Select Committee on Transport Appendices to the Minutes of Evidence


Memorandum by RMT (REN 38)

RAIL SERVICES IN THE NORTH OF ENGLAND

INTRODUCTION

  1.  RMT welcome the opportunity to comment on the Committee's Inquiry into Rail Services in the North of England. We represent 58,000 workers across all sectors of the transport industry. We are the largest union in the rail industry and have an estimated 10,000 members employed by rail operators in Northern England.

  2.  Our evidence is structured into the three main strands of the Committee's Inquiry: an analysis of the existing franchises; an exploration of the investment plans for the region; and a discussion of the wider role of rail services in the economic and social development of the North of England.

THE CURRENT FRANCHISE HOLDERS

  3.  Services in the North of England are run predominantly by the following companies:

Area
Franchise Holder
North East
Arriva
North West
First Group
Merseyrail
Arriva
West Coast Main Line
Virgin
East Coast Main Line
GNER
Cross Country
Virgin


  4.  The structure of rail privatisation created companies which were dependent upon national and local authority subsidy for their survival. Rail Industry Monitor (RIM) note that while the average operating margin for all UK rail companies was 2.2% in 2000, so-called regional operators made an average loss of 6.6% on turnover.

  5.  The 11 franchises that made an operating loss in 2000, include four who operate services within the North: Arriva Northern, First North Western, Arriva Merseyrail and Virgin Cross-Country. According to RIM, PTE subsidy per rail kilometre in the North varies substantially from 34.7p in Greater Manchester to 14.8p in West Yorkshire and just 10.5p in Tyne and Wear.

  6.  The overall quality of service for the North can be gauged from the following table, which reflects punctuality figures for the period 2001-02:


Franchise
Punctuality Figures 2001-02
% +/- National Average

National Average
78%
Regional Services Average
79.2%
+1.2%
Arriva Merseyside
81.2%
+3.2%
Arriva Northern
75.8%
-2.2%
First North Western
87.3%
+9.3%
Virgin Cross Country
63.7%
-14.3%
Virgin West Coast
68.8%
-9.2%
GNER
70%
-8%
All "Northern" franchises
74.5%
-3.5%


  Source: DTLR. Figures for each quarter added and divided by four

  7.  The picture largely reflects the poor levels of performance of the national railway, with slightly more than one in four of all "northern" services late during 2001-02—with inter-urban services particularly poor. Local services in particular have been the focus of substantial passenger discontent, since privatisation.

ARRIVA TRAINS

  8.  The Merseyrail and North East were awarded to MTL, a bus company, following privatisation. Arriva bought MTL and took over the franchises in January 2000. The combined train kilometres of the two franchises gives Arriva a 9.5% share of the national rail market.

  9.  It quickly emerged that neither franchise was economic at the subsidy levels set by privatisation, and Arriva received an extra £64 million on top of existing subsidies of £199 million to retain both franchise for a further year in March 2001. The SRA's justification for the additional funding into the Northern Spirit franchise (and also the Mersey Electrics franchise) was that there would be real improvements in service.

  10.  In reality, Arriva's North East franchise has been beset by difficulties since extension was agreed:

    —  In November 2000, a landslip caused severe problems on the Durham Coast route. Trains from Middlesborough and Hartlepool to Sunderland and Newcastle were severely affected for six months.

    —  A chronic driver shortage led to the cancellation of 80 services a day in September 2001 and the cancellation of the winter timetable, with trains replaced by buses for five months on busy commuter routes from Pontefract and Knottingley into Leeds. The SRA fined Arriva £2 million as a result of its poor performance in the aftermath of the driver shortage.

    —  In February 2002, Arriva was forced by the Advertising Standards Agency to withdraw an advert for new staff, which claimed they "provide efficient passenger rail services across the North of England." The ASA demanded withdrawal of the advertisement "until it can be substantiated."

