Northern franchise to end 1 March 2020 with Operator of Last Resort to take over

[Edders23]

I think Arriva will be relieved not disappointed at this the Germans have wanted to sell the business for some time now with this removed it will be a much easier business to dispose of

I suspect that this will also change staff outlook somewhat which might help the customer liaison aspects which have been somewhat strained of late

Ultimately the business was mismanaged so a change of management might get the focus on delivering a reliable service correct.

As mentioned previously though I think the really rough patch has been got through by the existing management once it is in government hands it might well be much smoother sailing for a short while

The real test will be if the government can see beyond the franchise model and come up with a better way to manage the uk's overcrowded railways a situation which they caused by engineering rampant house price growth resulting vastly increased need for travel by all modes of transport

 

[CHAPS2034]

I might be cynical but the first and last trains could be spotless yet you still get plenty of passengers who will still leave those trains like a rubbish tip.

It’s a nice idea but it’s not easy to carry out.

Considering many trains don't have a decent interior clean for days on end, never mind during the day, any additional cleaning will be a bonus for those of us who use them.

It's good that little things like this have been recognised and sorting the cleanliness out should be a quick and easy win

 

[Sceptre]

That line about "continuing to assess the Castlefield Corridor" is annoying me to no end.

How many "re-assessments" have we had where the answer at the end was "build it as is"?

1,449 days and counting…

 

[LNW-GW Joint]

And TfW

TfW is in a different category, at least so far.
The franchise itself is not failing, but the performance is poor enough to trigger fines.
SWR and TPE are failing financially.

 

[F Great Eastern]

It's like everyone shouting for GA to be stripped, the new 'owner' would take on the 755's / 745's and have all the same problems that GA have now, once they, well Stadler, sort out the issues, then GA will go back to how it was at the start, which, was on the whole not too bad at all !

The difference is that on GA, there's very little that is down to NR/DfT in comparison with Northern. Also Greater Anglia is in the south, in mostly secure Tory seats, so there's less of an incentive to do anything.

DfT could have took action against Northern months ago, when performance was far worse than it was now, but they decided not to do so because they realised that it wouldn't look good if they took over and nothing got better anytime soon.

Instead they waited for performance to start to rise again after a difficult period, in the knowledge that the worst was over, and therefore then can play a false narrative that things continuing to improve is down to them.

The whole thing is a ruse, the DfT's sole aim is to ensure it gets blamed for none of it's mistakes and someone else carries the can for all the problems in the rail industry. Until that changes, the UK railways will never be as good as they can be.

 

[Scottychoo]

The best thing of course is the Tories keeping their new northern voters happy meaning Labour will not regain those votes, meaning no Labour government in our lifetimes.
It's a win win for everyone.

 

[a_c_skinner]

Leaving aside the desirability or otherwise of a socialist government there is plainly a political imperative to be seen to do something. If HMG is lucky their takeover will coincide with (as up thread) the worst being over and it will seem like a miracle.

 

[delt1c]

There should be a financial fine penalty against the operator when a franchise is either handed back or taken back. They bid for the franchise hoping to make a nice return for shareholders, the fact it has failed is not the tax payers fault. Let’s get back to a joined up system run for the country and people , not for fat cats. Nationalisation had its faults but it was a transport system for the people and the growth of the economy

 

[blackpoolwelsh]

I wonder if the happy train emus parked at Crewe could end up at Northern? That would be a quick easy win

 

[WesternLancer]

I might be cynical but the first and last trains could be spotless yet you still get plenty of passengers who will still leave those trains like a rubbish tip.

It’s a nice idea but it’s not easy to carry out.

Indeed - however, other TOCs manage it better that Northern do. Since I presume that passengers in their area are not any more messy than in other areas it is presumably a question of resources, management and skill / motivation.

 

[175001]

The best thing of course is the Tories keeping their new northern voters happy meaning Labour will not regain those votes, meaning no Labour government in our lifetimes.
It's a win win for everyone.

The same Tory government who haven't delivered infrastructure promises you mean??

