National Union of Rail, Maritime & Transport Workers

National Union of Rail, Maritime & Transport Workers

Response to the

DfT & Rail North Transpennine Express Rail Franchise and Northern Rail Franchise Stakeholder Consultation

Introduction

The National Union of Rail, Maritime and Transport Workers (RMT) welcomes the opportunity to respond to the DfT & Rail North Transpennine Express Rail Franchise and Northern Rail Franchise Stakeholder Consultation.

The RMT is the largest of the rail unions and organises 80,000 members across all sectors of the transport industry. We negotiate on behalf of our members with some 150 employers.

Consultation

RMT has major concerns as to the manner in which the Future of Northern and TransPennine Express rail franchises consultation is being undertaken.

Firstly, RMT is concerned that the time period of the consultation is shorter than that recommended by the Cabinet Office at just 10 weeks (9 June – 18 August):

“Where it is appropriate, and enables meaningful engagement, conduct 12-week formal written consultations, with clear explanations and rationale for shorter time-frames or a more informal approach.” The Compact (Cabinet Office 2010) para 2.4.

Secondly, RMT believes that the process does not take adequate account of the holiday period. Again, the Government’s own Consultation Principles state:

Timeframes for consultation should be proportionate and realistic to allow stakeholders sufficient time to provide a considered response and where the consultation spans all or part of a holiday period policy makers should consider what if any impact there may be and take appropriate mitigating action.

The Summer Holiday period is assumed to be 4.2 weeks, which by any reasonably judgement would be 4.2 weeks contained within the proposed 10 week period.

It should be further noted that the Parliamentary recess begins on 22 July, and so for almost 4 weeks of the consultation period Parliament is not sitting.

Finally, RMT believes that small charities and other more vulnerable organisations will be affected by the proposals including passenger groups and transport charities such as the Campaign for Better Transport. We believe that the proposed timescale does not respect the principles of the Compact between government and the voluntary and community sector.

On that basis we request that the consultation be withdrawn and re-issued with an appropriate timescale.

The importance of our railways in the North

Railways perform numerous important economic and social functions with minimal long-term environmental impact. The benefits that railways provide are vital to a region’s prosperity – this is especially so in the North, due to geographical barriers and a population dispersed across numerous cities.

The existing Northern Rail and TransPennine Express franchise operators have feasted on government subsidy and revenues derived from a captive population of over 15 million people. But predictably, profit extraction has been the focus of the operators and investment has been deferred – to the point where substantial overcrowding is occurring across the network.

Consideration of bids to be the new franchise operators should have provided the government with a golden opportunity to ensure that all routes were properly served, something that the government admits in another context (eg its argument in favour of HS2) underpins a region realising its full potential. Unfortunately this is not what is occurring.

Devolution

RMT support the fullest possible consultation and involvement of local authorities in assessing the transport needs of the local area. Genuine consultation would allow local factors to be considered without requiring fragmentation. RMT believes that the Government is emphasising local passenger demand levels with a view to prioritising particular services and routes and allowing the creation of a two-tier rail network. It is an attempt to adopt a dual focus approach to the main franchises which will see the introduction of different levels of specification and regulation of what it considers to be economically viable (profitable) or socially necessary (not profitable) routes. Essentially this means shifting most of the responsibility for the socially necessary routes from the train operator onto the taxpayer and passenger, leaving the franchisees with the most profitable routes to exploit.

On this basis, RMT does not support the development of Community Rail.

Rail North

The extent of involvement from Rail North in the production of the consultation document is unclear.

It is even less clear whether Rail North consulted the local authorities before producing proposals and or whether councillors on these local authorities have any idea that Rail North are proposing massive service cuts and jobs losses in their name. Even the governance structure of Rail North is uncertain, making it difficult to assess the proposals in the consultation, or their viability. Certainly RMT is not aware that the local authorities have any mandate for these cuts which raises concerns about the transparency and accountability of the organisation.

Within the context of a unified national railway, RMT supports the fullest possible involvement of local authorities in the specification and delivery of rail services and we opposed the removal of powers from Passenger Transport Executives in the 2005 Rail Act. It has, however, proven impossible to engage with Rail North to discuss their proposals and this lack of discussion with stakeholders represents an alarming start to rail devolution.

RMT notes that written answers have been received through Parliament which clearly show that Rail North is embedded in the Department for Transport, which in itself makes a mockery of devolution:

First Transpennine Express and Northern Rail

Lisa Nandy: To ask the Secretary of State for Transport whether the local transport authorities which form Rail North and are jointly responsible for the (a) TransPennine Express and (b) Northern Rail franchises will have the freedom to specify (i) staffing levels, (ii) ticket office hours and (iii) driver-only specification of new rolling stock in the new franchise bids for each line. [204185]
14 July 2014 : Column 563W
Stephen Hammond: The Department for Transport is currently conducting a joint public consultation with Rail North which will inform the specifications for both the Northern and TransPennine Express franchises; no decisions have yet been taken. While the Secretary of State will make the final decisions on the franchise specifications, Rail North authorities are very involved in this process, including having representatives working within the Department for Transport teams. We expect, however, that for both franchises: (i) staffing levels will be left for bidders to propose; (ii) under the current policy bidders are free to propose changes to ticket office hours, but any change could only take place following further public consultation; and (iii) Specification of Driver Only Operation is being considered for the Northern franchise but we expect to leave this free for bidders to propose on the TransPennine Express franchise.

Value for Money

RMT does not agree with the objectives for the franchises as they do not address the key issues affecting the industry, and will lead to less integration, more fragmentation and a lower standard of service across the franchise areas.