  11.  The attempts by Arriva to resolve the driver shortages have led to serious industrial relations problems. A restructuring agreement boosted driver pay by up to 18%. At the same time, low increases for guards and station staff resulted in ballots for strike action by both RMT and our sister union TSSA.

  12.  Arriva's current position with regard to the guards' dispute is that they are unprepared to negotiate further and that they consider themselves in dispute with RMT until the end of their franchise in 2003.

FIRST NORTH WESTERN

  13.  First Group, which runs the North Western franchise, is responsible for 12.9% of national rail kilometres, and has been subject to similar stinging criticism to Arriva.

  14.  David Butterworth of the Rail Passengers Council summed up the year for First North Western customers as follows:

    "Workers who arrive late for work as a result of late running trains face the sack, whilst passengers bound for Manchester Airport have a nerve-racking start to their holiday." First North Western must work very hard to improve performance if it is to attract passengers back."

  15.  The RPC also singled out First North Western for criticism regarding lack of information on services and litter on trains.

INVESTMENT PLANS FOR THE REGION

  16.  The DETLR's 10 Year Transport Strategy has been rightly criticised by the Transport Select Committee for its lack of vision and vagueness on the question of resources. It can also be attacked as being focussed on the South East to the exclusion of the North and other regions. This is despite the fact that, as the SRA acknowledge, the current wave of economic prosperity has seen ridership increase substantially in the North, particularly in urban areas.

  17.  The 10 Year Plan includes only two projects (West Coast Route Modernisation and Cross Country upgrade) for which there is already committed funding. Beyond that the 13 investment projects identified by the SRA as having major priority, but no committed funding as yet, include only three which will provide any potential improvements for passengers in the North (Midland Main Line upgrade, East Coast Main Line upgrade and TransPennine upgrade).

  18.  Even these projects are reliant upon private sector funding which, as the Committee will know, has now been revised downwards from the £34.5 billion envisaged by the Government over 10 years to £23 billion by the SRA in their 2002 Corporate Plan. Unless the Government are able to provide more money it is now clear that a number of these projects, and the TransPennine Express proposal in particular, will not take place.

  19.  The Greater Manchester Passenger Transport Authority have stated that they are:

    "extremely disappointed by the Strategic Rail Authority's long term plan for the future of Britain's railways and the lack of financial resources allocated for the North. Addressing the capacity issues in Manchester city centre is one of the Authority's and the region's top priorities, as the problem with bottlenecks in the city is having an impact on the whole of the network. In the long term of course, it is having an adverse affect on the economic and social development of the region."

  20.  The SRA/Government investment plans sits alongside the SRA's proposals to redraw the franchising map fro the North. It is proposed that two new franchises will provide regional services. The first, TransPennine Express, will be drawn from the existing inter-urban services currently provided by Arriva Northern and First North Western. The second will combine whatever is left from the two franchises into a new Northern franchise. It is intended that the current Merseyrail franchise will be retained as a distinct area.

  21.  One of the problems of the current privatised structure is that because of the dominance of the industry by a small number of operators, franchises can often be awarded to companies who have a poor record elsewhere.

  22.  Most passengers, for example, would be disappointed to learn that the bidders for the TransPennine and Northern franchises included Connex, who were stripped of their SouthCentral franchise for poor performance, Arriva who were recently voted the Uk's worst rail operator and First Group whose performance in the North and South West has attracted heavy criticism and threats of passenger strikes.

THE TRANSPENNINE EXPRESS

  23.  The history of the TransPennine project (TPE), in RMT's view, serves as an indictment of the failure of the privatised railway to deliver improvements for passengers in the North.

  24.  The TPE was announced with a fanfare by the SRA in 2000. It proposed a new inter-city franchise, which would connect towns and cities in the North of England with the major transport hubs of Manchester, Liverpool and Leeds.

  25.  Sir Alistair Morton, the then Chairman of the SRA, described the project as follows:

    "The TPE network is to be upgraded to full high-speed, intercity status, running more trains per day than operators such as Midland Main Line or Anglia, and carrying more passengers than Gatwick Express. We aim to put in place major improvements in East-West travel, linking Newcastle, York and Hull with Manchester and Liverpool."