 

[LNW-GW Joint]

There should be a financial fine penalty against the operator when a franchise is either handed back or taken back. They bid for the franchise hoping to make a nice return for shareholders, the fact it has failed is not the tax payers fault. Let’s get back to a joined up system run for the country and people , not for fat cats. Nationalisation had its faults but it was a transport system for the people and the growth of the economy

The franchise failed financially as well as in delivery terms, which means the shareholders (DB) will have had to fork out to get this far.
That's the penalty you want, as it was for VTEC and (coming up) SWR.
In fact the DfT probably times these decisions to cause maximum penalty on the owners (as set in the franchise agreements).

 

[Killingworth]

So far, media reports have omitted reference to Arriva and DB. Sloppy reporting?

Rail passengers in the north and rail enthusiasts aren't usually over fussed about financial dealings. However, DB most certainly are. It's rumoured that they will have taken a massive hit from the Northern fiasco. We're unlikely to discover how big unless it suits them to come clean. It might.

The boil is to be lanced on 1st March. It's rumoured DB are waiting to go with an Initial Public Offer (IPO) to sell off Arriva, possibly as soon as March, subject to market conditions. Freeing itself from Northern would/will make that less difficult.

 

[F Great Eastern]

The same Tory government who haven't delivered infrastructure promises you mean??

Go ask 100 random Northern Rail users who they think is to blame for the things caused by the DfT, and almost all of them will blame the operator because the Government always tries to portray such false narrative that the operator is at fault all the time and never them.

 

[miami]

That's the penalty you want, as it was for VTEC and (coming up) SWR.

Didn't VTEC get taken back just before the large payments (which drove the return for the treasury above the previous OLR profits) were due to be paid?

 

[WesternLancer]

The difference is that on GA, there's very little that is down to NR/DfT in comparison with Northern. Also Greater Anglia is in the south, in mostly secure Tory seats, so there's less of an incentive to do anything.

DfT could have took action against Northern months ago, when performance was far worse than it was now, but they decided not to do so because they realised that it wouldn't look good if they took over and nothing got better anytime soon.

Instead they waited for performance to start to rise again after a difficult period, in the knowledge that the worst was over, and therefore then can play a false narrative that things continuing to improve is down to them.

The whole thing is a ruse, the DfT's sole aim is to ensure it gets blamed for none of it's mistakes and someone else carries the can for all the problems in the rail industry. Until that changes, the UK railways will never be as good as they can be.

Yep, but they could not do this before an election as it looked like they would have been adopting Mr Corbyn's policies. After having roundly defeated My Corbyn they can do it without that accusation - and look like they are being pragmatic or tough or whatever.

 

[LNW-GW Joint]

Didn't VTEC get taken back just before the large payments (which drove the return for the treasury above the previous OLR profits) were due to be paid?

Stagecoach/Virgin supported the franchise by something like £150 million before the plug was pulled, while still delivering the premiums to DfT.
That was when the full value of the parent bonds specified in the franchise agreement was paid.
DfT/OLR are now responsible for delivering the premiums.

First Group have committed £106 million of the TPE bonds so far, with another £80m at risk if they don't fix their problems.
So far they have not given up with TPE, unlike at SWR which is heading the same way as Northern.

 

[talltim]

Thank you for the clear explanation!

Under the present UK law and EU rules, franchises must be competed for periodically.
Direct awards (which is effectively what OLR is given) to plug the gap between franchise competitions can last for 2 years.
That's why Virgin got 4 successive direct awards since 2012 on ICWC, and First Group are currently on the same sort of deal on GWR.
The stated intention on LNER is that it will be refranchised as East Coast Partnership sometime in the future.
However, EU rules won't count for much going forward, and the Williams review will generate new legislation which will change the UK rules.
But nominally, DfT has a couple of years with OLR before refranchising Northern.

Is that an EU Rule? Not sure that the EU even say you have to franchise, or even privatise. I think they do say that if you put out tenders for contracts as large as a rail franchise, it must be open to EU bidders.
Edit: Ah, I see I was wrong. There are EU rules about the max length of a franchise (15 years) although I was right that there is no requirement to franchise.
https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:32007R1370

 

[Chiltern006]

Also now live is the information website, which has a lengthy Q&A and also confirms, that the branding and name will remain.

https://www.northern.olrholdings.co.uk/faqs/customers

just without the "by arriva" part

 

[Bornin1980s]

Well, the name will be Northern Trains Ltd rather than Arriva Rail North.
Branding to stay Northern "for the time being".

