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Co-operative open access

June 2010

Peter Plisner

Another new open-access rail operator has unveiled plans for a service, this time from the West Country to the Midlands. But this latest potential rail operator is very different from those of the past – this time it’s the brainchild of a ‘co-operative’ group interested in public transport opportunities. Peter Plisner reports

Talk about the Co-op and first you think of the supermarket at the end of the road or the milkman who delivers to your doorstep at the crack of dawn. Now get ready for a different type of service from the Co-op, this time on the railways. The mission for ‘Go Cooperative Ltd’, according to it’s prospectus to potential investors, is to ‘reduce the social and environmental impacts of travel by providing mutually owned, high quality inclusive public transport services that encourage people to choose more sustainable options’.

It’s an impressive opening statement from a group that’s promising ‘something very different’ in a privatised railway environment, where making a handsome profit for your shareholders is crucial. The concept of the Co-op going into rail services goes back to 2008 when Somerset Co-operative Services, a development body working on a range of projects, secured a grant to carry out preliminary research into the feasibility of a co-operative enterprise providing rail services through ‘open access’ on a model similar to that pioneered by Hull Trains. The work, according to the group, focused on three areas: first whether a co-operative could become a train operator; second where the best routes were in the south and south-west; and third, what kind of legal structure would enable sufficient finance to be raised from outside investors, while at the same time preserving the cooperative principles.

We’ve already seen the Co-op branch out into internet banking with it’s successful Smile operation. Phone services are available through ‘Phone Co-op’ and, more recently, gas and electricity has gone on sale through Co-op venture ‘Energy for All’. So why not a railway company? Until now open-access operators have focused on routes into and out of London, the most recent entrant being Wrexham & Shropshire, which runs through Shropshire and the West Midlands to London’s Marylebone station. But the latest open access offering is looking at different routing opportunities.

According to Go Co-op, which is likely to be known simply as ‘Go!’ in the future, there are plenty of other opportunities worthy of consideration. These range from small-scale unused and underused branch lines to largescale cross-country routes that cut across existing franchises. Following a thorough analysis of DfT studies and Network Rail route utilisaton strategies, a cross-country route that links the south coast to the Midlands was chosen.

The route would carry passengers from Yeovil to Trowbridge, and then head through Melksham to Swindon and north to Oxford before going on to Birmingham. Go Co-op believes that the route has the best potential for a new service because it connects to a number of centres of population for which there is currently no direct provision. But it also has a good balance between delivering social benefits to poorly served communities like Melksham and Frome and significant demand between large places like Swindon and Oxford.

Another good reason is that the route doesn’t require major changes to infrastructure. Go Co-op operations director Chris Phillimore says: ‘At a fundamental level we are looking at doing something different with open access. We are calling it the “multi-flow” model where, unlike existing open access operators, we are not just targeting a single London flow, but a series of inter-urban flows that make an overall profitable route. We have only looked, to date, in southern England, not because of any regional partisanship, but rather that we only had the resources to analyse a constrained area.’

The group believes that there is significant latent demand, especially in places like Melksham, which has a population of more than 20,000, but where there is currently only a minimal ‘parliamentary’ service. Having selected the route for the new service, Go! engaged an external contractor to undertake timetable modelling. That exercise resulted in a draft timetable that will, according to Go!, offer four roundtrips over the Yeovil to Oxford section, with three of those services being extended to Birmingham Moor Street. There are plans to extend southwards to Weymouth, although the timetabling exercise indicated that going there would require an additional train set.

The draft timetable envisages an earlymorning train running from Yeovil all the way to Birmingham, for business travellers, and a later train offering a commuter service from Westbury and Trowbridge through to Swindon and Oxford. A middle-of-the-day service to Birmingham would cater for the leisure market. Go! expects to use refurbished rolling stock and traction similar to those being used by Wrexham & Shropshire.

Using that sort of train set would help to avoid pathing issues with high-speed Great Western Main Line services. The group has also indicated that it will continue to investigate procuring new DMU vehicles, although it says that presently there isn’t a business case for buying new trains.

Negotiations have already started with both Network Rail and the Office of Rail Regulation. The group is expecting the approval process to take at least nine months, but it often takes much longer.

The prospectus talks of raising money through share issues and a possible joint venture to help it through initial stages prior to start-up. The document states: ‘Having begun to operate the service and established its credibility, Go! would be able to buy a progressively larger stake in the venture.’

Chris Phillimore says: ‘We have already managed to raise £100,000 from just the ethical investor/co-operative sector and are receiving a good response from our launch events. We know this is the high-risk phase as the track access contract is not guaranteed, but we are encouraged by our engagements with Office of Rail Regulation and Network Rail.’

Go! is hopeful that its new service could be up and running late next year. In some parts of the media, it’s been described as a ‘not-for-profit’ company, which appears to be a popular misconception.

Phillimore says: ‘Co-ops are businesses and must make a return for their investors. Where they differ fundamentally is the way that profit is distributed. In our case, amongst not just financial investors, but also users and employees. Also we are a “one member one vote” organisation and there are restrictions on voting rights. Financial investors will get a higher percentage of the financial return in the form of a dividend, but some profits (when they arise) are ploughed back into the business.’

The group isn’t just interested in heavy rail services. One of its original intentions was to develop short lines to feed into existing cross-country routes. Branches in Yeovil, Weymouth and Oxford were considered, but for technical reasons could not be quickly turned into viable public transport routes. A more immediate proposition, according to the prospectus, is a line on the border between Wiltshire and Hampshire. A branch line in the small town of Ludgershall near Andover could be converted for use by a light railcar, similar to that currently operating in Stourbridge in the West Midlands.

Go! says it’s been working closely with Lightweight Community Transport, a social enterprise providing leasing of light rail vehicles. Phillimore says: ‘We have made some interesting enquiries of suppliers in Europe and even the Far East, who are developing vehicles that combine the reduced operational cost of hybrid/stored energy vehicles, with more dynamically and constructionally conventional vehicles. We are looking to work with Network Rail and other parties to develop the project, initially to a trial stage. We are receiving considerable interest from local authorities in our ideas generally.’

With at least one party manifesto, during the recent general election campaign, talking about the welcoming franchise bids from notfor- profit, mutual or co-operative franchise enterprises, it appears to be a good time for Go! to unveil its plans. But the big question is what would Robert Owen, the founder of the Co-operative movement, make of plans to runs trains as a Co-op?

Chris Phillimore says: ‘I think he would see it as a logical extension of the co-operative model. He believed that people were a product of their environment and this is a cornerstone of the Co-operative movement. If an individual has a say in his environment he will be made better and more fulfilled. It’s something we hope will apply to our employees and users!’

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