Northern Rail and the future franchise ….

Posted on January 18th, 2015, by The Chairman

Last November, Stephen Waring, Chair of the Halifax & District Rail Action Group (HADRAG) wrote to the Secretary of State for Transport following the continuing talk about Northern Rail being the most heavily subsidised train operator (it isn’t), and there being a need for “more for less” in the future Northern franchise, political speak that we expect means further “no growth” or cuts.

His letter is below.

(The table in the letter has not formatted properly below – a properly formatted version can be downloaded here).

If you’ve not read our post “Northern Rail – Bursting the Myths“, this reads well in conjunction with the HADRAG letter.
___________________________________________________________________________

17 November 2014

Dear Mr McLoughlin,

Northern Rail and the future franchise

I wrote to you last December about future electrification of the Calder Valley Line (CVL) and am grateful for replies received at that time. I am writing now about the future Northern Rail franchise, what many of believe to be the myth of excessive “subsidy”, and also with relevant concerns about the current Northern direct award franchise. I am prompted by a recent quotation of your Franchising Director in relation to subsidies to train operating companies which, I believe, propagates a misconception about the level of subsidy to train services in the North of England compared with other parts of the UK.

As a group of rail users based in an area centred on Halifax and the Calder Valley in Pennine West Yorkshire HADRAG continues to campaign for strategic developments on our line which links the cities of York, Leeds, Bradford, Manchester and Preston. Along with other users’ groups and campaigning groups across the North of England we want to see an imaginative, expansionist and above all fair settlement for rail in the North – and for northern rail users both actual and would-be. We believe commuters on our line deserve a much better deal – more trains, more modern trains, trains with more seats, more reliable trains and faster journey times between key centres, along with – it should go without saying – continually improving station facilities and connectivity with other transport modes. And it must not be just about commuting. Rail is vital for the North’s economy from the biggest city to the smallest community served by an unstaffed halt. The rail tracks across the North have vast potential to do much more for the whole community in terms of business, leisure, social and cultural activity – all economically beneficial – and to do so without the damage to the environment that is implied by ever increasing car travel. We want to see rail become the natural mode of transport for more and more people whether the object of their travel is within our cities, in our market towns whose development needs to be encouraged or in more rural parts of the region that are served by community railways and where rail can be an instrument of sustainable tourism. Many of these places, for example the medium-size towns between Halifax and Huddersfield – Brighouse and Sowerby Bridge which have stations but needs a better service, and Elland which is waiting for its own station – have significant latent demand for rail travel. People want to use the train, and will happily fill the trains if they are of high quality, fast, frequent and reliable – and at fares that are both reasonably priced and simple to use.

The recent promise by the Prime Minister that the replacement of “Pacer” trains (Classes 142 and 144) is to be requirement of the new Northern Rail franchise is extremely welcome. We are very thankful for that promise.

Equally, many are excited by the idea of “HS3”. But developments of that scale are decades away and there is much to be decided about what form exactly HS3 will take. Many of us can see little point in a future promise of, say, a half-hour journey time between the centres of Manchester and Leeds if the numerous settlements in between – places such as Halifax, Bradford and Huddersfield are left with a slow and poorly connected service. Much more is needed, much sooner. By this we mean that the total modernisation and development of Northern – across its wide spectrum of functions from city-commuting through inter-urban express to market-town and rural community links – must make a flying start in 2016 with the new franchise.

The new Northern rail franchise should be about growth, not cost-cutting. We put that in our responses to your consultation back in August but I believe it is important to reiterate the message that Northern Rail can deliver increased value for money for both the passenger and the taxpayer not by a tiresome focus on cutting apparent subsidy but by investing and expanding. There has been talk of doing “more for less”. How about doing even more with the same or only slightly greater level of support?

As a start, the promises of the Northern Hub project must be fulfilled. For our line through Halifax, Brighouse and the Calder Valley that must mean improved line speeds Bradford-Manchester giving additional fast services and increased capacity with a better deal also for intermediate stations not served by the fasts. It must mean more trains between Leeds, Bradford and Halifax and on the lines through Brighouse linking Calderdale and Huddersfield, and a new station for Elland in eastern Calderdale, arguably the largest community in Yorkshire without a train station.

