Northern rail could be nationalised

The government is considering whether the management of the North of England's largest rail commuter service should be taken into public hands.

Transport Secretary Grant Shapps said Northern's poor performance, with trains regularly arriving late or not at all, "cannot continue".

Mr Shapps said he had issued a "request for proposals" from the firm and the Operator of Last Resort (OLR).

This could lead to services being brought into direct government control.

Giving evidence to the Commons' Transport Select Committee, Mr Shapps said: "As a fellow long-suffering commuter, I entirely believe we cannot carry on just thinking it is OK for trains not to arrive, or Sunday services not to be in place. That has to change."

The Department for Transport confirmed it was developing contingency plans for the replacement of the current franchise "with either a new short-term management contract with Northern or the Operator of Last Resort (OLR)".

"In the context of significant challenges facing the operator, such as delays to infrastructure upgrades and historic underinvestment in the northern rail network, issuing a request for proposal enables the department to examine whether the contract is properly aligned with current operating challenges in the North," it said.

"It also allows us to determine whether the franchise owner or an OLR would be best placed to tackle these issues and deliver for passengers."

David Brown, managing director at Northern, said the firm had faced several challenges in the past couple of years, outside the direct control of Northern.

The most significant of these is the continuing late delivery of major infrastructure upgrades, including the North West electrification, which is more than two years late.

Mr Brown added: "Arriva and Northern remain fully committed to delivering the transformation of the North's railways and improving customers' experience. We are delivering the biggest transformation of local rail for a generation."

This is another black mark for Britain's rail system.

A second franchise, potentially brought under government control is not what Conservative ministers wanted.

Labour will press its argument that the system is so broken that the same should happen to all train companies.

But Northern (a large commuter network) is a much more complex franchise than the East Coast Mainline (intercity services) which the government took control of last year and rebranded LNER.

For that reason the government is probably keen to stop short of the "full public control" option and take-on a more supervisory role, with Arriva (Northern's parent company) still in charge of the day-to-day.

But several leading politicians argue Northern has failed and therefore should be removed wholesale from managing the franchise.

Northern argues the system is at fault because delayed infrastructure upgrades (managed by publicly-owned Network Rail) have not allowed it to run the services passengers demand.

There is no silver bullet to fixing the railways but the government-commissioned rail review will, in a matter of weeks, attempt to come up with answers.

Northern, which is one of the biggest franchises in the country, has been in trouble for years. Industry sources have confirmed to the BBC that the train company, which is owned by Arriva, has been losing money for some time.

Passenger numbers on Northern dropped after the botched introduction of new timetables in the summer of last year.

Mr Shapps said: "If you are northern, and you are a Northern passenger, you're as frustrated as I was in 2018. With Northern it has failed to recover."

On Friday, Transport for the North said it believed the franchise should be taken into public hands, via what is known as an Operator of Last Resort (OLR). The OLR is, on behalf of the government, currently in charge of London North East Railway, the East Coast Mainline intercity franchise.

However, the OLR is not the only option for the government.

It could also opt for what is known as a "management contract", which would mean that Arriva would still operate rail services, but the Department for Transport would adopt a much more hands-on role for the operation of the franchise.

The OLR has been monitoring Northern for some time and any change to the operation of the franchise would take months to implement.

A review of the railways in the UK is already under way. The Williams Review, led by former British Airways boss Keith Williams, is due to publish its findings in coming weeks. It is expected that the rail franchise system will be completely overhauled, a point mentioned in the Queen's Speech earlier this week.