Well, for the time being, the operator remains the same until 1 March. I'd imagine the new branding will be unveiled then.

 

[Muenchener]

There should be a financial fine penalty against the operator when a franchise is either handed back or taken back. They bid for the franchise hoping to make a nice return for shareholders, the fact it has failed is not the tax payers fault. Let’s get back to a joined up system run for the country and people , not for fat cats. Nationalisation had its faults but it was a transport system for the people and the growth of the economy

Difficult to seperate out the purely Northern Rail element, I would suggest, given the involvement of Network Rail and the DfT in this sorry tale.

 

[pdeaves]

There should be a financial fine penalty against the operator when a franchise is either handed back or taken back.

There is. The company loses its bond ('returnable deposit', if you like) that amounts to big multiples of £millions.

 

[jfollows]

Ultimately the business was mismanaged so a change of management might get the focus on delivering a reliable service correct.

That's my feeling also; there were plenty of other factors but the common thread seemed to me to be the inability to manage any of them properly. Obviously the "other factors" also need to be resolved, but without a change of management I just didn't see a way through. Only my perception, I hasten to add, based on a lot of interesting information and input from places like this forum though.

 

[jfollows]

The dreadful Arriva statement including "largely because of external factors" just seems to me to demonstrate their denial of their responsibility.

 

[47421]

There is. The company loses its bond ('returnable deposit', if you like) that amounts to big multiples of £millions.

The Dec 2015 Franchise Agreement includes the definition of Funding Deed and Guarantor per below. Anyone know who the Guarantor is? Another member of the Arriva / DB group I expect but I can't see which company in particular. And anyone know what the total guaranteed amount was (know as the subordinated loan/funding in some franchises)?

“Funding Deed” means the deed made between the Secretary of State, the Franchisee and the Guarantor dated on or about the date of the Franchise Agreement specifying arrangements relating to the funding for the Franchisee by the Parent and giving rights to the Secretary of State in relation to such funding;

“Guarantor” has the meaning given to such term under the Funding Deed;​

 

[Goldfish62]

Well, for the time being, the operator remains the same until 1 March. I'd imagine the new branding will be unveiled then.

"For the time being" refers to the situation post-1st March, not before it.

 

[Clarence Yard]

No, there has been "no denial of responsibility for events". The phrase in their press release will be alluding to external factors being part of the cause and their resultant ability to claim through the "change" provisions in the franchise, for the period of their operation.

I suspect there will/has be/been such a claim and some kind of financial agreement has been/will be negotiated for those change events. That claim could, of course, have been waived as part of the handover agreement.

 

[adamello]

will it make any diference ? same trains, same staff same timetable...same issues !

Different management (senior level), direction etc.
whilst overnight nothing would change they can re-prioritise the organisation, instill, manage & challenge behaviours and they can also review timetable, maintenance plans and finances.

 

[Mogster]

The dreadful Arriva statement including "largely because of external factors" just seems to me to demonstrate their denial of their responsibility.

The failure of the DfT and Network Rail to deliver the promised infrastructure improvements plays a huge part in Northern and TPEs problems though.

I also blame Burnham for directing his ire solely at Northern and hardly mentioning the DfT and it’s broken promises. This then carries on through the MSM which hardly mentions the underlying infrastructure problems and rages against the TOC when they are only part of the problem.

 

[CHAPS2034]

That's my feeling also; there were plenty of other factors but the common thread seemed to me to be the inability to manage any of them properly. Obviously the "other factors" also need to be resolved, but without a change of management I just didn't see a way through. Only my perception, I hasten to add, based on a lot of interesting information and input from places like this forum though.

Spot on. Whist faced with a large number of factors, many outside their control, they failed to manage any of them and their engagement with customers and the press was dire. "Never our fault" was the mantra until very recently when Shapps said he was going to take things away. And even now,there's only a grudging acknowledgement that some of the chaos might be down to them.