Northern: Rail firm receives millions more in subsidies as profits fall

Northern train in Manchester Oxford Road Image copyright Getty Images
Image caption Northern has faced intense criticism from passengers over delays and the ongoing industrial action by the RMT union

The RMT union has criticised the government's decision to pay Northern rail millions more in taxpayer subsidies than previously announced.

It follows the release of the firm's annual financial statement which also reveals a sharp fall in profits.

A planned strike by union staff this weekend will mark the 43rd day of its industrial action.

The RMT's claim of £31m in subsidies was "misleading and erroneous", said a Department for Transport spokesman.

A BBC analysis of the rail operator's accounts suggest the actual increase in subsidies was £11m.

'Summer of chaos'

The dispute over Northern's funding follows an autumn in which the rail company apologised to passengers for the late running of many of its trains.

It also endured a summer of "chaos" following the introduction of new timetables, which led to calls for the company to be stripped of its franchise.

Accounts for the 2017-18 financial year from Arriva Rail North, which trades as Northern, reveal a fall in annual pre-tax profits from £21m to £12.7m.

This was due to "lower than expected passenger revenue growth" caused by the strikes, as well as "delays in Network Rail infrastructure upgrades and the impact of adverse weather conditions," the company said.

Image copyright PA
Image caption Northern services have been affected after the RMT union launched a long-running campaign of industrial action

RMT general secretary Mick Cash said the figures showed Northern benefited from millions in extra franchise payments from the government.

The union cited a written parliamentary answer by then-Transport Minister Andrew Jones in 2016, which said Northern would receive £281m and £276m in subsidy payments from the government in 2016-17 and 2017-18 respectively.

The company's financial statements show these payments were actually about £284m each year.

"It that's not bad enough, these payments are being funded by the UK taxpayer and will end up directly benefitting German state outfit Deutsche Bahn, who own Northern," Mr Cash said.

"That is nothing short of a scandal."

'Passengers first'

A DfT spokesperson said: "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 round the table."

Image copyright Stephen Pimlott
Image caption Commuters have been frustrated with issues on Northern, which runs services across the north of England

Northern said the extra subsidies were due to changes in government policy.

Deputy managing director Richard Allan said it was wrong to say Northern profits were being subsidised by the government.

In a statement, he said: "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.

"In the year to 31 March 2018, Northern had lower than anticipated passenger revenue growth, largely due to delays to infrastructure improvements preventing the introduction of new services, and RMT strike action."

Liverpool City Region mayor Steve Rotheram, who previously called for Northern to be stripped of its franchise, said the fall in profits was "yet another sign that passengers are voting with their feet because of the poor service the company is providing.

"2019 has to be the year in which Northern improves their performance and wins back the trust of the travelling public."

Network Rail said it regretted the delays to planned engineering work but "we continue to work with Northern and remain committed to improving the levels of service to their customers".

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