43096
On Moderation
- Joined
- 23 Nov 2015
- Messages
- 15,289
No, I was pointing out that former employees are not always an accurate guide as to what is going on in reality.
Have you got anything useful to say?
-
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
Have you got anything useful to say?
Sponsor Post - registered members do not see these adverts; click here to register, or click here to log in
R
RailUK Forums
43096
On Moderation
- Joined
- 23 Nov 2015
- Messages
- 15,289
There we are then.
Seems I’ve hit a nerve, not really much other reason for your attitude.
By the way, you should explain what S&A means - see forum rules on use of acronyms.
Given that this thread is about financial difficulty,there are two questions that flow from that. Firstly what does the 2% reduction in journeys translate to in terms of ££££(i.e. were the journeys lost mainly weekend journeys on off peak tickets leading to a less than 2% revenue loss)? Secondly how much associated expenditure was saved (eg guards wages, overtime, trains running costs not incurred)? Perhaps guards striking makes money
Last edited:
only that dilbertphil has probably got a lot more insight into what happened than either of us.
Killingworth
Established Member
Nothing went wrong overnight. It's been a build up of issues over decades. Standard first generation 3 car units replaced by 2, many of them Pacers, was possibly the right decision on traffic trends at that time. Around the late 1970s to early 1980s the growth of university education took off. Someone in rail marketing spotted the market and the student railcard was born. The coach equivalent never caught on as well. Catch 'em young. And they did, and generations brought up on Thomas the Tank Engine turned to rail. The young people who went to uni away from home and got the sort of jobs that required travel.
You may laugh, but it's one of the untold stories of the industry.
Arriva North got carried away with their excessive optimism and promises. Alex Hynes gave some tremendously upbeat speaches and presentations based on what his team must have told him. They sounded too good to be true and many who heard them won't have been surprised that they haven't come as quickly as suggested.
Those who passed on those optimistic projections to the public must now be feeling a little embarrassed. However, a lot hasn't been Northern's fault entirely. They didn't handle the Bolton electrification and DOO issues well, but Network Rail and the DfT are responsible for a lot of that.
Northern are the last to get paths allocated as all long distance operators get first dip, and freight operators have ancestral rights to to many they may rarely use. Delayed cascading, late new trains, rand refurbishing 30 year old rusty coaches hasn't helped either.
The momentum of improvement is slow but it does seem to be picking up. It's well behind schedule so you don't need to know much about cashflow management to realise the overdraft won't be coming down very fast, and might still be going up.
What concerns me is that the trains are often so full that revenue is missed by being unable to check or issue tickets. On my line in particular we have 3 operators and Northern often have the cheapest through fares. No ticket barriers until Piccadilly + trains so full the guard can barely get in the train. Most do pay before boarding. Not a few do not because even when the train isn't full the guard is quite likely to stay in the back cab.
Annual passenger statistics for 2018/19 must be down due to the Saturday strikes and stand in guards not checking or issuing tickets. In reality passenger numbers across most of the region have held up remarkably well. Despite it all some stations may have recorded increases. The finances should be on the way back up.
And yet, higher staffing costs, higher train hire and maintenance costs, higher fuel costs, and higher track access costs will need a lot more passengers to make the balance sheet come out right. It must be a nightmare for the accountants.
You may laugh, but it's one of the untold stories of the industry.
Arriva North got carried away with their excessive optimism and promises. Alex Hynes gave some tremendously upbeat speaches and presentations based on what his team must have told him. They sounded too good to be true and many who heard them won't have been surprised that they haven't come as quickly as suggested.
Those who passed on those optimistic projections to the public must now be feeling a little embarrassed. However, a lot hasn't been Northern's fault entirely. They didn't handle the Bolton electrification and DOO issues well, but Network Rail and the DfT are responsible for a lot of that.
Northern are the last to get paths allocated as all long distance operators get first dip, and freight operators have ancestral rights to to many they may rarely use. Delayed cascading, late new trains, rand refurbishing 30 year old rusty coaches hasn't helped either.
The momentum of improvement is slow but it does seem to be picking up. It's well behind schedule so you don't need to know much about cashflow management to realise the overdraft won't be coming down very fast, and might still be going up.
What concerns me is that the trains are often so full that revenue is missed by being unable to check or issue tickets. On my line in particular we have 3 operators and Northern often have the cheapest through fares. No ticket barriers until Piccadilly + trains so full the guard can barely get in the train. Most do pay before boarding. Not a few do not because even when the train isn't full the guard is quite likely to stay in the back cab.
Annual passenger statistics for 2018/19 must be down due to the Saturday strikes and stand in guards not checking or issuing tickets. In reality passenger numbers across most of the region have held up remarkably well. Despite it all some stations may have recorded increases. The finances should be on the way back up.
And yet, higher staffing costs, higher train hire and maintenance costs, higher fuel costs, and higher track access costs will need a lot more passengers to make the balance sheet come out right. It must be a nightmare for the accountants.
