I think the idea behind it is that if that subsidy wasn't paid, there would be no infrastructure to run some the services of that TOC on. There are many places where Northern's track access charges will not support the cost of keeping the line open. Others will be able to make better explanations than me.
-
Our booking engine at tickets.railforums.co.uk (powered by TrainSplit) helps support the running of the forum with every ticket purchase! Find out more and ask any questions/give us feedback in this thread!
Financial Difficulty at Northern?
- Thread starter Starmill
- Start date
- Status
Sponsor Post - registered members do not see these adverts; click here to register, or click here to log in
R
RailUK Forums
tbtc
Veteran Member
The problem is that expenditure will also be rising, possibly a bit faster than revenue - doubling the frequency on some lines (or extending services), running longer trains, increasing the fleet size with the various cascades from ScotRail/ GWR... at the same time that the new 195/331s are entering service (requiring extra costs to cover the training etc, since staff still need to cover rotas) ... and they aren't making the savings they budgeted for from DOO... so even if passenger numbers are up 5% or 10%, the costs could be a lot more (195s are obviously going to cost a bit more to lease than 142s).
is this significantly different to other TOCs? Or other ex-"Provincial" / non- main line TOCs anyway.
Anyway the original quote said it's "including money paid to Network Rail to maintain and upgrade the tracks. TransPennine received £158m" If the TOC pays the Track access charges (even if they do get some subsidies specifically for this,) why single Northern out?
its all in here:
https://orr.gov.uk/__data/assets/pd...il-industry-financial-information-2017-18.pdf
Tables 2.13 and 2.15 in particular.
The headlines for Northern in the 2017/18 financial year:
Fares income £298m
Other income £46m*
Income from Government £285m
Total income £629m
Total expenditure £618m (incl. £88m access charges to NR)
Share of NRs direct grant from Government apportioned to Northern (net of financing) £383m.
Total Government support to provide Northern services £668m, of which only £285m goes directly to Northern.
2018/19 numbers are not due until next year.
* the ‘other income’ includes ancillary income such as parking, property, sales of services etc. It could possibly include transfers of funds from the owning group, but I believe this is unlikely in this case.
So it didn't "receive £675m of taxpayers’ cash in 2017-18, including money paid to Network Rail to maintain and upgrade the tracks" then.
Government money maintains the road network, also the rail network. Why single out one TOC for this, if not a softening-up exercise ahead of Westminster getting ready to look after the home counties?
If you look through the linked tables you can see the other TOCs also have the numbers in the same field.
NR gets a similar grant for all TOCs, Northern is not being "singled out", this is a thread about Northern and you asked about Northern in detail.
The situation is somewhat similar to HGV operators who don't cover the cost of the wear and tear their vehicles to the roads so HMRC effectively funds the difference.
Some thoughts to consider:
For the whole network only 23% of NR's income comes from Access Charges.
For Northern only 15.4% of NR costs are covered by access charges so the difference has to come from somewhere. (Running short trains infrequently tends to generate very little access charge revenue...)
Northern's fare income doesn't even cover staff and diesel costs let alone rolling stock leasing or access charges.
Of the total costs to operate Northerns services (inc NR allocated costs) only 23% came form Fares... For most operators this is over 50%.
The first half of operators listed in that (table as I don''t have the time do the whole lot):
%NR costs from Access Charges / % NR cost from DfT direct grant for Operator
C2C: 22/64
Chiltern: 17/69
XC: 18/66
LNER: 30/62
EMT: 19/70
Anglia:24/63
GWR: 17/60
Northern: 15/71
SE: 21/60
SWR: 25/56
Last edited:
As I have said on many threads, Northern is an artificial construct where all the least lucrative routes have been hived off to look expensive to the taxpayer, to justify decades of under-investment.
Other areas such as the South West and Greater Anglia doubtless also have routes which require subsidy just like Northerns, however because those routes are paired with InterCity and London Commuter routes, that subsidy is less immediately visible to the public gaze.
Other areas such as the South West and Greater Anglia doubtless also have routes which require subsidy just like Northerns, however because those routes are paired with InterCity and London Commuter routes, that subsidy is less immediately visible to the public gaze.
I would love to see a bespoke Profit and Loss account for the Lymington branch.
Indeed. I don't doubt the importance of the line to the network, but I suspect it's not a money spinner in itself (especially now it no longer has its heritage traction !).
LNW-GW Joint
Veteran Member
The "£106m loss" last year for TPE was the forecast loss over the remaining length of the franchise, not just for that year.
ie things would have to get worse to push this number higher.