RMT does not agree with the arguments for efficiency set out in the consultation document. Most specifically RMT objects to the proposals to introduce permanent austerity into the rail industry by demanding constant reductions in unit costs as opposed to challenging the leakages from the industry caused by dividends and fragmentation.

RMT believes that real value for money and efficiency can be delivered through recognising that Value for Money must include the cost and benefits to society as a whole and that the railways have clearly defined economic, social and environmental objectives.

If passengers are forced to pay even more for fares and see capacity improvements delayed then the railways will be less successful in achieving their objectives and delivering Value for Money to society as a whole.

European Railways are on the whole integrated and benefit from far more unified and accountable decision making structures. This in turn has made them more likely to successfully deliver economic, social and environmental objectives. The structure of railways in Europe and the fact that they are run primarily on a not for dividend basis means that they have not suffered the same cash leakages as the UKs railways. A conservative estimate is that this cash leakage has been £10bn since privatisation.

The railways would be more efficient if they were re-nationalised, re-integrated and publicly accountable. In the interim, however, passengers, workers and the very fabric of the industry should not be made to pay for the banking crisis, the franchising fiasco or indeed the avarice and short termism of the privatised rail industry. Instead revenues should be raised by a freeze on dividends and a windfall tax on profits previously enjoyed.

The threat to rail jobs and services

The consultation document includes many direct attacks on rail services, including:

·  The threat to only introduce new rolling stock in return for cutting services to customers. This “one or the other” trade off is divisive and cannot meet the needs of all communities

·  Bidders must introduce Driver Only Operation on the Northern franchise and will be encouraged to do so on the TransPennine Express franchise

·  Closing ticket offices and reducing ticket office opening times

·  Encouraging “local delivery models” and community rail (especially in the North East of the Northern franchise)

·  Further increasing fares, even though UK rail fares are already the most expensive in Europe

·  Cutting or leaving services at the discretion of operators through promoting third party funding of services or, for example, not specifying a timetable for TPE, and

·  Transferring some services between TPE, Northern and East Midlands Trains.

Service Specification

RMT believes that the maximum level of contract specification should be used for the new franchises on the basis that this would prevent the franchisees from sweating the assets and reducing services to increase profit.

It is the view of RMT that whatever balance is struck between end-to-end journey times and intermediate stops on long distance services this should not lead to any reduction in the number of services through the shortening of services and the introduction of more interchanges. This requires the highest possible level of contract specification.

RMT believes that any suggestions for train services should be considered as suggestions for additional services to those already operated on the franchise. Services should be determined based on their economic and social value, and ultimately passenger need, not on cherry-picking by private train operators. Again this necessitates the highest level of service specification possible to be contained within the ITTs and ultimately the franchise agreements.

RMT believes that all current services should be maintained and fully specified within the franchise agreements.

RMT considers that there are serious issues with the proposals including, for example, transferring Transpennine Express services to Northern between Blackpool and Manchester Airport, Cleethorpes and Manchester Airport, Barrow and Manchester Airport and Scarborough and Manchester Airport. The Transpennine Express is an intercity operator and the loss of these services would be detrimental to the communities they serve, and have a seriously negative impact on the economy of the North. Furthermore, these are tourist routes so it will be highly detrimental to that industry. This proposal also break a key connection link between these important locations and reduce through travel across the North.

More fragmentation

RMT notes that the Government is proposing to increase the fragmentation and complexity of the franchise. The proposals to subdivide the franchises in terms of routes, fares, what is economically viable (profitable) and what is socially necessary (not profitable) will be disastrous for the railway.

RMT maintains that the franchises should not be subject to fragmentation, and instead the Government should be considering its options for increasing integration of operations across the industry.

So-called Trade Offs

The consultation tells passengers and communities that they must choose between maintaining services on less busy routes or gaining new rolling stock and services on busier routes. The proposals for ‘trade-offs’ in the consultation document mean less busy routes and stations will have services reduced to help pay for more services and new rolling stock on lines which are currently more in demand.

Basic railway knowledge tells us that this approach is self-fulfilling – the worse a service is (eg less frequent) the less it is used. This downward spiral is compounded by the minimal service specification proposed (including not specifying a timetable for TPE) which will also encourage operators to cherry picket the more profitable routes.

Staffing

RMT argues that increasing staffing levels is the most effective way of improving security and safety on the rail network, and has consistently provided evidence to that effect.

McNulty claims that rail workers should lose their jobs and have worse pay and conditions because he says there has been a 50% increase in staff costs since privatisation. This claim is riddled with inaccuracies and misinformation.

• McNulty ignores the fact that due to economic growth over most of the period of the study passenger journeys have gone up by 59%, passenger kms by 50% and passenger revenues per member of staff by 56%. So staff productivity has more than offset increases in staff costs.

• McNulty is guilty of even more blatant misinformation by choosing to remove figures from the summary report provided to the media and politicians which shows that UK rail workers are actually ranked highly amongst the most productive of all European countries.

• The report also falsely states “working practices and agreements within the industry have not undergone any significant changes for many years if not decades” when the reality is nearly every grade on the railway has undertaken a restructuring in terms and conditions.

• McNulty omits to mention that unit wage costs (workers pay per output) for the railway have actually risen at a slower rate than unit wage costs in the whole economy.

• It is therefore not surprising that in a letter to the TUC dated 10 May 2011 McNulty was forced to admit that “there is no strong correlation between staff costs in the rail industry and public subsidy”. It is also not surprising that this admission did not find its way into the final McNulty report.

• Costs that have increased are the thousands of highly paid lawyers and consultants arguing over the multitude of contracts that exist between hundreds of different competing companies. An example of this costly bureaucracy is Network Rail employing 600 lawyers on the books doing nothing other than negotiating with the train operators on who is responsible for delays and assorted service failures.