Submission to the Transport Select Committee Inquiry On

National Union of Rail, Maritime & Transport Workers

Submission to the Transport Select Committee Inquiry on Investing in the Railway Introduction

The National Union of Rail, Maritime and Transport Workers (RMT) welcome the opportunity to submit our views as part of TRANSCOM’s inquiry into Investing in the Railway.

The RMT is the largest of the rail unions and the only union that represents all grades of rail workers. We organise 80,000 workers who are employed across all sectors of the transport industry, rail, maritime, bus and road transport, with the exception of aviation. We negotiate on behalf of our members with over 150 employers.

Key Points

 Main features of CP5 – RMT believes previous mistakes and failures from CP3 and CP4 are being repeated. These led to a maintenance and renewals backlog which impacted on passenger service. CP5 continues a process of on going cuts and future privatisation which will further undermine safety and passenger services.

 Ensuring Network Rail delivers? – RMT opposes further privatisation and fragmentation of the network. Why are ten mini Railtracks likely to be better than one?

 Passenger Satisfaction – RMT supports more time period perceptions of performance as well as journey specific surveys and greater use of social media and electronic methods.

 Rail resilience – RMT supports the re-nationalisation of the rail network but until then, train operating companies should be obliged to produce winter and extreme weather resilience contingency plans as part of any franchise agreement with the Government.

 Balance of freight and passengers – RMT believes both are integral to the future of the industry and it is not a choice of either/ or.

 Rolling Stock - New trains should be designed to be fully staffed, including guards and on board catering facilities, and should be built in Britain.

 Electrification - RMT want to see funding to be made available to create a rolling programme of further electrification to be continued well into CP6 but not at the expense of jobs on trains.

2  Priorities for investment - RMT will continue to support all genuine long term investment in the railways as part of a strategy to bring about a modal shift from air to rail and from car to train.

1. Main features of CP5

1.1. In 2019 the annual public subsidy to Network Rail (NR) will be cut from £4 to £2 billion. How that can be done is not clear but is likely to be at the expense of standards, jobs and new technology. Network Rail Strategic Business Plan for England and Wales predicts cuts of well over 5,000 staff, 4000 of whom are signallers as they changeover from over 800 control locations to just 14 Operating Centres. With losses of 1,000+ maintenance staff RMT notes with concern Network Rails own admission that “It is critical that we do not set targets to simply reduce headcount in order to achieve cost savings…. We are concerned that this is likely to have implications for the effective management of the network”1

1.2. NR also started CP5 in April battling to catch up around £1bn underspent across CP4. The ORR in 2013 criticised Network Rail for taking a ‘find and fix’ approach to maintenance and renewal rather than adopting a ‘predict and prevent’ culture. RMT believe the bonus culture which the ORR imposes on Network Rail incentivises the company not to spend its full allocation of funding, due to the so- called “financial value added” being used to calculate bonuses. RMT believes that this scheme contributed to very significant underspends during CP4. Furthermore the transition between CP3 and CP4 saw a 25% reduction in track renewals and tamping shifts which was subsequently backloaded, leading to a reduction in staffing levels and increased casualisation.

1.3. Our experience from CP4 has shown us that budgets were driven by assumptions which did not necessarily materialise. For example, efficiencies from the introduction of new technology had clearly been budgeted for despite the technology not having been fully introduced. Consequently staffing levels and other budget areas were affected where the budget has been mismatched without

1 http://www.networkrail.co.uk/publications/strategic-business-plan-for-cp5/ page 76

3 an accurate timeline. RMT continues to believe that measures to introduce efficiency (i.e. new technology) must be implemented prior to being considered as reason for a reduction in the current budgets and should supplement and not replace the work of NR staff.

1.4. We are concerned about ORR’s motivation in placing NR in a permanent position of cost cutting, and not providing any evidence as to the implications of this on the safety of the public or workforce. Furthermore, value for money has not been considered outside of the parameters of what is clearly a failed model of running a railway in the eyes of a public who overwhelmingly support nationalising the railways.

1.5. The next five years for the railway will therefore prove to be critical. It faces a challenge to respond to rising passenger demand and expectations as well as the need to grow and expand the network while at the same time cutting costs but maintaining safety standards, improving performance, and delivering on important and necessary investment projects from which substantial social and economic benefits flow.

1.6. The determination therefore must be to help Network Rail and our railway as a whole succeed and deliver what’s needed by passengers, freight users and the taxpayer. To persist with a model of running a railway that has failed in the public’s mind and which is seen by many as a serial shambles designed to create artificial profits for the franchise holders, at the expense of the taxpayer, is not sustainable

1.7. The basic problem continues to be that there is not enough money in ticket sales, so the tax payer is putting nearly £10 billion a year in cash subsidy and bond guarantees to cover operating costs, debt interest and capital investment requirements; while Network Rail has accumulated £32.9 billion of debt for which the taxpayer is liable. Train Operating Companies make profits only because since 2002 Network Rail runs the infrastructure with a public subsidy of around £4

2 billion a year as shown in the ORR financial info graphic referenced below . The

2 http://orr.gov.uk/__data/assets/pdf_file/0020/11945/gb-financial-infographic-2012-13.pdf

4 charade of privatisation being hailed as a success is only possible because the TOC’s are able to present themselves as self reliant profit earners, as a result of this undeclared subsidy from the taxpayer who pays the network grant in lieu of track access charges. ORR recently acknowledged that “The current £4 billion Network Grant received by Network Rail from government covers a large part of the costs of the infrastructure that TOCS use, and so TOCS are currently insulated from the true costs of the network”3

