Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence


Memorandum by the National Union of Rail, Maritime and Transport Workers (PRF 29)

PASSENGER RAIL FRANCHISING

INTRODUCTION

  RMT once again welcome the opportunity to submit comments to the Transport, Local Government and the Regions Sub-Committee.

  Unfortunately we do not believe that the proposed new set of Strategic Rail Authority (SRA) guidelines will resolve the current problems of the Rail Industry. At the current time taxpayers and passengers have the worst possible deal. Whilst the financial risk and responsibilities still remain with the taxpayer there is no effective control over the industry.

  The position has improved a little in the last few years, in so far as the Regulator is far more rigorous in his approach than his predecessor. However the fundamental problem remains. The current structure of the rail industry, whereby competing private rail companies all operate with a primary objective of making a profit, mitigates against running an integrated service existing for the benefit of all. The current fragmented system suffers from a lack of overall control that severely impacts upon operations and safety. We shall provide more details to illustrate our case in this submission.

MOVING FORWARD

  The Environment, Transport and Regional Affairs Committee decided to hold an inquiry into rail investment in May 2000. The inquiry considered all matters relating to the operation of the industry. RMT submitted a detailed paper and a report was produced in March of this year. The Committee made a number of recommendations as to how the rail industry could be improved. They were not radical suggestions that suggested a complete overhaul of the current structure of the industry, but if implemented we believe they could still deliver improvements for passengers.

  We are pleased that the Regulator is endeavouring to secure from Railtrack far better information on the state of the network. However Government show little sign of taking heed of other recommendations. The two most important recommendations made by the Committee related to Government acquiring more control over the network, and secondly the effective management by Railtrack over essential renewal and maintenance work. Little progress has been made. The Committee has asked about the implications for the Industry of the revised Strategic Rail Authority guidance. The amendments proposed by the Government will unfortunately do little to achieve the objectives as desired by the Committee following its last investigation. We will refer to each of the objectives now listed in the latest inquiry.

IMPROVEMENTS IN SERVICES

  The committee has stated that it is seeking rapid improvements in safety, punctuality, reliability, comfort and frequency of services. These are all desirable objectives but we believe are not all necessarily achievable given the current state of the network.

  It is of course acknowledged that the rail network is suffering from decades of under investment and the situation has further deteriorated following the poor stewardship of the network since privatisation. RMT believe that significant improvements in safety and reliability of services can only be achieved through sustained long-term investment in the network. Indeed concentrating too heavily upon running more services to tighter timetables is not necessarily the right objective for the industry at the present time.

  Investment to improve services in the long term is the priority. Whilst disruptions to services should be kept to a minimum RMT believe this may be inevitable if long-term network benefits are to be secured. At the current time the existing network is struggling to cope with even the existing number of services.

  In our last submission to the Committee we stated that the current unwieldy regulatory system was completely unsatisfactory. At the moment Railtrack derives the overwhelming majority of its revenue from fixed asset charges. There is often little incentive to work with train operating companies to increase the capacity on the network. Indeed in order to boost profits Railtrack has in the past strived to reduce costs in maintaining the network. The problem with this is of course that they are custodians of a public service.

  The company have been guilty of presiding over a deteriorating network and not effectively managing maintenance and renewal work. The tragic consequences of this were witnessed at Hatfield. RMT believe that the industry cannot continue in its present form. As the committee recommended earlier this year there must be greater public control of the network provider so that the desire to increase profitability can no longer impinge upon the safety of the network.

  However RMT do have sympathy with Railtrack in respect of the pressures that are brought to bear upon the company for reducing train delays. It is recognised that train operating companies wish to ensure that they meet performance targets and generate additional revenue by running their passenger services as reliably as possible. Consequently a complicated set of contracts has been set up governing the conditions relating to Railtrack gaining possession of the track for renewal and maintenance.

  As RMT reported in last year's submission, track workers were experiencing greater difficulty in securing safe access to the railway for maintenance. Consequently work was being undertaken under more dangerous conditions, that is "red zone" working whereby a "lookout" was required to warn fellow workers of oncoming trains. Needless to say this problem has not gone away. In July 2001 a track worker was killed whilst working under red zone conditions at Purley Oaks.

