Northern Rail on brink of collapse says union

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The region’s biggest train operator is facing a cash crisis that has put it on the brink of collapse, a union claimed last night.

The Transport Salaried Staffs Association quoted what it said was a “senior rail industry source” which indicated that Northern Rail was “likely to go bust later this year”.

Northern Rail is said to be facing a cash crisis

Northern Rail is said to be facing a cash crisis

It said it was putting “substantive rumours in the rail industry” about a “serious financial crisis” at Northern into the public domain, in order to give the Government time to act and to ensure that passengers’ interests were protected.

A spokesman for the union told The Yorkshire Post: “Northern is running out of money. It could probably stagger on for another year, but that would raise questions about ongoing repairs, safety and the level of service.”

In January, Northern revealed a fall in annual pre-tax profits from £21m to £12.7m, for which it blamed lower than expected passenger growth caused by “adverse weather conditions” as well as last year’s timetable chaos and the effect of continued strikes by another union, the RMT.

The franchise received nearly £280m of taxpayer subsidies in its first year, a figure that was due to reduce over time as part of a Government commitment to ease the burden on the public purse. However, it emerged earlier this year that it had instead increased by around £11m. Northern said the extra cash was for “changes in services and other policy areas” it had been asked to implement.

In March, its owner, the German state rail firm Deutsche Bahn, put Northern and the rest of its UK Arriva arm up for sale.

Manuel Cortes, general secretary of the TSSA, called on the Transport Secretary, Chris Grayling to step in, as he had to last year after the collapse of Virgin East Coast, which ran the Yorkshire to London franchise.

He said: “Speculation within the rail industry indicates that Northern is facing a serious financial crisis and is likely to follow Virgin East Coast, which eventually ran out of money and was then forced to hand the franchise back to the Government.

“Chris Grayling can’t drag his heels on this one. The travelling public is sick and tired of the misery caused by Northern.”

Asked if it had a contingency plan in the event of Northern’s collapse, Mr Grayling’s Transport Department did not respond directly, but a spokesman said: “Change could result in significant disruption. We see no reason at this stage to consider making changes to the franchise.”

Northern did also not address the union’s claims, but said: “We are working hard to improve performance and reliability.”