The Northern Rail subsidy myth

[northwichcat]

The below has been written by The Halifax & District Rail Action Group to MP Patrick McLoughlin. There's no real surprise in it but they have come up with the figures for non-DfT franchises which usually get forgotten about.

The subsidy myth
But many of us are very worried by comments that continue to come out of government about the size
of revenue support – so called subsidy – to Northern Rail compared with other TOCs. In a recent issue of
Passenger Transport magazine (http://www.passengertransport.co.uk/2014/09/northern-franchise-willreflect-‘angry’-feedback/) your
Franchising Director Peter Wilkinson is quoted. Mr Wilkinson states that “a third of Britain’s entire rail subsidy
goes to the Northern franchise…”. This is simply not true. Mr Wilkinson’s comment is perhaps based on the same
figures that are quoted on the DfT website at https://www.gov.uk/government/publications/rail-subsidy-per-passenger-mile.

However:
 The DfT spreadsheet of TOC subsidies does not include First Scotrail, Arriva Trains Wales or
Merseyrail Electrics. Nor does it show support for the various rail operations (Overground,
Underground, DLR and Tramlink) devolved to Transport for London. “Britain’s entire rail subsidy”
surely must include revenue support to these operations.

 Northern’s subsidy (£707M including Network Grant in 2013-14) was little more than half of the
subsidy to First Scotrail (£1394M). Yet the population of the area covered by Northern Rail (North
West, North East and Yorkshire & Humber regions) at 14.9 million is roundly three times that of
Scotland (5.3million)! (Popn figures from 2011 census quoted in Wikipedia).

 According to Transport for London’s 2013-14 annual accounts, TfL received an annual revenue
grant of £1578M, more than twice that received by Northern Rail.

 If we compare subsidies on a per passenger mile basis (which seems to be the emphasis of the
DfT website data), it is important to realise that train operations in the North have been artificially
split into Northern Rail and TransPennine Express. In effect the more commercial, longer-distance
inter-urban/inter-city operations have been creamed off. This does not appear to have been
done with any other regional train franchises; the tendency over recent years has been to
create multi-purpose franchises, examples of which include Greater Anglia and Greater
Western, as well as the Wales and Scotland franchises and the new Greater Thameslink
and Southern operation (InterCity East Coast and West Coast are perhaps exceptions as long
distance franchises crossing a number of regional TOC boundaries). It is not clear why trains in
the North of England continue to be picked on for this creaming off. The effect can only be bad
for the Northern franchise not only because of the removal of more profitable elements but also
because of the effect on operational costs of a far-flung and discontinuous geography. The
table below compares subsidies per passenger mile for Northern, TPE and Northern+TPE
combined with Scotrail, the Wales franchise and Merseyrail Electrics. Northern+TPE combined
have a similar profile of service types to Scotland and Wales meaning that comparison with
these franchises is particularly relevant.

 The key point is that the combination of Northern and TPE has a lower subsidy per
passenger mile than either Arriva Trains Wales or First Scotrail (or, for that matter
Merseyrail).

It is encouraging that the report of Mr Wilkinson’s comments in Passenger Transport suggests that the
specification of the new franchise will take account of the many comments that were made in
response to the summer consultation. Many of us responded to that consultation with a call for growth
and development as a means of marketing rail travel to more people and at the same time increasing
value for money for the taxpayer by reducing subsidy per passenger mile. We included in our response
the data shown above (albeit for the previous year). What therefore remains worrying is that we
continue to get the comments from Government sources that refer misleadingly to an apparently high
level of subsidy in a way that sounds alarm bells about the forthcoming franchise specification.
Fair treatment for the railway in the North and its present and potential passengers under the
forthcoming Northern and TPE franchises must mean fair comparison with relevant other TOCs such as
Scotrail and Wales as well as London rail operations.
You must surely have all of the above considerations as priorities in specifying the new franchises. The
following points are also relevant in terms of treating Northern railways fairly.

The pdf of the letter comes with a subsidy table which isn't practical to copy and paste in to a thread.

 

[LNW-GW Joint]

The below has been written by The Halifax & District Rail Action Group to MP Patrick McLoughlin. There's no real surprise in it but they have come up with the figures for non-DfT franchises which usually get forgotten about.

That's actually quite a well-written piece, though I suspect the last section on fares anomalies may have weakened the impact of the subsidy debate.

DfT seems determined not to merge TPE and NT.
That would at least get things on a common basis across the region.
I personally think TPE has been teacher's pet (for reducing its subsidy sharply) and DfT does not want to lose its focus despite the negative impact on NT.