However TPE (and Northern) must be hurting from the late delivery into service of new rolling stock, much of which seems to be self-inflicted.
Somebody will be paying to keep those trains in sidings for up to a year.
If First Group were about to default on their TPE franchise, they wouldn't have been awarded the West Coast Partnership contract.
Arriva is in the process of being sold by DB, so there will likely be a change of ownership anyway.
On NR costs attributable to the TOCs, there have been massive upgrade works across the north recently - eg all the work associated with moving signalling to Manchester ROC, not to mention electrification, Ordsall Chord and the Victoria-Stalybridge upgrade, among many others.
It all has to be paid for.
We still come back to both franchises operating frequent short trains with low productivity as an underlying issue.
Shapps might indeed decide on new devolved governance arrangements for TPE/Northern as part of the Northern Powerhouse agenda*, but I'm not sure TfN is yet mature enough to take over - they have been practically invisible during the recent operational travails.
That wouldn't of itself force contract termination with the TOCs, though.
*with Parliament not sitting, it's the kind of announcement that might make the Conservative Party Conference, held in Manchester Central at the end of the month.
ie things would have to get worse to push this number higher.
However TPE (and Northern) must be hurting from the late delivery into service of new rolling stock, much of which seems to be self-inflicted.
Somebody will be paying to keep those trains in sidings for up to a year.
If First Group were about to default on their TPE franchise, they wouldn't have been awarded the West Coast Partnership contract.
Arriva is in the process of being sold by DB, so there will likely be a change of ownership anyway.
On NR costs attributable to the TOCs, there have been massive upgrade works across the north recently - eg all the work associated with moving signalling to Manchester ROC, not to mention electrification, Ordsall Chord and the Victoria-Stalybridge upgrade, among many others.
It all has to be paid for.
We still come back to both franchises operating frequent short trains with low productivity as an underlying issue.
Shapps might indeed decide on new devolved governance arrangements for TPE/Northern as part of the Northern Powerhouse agenda*, but I'm not sure TfN is yet mature enough to take over - they have been practically invisible during the recent operational travails.
That wouldn't of itself force contract termination with the TOCs, though.
*with Parliament not sitting, it's the kind of announcement that might make the Conservative Party Conference, held in Manchester Central at the end of the month.
Last edited:
We passengers would very much like longer trains to improve comfort and (eventually) productivity.
A good first attempt would be to start forming more 3 carriage units out of 153's and cascaded 150's, however there's no confirmation that this will happen.
The overall industry framework needs to do more to incentivise longer trains.
I am pretty sure it would look better than many northern branches!
Always pretty busy when I have been on it - it has a very good connection to the ferry, the town station is right in the town (which has difficult parking), lots of tourists, driving to Southampton or Bournemouth is not fun, fast connections to London, and is electric rather than burning diesel (so less maintenance too).
Well if we compare it with the Windermere branch, for example, it appears to offer twice as frequent a service with trains that are twice as long and yet seems to generate half the passenger traffic?
tbtc
Veteran Member
"Hiding" those routes inside bigger franchises may fool some people, but it doesn't get away from the fact that Northern run a large number of mileage over relatively quiet lines (e.g. we've recently discussed the Colne branch on the Forum, where a minibus could cope with the thirtysomething passenger loads, but in four months time the shortest train on that line will still be able to accommodate a hundred and fifty passengers).
Other TOCs have some quieter lines but these form a tiny proportion of the overall franchise, so things like the Lymington branch (or a Norfolk branch line) are essentially a rounding error. Whereas Northern are the only TOC on a lot of lines where the passenger income won't be enough to pay for the wages of the driver and guard (yet alone things like fuel, the rolling stock costs, paying for the infrastructure...).
Is it even possible to run a two coach DMU without losing money (given all of the costs I've listed above)? And yet the bulk of Northern's services remain two coach DMUs (with costs set to go up when routes run by cheaper 142/144/153s have to have heavier thirstier stock (with higher track access charges, requiring additional fuel).
For all that people on here excuse problems by citing "untapped demand" and "sparks effects" and all of that, it looks like passenger numbers haven't always risen fastly enough to warrant the increase in frequency (or longer trains) that Northern has introduced in the last year or two.
Killingworth
Established Member
Losing Pacers will remove the most economical units on the railway so costs will go up substantially, as they will again when longer trains run.
However overcrowded trains deter more passengers. This is particularly the case when using non-reservable seats, which includes most with season tickets.
