THE country's largest railway network finally had a new operator last night - along with billions of pounds in public subsidy.

Rail chiefs said that preferred bidder Serco-NedRailways would take over the Northern Rail franchise on December 12 - about two months later than planned.

The franchise, to run for up to eight years and nine months, provides inter-urban, commuter and rural services across the North of England.

A dispute over the level of public subsidy - set at a massive £2.4bn by the Strategic Rail Authority (SRA) - was believed to lie behind the delay in signing the contract.

Rail unions said the delay had caused huge uncertainty among the 4,000 staff affected, with previous incumbents Arriva Trains Northern and First North Western being asked to carry on running services until December 12, even though they lost out to Serco-Ned in the bidding process.

The SRA said there would be targets to reduce cancellations and delays by more than 15 per cent in the first five years, and a new incentive and penalty regime to ensure the maintenance of station and train facility standards.

Brian Burdsall, chairman of the new operating company, said: "From today, our priority is to open discussions with the current managers, staff and trade union representatives to ensure we deliver a truly unique and first-class service to all our customers and employees."

The Serco-NedRailways joint venture already operates Merseyrail, which is recognised as one of the most efficient and punctual franchises in the UK.

Meanwhile, the SRA has formally set out what it expects of bidders for the region's other main rail franchise, East Coast Main Line, currently operated by York based GNER.

A briefing document containing nearly 50 pages calls for significant improvement in the punctuality of services and the numbers of trains cancelled.

But it also allows for the withdrawal of a handful of services from December next year, including one between Edinburgh and Newcastle in each direction.

Bidders are asked how they will minimise overcrowding with passenger journeys on the route expected to grow by as much as 30 per cent between next year and 2012.

Those bidding for the initial seven-year franchise, which will begin next May, are GNER; DSB, part of Danish Railways; First London, Scottish and NorthEast Railway, from the First Group; and Inter-city Railways, a consortium of Stagecoach and Virgin Group Investments.