The cycle of franchise renewal means, unfortunately, that these two come at the fag end of a parliament when most of the available money has been committed elsewhere.
It only wants the incoming government to ditch the competitions half way through and the misery will be complete.

I think if FGW are confirmed as getting 319s for Thames Valley services it will lift the northern gloom a little - ie pain for all, not just in the north.

 

[northwichcat]

I think if FGW are confirmed as getting 319s for Thames Valley services it will lift the northern gloom a little - ie pain for all, not just in the north.

FGW may get 319s but how long for? There's always been a suggestion that Thames Valley will get 5 car 110/125mph trains in the future, at one stage it was suggested from the outset but during CP6 seems to be the current plan.

 

[HSTEd]

So.... because devolved administrations in other parts of Britain chose to spend ridiculous amounts on rail subsidies, the British government should be expected to pay, without complaint, those ridiculous subsidies, even if they are drastically larger per passenger mile than those recieved (from it) by other franchises?

That argument is slightly dodgy.

 

[DarloRich]

I would point out you are quoting a pressure group report - that will hardly be free of bias and will present the figures in such a way as to support their required conclusion. Much as many posters do............

Are there any independently audited figures available to support the case?

 

[Rich McLean]

FGW may get 319s but how long for? There's always been a suggestion that Thames Valley will get 5 car 110/125mph trains in the future, at one stage it was suggested from the outset but during CP6 seems to be the current plan.

There has been another suggestion from a FGW Driver Manager that FGW will get 387s at it stands once the 700s are rolled out, but knowing the MDTR, this could have changed, and may change again

 

[Oswyntail]

So.... because devolved administrations in other parts of Britain chose to spend ridiculous amounts on rail subsidies, the British government should be expected to pay, without complaint, those ridiculous subsidies, even if they are drastically larger per passenger mile than those recieved (from it) by other franchises?

That argument is slightly dodgy.

Slightly less dodgy than ignoring them. J. Public travelling on Northern may compare his experience with London or Scotland and think this is despite receiving more money, because misleading information is all he has.
The British government should be expected to pay for what is required to fulfil its economic plan for the UK; what it should not be required to pay is the costs produced by lifestyle choices in limited areas of te UK.

 

[thealexweb]

I am dreading the Northern ITT. After reading the details of the new Scotrail franchise it is going to be dreadful at best. Rail North should settle for nothing less than a word for word copy of the ideas in the Scotrail franchise e.g. scenic stock for Preston to Carlisle via Barrow, bogied vehicles as a requirement, etc. The UK Gov created the mess so should be the one to clear it up.

 

[Fishplate84]

DfT has nothing at all to do with ScotRail. Its a franchise let, and funded by Transport Scotland (Scottish Government) as Transport is a devolved power to the Scottish Parliament. I don't doubt the figures but does demonstrate that the Scottish Parliament and Government is willing to spend a lot more supporting railways (per head of population) than Westminster.
Plus of course, Scotland as a whole is a lot larger than the Northern area of England. Its as far from Edinburgh to London as it is Edinburgh to Thurso. Thats a lot of track miles to provide to connect places on the network.

 

[LNW-GW Joint]

So.... because devolved administrations in other parts of Britain chose to spend ridiculous amounts on rail subsidies, the British government should be expected to pay, without complaint, those ridiculous subsidies, even if they are drastically larger per passenger mile than those recieved (from it) by other franchises?
That argument is slightly dodgy.

Wales isn't actually like that (yet).
The ATW franchise was let by the SRA pretty much on the same terms as Northern.
All that's happened since is that the Welsh Government got to manage the franchise agreement and tinker with it a little.
And of course it serves large chunks of England with overlaps with Northern and other "English" TOCs.

 

[kieron]

I would point out you are quoting a pressure group report - that will hardly be free of bias and will present the figures in such a way as to support their required conclusion. Much as many posters do............

And much as the DfT does. While I don't criticise them for only gathering statistics where it is easy to do so, Peter Wilkinson's statement based on them, as quoted here, seems to simply be untrue. His "third" isn't too much larger than the 29% Northern Rail have as a share of the "Total subsidy" listed in this table, but this table doesn't include "Britain't entire rail subsidy", or anything like it, even if you say that Network Rail's growing debt mountain is nothing to do with the TOCs.

Challenging the "Northern Rail gets more heavily subsidised than it deserves to" mindset is a useful thing to do, although I do worry that the impact may be blunted by the way the TfL subsidies are mentioned in the letter but don't appear in the table. Are they scared of including a figure which is lower than the one they want to be lowest? Or has TfL failed to publish the cost of London Overground to the taxpayer?

