‘Back to the bad old days’: senseless rail cuts sounded the alarm

‘Back to the bad old days’: senseless rail cuts sounded the alarm

TRain operators have been urged to find ways to cut the costs of operating the railway by hundreds of millions of pounds over the next year, which will likely lead to fewer services and worse stations for passengers.

The transport ministry is looking to cut spending by 10% after Chancellor Rishi Sunak’s fall budget.

With the Treasury keen to curb rail spending, which has increased dramatically during the pandemic, letters from DfT’s director general of passenger services, Peter Wilkinson, have been sent to individual operators exposing the drastic cuts needed in the industry.

While rail operators expected cuts – the Williams-Shapps plan for rail, which was released in May, set a target of saving £ 1.5bn over the next five years – the immediacy and scale of financial demands were a surprise. Government sources said there were no final decisions and denied that individual operators were asked to cut spending by 10% or more.

Operators have been under direct contract with the government since the abolition of the franchise at the start of the pandemic in March 2020. Under emergency take-back contracts, they receive a fixed fee to provide services with the risk of income and costs taken by the government.

Even though, as DfT sources suggest, the last call to the economy is a “routine business planning process” to maintain efficiency and reduce costs for taxpayers, alarm bells are ringing in the door. industry. While the effects of the pandemic on train travel habits and income are clear to all, a division has grown between those who believe it is essential to maintain services and lower fares to attract passengers. and those who focus on reducing costs and maximizing current revenues.

According to figures released by the Office of Rail and Road on Wednesday, the Treasury spent an additional £ 6.5 billion on the operation of the railway in 2020-2021, to cover lost revenue as the number of passengers fell 78% overall.

The shortfall will be significantly smaller this fiscal year, as weekly rail demand has steadily increased to around 70% of pre-Covid levels in November – although the discovery of the Omicron variant and the reintroduction of mandatory mask wear are expected to decrease. numbers. Preliminary figures from the DfT showed a 10% drop in train travel last Monday, although the impact of storms would have played a role.

A Scotrail train at Corrour on its way from Glasgow to Mallaig on the West Highland line. Photographie : Iain Masterton/Alamy

In October, rail operators announced a voluntary severance package in an attempt to reduce personnel costs. However, further budget constraints could lead to mandatory job cuts, as most fixed rail costs, such as rolling stock and track access charges, cannot be reduced quickly.

Operators fear the reputational damage and financial blow associated with dealing with the decline and likely industrial action. Under the new contracts, at least 20% of the potential profit will be linked to performance measures, including customer satisfaction. One insider said, “If you set the budget at a time when customers and staff are going to be unhappy, it seems pretty hard to get those charges. ”

The forced layoffs would lead to some strike action, with even the scale of voluntary departures – several thousand people applying to Network Rail alone – have yet to be agreed after months of talks with the unions.

In the meantime, unions have braced for a battle over proposed service cuts that operators had already prepared ahead of DfT’s latest cost-cutting demands. South Western Railway, which has been hit hard by a drop in the number of daily commuters to London from the stockbroker belt, has consulted on long-term schedule reductions that will be introduced next December. A spokesperson for SWR said it would still have 93% of the pre-Covid capacity, adding that it was “appropriate and responsible for us to scale our services on demand into the new normal”.

Meanwhile, LNER, which has been run by the government’s own operator of last resort since the collapse of Virgin, has held consultations on downsizing; demonstrations against the cuts are scheduled for Monday at stations in the northeast.

Requests for savings have compounded the gloom in the industry after the north-eastern section of the HS2 and the new Leeds-Manchester line was cut last month from the government’s integrated rail plan.

The enthusiasm of parts of government for building new rail infrastructure and improving services – a key tool for both ‘leveling’ regions and decarbonizing transport – has been met with reluctance by the Treasury to spend. not anymore.

It’s a throwback to the days of British Rail when they cut services and then said no one used the trains because the service sucked

Christian Wolmar, author of the upcoming History of British Railways, argued that the £ 96 billion plan was in fact “a vote of confidence in the long-term future of the railways, however poorly sold”.

But, he said, “In the short term, they’re completely squeezed. It’s inconsistent. And this is going to have a real impact.

Schedules are likely to be fine-tuned and late-night services removed to cut costs, he predicted: “It’s a throwback to the good old days of British Rail when they cut services and then went on. said no one was using the trains because the service sucked.

“In a rational world, they would just cut off the branch lines – but they can’t do it politically because the ministers said they were overthrowing Beeching. “

Meanwhile, the depth of Treasury control also raises questions about the future plans of Great British Railways, the independent “guiding spirit” supposed to support the Williams-Shapps plan to improve the railways.

Six months after the publication, progress has been slow, and legislation is now unlikely to put a new body into effect before 2024 or 2025. Its appointed leaders – Network Rail’s chief executive, Andrew Haines, and chairman, Peter Hendy – were kept at bay as government departments fought for cuts to the integrated rail plan.

As one industry veteran put it, “Network Rail can’t paint a station fence without asking the Treasury now. “

Industry leaders and unions believe the Treasury wants to target working conditions. According to a senior railway official: “The most important thing is workplace reform, they think productivity is low. “

Mick Lynch, the secretary general of the RMT, sees it as “a cynical exploitation of the Covid crisis”, at a time when the government has been touting the value of rail as a green mode of transport and a means of leveling up. “What they really want to do is cut down on the existing workforce and start rehire on lower terms when demand returns,” he said.

Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

A DfT spokesperson said it was “patently false” to suggest the government was making cuts to the railroad, given current levels of investment, the £ 96bn rail plan and the restoration of lines such as Okehampton.

They added: “With the number of passengers dropping significantly, it would be unwise and irresponsible not to ensure that the railway is more efficient and reduces its costs to the taxpayer.

“As taxpayers would expect, we have asked operators to deliver credible and sustainable business plans that ensure taxpayer dollars are used efficiently, to provide exceptional services, promote recovery to restore balance financial support and guarantee a bright future for the railway. ”


Please enter your comment!
Please enter your name here