Shaw S Hunter
Established Member
Not a bad summary but the 2-for-3 replacement policy was nothing to do with traffic trends. Rather it was the belief that newer DMUs would need less maintenance than the old ones thereby allowing the service to be run with a smaller fleet. However a 33% cut in fleet strength was always ambitious and diesels being diesels the maintenance requirement inevitably rose as they got older. We rightly complain about the the Serco/Abellio version of the Northern franchise having been let on a zero growth basis but the DfT attitude to what were then known as BR's Other Provincial Services was born of the same unambitious thinking. There was also no consideration of the possibility that the new trains might generate additional traffic simply by being so much better than what they replaced, especially where 158s replaced very tired locos and Mk1 coaching stock.
The overarching problem is Treasury/DfT thinking that in a more commercialised railway the idea of subsidy is an anathema to be chipped away at every opportunity almost regardless of the net effect on the experience of paying customers. ISTM that Transport Scotland has a much better way forward in its widespread use of service quality monitoring of the Scotrail franchise and the expressed intention that strategic transport planning should form part of a wider government policy in all areas of economic activity, something taken almost for granted in most European countries.
Bantamzen
Established Member
And herein lies the real problem. Governments who believe that subsidies should be reduced to zero, and even eventually expecting returns from a franchise that is effectively a local commuter service. The Northern franchise is probably one of least sexy of all the UK's current franchises, no real long distance / intercity services where first class products can be sold, spread out over a very wide area with lots of low yield yet essential routes, with up until now a very aged rolling stock. If I were to be honest, I am amazed that any company would actually still want to run it, and I fear that we may rapidly be reaching the point at which none will.
Upthread there is an ex-employee who talks about Arriva cost cutting, and I don't doubt that this has taken place. But what they failed to mention is that the DfT insisted on this as part of the franchise agreement, just as the DfT for so long insisted on a move towards DOO (Driver Only Operation) which caused over a year of very damaging union action & disruption. They insisted on this because they expect the franchise to move towards a zero subsidy position in the not too near future, but at the same time wanted the operator to bring in new stock, & refurbish existing stock as well as bring it up to the standards of accessibility demanded by legislation by the end of this year. In other words they wanted vast investment, for diminishing returns. Had Arriva not tried to meet these demands, another company would have & would probably have found themselves in exactly the same situation, facing exactly the same criticism.
The reality is that this franchise cannot be expected to become a profitable one for a very long time. No operator can afford to charge the kind of fares that would deliver these profits, partly because of the nature of the Northern network & partly because incomes in this part of the world could not sustain them. But the North of England needs it's railway infrastructure as it is if it is ever to grow it's economy. So central, or if needs be local subsidies are needed regardless of what Westminster's politicians & Whitehall's bureaucrats think. If Arriva do throw in the towel, it will not be good news as some seem to think. Faced with the realities of the franchise, I am almost certain that within a few short years of running it the DfT would make deep, damaging cuts to it that will destroy the North's economy, and force yet more people to try and shoehorn themselves into the already over-crowed South East. As things stand it is a lose-lose situation for the North, and that is deeply depressing, as is the fact that some people still cannot see what is really happening.
Greybeard33
Established Member
Certainly the DfT specified challenging requirements in the Northern franchise ITT. But Arriva was under no obligation to bid, nor were Abellio or Govia (the two losing bidders). Presumably all three bidders judged that it was feasible for them to make a return for their shareholders despite the onerous requirements. And Arriva's bid promised more new diesel carriages (195s) than required by the ITT, plus new EMUs (331s) that were over and above the ITT requirements (refurbished 319s would have been compliant).
The losing bids are not in the public domain. However, it might be surmised that Abellio's greater knowledge of the Northern franchise, as a partner in the incumbent joint venture with Serco, led it to make a more conservative bid than Arriva.
The losing bids are not in the public domain. However, it might be surmised that Abellio's greater knowledge of the Northern franchise, as a partner in the incumbent joint venture with Serco, led it to make a more conservative bid than Arriva.
DJH1971
Established Member
Looks like Northern could face losing the franchise if things don't improve.
Very much a similar story to North Western Trains a couple of decades ago when the faced such a threat.
Very much a similar story to North Western Trains a couple of decades ago when the faced such a threat.
Last edited:
Glenn1969
Established Member
Kind of rehashing old news. Grayling is of course no longer in post
DJH1971
Established Member
I noticed that about Chris Grayling still being referred, but this is in fact a very recent article as the web page had a picture of a 195.
It's a recent article about old news. They did an identical article the day before. It's clickbait.
Glenn1969
Established Member
It's a recent article that mainly rehashes old news
If I had a pound every time some started a thread saying Northern were in trouble....
I’m guessing the Westmorland Gazette is associated with other papers in the area and just put a local angle on syndicated ‘news’ that is just spread across all relevant titles.
And of course with the most extreme outcome as the clickbait friendly headline...
I’m guessing the Westmorland Gazette is associated with other papers in the area and just put a local angle on syndicated ‘news’ that is just spread across all relevant titles.
And of course with the most extreme outcome as the clickbait friendly headline...
