorkshire Combined Authority (WYCA)
Monetising the costs and benefits associated with open access
Respondents supported the proposed approach to developing a routine approach for monetising the costs and benefits associated with open access. Several respondents stressed the need to avoid increasing the burden on applicants or lengthening the decision-making process.
There were some specific issues raised about the use of DfT’s Transport Analysis Guidance, including the potential for carbon benefits, wider economic benefits, or transformation changes to be understated. As suggested by Rail Partners, ORR will keep our methodology under review, and we will share both our methodology and the results with applicants as suggested by FirstGroup.
Network Rail queried whether the use of monetised costs and benefits would make it more or less likely that open access applications would be approved. RMT opposed use of monetised costs and benefits if it would make it more likely that an open access application would be approved. Our proposed approach will not change the likelihood of applications being approved (as we already consider these factors) but will allow ORR to ensure that factors are consistently taken into account as part of our decision making. Our approach will also allow us to develop an improved evidence base over time.
WYCA suggested that the term “marginal” should be clarified. We have amended the guidance to explain this.
RMT further suggested that any benefits of open access should be weighted against the benefits of an integrated and publicly owned national railway. ORR will review our policies as rail reform progresses.
HEOC’s response highlighted that on the Heathrow Branch, they are abstracting from other modes such as private vehicles. This isn’t captured by NPA test currently, but this modal shift will be captured by our proposed approach to monetising costs and benefits.
Removal of the benchmarking stage of the Not Primarily Abstractive Test
Most respondents accepted the removal of the benchmarking stage, although some were neutral and Grand Central did not support this. Those who did support the removal of the benchmarking stage suggested that benchmarking should still play a role in calibrating gravity models or for small changes to existing train paths.
We reiterate our view, as set out in the draft guidance, that the most recent Passenger Demand Forecasting Handbook (PDFH) parameters and existing forecasting methodologies such as gravity models are more robust and useful for forecasting the impact of open access entry, including small changes to services. We would not use benchmarking to calibrate a gravity model as they are calibrated using actual demand data.
Explanations of ORR decision making
Overall respondents reflected positively on the approach taken to this guidance. TfGM welcomed additional explanations and glossary.
There were several suggestions that the guidance could be widened further to create a “one stop shop”. We have therefore added a new section, “Where can I find more information” which includes links to our other guidance. As we refresh our guidance, we will keep the linkages between them under review. We have also tried to improve the explanations of the NPA test itself and added explanatory headings.
There were some specific comments about the timescales referred to in the document, and suggestions that it would be helpful to reflect the need for operators to contract rolling stock and mobilise. We have added some additional text to reflect this and referred to the Starting Mainline Operations guidance.
Evidence base on abstraction
In our April 2024 report, Assessing the costs and benefits of new open access services, we said that we had “recently commissioned a review of forecasting of abstraction and generation and plan to publish the results. We will consider what further actions may be appropriate once we have this new evidence.”
Rail Partners asked about this study, which has now been completed and published. This research did not suggest that our previous decision making had either been too permissive or insufficiently permissive. We therefore do not plan to recalibrate the Not Primarily Abstractive (NPA) test at this stage.
ORR’s duties and the use Not Primarily Abstractive test
RMT expressed the view that the NPA test is “inherently flawed because the threshold is set so low”. It suggested that permitting abstraction was at odds with ORR’s duty to have regards to the funds available to the Secretary of State. We do not consider that our approach is at odds with this duty as ORR must weigh all its relevant duties when making decisions.
WYCA also had misgivings about the current balance stuck by ORR in the weighing of our duties and was concerned that there was too much emphasis on the NPA test. Although the NPA test is an important element of our decision making, it is not determinative as ORR considers all relevant factors. We have amended the guidance to make this clearer.
Our April 2024 report explained the development our of NPA test as a tool supports our decision making and the weighing of our duties. ORR’s duties have not changed and so we have not fundamentally changed our policy on how we weigh our duties when making open access decisions.
Other comments on the guidance
FirstGroup suggested adding track access charges and other infrastructure charges to paragraph 2.5. This has been done.
London TravelWatch highlighted the importance of considering the impact on stations of increased passenger numbers or multiple train operators. We have amended the performance and operations sections (3.13) and Annex 2 to include passenger numbers at stations and any impacts arising from multiple train operators.
HEOC asked about definition of “large journey time savings”. The definition in the glossary has been clarified to confirm a large journey time change is a change of more than 30%.
HEOC and HAL also raised a number of issues on the position post 2028 which we will discuss with them.
TfGM queried the definition of ‘rail heading’ and so we have amended the definition so that it is clear this relates to travel by any mode rather than just by cars.
TfGM suggested we include further information about what evidence ORR requires on availability of capacity. In response we have widened the section on competing applications to address alternative uses of capacity more generally.
TfGM also suggested that OA should be required to invest in stations they intended to call at if they are not accessible. Many accessibility improvements are funded by DfT’s Access for All scheme and operators can chose to invest in stations. However, the funding of station enhancements isn’t within scope of this guidance.
TfGM and WYCA both questioned how infrastructure capacity associated with infrastructure projects such as the TransPennine Route Upgrade can be protected. Tools such as track access options maybe appropriate to consider. We will discuss this issue with both organisations.
Network Rail highlighted safety and the importance of the applicant providing specific and complete information to the infrastructure manager to enable them to assess performance and operations. We have amended table 4.2 is amended as Network Rail suggested.
WYCA was disappointed that the views of subnational transport bodies are not referred to within the guidance. The section WYCA referred to reflects ORR’s duties in respect of the Secretary of State, Scottish Ministers and the Welsh Government. While ORR does not have a comparable duty in respect of subnational transport bodies, we nonetheless consult subnational transport bodies in furtherance of our other duties such as promotion of an integrated system of transport, performance, interest of users of railway services etc.
WYCA suggested that examples should be given on how tests apply. We have addressed this by improving the links to our decisions which include further examples of the use of these tests.
Benefits and disbenefits of open access
Some respondents provided broader commentary on the benefits or disbenefits of open access.
Rail Partners referred to the provision of new journeys to otherwise underserved communities, lower fares, innovation, competition driving growth across the routes in which they operate and support of model shift. Rail Partners also expressed concerns about the challenges facing open access operators, including those potentially associated with rail reform and the creation of Great British Railways.
Conversely, RMT highlighted abstraction by open access operators from publicly funded services and suggested that open access operators receive indirect subsidy because they do not pay the fixed track access charges that publicly funded operators do. RMT also expressed the view that the current system is “skewed” in favour of open access operators.
Wider rail policy issues
Respondents noted that the rail industry is anticipating significant changes associated with the expected creation of Great British Railways. Some respondents queried the update of the guidance of this stage, while RMT expressed the view that ORR should not be updating guidance or making decisions on open access currently. We do not consider it would be appropriate to pause our regulatory activity, and on balance we consider it beneficial to improve our guidance now rather than waiting for rail reform to conclude.
We are grateful for all those who have taken the time to respond and to share their views on wider rail policy. We have not responded to the wider policy issues here as these are matters for the Department for Transport.
As noted by a number of respondents, we will continue to keep our guidance under review and will consider what changes may be necessary as rail reform is progressed.