We see families and groups of friends walking up and down carriages trying to get seated together and failing that near to each other. It happens so often regular users take it for granted.
You get a reserved seat and find yourself next to a fellow passenger selected at random. You don't have a reserved seat and may find the free seat at starting station A becomes booked from station B and you have to move. And that game of musical chairs can happen several times on a Crosscountry service.
Most of us, given the opportunity, prefer to sit by ourselves, or chose who we sit next to.
My car is air-conditioned to the temperature I prefer. It seats 4, has no timetable except the one I set. It goes door to almost door and is available 24/7. I can listen to my choice of music, cricket or the news without disturbing anyone or earphones. The costs are virtually the same if I travel alone, or as 2, 3, or 4 of us.
I understand why so many avoid trains, especially when they don't turn up on the most busy days of the week, as no Northern stopping services did until lunchtime on Sunday on the Hope Valley line into the Peak District.
Losing one train is bad enough but when Arriva Northern took over much was made of more Sunday services. Timetables may show that's been achieved. The performance suggests it wasn't thought through and it can't even deliver what previously operated. It seems to have got worse since ASLEF members turned down a harmonisation deal.
If public transport is to compete with cars it has to be reliable, every train, every day, every week, every month. Too often it's not.
Most of us quickly revert to cars as soon as a train trip goes wrong. That will be eating into Northern's bottom line and passenger growth.
There is massive potential demand for more spacious carriages that turn up on time and are priced accordingly.
PS I travelled to Leeds yesterday. Trains were crowded and a 153 tagged on would have made it more relaxed - but would any potential extra revenue have covered the extra costs (ignoring compliance issues)?
Last edited:
Northern's passenger figures will probably see massive increases over the next 2 years as Saturday passengers are counted again. The big problem facing Arriva now is that from year 4 of the franchise the subsidy from the DFT reduces massively as the business model forecast huge passenger growth and revenue growth to match. I've heard off several sources that revenue is nothing like what was forecast so whilst Northern is making a modest profit now, this will become a loss when subsidy reduces.
it looks like passenger numbers haven't always risen fastly enough to warrant the increase in frequency (or longer trains) that Northern has introduced in the last year or two.[/QUOTE]
And nor will they whilst Northern continues to be unreliable, especially at the weekend.
I am not sure where these mythical longer trains are, but I would suggest overcrowded Pacers probably don't help boosting passenger numbers either.
Although my travel on Northern is focused on Liverpool and Manchester my experience is that the trains are full to bursting.
And nor will they whilst Northern continues to be unreliable, especially at the weekend.
I am not sure where these mythical longer trains are, but I would suggest overcrowded Pacers probably don't help boosting passenger numbers either.
Although my travel on Northern is focused on Liverpool and Manchester my experience is that the trains are full to bursting.
With respect, hiding unremunerative lines in big franchises fools everyone. It's why we don't have this issue with such lines on Great Western and East Anglia, both of which have plenty of long routes with two carriage trains.
You say that we need longer trains to avoid losing money. I don't doubt the four carriage electric trains recently introduced in the North west will provide such a "sparks effect" in time. Afterall, it's not the lack of revenue generation that's caused Whitehall to get the collywobbles over electrification - its that it doesn't like spending the capital.
The only option remaining to run longer trains, is to use 153's and other odds and ends to run more 3 carriage trains. DfT should be working out a plan with Northern to do just that, however I suspect that they will be more concerned with shrinking the subsidy commitment.
The easiest thing would be to bung a 144/143 on various busy services that couldn't be extended to three carriages, however that option is soon to be closed off.
GRALISTAIR
Established Member
Absolutely
Greybeard33
Established Member
If a 2-car train is already carting fresh air around, adding carriages will just increase costs further without increasing revenue! As I understand it, @tbtc was suggesting that a lot of the quieter Northern lines carry so few passengers that farebox revenue cannot cover the marginal operating costs at current frequencies, whatever the length of train.
On the other hand, if frequency is cut to reduce costs, more passengers will forsake the railway and revenue will fall further, in a downward spiral....
I rather doubt there is a single Northern service that makes money other than in the peak. What you are saying is not wrong, however why does everything in this system have to make money? Is it not time we as a society started looking at other issues. We have over the decades forced people into working in towns and cities, we have a responsibility to ensure those people have a service to get them there. There is not a single rail network in the world that runs without subsidy, why did this disjointed government think it can do any better?
That may be because passenger numbers didn't rise at all? They fell, by 2%... Northern 18-19 results will probably show a larger fall.
I agree that in 19-20 and subsequent years, there will probably be a large bounce-back.