  26.  Best and final bids for the franchise were originally received by the SRA in March 2001. Strong industry rumours suggested that the already discredited South East operator Connex were the preferred bidder.

  27.  After the 2001 General Election, bidding was restarted following concerns about the robustness of the process and its vulnerability to legal challenge from the other bidders. At this point, the scope of the franchise was reduced substantially, so that the winner of the bidding would now be the company that offered "best value".

  28.  The current plan is that the new franchise will start in 2003. However, SRA have now scaled down Sir Alistair's "intercity" concept so that there will be:

    —  No infrastructure investment in the first contract phase.

    —  Proposed major infrastructure enhancements to the infrastructure surrounding Manchester Victoria now "off the agenda".

    —  New bids will be focussed around Manchester Piccadilly at which there are major train path constraints.

    —  No re-opening of the Sheffield/Manchester route via Woodhead Tunnel as proposed by the South Yorkshire PTA because of lack of funds and train paths at Manchester.

    —  Rolling stock is now likely to be pre-owned or cascaded (probably ex-Midland Main Line) rather than new "intercity stock.

  29.  In two years, the dream of a Northern intercity network has been downgraded to a smartening up of the existing network. RMT's view is that this is a microcosm of the wider problems of the privatised industry. Investment is dependent upon private finance, which itself is vulnerable to the type of downturn that happened across the network after Hatfield. Meantime, the SRA is reliant upon franchisees like First Group, Arriva and Connex to pick up the pieces whose own record with their existing franchises is poor- and in the case of Connex resulted in them being stripped of their franchise.

THE WIDER ROLE OF RAIL IN THE REGION

  30.  Northern England takes up 16% of the area of Great Britain, accounts for some 25% of the population and provides 21% of GDP. It contains the major business centres of Manchester, Leeds, Liverpool and Newcastle.

  31.  The importance of rail to the region can be gauged by the figures for car ownership:

Households with No car

Great Britain
27%
North East
39%
North West
30%
Yorkshire and Humberside
32%


  32.  The Region is more heavily dependent upon public transport in general, and rail in particular, than any other area. However, despite a small number of high profile light rail schemes, which have attracted increasing numbers onto public transport, the general pattern created by deregulation and privatisation is of a region that has been forgotten.

  33.  Bus patronage across the region has fallen dramatically since deregulation (journeys down 34% in the North East, 22% in the North West and 30% in Yorkshire and Humberside) and the real fear must be that a similar pattern will emerge for rail unless substantial investment is made in our rail infrastructure.

  34.  This is important because the Government policy to reduce social inequality and exclusion are intimately bound up with access to public transport—particularly in an area with low levels of car ownership and therefore mobility.

  35.  This is despite the growing importance of Manchester and Leeds as business centres, and of Manchester Airport as key drivers for prosperity. Major improvements are needed across the region, not just to the TransPennine routes but also on the Cinderella lines. Commuter services in and around major cities like Manchester, Leeds, Bradford and Liverpool continue to be overcrowded, while the growth of Manchester Airport may well be seriously impacted by the downgrading of the TPE franchise.

  36.  Equally, it is often forgotten that for many passengers in the North the flagship West Coast and East Coast Main Lines are not simply corridors to London but rather are an important link between relatively close Northern cities.

CONCLUSION

  37.  RMT welcome the Committee's Inquiry into rail services in the North of England. We believe that the problems in this area illustrate wider problems with the Government's rail strategy: lack of coordination; lack of clarity on future plans; and over-reliance on private funding and discredited private companies.

  38.  The current franchising process serves to institutionalise these problems rather than resolve them, and RMT's considered view is that without a properly accountable public railway improvements will be difficult to deliver.

  39.  RMT will welcome the opportunity to provide verbal evidence in support of this paper.

10 June 2002



 
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