Northern in crisis talks?

[thealexweb]

It's this, though running trains from Crewe to Liverpool via Manchester that nobody wants to use south of Manchester other than to travel to Manchester doesn't help.

My family use it. They found Styal having a real service again really helpful.

 

[Xenophon PCDGS]

According to an article in the ‘Telegraph’ Arriva are in crisis talks to renegotiate the franchise due to dwindling passenger numbers.

Since this posting was made, has any officially-sanctioned information been placed in the public domain and would such a matter be one that would have to be placed with the Stock Exchange?

 

[HH]

Once again, the national newspapers don't know how the franchising system works. The last time it was The Times with SWR.

In a franchise agreement there are Change mechanisms if certain things occur or do not occur. One is Infrastructure delay. Most " new" franchises have an "IAD" (Infrastructure Assumptions Document) or "IRAD" (Infrastructure and Rolling stock Assumptions Document) appended to it. This lays out when certain key infrastructure (or rolling stock, if it procured by the DfT) is assumed to be delivered.

If it isn't delivered by that date, Change occurs and the franchisee is financially held harmless through the Change mechanisms. This is because NR Infrastructure delivery (and consequential timetable/stock effects) cannot be a risk that a TOC can take on under the present structure.

The timetable bidding delays have been at the behest of the DfT and the Secretary of State has had to write to all affected TOCs saying that his decision to delay timetables is a "Change" event and therefore the franchisee will be held harmless through the Change mechanisms.

How this works is quite simple. The franchise financial models are re-run to take account of the revised inputs. Negotiating these changes is far from simple as the DfT (and the Treasury) go into some detail here, to ensure they are not getting conned and the TOC isn't trying to load the Change with events that were under it's own control, or had no Change protection for.

We don't see key sections of franchise Agreements (the sensitive bits always get redacted) so we don't know if Northern have strike protection from the DfT for any DOO/DCO dispute. If they have, they will be covered, if they haven't, they will be losing mega bucks.

There are some TOCs that are in near perpetual re-negotiation at the moment, such is the divergence from the original Franchise or Direct Award. GWR is a good example of this.

There is no such thing as a fixed price Franchise these days. Change events are very likely to happen in the majority of franchises so "in-franchise" re-negotiations are becoming increasingly common and, of course, these have to be reported as financial results are declared. The newspapers pick up on this and, for a story, assume the worst.

Just to correct the bolded section, there is a standard clause in current Franchise Agreements on Force Majeure. This is stated to include strikes, except unofficial strikes which DfT thinks you caused through poor management (my paraphrasing).

Regarding the Infrastructure Assumptions Document. If one exists (as it did with Northern) it is a Network Rail Document available to bidders at the time of the ITT (as it was with Northern). Regardless of whether a document exists, main infrastructure changes to be assumed by bidders have always been in the ITT and late or non-delivery is an applicable Change. Problems with delivery, or caused by delivery, on the other hand, would see a claim to Network Rail under Network Change (and of course this would eventually be paid for by DfT).

 

[matt_world2004]

Why should ths government bail out an operator because of strikes.the state of industrial relations are something thats directly in the operators control.

 

[yorksrob]

Why should ths government bail out an operator because of strikes.the state of industrial relations are something thats directly in the operators control.

Added to this, the fact that the Government is effectively using taxpayers money to prolong the dispute.

 

[ainsworth74]

Why should ths government bail out an operator because of strikes.the state of industrial relations are something thats directly in the operators control.

Because the Government is the one pulling the strings on a) ensuring that there is a dispute and b) ensuring that Northern cannot reach an agreement because Northern cannot change their negotiating position outside of the one that the DfT want.

 

[matt_world2004]

Because the Government is the one pulling the strings on a) ensuring that there is a dispute and b) ensuring that Northern cannot reach an agreement because Northern cannot change their negotiating position outside of the one that the DfT want.

