Posted 5th November 2018 | 6 Comments

Northern ‘in crisis talks’ over revenue shortfall

THE German state railway Deutsche Bahn is reported to be in urgent talks with the Department for Transport over revenue shortfalls at the Northern franchise.

The franchise has suffered this year from the failure of its May timetable. It blamed late-running electrification work for some of the disruption, when plans to run electric trains had to be abandoned at short notice. It is also embroiled in a bitter dispute about on-train staffing with the RMT, and a series of 24-hour strikes is continuing.

The Daily Telegraph claims that DB is trying to renegotiate the subsidy profile included in the contract. Under the terms agreed by DB’s subsidiary Arriva, the amount of subsidy is suppose to fall each year, but the continuing disruption on Northern has dented predicted revenues, and the subsidy has allegedly risen to £282 million this year.

Passengers are certainly unhappy with Northern’s performance. One responder to a Transport Focus survey published last week said: ‘I no longer have any confidence in the Northern network. I have only used the train three times since May and feel trapped in my home because I have not been able to get out and about as I would have done. I feel really depressed about the rail services and am not sure whether I will ever return to routinely travelling by Northern trains.’

The Department for Transport has refused to confirm or deny the reports of spiralling losses at Northern. A spokeswoman told Railnews that ‘we do not comment on financial discussions with franchise holders’, although she did confirm that the Department has regular meetings with all franchisees. She was unwilling to be pressed further on what those meetings involve, even in principle, although it is already known that each franchise has an effective ‘account manager’ within the Department who is the key contact.

However, a spokesman for Northern said: ‘We are delivering on all of our commitments and are investing more than £600 million to transform local rail in the North – with new trains, better stations, more services and faster journeys for our customers. This is the biggest investment into rail in the North in a generation. But the franchise has faced a number of exceptional circumstances, notably the ongoing, late delivery of infrastructure upgrades. These delays were out of our control and have impacted growth in passenger numbers. As is standard practice, we are in constant dialogue with the Department for Transport about how to improve journeys for customers in the North.’

The RMT has been demonstrating outside Parliament in London today on the 25th anniversary of the 1993 Railways Act, which legalised privatisation. The union has just announced more strikes on Northern on every Saturday until the end of the year.

RMT general secretary Mick Cash said Northern is a ‘basket case rail franchise sucking up well over a quarter of a billion pounds a year in public bail-outs while wrecking service standards, ripping up the safety rule book and threatening to throw the guards off over half their trains. This scandal needs to end immediately and that means the Government taking immediate action to bring the Northern routes into direct public ownership and control with the services run on the basis of safety, security and access and not private profit. That means a guard on every train and proper staffing at station level as well.

‘With reports that TransPennine Express are in similar dire straits this national disgrace on our privatised railways, coming exactly 25 years after the Act was passed ushering in the Great British Rail Rip-Off, has to be called to a halt before irreversible damage is done.

‘If Virgin can be kicked off the East Coast and the lines returned to public ownership there is no excuse whatsoever for dragging out the death throes of Arriva on Northern Rail.’

Meanwhile, Labour shadow transport secretary Andy McDonald said: ‘Twenty-five years on it’s clear that rail privatisation has been a catastrophic failure, with the taxpayer putting in even more money to the privatised system than when it was nationalised.’

Railnews asked the Rail Delivery Group to comment on Labour and RMT claims that rail fares have risen by 20 per cent in real terms since January 1995, but it has not done so.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Nick , Cheshire

    Mick Cash and the RMT need to change the rhetoric. The Unions bring nothing to the solution, and in many ways are a contributor to the overinflated costs of running the UK rail network.

  • Geoff Kerr, Littleborough, Lancs

    The Government is far-more involved with running the railway than it ever was under BR. Removing Civil Servants from micro-management would be a good start. Then scrap the ORR and replace it with something more like the old HMRI, which worked with the railway rather than against it.

  • Steve, Kuwait City

    The Nationalised Network that was Previously Abused and Mismanaged by a Private Company, under a foolish Privatisation Mandate. Context is important.

  • Watcherzero, Wigan

    We can see how badly the Nationalised Network Rail is performing. The root of Northerns financial problems arise from the union strikes (3 months of consecutive Saturdays now as well as the earlier strikes), Network Rail cocking up the May timetable and the late delivery of Electrification again by Network Rail.

  • Jeremy Milton, Manchester

    I cannot understand why some people find it so hard to understand that all the problems on Northern Rail stem from Network Rail's repeated failures to deliver enhancements and from a far left union which wants to force 1950s working practices on whichever management it faces, for ever more.

    Wake up!!!

  • Jim Livesey, Mirfield

    The article says it all. But neither side of the political argument appears to have any clue what should really be in place to improve things. The Tories with Grayling in charge have suggested tinkering with the relationship between NR and the passenger TOCs to promote "alignment" but don't appear to know how that should work. The unions shout "Nationalise" which may seem attractive in the present situation but also do not specify a preferred organisation. The Labour party appear happy to go along with the union's call but also are quiet on what it actually means....which suggests another "lash up" with more reorganisation to come later. "Nationalisation" almost certainly means that the Treasury will be in charge of spending for operations as well as infrastructure without a strong well organised body to speak for the system (BRB?).

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