  Government has forecast rail passenger demand to increase by 34 per cent in the next decade. Greater usage of the network means more wear and tear, and therefore an even greater need to do the necessary maintenance and renewal work. There seems to be no strategy for dealing with this problem.

  We also reported that in the previous year Railtrack was fined £10m for failing to reduce train delays, whilst a fine of only £1.5m was imposed on Great Western following the Southall crash. The current regulatory system gives insufficient priority to the importance of securing a safe network.

  We would ask the committee to take careful note of these considerations when deciding what should be the priorities for the railway.

INVESTMENT, THE 10 YEAR PLAN AND THE ROLE OF RAILTRACK

  The tragedy at Hatfield and its aftermath revealed just how serious is the plight of the rail industry. RMT welcomed the 10-year plan and the associated investment planned by the Government. However the £60 billion of rail investment was based on an injection from the private sector worth £34 billion. It is now acknowledged that the private sector will not be able to deliver anything like this figure. However of even more concern is the parlous state of Railtrack who are currently eating into the funds available for rail investment from the taxpayer. We have so far seen little return for the considerable public subsidies and we see no evidence that this will change.

  Since Hatfield the Government has already forwarded Railtrack an advanced payment of £1.5 billion, and the company are now seeking a further £2 billion. RMT have grave doubts about the suitability of Railtrack to oversee the more limited role of maintaining and renewal of the network given their record so far. They certainly seem incapable of delivering any major infrastructure projects. In our last submission to the committee we made reference to the West Coast Main Line modernisation. We make no apologies for doing so again because it is by far the most significant project that they have been asked to undertake.

  Reports now advise us that the cost of the project has increased from £2.2 billion to £6.3 billion. The cost to the taxpayer will be £4 billion. In addition the first stage of the project is now unlikely to be delivered to the already revised timetable for completion of October 2002. The final cost of phase one and two is now unofficially put at £10 billion and again there seems no prospect of meeting the 2005 target date for completion of phase two without a further substantial injection of public funds.

  The outgoing Chairman of the Strategic Rail Authority has already warned that the Government's 10-year plan could not take 15 years without significant extra funding. It is apparent that additional money for investment will need to be provided, however we believe value for money will never be obtained under the current fragmented system. The enhancement projects need to be co-ordinated in a structured way so that they are planned as part of one overall strategy for the railway. According to an analysis by Roger Ford of Modern Railways investment schemes now cost between two and three times as much they did under British Rail. This is because of the need for rail companies to make profits and to pay compensation for disrupting the services of the train operators.

  If Railtrack are to retain the responsibility for maintaining the rail network, the infrastructure and renewal projects also need to be properly planned with an permanent core of workers undertaking projects under central command. The current set of competing contracts is not satisfactory and indeed the Committee recognised this during the last inquiry.

SRA LEADERSHIP OF THE INDUSTRY

  The Government have very recently published a revised set of directions and guidance for the Strategic Rail Authority. In July the Government also announced that the SRA should concentrate on improving services within existing franchises, or by negotiating two-year extensions. The early replacement of franchises should be the exception rather than the rule.

  RMT can only see logic in this decision if the intervening period is used to carry out a far-reaching review the whole industry. If as a result of this full operational and financial control can be restored to the industry then the short delay will be worthwhile. However we fear that this is not the Governments intention. This being the case we see little merit in short term improvements to services. As stated above the priority for the industry should be long-term investment. This is the only way to deliver a lasting improvement to both existing services and to generate the additional capacity that the industry so desperately needs.

  RMT intend to respond directly to the DTLR in respect of the SRA draft directions and guidance. However we will make brief comments in this section. First of all the plan makes reference for the need to provide clear strategic direction to the railways. The fact that no comprehensive plan has yet been produced is a matter of real concern. We note that this is now timetabled for November 2001.

  The Directions and Guidance also makes reference to the targets outlined in the 10-year plan. We believe that all of these are no longer achievable without significant Government investment over and above that already announced in the 10-year plan. There is no reference to new investment in the document. There are many references to the need to achieve value for money but hardly any reference to enhancement of the existing railway. As we have already stated the Government will not achieve value for money under the current fragmented railway system in the UK.