Northern bid for the contract knowing exactly what would be the case. Therefore they should have factored that into their bid costings.

 

[Robertj21a]

Since this posting was made, has any officially-sanctioned information been placed in the public domain and would such a matter be one that would have to be placed with the Stock Exchange?

What has the Stock Exchange got to do with it ?

 

[B&I]

Northern bid for the contract knowing exactly what would be the case. Therefore they should have factored that into their bid costings.

Northern should either take it all on their big free market business chin, or make clear what's the government's fault. Both they and the government are trying to have their cake and eat it, by constantly passing the blame to someone else

 

[B&I]

Made next to no difference in BR days when "everyone" allegedly owned the railways. Makes little difference with TfL control and political accountability via the Mayor and oversight via the London Assembly. We have had massive issues with rolling stock and electrification works in London and barely a thing has been said in public about any of this. Yes some politicians have jumped up and down but people still face regular delays and broken down trains. the "jumping up and down" has not brought about a faster resolution of any of the problems. TfL are allegedly far more "hands on" with their rail contractors but you wouldn't know it if you were standing on a jam packed platform due to delayed trains.

Putting Whitehall in greater charge of railways in Northern England will not provide any sort of panacea. It is very difficult to actually work out what form of new structure would stand a reasonable chance (note that unambitious phrasing) of meeting the massive and conflicting demands of finance, reliability, puntuality and what passengers / politicians actually expect the railway to do. Do any of them actually have any sort of coherent clue what they want? I doubt it. And we wonder why so many TOCs are in trouble?!

Whitehall is in charge. Getting rid of the fiction of independent TOCs would remove the figleaf that DfT hides behind, and even if it is frankly unlikely that anything positive would happen (as the civil servants hate people outside the south east as much as their political masters), at least public anger would be focused on the ultimate source of all.the railway's problems.

 

[B&I]

TBF they're a piggy in the middle in both situations and are baring the brunt of everything (less so on the DCO front but still).

Perhaps, but to paraphrase the host of 'Counter Point Counter' in 'Airplane !' - 'They bid for the franchise. They knew what they were getting into. I say - let 'em crash !'

 

[B&I]

I really do like the way you crafted that response. Perfect.

Ayethangew

 

[Xenophon PCDGS]

What has the Stock Exchange got to do with it ?

Does not anything that has a detrimental effect upon a large commercial organisation have to be so reported? If I am mistaken in my belief on such matters, could someone inform the thread what are the matters affecting companies that have to be reported to the Stock Exchange, please.

 

[Clarence Yard]

Just to correct the bolded section, there is a standard clause in current Franchise Agreements on Force Majeure. This is stated to include strikes, except unofficial strikes which DfT thinks you caused through poor management (my paraphrasing).

Regarding the Infrastructure Assumptions Document. If one exists (as it did with Northern) it is a Network Rail Document available to bidders at the time of the ITT (as it was with Northern). Regardless of whether a document exists, main infrastructure changes to be assumed by bidders have always been in the ITT and late or non-delivery is an applicable Change. Problems with delivery, or caused by delivery, on the other hand, would see a claim to Network Rail under Network Change (and of course this would eventually be paid for by DfT).

Not quite. The draft IAD (or IRAD in some bids/DAs) may have been made available to bidders but it is not necessarily the final version that went into the FA. I know of one TOC that has one that is substantially different to the one that NR compiled. They are regarded as commercially sensitive so don't appear as part of the published FA document.

This difference is because when a franchise is being awarded, there are commercial negotiations and legal discussions about what goes in the Franchise Agreement. Basically it's a game of seeing how much commercial risk can be allocated elsewhere and therefore, for the successful bidder, what goes into Schedule 9 of the FA. The winner will want to either have more Secretary of State Risk Assumptions listed or have more included in the IAD/IRAD. There is a real commercial tension here because if the DfT feel they are getting conned or are stepping outside of the bid process, they can always go to the next bidder.