I hope you will be requiring bidders for the franchise to deliver or play their part in delivering these promises in cooperation with Network Rail, the combined authorities and local authorities as appropriate.

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-will-reflect-%E2%80%98angry%E2%80%99-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).
(I am grateful to my friend and HADRAG colleague Dr Andrew Whitworth for researching and compiling the figures, particularly those that are strangely omitted from the DfT website.)

Rail subsidy information – 2013/4 Data released 21 August 2014

Northern Trans Pennine Express Northern / TPE Combined Arriva Trains Wales First Scotrail Merseyrail
Passenger km (millions) 2210 1663 3873 1167 2828 658 Source – 1
Passenger miles (millions) 1374 1034 2407 725 1758 409

Subsidy funding £m
Government 172.1 61.5 233.6 152.5 493.8 83.5 Source – 1
PTE Subsidy 182.5 182.5 Source – 1 Note A
Total 354.6 61.5 416.1 152.5 493.8 83.5
Network rail grant 352.6 112.2 464.8 202.0 900.1 33.8 Source – 2
Total 707.2 173.7 880.9 354.5 1393.9 117.3

Subsidy p / passenger mile
Including network rail grant 51.49 16.81 36.60 48.88 79.31 28.68
Excluding network rail grant 25.82 5.95 17.29 21.03 28.09 20.42

Sources 1 – ORR data portal ‘Government support to the rail industry by TOC’
2 – For Northern and TPE, DfT report https://www.gov.uk/government/publications/rail-subsidy-per-passenger-mile

for others, apportioned in the same ratio over Network Rail fixed access charges from
http://orr.gov.uk/__data/assets/pdf_file/0014/4190/cp4-pl-fixed_track_charges_sched_181208.pdf

Notes A – Allocated fully to Northern

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 current Northern rail situation – fares

There are aspects of the current (April 2014-February 2016) Northern Rail “direct award” franchise that are causes for concern and from which lessons must be learnt in the future.

Firstly, the direct award called for improved performance by the TOC. Unfortunately since May 2014 Northern has been saddled with the consequences of a major recasting of the timetable right across the North resulting from the decision that TransPennine Express should have five trains an hour between Leeds and Manchester via the Huddersfield route. The result for Northern has been a need for greater resources in order to run the same level of service as before. Shorter layover times at terminals on the Calder Valley Line at Leeds and at Manchester Victoria have had an effect on punctuality that can only make it more difficult for Northern to achieve its performance targets. Having experienced a decade of generally improving punctuality and reliability we have in recent months felt that performance is slipping. We hear, also, that Northern staff members (for example drivers) are poorly paid compared with the staff of other TOCs, leading to good people leaving the company with obvious effects on performance.

In the light of these issues affecting the daily experience of Northern passengers the prospect of fare increases to pay for improvements that have yet to be felt can only give rise to anger.

Secondly the current situation following imposition in September of new restrictions on off-peak fares is highly unsatisfactory. We understand that this is a response to a DfT demand to increase revenue and hence reduce subsidy. A blanket ban has been imposed on the use of off-peak tickets for journeys wholly within the metropolitan counties (West Yorkshire etc) between 1600 and 1830, Mondays to Fridays. We can understand the logic of banning off-peak tickets on the busiest teatime trains from major terminals such as Leeds. But the way this has been done is punitive. It hits people using relatively quiet trains running in the opposite direction to the main peak flow and may well deter enough passengers to result in revenue actually decreasing. To spell it out, people are being deterred from using rail for example for journeys into the city at teatime at the start of an evening out; they are more likely to use other modes of transport. Whether the overall effect on revenue is positive or negative, the social and economic effect is bound to be bad because it will deter some off-peak passengers who could be filling quieter trains but will instead use other modes. .

It is accepted that evening peak restrictions apply in other places. But in general we understand these are applied in a more carefully judged manner such that off-peak tickets may still be used in the teatime period on quieter trains going in the opposite direction to the peak commuting flow.