LNW-GW Joint
Veteran Member
Part of it is that the local MP (Westmorland & Lonsdale) is ex-Lib Dem leader Tim Farron and campaigning for Arriva to lose the franchise is one of his crusades, much like Andy Burnham.
I don't doubt DfT are "watching things carefully" but I don't think they are interested in turfing out Arriva, they have more important fish to fry (HS2, NPR, ICWC, Williams...).
Looks like Paul Maynard (MP for Blackpool North & Cleveleys) is back as DfT rail minister after an 18 month gap, and will be doing the "watching".
I don't doubt DfT are "watching things carefully" but I don't think they are interested in turfing out Arriva, they have more important fish to fry (HS2, NPR, ICWC, Williams...).
Looks like Paul Maynard (MP for Blackpool North & Cleveleys) is back as DfT rail minister after an 18 month gap, and will be doing the "watching".
Spartacus
Established Member
- Joined
- 25 Aug 2009
- Messages
- 2,926
This is beginning to rival the number of times we get a debate going about why the UK doesn't have double deck trains! 
Sorry to restart this thread but I was rather alarmed about what I read in The Times at the weekend.
I know it's not a surprise and I'm half-expecting Northern to fail as a result of no passenger growth and increases in operating costs due to new rolling stock but for a reputable paper like the Times (with links to the government) to be that declarative is something. They did publish an article a few months ago stating the Operator of Last Resort is on stand-by in case Northern falls through.
My analysis of the situation is that the problems that were being commented upon by journalists and insiders when I originally created this thread are latent. They have not gone away, the situation is not improved. There is still scope for improvement, but if it does not happen fast, they will be proven right and the franchise will not make it to full term.
SWR appear to be in a similar situation. TPE (as mentioned above) may follow Northern.
I may be quite wrong. Time will tell. And next year's financial results at Northern might make all the difference.
SWR appear to be in a similar situation. TPE (as mentioned above) may follow Northern.
I may be quite wrong. Time will tell. And next year's financial results at Northern might make all the difference.
Bletchleyite
Veteran Member
Much as I don't want to start an actual DOO debate (so please don't drag this thread that way), I'd imagine that the combination of the strikes themselves and the need to keep a rather larger number of guards employed than planned has whacked them hard in the wallet.
Killingworth
Established Member
I'm not sure that it's true that there's been no passenger growth. That may be the case on some routes and at some stations but now revenue protection practices are beginning to bite income must be rising.
That said, the Saturday strikes and current Sunday cancellations will be negative factors.
My email notification of the post starts with the Times saying
which stinks of distorted propaganda worthy of Alistair Campbell or some other practitioner of that dark art.
How does Network Rail's expenditure on (probably long-neglected) track have anything to do with the subsidy to a TOC, which cshares quite a lot of its track with a lot of other franchises?
"A paper like the Times (with links to the government)" may well be correct, and should have given you a clue about the source of the propaganda, but to call it "a reputable paper" is straining credibility nowadays!
I'm sure it's not that there's been no growth, it's that growth is running behind schedule. An absence of enhanced services in many areas is probably the biggest single driver of this one, with disruption from strikes and staff shortages following.
Do franchises still do 'cap and collar'? The first 3-4 years were generally fine before it kicked in - after that franchises tended to grossly over-estimate passenger numbers as the government would cover losses above 10%. And would it be reasonable there is some mutual break/termination clause in year 4 of the franchise agreement? It's in Arriva's interests given it is an ambitious franchise programme but also in the government's interests given Northern is heavily subsidised and they wouldn't want to losing money hand over fist.
It's a real shame about TPE. Their train refurbishments and on-board service are pretty good - not to mention the new long-distance rolling stock will elevate it again. The May 2018 timetable really screwed them up and turned a lot of customers away. They were collateral damage amid the Network Rail/Northern chaos.
I am not sure it is propaganda. It is referring to the Network Rail grant paid by the government via the TOC?
Am I hallucinating when a pan-Northern franchise would potentially a good thing? Northern for commuter services and Northern Connect for TPE services/long distance. I am of course hypothesising both the franchises will collapse at the same time / close enough to explore the possibility.
Admittedly decreased competition. But there would be potential to rationalise service arrangements where crossover exists and greater availability of train crew which both Northern & TPE struggle with?
Admittedly decreased competition. But there would be potential to rationalise service arrangements where crossover exists and greater availability of train crew which both Northern & TPE struggle with?
So if it's just passed on it's not a subsidy to the TOC then...
If anyone wishes to post ideas on what they would do differently, please use this thread: https://www.railforums.co.uk/thread...uce-losses-in-the-northern-franchiise.191880/ Thanks 
Others will understand this with more clarity than I do. @Bald Rick @Greybeard33 @LNW-GW Joint might have the financial documents readily at hand? If not I will go digging around when I have the time. Right at the moment I do not I'm afraid.
The NR Grant goes direct from DfT to NR and doesn't touch the TOC.
The TOC access charges only cover a fraction of the overall costs hence DfT covering the difference with the grant.
With both direct and indirect (NR grant) Northern receive circa 60% of total costs as subsidy.
- Status