Track services

UK rail strike reveals reforms needed to get industry back on track

The biggest strike to hit Britain’s railways in decades has highlighted how the coronavirus has wrecked the sector’s finances and exposed a deep rift over how to modernize the industry in the country that has it invented 200 years ago.

A collapse in passenger numbers at the height of the pandemic and the subsequent shift to remote working left an annual funding gap of £2billion as ticket revenue plummeted.

This week, members of the RMT union came out to protest the way the government and rail companies are proposing to balance the books: cutting staff costs through limited pay rises, layoffs and changes in practice work to increase productivity.

Some 40,000 union members will stage the second of three one-day strikes on Thursday in a dispute over layoffs, wages and working practices. Only about 20 percent of services will work as a result of the action. The third day of action is scheduled for Saturday.

For Mick Lynch, the militant general secretary of the RMT, the government’s ‘transport austerity’ is a serious threat to its members, particularly with inflation at its 40-year high, and to the wider future of railways. iron.

But for ministers and industry, it’s the only way to respond to an environment where the numbers no longer add up.

“I think, frankly, that some of our union colleagues are taking too long to recognize that this isn’t about some kind of class warfare, it’s about the fundamental financial deficits that the industry is facing” said Andrew Haines, chief executive of Network Rail, the public company that oversees the network’s infrastructure.

Passenger numbers fell to 5% of normal levels during the first wave of Covid-19, and two years later are still down by a fifth.

While leisure travel has rebounded, commuters, who tend to pay higher prices, have been slower to return.

South Western Railway recently revealed that the number of commuters was still only around half its pre-pandemic level, and those with the longest and most expensive journeys have returned to the smallest proportion. Its passenger surveys show that people expect to make around 60% of pre-pandemic journeys, which is equivalent to working in the office three days a week.

Commuters at Waterloo station during the pandemic, Grant Shapps said Covid had left the railways in a ‘critical financial situation’. © Niklas Halle’n/AFP

“Covid has left the railways in dire financial straits,” Transport Secretary Grant Shapps said last week as he claimed the network was competing with video conferencing as much as the car.

The state has injected £16billion in emergency funds to keep the trains running over the past two years. But Shapps said the industry must now reshape its finances to adapt to the new landscape.

“It’s not like the good old days…for millions of passengers, rail is now a choice, not a necessity,” he said.

Column chart of revenue (in billions of pounds sterling) showing government support for the UK rail industry

The railroad has always received some level of taxpayer subsidy. Government support for operational funding for the railway has risen from less than £4bn in the 2015/16 financial year to £6.5bn in 2019/20, around 30% of its revenue global.

But the pandemic has accelerated that. In 2020/2021, government support for day-to-day operations rose to £16.9bn, while fares revenue was just £2.5bn, down from £9bn in one year.

There are only three ways to close a funding gap that has since stabilized at around £2billion a year: more taxpayers’ money, even higher ticket prices or lower costs.

Track Inspection Team
Track Inspection Team © Chris Cooper-Smith/Alamy

Ministers say injecting more money would be unpleasant given demands from other services and limits on public spending, and that raising fares further would also prove difficult.

Reductions could come from running fewer trains, but the biggest savings are expected to come from personnel costs.

The RMT rejected a pay rise of about 3 percent, well below inflation, which is 9.1 percent, and demanded 7 percent on top of no mandatory layoffs.

But government and industry argue the way to unblock the dispute is for unions to modernize work practices rooted in bygone times, which would create savings to reinvest in wages.

Line graph of number of journeys (mn) showing that passenger numbers on Britain's railways have yet to return to pre-pandemic levels

Haines told unions this week he needed to cut 1,800 jobs, but almost all of those could be achieved through an oversubscribed voluntary departure plan.

Haines and Shapps revealed some ‘unacceptable’ work practices that unions have tried to cling to, whether it’s taking a year to negotiate a new app to message staff or refusing to stop working. send teams to physically check voltages on wayside cables that could be monitored remotely.

Sundays are still considered overtime rather than a day of the working week, which meant that during an England World Cup game in 2018, hundreds of trains were canceled because staff chose not to work.

“I feel like it’s a bit of a wake-up call, saying we can’t continue to fund salaries and pay rewards while we live with such unacceptable practices,” Haines said.

But for union members and RMT bosses, all “efficiency” is risky work or changing hard-won working conditions.

Lynch said he negotiated the modernization of all the companies his union had members in and agreed that the rail industry would become smaller over time as technology replaced some jobs.

Many new technologies, such as track fault detection, have already been rolled out with the blessing of unions, he added. But, he argued, anyone who wanted to stay in the industry should be allowed to do so and workers should be paid more for the work they do.

RMT officials are angry at what they see as attempts to caricature their members. “I work on Sundays. If my manager calls me on my day off, I answer the call. We work Sundays, late shifts, morning shifts. . . I am not a 1970s person,” an RMT branch secretary said.

Haines said there was a path to a deal if the RMT could move on working conditions, but Lynch said this week he was ready for a long dispute.

“What else should we do?” Are we going to plead? Are we going to beg? We want to negotiate our future. We want to negotiate, and if you don’t negotiate, you have to beg,” he said.

Additional reporting by Delphine Strauss and Jim Pickard in London