Rail franchises operators & contracts

04.01.19

Northern under fire over £31m government subsidy ‘secret payments’

The RMT union has criticised “secret extra payments” funded by taxpayers given to Northern Rail after it was found that the government paid the train operator a total of £31m more than previously announced since the franchise began.

The figures come from the new Arriva North annual financial statement, showing that it received an extra £11m than originally announced back in 2016 when the franchise began— as well as revealing a fall in profits for the company.

The accounts revealed that the German state-owned company was given an extra £31m of taxpayer-funded payments since April 2016, allowing the company to make profits of £33.7m over the same period.

This is based on the previous figures from rail minister Andrew Jones, who told MPs in a written parliamentary answer in 2016 that Arriva Rail North were to receive £537m in real terms; compared to the £568m that was actually received.

The DfT strongly deny the claims, with a spokesperson stating: “The RMT claims are completely misleading and erroneous and show a total misunderstanding of the figures.

“Their needless strikes have nothing to do with jobs or safety, and are deliberately causing maximum disruption for passengers and damaging local economies.

“We urge them to stop putting out inaccurate stories such as this, put passengers first, call off strikes, and get around the table.”

Northern slammed the criticism from the RMT, saying that the union ignored inflation, adding that the extra payments were for changes to services.

Richard Allan, the deputy managing director of Northern, said: “It is wrong to say these additional franchise payments are 'secret' and subsidise profits for Northern.

“The additional franchise payments are due to changes in services and other policy areas that Northern has been asked to deliver on behalf of Transport for the North and DfT since its bid for the franchise was submitted in 2015.

“The payments are based on the additional costs or lower revenue for Northern arising from these changes.”

Allan also stated that last year Northern had lower than anticipated passenger revenue growth, which was largely due to delays preventing the introduction of new services and the RMT’s strike action.

RMT general secretary Mick Cash commented: “As well as bailing out Northern Rail on strike days these new official company figures reveal that ministers have misled MPs about the extent of taxpayer support the company is receiving.

“Without informing parliament, ministers have authorised secret extra payments of £31m, which have only just come to light and which have been used to subsidise profits of £33.7m. That is nothing short of a scandal.”     

All this follows a long and bitter dispute between Northern and the RMT over the future role of the second person on Northern train services, with the latest update coming when the train operator called for a formal independent ACAS inquiry to help resolve the issue.

In the wake of the DfT and Transport for the North publicly confirming that a second person would be retained on Northern services, the RMT has said that strike action will continue as it prepares for the 43rd day of strike action.

Image credit - Danny Lawson

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