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Did Northern Receive Secret Government Subsidies?

Speculation is being made as to whether Northern received an extra £31m in ‘secret subsidies’ from the Government.

The speculation comes after the RMT union has stated that Northern received a total of £31m more than previously stated in government subsidies, since the passenger transport franchise began in 2016.

The statement is based on data gathered from the latest Arriva North financial statement, released only days after the company announced widely criticised price increases across the country.

According to RMT, the Arriva statement shows that Northern received a total of £568m in taxpayer funded government subsidies between the financial years March 2016 – March 2017 and March 2017 – March 2018. This is £31m more than the £537m originally declared back in 2016.

After receiving these extra subsidies Northern made £33.7m in profit during the financial years under speculation.

The figures gathered by RMT according to the Arriva Rail North Accounts are shown below:

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

RMT also believes that money from taxpayers is being used to subsidise the private company to enable it to continue to make profit during times of industrial action carried out by RMT union members. According to RMT the Arriva accounts demonstrate that during the first year of RMT industrial action (March 2017- March 2018) Northern received £22m more than previously declared from the government.

Northern deputy managing director, Richard Allan, has completely dismissed the accusations made by RMT. He stated that the statements made by RMT are inaccurate and that increases in subsidies are due largely in part to changes in services and other policies that Northern has been asked to complete by the government. Northern also attributed the unexpected fall in profits to constant industrial action from RMT.

The statement from RMT was released just two days before rail workers prepared to participate in the 43rd day of industrial action which took place on Saturday 5th January 2019.

Deborah Lillis

About Deborah Lillis

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