Everyone seems to have forgotten NI Railways, but perhaps that's for the best.

 

[LNW-GW Joint]

And much as the DfT does. While I don't criticise them for only gathering statistics where it is easy to do so, Peter Wilkinson's statement based on them, as quoted here, is simply untrue. His "third" isn't too much larger than the 29% Northern Rail have as a share of the "Total subsidy" listed in this table, but this table doesn't include "Britain't entire rail subsidy", or anything like it, even if you say that Network Rail's growing debt mountain is nothing to do with the TOCs.

The practical problem for Peter Wilkinson is that he only has control of the DfT "English franchise" pot.
He is quite right to say that Northern takes 1/3 of this budget.
The other funders are not going to bail him out, nor is George Osborne unless there is a back-stage deal for Transport that isn't available to the other depts (Defence, Education etc).
These budgets keep on being cut to solve the deficit target.

Every week that passes makes this franchise competition more significant to the upcoming election.
They may just decide to kick it into the long grass (new direct awards etc) and let the next government (with Rail North) try and solve the problem.
This will avoid too much "bad news" in the pre-election period.

 

[yorksrob]

The practical problem for Peter Wilkinson is that he only has control of the DfT "English franchise" pot.
He is quite right to say that Northern takes 1/3 of this budget.
The other funders are not going to bail him out, nor is George Osborne unless there is a back-stage deal for Transport that isn't available to the other depts (Defence, Education etc).
These budgets keep on being cut to solve the deficit target.

Every week that passes makes this franchise competition more significant to the upcoming election.
They may just decide to kick it into the long grass (new direct awards etc) and let the next government (with Rail North) try and solve the problem.
This will avoid too much "bad news" in the pre-election period.

He didn't say that Northern takes a third of England's subsidy pot.

He said "a third of Britain's entire rail subsidy goes to Northern Rail".

This is quite simply a lie, designed to soften up the Northern population as they think we are easy pickings.

 

[HSTEd]

Actually it's not a lie as such.
It is a third of Britain's entire rail subsidy in that it is a third of the entire rail subsidy distributed by the British national Government in direct spending.

 

[yorksrob]

Actually it's not a lie as such.
It is a third of Britain's entire rail subsidy in that it is a third of the entire rail subsidy distributed by the British national Government in direct spending.

But the entire rail subsidy distributed by the British National Government does not equate to "Britains entire railway subsidy" so it is incorrect.

What's more, it would have been very easy for him to differentiate by calling it England's rails subsidy, so I can only assume that this has been done to deliberately suggest that Northern takes a bigger slice of the pie than it actually does.

 

[Bletchleyite]

DfT seems determined not to merge TPE and NT.

This is the problem. Northern was split off I believe for an original idea that it would be a basic railway managed for decline. That hasn't happened, and it's clear to me the split should never have happened. Yet nobody has the guts to re-merge.

Neil

 

[HSTEd]

A merge would lead to the end of all doubling of 185s and 170s on TPE's services as all the units are pulled for commuter reinforcement.
That would be political suicide.

 

[yorksrob]

A merge would lead to the end of all doubling of 185s and 170s on TPE's services as all the units are pulled for commuter reinforcement.
That would be political suicide.

TPE's doubled 185's and 170's are commuter reinforcements.

 

[northwichcat]

Actually it's not a lie as such.
It is a third of Britain's entire rail subsidy in that it is a third of the entire rail subsidy distributed by the British national Government in direct spending.

On that basis if for the next franchise the government awards £500m a year to Rail North who then use that money to support rail services in North, would you then be happy with claims that London Midland is a more heavily subsided franchise than Northern because it gets more directly from central government?

 

[47802]

Wow that Scotrail Subsidy is outrageous no wonder they will be able to run HST's all over the place and their worst train is a 156, maybe its time for Scottish independence now after all especially now the oil price has dropped

 

[HSTEd]

On that basis if for the next franchise the government awards £500m a year to Rail North who then use that money to support rail services in North, would you then be happy with claims that London Midland is a more heavily subsided franchise than Northern because it gets more directly from central government?

If the Rail North money was not awarded specifically for the support of rail services, then yes, I would say that London Midland gets a higher fraction of the national rail subsidy budget. Not that it was more subsidised.

Those two things are very different as this thread demonstrates.

 

[Jonny]

So.... because devolved administrations in other parts of Britain chose to spend ridiculous amounts on rail subsidies, the British government should be expected to pay, without complaint, those ridiculous subsidies, even if they are drastically larger per passenger mile than those recieved (from it) by other franchises?