  RMT believe that more detail should be given regarding the wider social objectives of the railway. For example travel for all age ranges and social groups should be facilitated, and the argument for increasing rail capacity on the basis of social inclusion and environmental benefit also needs to be made.

  There is insufficient detail on how the industry may be made to work together more effectively. The current structure of the industry works against cross industry co-operation, for example there are no surplus drivers that can be utilised to prevent the cancellation of train services due to staff shortages. This has happened on several occasions, most recently with Arrivia Trains.

  RMT have noted with concern the section on fares. In considering the caps on fares the Government have placed the emphasis on covering the costs through increased fares, or by increasing the cost of travelling at peak times thereby redistributing peak demand. We do not believe that pricing passengers off the railways at the times they wish to use the trains is a serious way of tackling current difficulties. The SRA should be encouraging more, not less people, to use the railway. Recent figures have shown that for every pound of subsidy the Government puts in, the passenger contributes more than double. In 1999-2000 passengers paid £3.3 billion whilst the Government spent £1.4 billion. The passenger already contributes enough revenue to the railway.

  Finally the SRA should have a duty to consult all interested parties within the industry, not least of course the trade unions representing the staff. We will make more reference to staff issues in the next section on industrial relations.

INDUSTRIAL RELATIONS

  Industrial relations are not as harmonious as they should be on the railway. Railway staff continually make representations to the RMT about how the industry no longer works as a cohesive unit. They are no longer part of an industry working together but instead an employee of a particular company.

  Many rail workers jobs are dependent on re-tendering or refranchising. A possible career in the industry could be curtailed by being undercut through the lower pay and conditions of a competitor. Rail workers believe that employers are primarily interested in the generation of profits. Investing in staff is seen as a low priority and staff numbers are kept at the very minimum levels, often with very little regard for passenger comfort or assistance.

  The most glaring example of this is the complete absence of staff at many stations. On the trains themselves RMT members at c2c have recently felt that they have had to carry the can for safe working in the dispute over the retention of guards on trains. Fortunately other train companies have agreed with the RMT position on this matter. However it is undoubtedly the case that public pressure for a more visible staff presence has played a part in many of these decisions. Railways have a big image problem in terms of personal security. Closed circuit television cameras are no substitute for a staff presence and we are sure that many more women would use train services if they felt more secure.

  All these factors contribute to lowering morale within the industry and this can obviously cause industrial relations problems. We should also mention that as staff grapple with keeping train services running with ageing track, rolling stock and equipment the effects on services has led to rising anger among passengers. In 2000-01 assaults on railway staff increased by 22 per cent, those resulting in major injuries increased by 45 per cent.

  Finally the industry is facing an increasing problem of skills shortages that needs to be tackled. The rail companies now operating on the network have been guilty of short-term thinking. In the past apprentices and management trainees were hired on a regular basis so that the skills base was protected. There are now real shortages of staff with signalling and signal design expertise. Restrictions on the recruitment of overseas nationals have therefore been relaxed. The SRA and the DfEE are investigating this but a plan of action must be implemented quickly.

CONCLUSION

  The rail industry is suffering from a crisis in confidence. The momentum gained from the announcement of the 10-year plan has gone. Hatfield exposed the problems of a fragmented industry.

  No serious commentators seriously believe that the £60 billion of proposed investment, over half of which was meant to be funded by the private sector, can now be delivered. Railtrack is easily the most significant player in the industry and they clearly can no longer deliver their side of the bargain.

  New money is now needed, but value for money will not be obtained unless Government can actually retain greater control over the network. We are concerned that the Government show no signs of acting upon the recommendations made by the Committee earlier this year. The proposed SRA Directions and Guidance will make little impression.

  RMT believe that if Government can be brave enough to grasp the nettle and provide some clear leadership then a sense of confidence can be restored to the industry. At the current time the industry is drifting along with no overall control, either operationally or financially. Many are agreed that action needs to be taken, and the only serious argument against restructuring the industry seems to be that more upheaval would not be welcome. However the costs of keeping the status quo will be far greater in the long term.

September 2001


 
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