personally I think the current franchise is unsustainable due to a couple of different things:
1) Sheer size. It's a huge franchise with many boundaries of interoperation, which leads to delays and other knock-ons.
2) Service 'level'. There are basically 3 types of service in Northern's region-Intercity (existing TPE long-distance, Scarborough-Blackpool), Regional (Leeds-Nottingham etc.) and local (Leeds & Manchester commuter lines)
I'd look to split into a couple of different franchises, starting from the bottom
LEEDS, SHEFFIELD & MANCHESTER 'METROTRAIN', New Merseyrail
these lines running as commuter services, all stops with an emphasis on new stations & electrification, PTEs to be heavily involved.
from Leeds, stopping services on the following lines
Airedale & Wharfedale (Skipton, Ilkley, Bradford)
Harrogate (York via Harrogate)
York & Selby (York & Selby)
Pontefract (Goole)
Hallam (Sheffield via Barnsley)
Wakefield (Doncaster & Sheffield via Moorthorpe)
Huddersfield (Huddersfield via Dewsbury)
Caldervale (Bradford, Todmorden & Huddersfield via Brighouse)
Sheffield lines
Penistone (Huddersfield)
Dearne Valley (York)
Hull (Doncaster)
Lincoln (Retford)
Manchester lines
Caldervale (Blackburn via Burnley)
Ribble Valley (Clitheroe)
East Lancashire (Colne)
Preston (Preston)
Southport (Southport via Wigan)
Liverpool (St Helens & Warrington Central)
Crewe (Crewe, Manchester Airport)
Stafford (Stoke on Trent)
Buxton (Buxton)
Styal (Crewe via Airport)
Mid Cheshire (Northwich)
Merseyrail Lines
Manchester (Warrington Central, Warrington Bank Quay)
Crewe (Crewe)
Ormskirk (Preston)
Kirkby (Wigan Wallgate)
Wigan (Preston via Wigan North Western)
Chester (Chester)
Northeastern Lines
Bishop Auckland-Saltburn
Middlesbrough-Newcastle
Newcastle-Hexham
Darlington-Berwick
NORTHERN REGIONAL LINES
These services running semi fast, serving large-moderate towns as 'connecting' services, operated mainly with Turbostars, Desiros or similar
Leeds-Carlisle
Leeds-Nottingham
Leeds-Scarborough
Leeds-Hull
Leeds-Lincoln
Leeds-Cleethorpes
Sheffield-Lincoln
Sheffield-Cleethorpes
Sheffield-Hull
Sheffield-York via Pontefract
Manchester-Carlisle via Hellifield
Manchester-Chester
Manchester-Bradford
Manchester-Blackpool
Manchester-Liverpool
Manchester-Barrow
Carlisle-Barrow
Newcastle-Carlisle
Newcastle-Edinburgh (Run jointly with ScotRail)
Liverpool-Blackpool
NORTHERN INTERCITY
Long-distance intercity services, run as such with reduced stops & shorter journey times.
Newcastle-Liverpool via Leeds & Manchester
Hull-Liverpool via Leeds & Manchester
Middlesbrough & Sunderland-Manchester via Leeds
Lincoln-Liverpool via Sheffield
Scarborough-Manchester
Scarborough-Sheffield via Pontefract
Scarborough-Blackpool via Leeds
Hull-Holyhead via Leeds & Manchester
OTHER SERVICES
Manchester-Scotland Services to ICWC
Leeds-Scotland Services (via Newcastle & via Carlisle) to ICEC
Liverpool-Norwich to ICXC
Liverpool/Manchester-Holyhead to ATW
as an addendum, an example of service where all 3 operators are present, on the Leeds-Hull line
WY Metro:
SELBY, Thorpe Willoughby, Hambleton, South Milford, Micklefield, East Garforth, Garforth, Thorpe Park, Cross Gates, Killingbeck, East End Park, LEEDS (2TPH)
Northern Regio:
HULL, Hessle, Brough, Selby, Garforth, LEEDS (2TPH)
Intercity Northern:
HULL, LEEDS (1tph)