That argument is slightly dodgy.

If TfL, i.e. Transport for London is one of those organisations then it is only fair that the rest of England gets equivalent subsidies.

 

[Bletchleyite]

A merge would lead to the end of all doubling of 185s and 170s on TPE's services as all the units are pulled for commuter reinforcement.
That would be political suicide.

Why would it do that? I'd more think it likely that 3.185 would be replaced with 4.156, as is happening on the Blackpools, but without all the politics and "on hire" rubbish?

Neil
--- old post above --- --- new post below ---

If TfL, i.e. Transport for London is one of those organisations then it is only fair that the rest of England gets equivalent subsidies.

If "equivalent" means "in proportion to population and/or tax income in those areas", that's fair. London has a massive population and a massive tax take.

If you mean TfGM should get the same budget as TfL, that would be a nonsense.

Neil

 

[BantamMenace]

A re-merging of TPE and Northern would somewhat devalue the consumer perception of TPE routes. It would also lead to more of a rolling stock lottery on all routes in the north of England.

Do you have any predictions on what level of subsidy/premium to bidders for the next TPE and northern franchises will bid?
Will we see the TPE franchise operate on a no subsidy no premium basis with an agreement that a new fleet of EMUs will be operating on all TPE routes by the end of the franchise? Will there be any form of Chiltern-style, we'd like these upgrades, stick it on your credit card and you'll get paid back over 50 or so years? (Electrification to Middlesbrough/Scarborough/Barrow/Cleethorpes* springs to mind)

*delete as appropriate.

 

[TheKnightWho]

A re-merging of TPE and Northern would somewhat devalue the consumer perception of TPE routes. It would also lead to more of a rolling stock lottery on all routes in the north of England.

Do you have any predictions on what level of subsidy/premium to bidders for the next TPE and northern franchises will bid?
Will we see the TPE franchise operate on a no subsidy no premium basis with an agreement that a new fleet of EMUs will be operating on all TPE routes by the end of the franchise? Will there be any form of Chiltern-style, we'd like these upgrades, stick it on your credit card and you'll get paid back over 50 or so years? (Electrification to Middlesbrough/Scarborough/Barrow/Cleethorpes* springs to mind)

*delete as appropriate.

It shouldn't be any more of a lottery than the chances of getting an HST on the St Ives branch, or a Pacer running Paddington-Penzance.

 

[GrimsbyPacer]

If Northern are a third of all subsidy for England (excluding London) than that isn't very high considering the area has a population around a third of that area.
And it's the largest rail operator in the country by stations served and operated and carries more people than West and East coast combined according to Rail magazine.

I really think RailNorth is the way forward. I'm sure devolution to the area the rail network serves is the right thing.
Any Londoners on here think Transport for London should be scrapped??
Any Scots want DfT to be in control instead of the Scottish Parliament??
Any Merseysiders want the Merseyrail franching done in London??

If these systems have done well elsewhere, why not everywhere?
At least the recently proposed cuts to rail in the North would have to have been from local authorities rather than "central" government.

 

[HSTEd]

All of those places have some sort of single identity - RailNorth will be so riven by factional divisions between Merseyside, Manchester and the Various Yorkshires as to be almost worthless.
There is no real 'northern' identity to form the basis of the body.

 

[TheKnightWho]

All of those places have some sort of single identity - RailNorth will be so riven by factional divisions between Merseyside, Manchester and the Various Yorkshires as to be almost worthless.
There is no real 'northern' identity to form the basis of the body.

Because there's no Highland/Lowland friction, right?

 

[HSTEd]

Because there's no Highland/Lowland friction, right?

Not really, the Highland are tiny in terms of population, they have next to no real impact on the Scottish political scene. (The Highland Council area is 232,000 people - about ~4% of the total Scottish pop.)

That is roughly the same as including a third of Chester in Merseyside and saying that will essentially alter transport policy in any serious manner.

 

[yorksrob]

Not really, the Highland are tiny in terms of population, they have next to no real impact on the Scottish political scene. (The Highland Council area is 232,000 people - about ~4% of the total Scottish pop.)

That is roughly the same as including a third of Chester in Merseyside and saying that will essentially alter transport policy in any serious manner.

There's also a fair amount of rivalry between Edinburgh and Glasgow.

Hopefully such rivalries won't be too problematic in the North. Experience in Scotland seems to have been founded on shared economic aims rather than cultural common feeling. The PTE's themselves are used to rubbing along together. I'd be more worried about rural areas losing out to urban ones.