Rail minister Huw Merriman will meet union leaders together with Mick Lynch of the RMT on Monday after three weeks of unseasonal disruption left the 2 sides apparently as far aside as ever.
While each say they’re prepared to speak, unions stay dedicated to additional strikes if required and the federal government is legislating to restrict industrial motion, an inauspicious background to the primary direct talks between ministers and managers since November.
Ultimately, progress will rely on concessions on each side, however at its coronary heart are monetary issues which have modified radically within the three years since COVID-19.
These modifications, pushed by necessity and authorities technique, have essentially altered the incentives for the constituent components of the fiendishly complicated rail community to do a deal.
Understanding these modifications might assist clarify why a dispute that started in excessive summer time appears no nearer to decision within the depths of the next winter.
The pandemic has dramatically and maybe completely modified the monetary mannequin. In 2019-20, the final full yr earlier than COVID struck, there have been 1.74 billion passenger journeys producing £10.4bn in fares. Government subsidy amounted to £6.5bn.
The following yr COVID lockdowns and dealing from dwelling noticed the place flip, with a meagre 388 million passenger journeys producing simply £1.8bn in fares, and authorities help to maintain the wheels turning rising to £16.5bn.
Even within the yr to March 2022, with the pandemic in abeyance and restoration underneath approach, there have been fewer than a billion journeys, fares income was nonetheless under £6bn, and the federal government was placing in £13.3bn, greater than double the pre-COVID price to taxpayers.
So when Network Rail says the railways not have the income to satisfy inflation-matching wage calls for they’re a minimum of half proper.
Passenger fares income has plummeted.
Yet the newest pay gives, of 5% plus 4% over two years from Network Rail, and 4% plus 4% from the practice operators, are under the 5.9% fare rise that may apply from March.
But there may be one other equally essential change underlying this dispute; the place that income goes.
Revenue threat from practice operators eliminated
In response to the pandemic the federal government tore up franchise agreements with privately owned practice operators and changed them with service contracts, eradicating at a stroke the income threat from practice operators.
Instead of fares going to coach operators who paid assured income to the federal government, fares now go on to the Department for Transport, which pays the operator to run providers.
Crucially although, the practice operators nonetheless receives a commission when staff are on strike, receiving compensation for misplaced income of £20m-£25m a day. The RMT claims that provides as much as £340m paid by the federal government to non-public corporations because the dispute started.
The Department of Transport wouldn’t present a determine for whole compensation paid however did say: “We do not tend to penalise the train operators for failing to run a full service on a strike day given it’s not the train operators who have opted to strike.”
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A modified calculation for Network Rail
While the brand new contracts have decreased the inducement for practice corporations to do a deal by eradicating their threat, the restructuring has additionally modified the calculation for Network Rail, concerned in its personal dispute with the RMT.
Under the outdated franchise system, if trains couldn’t run as a result of Network Rail signalling and station employees have been on strike, it compensated the operators for misplaced fares.
That meant that for practice operators, Network Rail and the unions there was a fundamental calculation when contemplating a pay deal.
If the pay demand from staff was cheaper in the long term than the misplaced income or compensation price of strike motion, a deal might, and often would, be performed.
That fundamental calculation has helped rail staff stay one of many few public sector teams whose pay has stored monitor with inflation since 2010. With revenues collapsing since COVID that stability of incentives has modified.
Cost of commercial motion
Taxpayers at the moment are those bearing the overwhelming price of commercial motion, not the employers, which means it’s ministers and the Treasury whose urge for food for monetary ache is being examined.
On the union’s facet it’s nonetheless staff who pay for strike motion in misplaced pay and their resolve will probably be weighing on the minds of bosses and ministers this weekend.
Rail staff are paid on four-week shift cycles and every of the six waves of strike motion up to now has taken place in a separate cycle limiting the lack of wages from a single wage slip.
The price is including up for RMT members even with help from strike funds that ease the blow. They have misplaced as much as 19 days pay because the first strikes in June, and a minimum of 4 days pay in every of December and January, a major hit for anybody.
As Mick Lynch considers his subsequent transfer he will probably be weighing up how far more his members can bear. They have proven exceptional solidarity because the dispute started however in a price of residing squeeze it will not be infinite.
Barriers to a deal
There are many points that would stop a deal, not least the brand new calls for to alter sure working practices unions imagine have been intentionally launched to derail progress.
The deliberate restructuring of the complete community underneath a brand new physique ‘Great British Railways’ can be muddying the waters.
Political help for the Boris Johnson-Grant Shapps reform has fluctuated with the political chaos in Downing Street, leaving the business unsure if and when everlasting change will come, and the railways successfully being run and paid for by ministers who declare to oppose nationalisation.
In the quick time period although this dispute might come all the way down to who has the upper threshold for the monetary ache: the Treasury paying a whole bunch of hundreds of thousands in compensation, or rail staff sacrificing their pay.
Source: information.sky.com”