It's much easier to get additional items in or changes to an IAD/IRAD if there are known changes between submission of bid and award. Otherwise it is a bit of a bun fight between the DfT and the winner. But the prize to getting your IAD/IRAD right isn't an ability to claim against NR for non delivery of those items through Network Change - that takes far too long and with no guarantee of getting your full compensation. It now becomes a "Event of Change" under the FA. TOCs are no longer prepared to go through the tortuous NR Claims Panel procedure for bid risk so usually, under the FA, the DfT pays the TOC direct by re-running the bid models for an IAD/IRAD failure. This exact process is going on elsewhere in one TOC right now.

How far Northern have managed to cover off all their infrastructure risks in the FA is a matter for them. But they should have the timetable comfort letter from the DfT that other TOCs had. That says that the decision by the DfT to defer timetable changes, as a result of NR difficulties, is a "Change" Event. They should be gearing up to re-run the bid models to make their claim against the DfT, as per the FA.

 

[Clip]

Does not anything that has a detrimental effect upon a large commercial organisation have to be so reported? If I am mistaken in my belief on such matters, could someone inform the thread what are the matters affecting companies that have to be reported to the Stock Exchange, please.

If they were listed on the stock exchange, maybe. But I cant find northern listed there at all so i would guess you are mistaken

 

[Carlisle]

Because the Government is the one pulling the strings on a) ensuring that there is a dispute and b) ensuring that Northern cannot reach an agreement because Northern cannot change their negotiating position outside of the one that the DfT want.

The problem with that way of thinking is that in practice its falling completely into the trap the RMT want, whilst forgetting they’ve also changed their negotiating position along the way, otherwise there’d likley be talks right now, with strikes suspended.

 

[LNW-GW Joint]

Northern bid for the contract knowing exactly what would be the case. Therefore they should have factored that into their bid costings.

Yes, they bid on the DfT taking the risk on strikes, as per ITT/contract.
It's entirely possible nobody would bid if that wasn't the case.

 

[matt_world2004]

Yes, they bid on the DfT taking the risk on strikes, as per ITT/contract.
It's entirely possible nobody would bid if that wasn't the case.

So the dft unilaterally changed their contract?

 

[142Pilot]

Does not anything that has a detrimental effect upon a large commercial organisation have to be so reported? If I am mistaken in my belief on such matters, could someone inform the thread what are the matters affecting companies that have to be reported to the Stock Exchange, please.

It's not a public listed company. Therefore doesn't have shares, or is even listed on the stock exchange.

When DB bought it outright it was delisted.

Hence no announcement, nor any future announcement.

 

[Xenophon PCDGS]

It's not a public listed company. Therefore doesn't have shares, or is even listed on the stock exchange.

When DB bought it outright it was delisted.

Hence no announcement, nor any future announcement.

Thank you for that clarification. I was unsure how any EC trading regulations may have affected matters with DB having ownership.

 

[CN75]

There should be no renegotiation without an explicit instruction for the dispute to be settled. If the DfT reach a new agreement with Arriva that locks in the dispute, it will just illustrate the contempt in which the Government holds passengers in the North of England.

In 2016 GTR was ‘bailed out’ with amended contractual terms repeatedly and sustained it’s conversion of conventionally operated routes to a new driver and OBS model. The disruption in the South was the most significant that had been seen in decades. SWR also continues to suffer strikes every weekend, subsidised by the DfT. It is not reasonable to assume that the government is picking on the North of England. It is also easy to forget that the changes to operation are what the DfT believes are best for passengers, not (just) for RMT members in the long run. However, there should be nothing wrong with the government attempting to run a more customer focused and efficient railway.

The rush to introduce DOO has not helped matters though it could have been dealt with a lot better. For a start they could of introduced the new trains first using conventional methods, negotiated with ASLEF and then pushed to introduce DOO in the next franchise once the stock was compliant. Now it seems they are waiting until the time they can impose DOO which is still some time away.