The question at hand is will the existing structure survive that long?
Jozhua
Established Member
- Joined
- 6 Jan 2019
- Messages
- 1,856
I think Northern has really pushed away the bread and butter that is the commuters and it's a terrible mistake. Large numbers of passengers arriving at predictable times, willing to pay much higher fares than young people like me, using their railcard to get a cheap off peak to go see their mates or nip to the shops.
What these passengers really need is reliability and space during peak times. Perhaps some messing round with train lengths and nabbing some cars off trains going back against the flow at peak times. At the very least, making sure no short forms will be going into at 7/8am or out of at 5/6pm Manchester or other major cities.
The states heavily gears their systems around commuters. The Long Island Railroad in NY state literally only flows one way in the mornings and evenings, only now they are adding extra tracks will a reverse flow exist. Obviously, this is not at all the UK way of doing things, but my point is a bit more thought being put in to catering to these spikes in demand could make a massive difference.
Commuters are bread and butter and if you treat them nicely enough, they might use the train for leasure as well
What these passengers really need is reliability and space during peak times. Perhaps some messing round with train lengths and nabbing some cars off trains going back against the flow at peak times. At the very least, making sure no short forms will be going into at 7/8am or out of at 5/6pm Manchester or other major cities.
The states heavily gears their systems around commuters. The Long Island Railroad in NY state literally only flows one way in the mornings and evenings, only now they are adding extra tracks will a reverse flow exist. Obviously, this is not at all the UK way of doing things, but my point is a bit more thought being put in to catering to these spikes in demand could make a massive difference.
Commuters are bread and butter and if you treat them nicely enough, they might use the train for leasure as well
The point is that tha vast majority of Northerns routes aren't carting fresh air around. If the routes which currently have overcrowded two carriage units, had longer trains, they might stand a chance of generating some more revenue to help support quieter lines.
Trouble is, there are hardly any Northern workings that don't carry a peak flow of some kind, so reducing their length is difficult (and in any case they are already max 2 cars!).
OK, I doubt the new 0718 Leeds-Lancaster and back loads well, but that's an exception to the rule.
And avoiding short forms simply requires more, or more reliable stock.
A couple of observations:
Northern has a variety of different route types. Discussing them in one size fits all approach doesn't work.
The commuting peak in "Northern" area is much shorter than in London & SE so typically each train can only do one peak flow direction service in the rush hour at best. The much longer peak in L&SE means more full loads per day are carried on each unit so the economics are better.
Slowish journey times on underpowered DMUs often with poor dwell times lead to lower slow average speeds and less daily services run per unit.
Long layover times at the extremities of routes again lead to fewer services run per unit per day.
Lots of routes terminating in city centres rather than running through so more central station dwell times. (e.g. sort Castlefield corridor and get electrifying)
Revenue collection is much lower than where it should be but that is a work in progress.
The solution for many Northern commuter routes is to get electrifying - this would shave 15-20% of stopping service journey times (making the train more attractive) and mean that you get more services run per unit per day improving the economics.
Some of the ex PTE area fares are extremely low on a /mile basis, this needs to be looked at...
Northern has a variety of different route types. Discussing them in one size fits all approach doesn't work.
The commuting peak in "Northern" area is much shorter than in London & SE so typically each train can only do one peak flow direction service in the rush hour at best. The much longer peak in L&SE means more full loads per day are carried on each unit so the economics are better.
Slowish journey times on underpowered DMUs often with poor dwell times lead to lower slow average speeds and less daily services run per unit.
Long layover times at the extremities of routes again lead to fewer services run per unit per day.
Lots of routes terminating in city centres rather than running through so more central station dwell times. (e.g. sort Castlefield corridor and get electrifying)
Revenue collection is much lower than where it should be but that is a work in progress.
The solution for many Northern commuter routes is to get electrifying - this would shave 15-20% of stopping service journey times (making the train more attractive) and mean that you get more services run per unit per day improving the economics.
Some of the ex PTE area fares are extremely low on a /mile basis, this needs to be looked at...
The supposedly extremely low ex-pte fares have already been looked at and price gouged over the past few years, with many fares doubling in some areas.
I doubt that Manchester - Atherton, for example would support much more than the £6.40 or so, off peak, than it currently commands.
Compare this to say, Ashford - Brighton for around £10.00/11.00 (with a Network Card or Groupsave, for example - neither of which are available in the North) then the PTE fares don't look so extremely low at all.
I was mainly referring to the very short distance ones over <5 stations especially in the peaks.
- Status