New Arriva Rail North Accounts reveal secret extra payments

Arriva Rail North’s latest report and accounts, smuggled out at the last possible moment today just after the latest fare rise disgrace, have revealed that the German State-owned company has been given secret extra taxpayer funded payments of £31 million since the franchise began in April 2016, directly allowing the company to make profits of £33.7 million over the same period. 

 

The Rail Minister, Andrew Jones had previously told MPs that Arriva Rail North were to receive £537 million in real terms in taxpayer subsidy by April 2018 but the company’s latest report and accounts show that they in fact received £568 million, an extra £31 million which is almost the same as their profits of £33.7m.

 

The accounts also show that for the first year of RMT industrial action from March 2017 to March 2018 the government gave Arriva Rail North an extra £22 million to help subsidise profits of £12.7m confirming the union’s fears that Ministers are even using taxpayer’s money to bail out the company on strike days.

 

The latest Northern bail-out bombshell come as RMT members prepare for their 43rd day of strike action on Saturday in the long-running fight to keep a safety-critical guard in Northern Trains – a guarantee of passenger safety and access that the company can clearly afford.

 

RMT General Secretary Mick Cash said:

 

“Arriva Rail North’s latest report and accounts have been deliberately smuggled out at the last possible moment so they appeared after the latest rail fare hike disgrace.

 

“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. 

 

“If 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.

 

“This is money that could have been used to underpin the guard-guarantee on Northern trains but will be used instead to fund German railways. That is nothing short of a scandal.”      

 

ENDS

 

Notes to editors

According to the recently published Arrive Rail North Accounts the company received the following Franchise payments from the government (financial years)

 

Year                        Subsidy Actual *      Subsidy advised        Extra Subsidy                              Profits***

                                    to MPs** 

 

2016/2017            £284m                       £275m                       £9m                                                £21m

2017/ 2018           £284m                       £262m                        £22m                                             £12.7m

 

 

Total Extra

Subsidy / Total Profits                                                               £31m                                              £33.7m

 

 

 

*              Arriva Rail North annual report year ended 31st March 2018 page 20. (Figure Rounded down to

Nearest £m) . Shown as franchise payments      

**            Parliamentary Answer of 11 January 2016

***          Arriva Rail North annual report year ended 31st March 2018

 

Railways: North of England:Written question - 21124

 

Q

Asked by Lilian Greenwood

(Nottingham South)

Asked on: 05 January 2016

Department for Transport

Railways: North of England

Commons

21124

To ask the Secretary of State for Transport, what (a) premium and (b) subsidy payments the new Northern franchisee is expected to make or receive in each year of that franchise's duration.

 

Answered by: Andrew Jones

Answered on: 11 January 2016

The new Northern Franchisee is expected to receive subsidy payments during each year of its franchise term. I note however, that under this franchise agreement the amount of annual subsidy will be reduced by £160million by the end of this 9-year contract and at the same time, unlike the last Northern franchise in 2004 which included limited plans to invest in services or meet demand, this new franchise will deliver more than 2,000 extra services each week, nearly a 40% increase in capacity and the complete removal of the outdated and unpopular Pacers by the end of 2019.

 

The subsidy payments are set out below in both nominal terms and in real (i.e. constant) terms in 2015/16 prices. Years 1 to 9 are the payments for the core Franchise Term. Year 10 is an optional extension period of up to one year, callable at the discretion of the Secretary of State.

Year		£M
		Nominal	Real – 2015/16 prices
Year 1	2016/17	281	275
Year 2	2017/18	276	262
Year 3	2018/19	282	260
Year 4	2019/20	247	221
Year 5	2020/21	204	177
Year 6	2021/22	158	134
Year 7	2022/23	136	113
Year 8	2023/24	114	92
Year 9	2024/25	92	73
Year 10	2025/26	53	39