The RMT asked Arriva to guarantee there would be no extension of DOO during the Northern franchise. Arriva could not give that guarantee, so the strikes started. If they had done so, they would have been lying. Arriva did not pick the time to start the dispute.

 

[Starmill]

Actually I did find that service of use last week to get from directly from Wilmslow to Manchester Airport connecting off a train from Euston!

My family use it. They found Styal having a real service again really helpful.

These parts of the service are of value. The same goes for the hourly service between Manchester Airport and Wilmslow on Sundays. I believe the point that Puffing Devil was making was that there was a worsening of journey times (because of much extended recovery time at Manchester Airport) and a decrease in reliability following the conjunction of this service with the Chat Moss stopper.

 

[northwichcat]

Why should ths government bail out an operator because of strikes.the state of industrial relations are something thats directly in the operators control.

The bidders told DfT they didn't want to introduce DCO as they knew the unions would kick off about it. The compromise was they'll still have to do it but if the unions call prolonged industrial action they won't lose out because of it.

 

[northwichcat]

It's not a public listed company. Therefore doesn't have shares, or is even listed on the stock exchange.

When DB bought it outright it was delisted.

Hence no announcement, nor any future announcement.

Absolute rubbish. Arriva is still a PLC with a registered office in Sunderland https://beta.companieshouse.gov.uk/company/00347103

Arriva Rail North t/a Northern, on the other hand is a Ltd and a subsidiary of Arriva PLC so only invited people can have shares in Arriva Rail North.

 

[matt_world2004]

The bidders told DfT they didn't want to introduce DCO as they knew the unions would kick off about it. The compromise was they'll still have to do it but if the unions call prolonged industrial action they won't lose out because of it.

So is Northern just recieving the reinbursement for this or did the dft unilaterally change the contract .

 

[northwichcat]

So is Northern just recieving the reinbursement for this or did the dft unilaterally change the contract .

Arriva could get compensated for the strike action but it's been claimed as of yet they've not tried to get compensation.

 

[Bantamzen]

The bidders told DfT they didn't want to introduce DCO as they knew the unions would kick off about it. The compromise was they'll still have to do it but if the unions call prolonged industrial action they won't lose out because of it.

Arriva could get compensated for the strike action but it's been claimed as of yet they've not tried to get compensation.

Maybe then its time they did, it might help negotiations with DfT if there's a cost to their budget involved.

 

[47421]

Absolute rubbish. Arriva is still a PLC with a registered office in Sunderland https://beta.companieshouse.gov.uk/company/00347103

Arriva Rail North t/a Northern, on the other hand is a Ltd and a subsidiary of Arriva PLC so only invited people can have shares in Arriva Rail North.

Arriva PLC = Arriva Public Limited Company. A company can be a PLC, like Arriva, without being listed on a Stock Exchange.

Note a company can have a listing on a Stock Exchange even if does not have any shares issued to public, ie can be listed in respect of debt issues only. TFL is not a standard company at all, it is a statutory corporation. It does however have debt listed on the London Stock Exchange, and as such is required not to mislead the market, which is why it is under investigation by Financial Conduct Authority in relation to its statements in July that Crossrail was on time.

 

[aylesbury]

The parent DB is reported to be losing revenue due to private companies gaining more and more contracts on the German network so bail outs from them will not happen.

 

[Puffing Devil]

It's this, though running trains from Crewe to Liverpool via Manchester that nobody wants to use south of Manchester other than to travel to Manchester doesn't help.

My family use it. They found Styal having a real service again really helpful.

Actually I did find that service of use last week to get from directly from Wilmslow to Manchester Airport connecting off a train from Euston!

Perhaps I should have been more specific: the Crewe - Airport - Piccadilly service is a good thing. The madness comes from running it on from Piccadilly through to Liverpool. Better to have a break in service in Manchester as the number of through passengers from Cheshire must be minimal.