Key test for Rail Regulator as firms pitch for new services
The Times: March 06, 2006
By Angela Jameson, Industrial Correspondent
RIVAL train companies will fight it out in front of the Rail Regulator today in what will be the first real test of the regulator's independence since the Department for Transport took back control of the railways.
Grand Central Trains wants to run trains from London to Sunderland and Bradford, but GNER, the present East Coast Main Line operator, is arguing that it should be allowed to run extra services to Leeds instead.
The Office of Rail Regulation (ORR) said in January that it was "minded to" approve Grand Central's plans, but said it would mean that GNER's application to run more Leeds services and Grand Central's proposed Bradford services could not be put in place before December next year.
Pressure from the Government and GNER has prompted the regulator to allow a rare oral hearing on the applications. A final decision will be announced at the end of this month. However, the adjudication is seen as a key test of whether private operators without a franchise should be allowed on to busy railways.
Mike Mitchell, the director-general of rail at the Department for Transport, has attacked the regulator's draft ruling over concerns that GNER may be unable to pay its promised £1.3 billion to the Treasury.
The department is also concerned that the ORR's decision will worry existing franchise-holders by making the future of their businesses less certain. "As a result, we can expect to see more caution exercised by bidders, which may be reflected in lower bids, and a potential reduction in premium or an increase in subsidy required," the department said in its response to the decision in January.
Ian Yeowart, the chief executive of Grand Central, said: "The regulator has proven himself on more than one occasion that he is properly independent."
Grand Central plans to run three trains each way daily on the East Coast Main Line between Sunderland and London, calling at Hartlepool and Eaglescliffe, on the edge of Middlesbrough, as well as Thirsk and Northallerton. None of these sites has a direct link to London and the proposal has been welcomed.
Mr Yeowart said that he was confident that his company had proven the economic case for the new services. "We have done our homework and our view is that he has already said "yes"," he said.
Chris Bolt, the Rail Regulator, has a duty to "promote the development of the network to the greatest extent economically practicable", which train operators think means opening new routes. However, he is also obliged to make sure that new operators do not cannibalise subsidised services.