The restrictions have also been applied to certain day ranger tickets such as the West Yorkshire Day Rover. Over many years this ticket has been an excellent way of attracting people to try out rail travel on the local network. With the new restrictions, however, there is a real fear that a significant number of people will find themselves stung for a large additional fare if they inadvertently travel during the 2½-hour teatime ban. First-time passengers such as these may vow never to travel by train again. This measure will do nothing to encourage more people to travel on less well-used off peak trains. We should be welcoming people onto our trains, not punishing them for travelling at the wrong time!

Interestingly:
• The price if the West Yorks off-peak adult rail+bus Day Rover is precisely one fifth of the price of a weekly all zones (anytime) WY Metrocard. It is thus already priced at a daily rate equivalent to that of a peak-valid ticket. Logic therefore suggests it should at least be available in the teatime peak.
• I note the recent announcement that in the Transport for London area daily peak capping levels on Oystercard are to be reduced to 1/5 of the weekly rate to benefit part-time workers. This is clearly a progressive move. It contrasts with the recent crude implementation of off-peak fare restrictions in the North.
• In London the off-peak day travelcard and the off-peak cap on Oystercard applies anytime after 0930 Monday-Friday with no penalty for travelling during the evening peak in contrast with the new restrictions on off-peak rail fares in the North.

Given that the quality of train service in the North is nothing like that of services in London and the South of England more generally, it seems grossly unfair that off-peak train users in the northern metropolitan counties are currently being penalised (apparently at the behest of the DfT) in a way that people in London and the South East are not.

Whilst it may be true that fares in some parts of the North are lower than in the south, to generalise on this matter is to grossly oversimplify. In fact there is a wide variation in fare levels. The fact that wage levels are higher in the South must also be taken into account. A general fare increase across the North to pay for future investment and improvement could be counterproductive and would be met with widespread anger from regular travellers who suffer intolerable conditions at peak times and already pay fares seen as poor value for money.

To sum up, we hope that the aim of the new franchises for train services across the north will be to make rail the natural mode of travel for more and more people, for more and more different types of journey, not just commuting. Fares must be simply structured and at a reasonable level to encourage passengers, not penalise them.

I appeal to you to adopt these principles in specifying the new Northern and TPE franchises. Perhaps, indeed you may have already decided on such a progressive approach.

Thank you for taking the time to read this letter, which, as you will understand, I shall be copying widely.

Yours sincerely,

J Stephen Waring
Chair,
HADRAG: The Halifax & District Rail Action Group

___________________________________________________________________________

Since then, the publication of the Invitations to Tender for the replacement Northern and TPE franchises has been delayed from November 2014 until “early 2015”. We suspect this will be February or March 2015 at the earliest, once the DfT have a better idea of the extent of the delays to the North West Triangle and Trans-Pennine electrification programmes. (Liverpool to Manchester via the Chat Moss Line should have been completed in Autumn 2014 to allow crew training prior to the Lime Street – Manchester Airport services going over to class 319 electric trains on 14 December 2014. However, as of today there are still at least 4 sections between Earlestown and Edge Hill where the wires have yet to be erected, and a section over Sankey Viaduct where all masts have yet to be erected). Currently, a handover in mid February is being talked about, giving just about enough time for crew training to allow for the electrics to start running from Lime Street to the Airport in May 2015. Tight!

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Stephen Waring of HADRAG has now had a response from DfT to his letter.

HADRAGp1

HADRAGp2

So, it seems that Northern Rail is the most heavily subsidised train operator in Britain, so long as we take those in London, Merseyside, Scotland and Wales which are more heavily subsidised out of the discussion.

Thanks to Stephen for providing us with a copy.

Please leave a comment

  1. The Chairman Says:

    Stephen Waring at HADRAG has now had a response from DfT to his letter sent to them.

    I’ve placed a copy at the bottom of the post, above.

  2. Andrew Macfarlane Says:

    Northern has already made one change to the Evening Peak restrictions. As from the January 2015 fare change, stations between Furness Vale and Buxton (inclusive) are excluded from the restrictions.

  3. Jen Says:

    Apparently the franchise specifications for the next Northern and TPE franchises will appear on the DfT website: https://www.gov.uk/government/organisations/department-for-transport this coming week.

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