1.8. Industry revenues are still much lower than costs and direct public funding still makes up around one-third of the industry’s income. That will continue and ORR whilst recognising that it will depend on direct government support, ducks the question of sustainability simply adding that “the burden on future generations to pay for the costs of historic investment will continue to rise as Network Rails debt grows to fund further investment” 4

2. Ensuring Network Rail delivers?

2.1. The favoured answer to this continuing conundrum is seen by the ORR and NR as more innovation in different models for maintaining and operating rail infrastructure, building on recent ‘Alliance’ experiences like the Wessex one between NR and South West trains. NR say they are “investigating the possibilities of letting an infrastructure concession to manage part of our network while retaining a focus on the network through improvement of our system operator activities. Clearly this would be a major change and all concerned would need to be assured that any incremental benefits are sufficiently worthwhile”5.

2.2. But is this a sensible strategy for our railways. The issue of aligning the incentives applicable to TOCs and Network Rail in the maintenance of our infrastructure proved a disaster during the era of Railtrack. Why are ten mini Railtrack’s across

3 http://orr.gov.uk/publications/policies-and-statements/opportunities-and-challenges-for-the-railway- orrs-long-term-regulatory-statement

4 ibid

5 http://www.networkrail.co.uk/publications/strategic-business-plan-for-cp5/

5 the ten routes likely to be any more effective? After the Ladbroke Grove disaster it became clear that profit making and rail maintenance are a potentially lethal combination. RMT is extremely concerned that financial incentives are again creeping back into this safety critical area of the industry.

2.3. We do not want to see the loss of a publicly owned and accountable body to a multitude of unaccountable alliances. Nor do we want the privatisation of Network Rail through the letting of infrastructure management concessions to private providers. To be even considering this after the proven benefits of bringing delivery back in-house, where Network Rail made savings of £400m following the in-sourcing of its maintenance workforce is shameful. With NR re-designated as a public body from September what is to stop the historic debt being written off (as in the case of Royal Mail pensions) before ultimately privatising all of the ‘alliance’ arrangements, including operations and maintenance.

2.4. It is clear ORR believes that customers will be better served if TOCS and FOCS are able to have a more normal customer/client relationship with Network Rail, where the majority of Network Rail’s costs are met from income generated by selling their services to the operating companies. “This could allow remaining public funding to be more transparent and targeted in return for providing specific services which would otherwise be uneconomic to run”6. RMT believes this is a flawed model, a recipe for more privatisation and one designed to bring about further cuts and loss of capacity in the network and not increase it, or only at the expense of lines deemed not profitable.

3. Passenger Satisfaction

3.1. Passenger satisfaction is expected to increase during CP5 but RMT is increasingly concerned at how this is measured given the discrepancy that exists between the two main surveys currently carried out by Passenger Focus (PF) and the consumers’ association Which?

3.2. PF seeks passengers’ views on the quality of their journeys on an actual day, whilst Which? asks rail users from its membership to consider recent journeys over the last year. PF’s survey of 30,000 passengers was published in January and

6ibid 4.17

6 showed the percentage of passengers satisfied with their journey overall was 83 per cent. Overall satisfaction by TOC varied between 76% and 96%.

3.3. The survey in February by Which? of 7,400 regular rail users found that more than half of the UK's TOCs had a customer satisfaction rating of 50% or lower. Which? Executive director, Richard Lloyd said: 'It’s disappointing to see some train companies consistently falling down on the basics of customer service, with dirty and overcrowded carriages and toilets that don’t work”.

3.4. The Which? survey’s primary objective was to gauge passengers' overall perceptions of the TOCs over the last year, while the PF is intended to provide much more specific feedback on individual routes and times to help companies improve customer experiences in particular problem areas. Despite their different approaches, the two surveys do find common ground - the ranking of TOCs is largely similar, and both identify problems with value for money and commuter services.

3.5. RMT would like to see PF ask similar time dated questions about overall TOC performance. RMT believes that the impact of social media should be looked at and highlights the opportunities available through electronic surveys or twitter analysis.

3.6. This is important for the RMT because the rail-travelling public deserve either positive or negative headlines to be presented in proper context. Simply perpetuating sunshine stories about TOC success will not suffice for accountable and transparent research, nor help our hard pressed members who have to deliver the services.

4. Preserving the resilience of the energy supply in winter weather

4.1. RMT support the long term move towards overhead wiring and electrification of the national rail network as a way to improve the overall resilience of rail. We note that the Government and Network Rail have made some progress in improving the insulation of ground level third rail energy distributors, but this is too slow. We need robust physical and procedural frameworks to dramatically improve the resilience of the transport network as a whole to ensure the budget is not vulnerable to cuts in an era of political hostility toward state planning and

7 provision.

4.2. As noted previously ORR cuts in budget to CP5 reduce the overall available funds and when resilience is difficult to identify as a specific budget stream, it is likely to suffer from further reductions.

4.3. RMT believe that ITTs are too vague in the area of resilience in order to deliver a national, co-ordinated strategy for winter and other averse or extreme weather. They should contain prescriptive reference to what the bidding train operating companies are legally required to provide and subjected to analysis by the government to ensure that they comply with the logistical aims of a nationally co- ordinated strategy.

5. Balance between Passengers and Freight

5.1. With 1.6 billion passengers using trains last year and journey numbers having doubled since 1994/95, freight traffic has also increased by 60%; and that growth is projected to be to be 14% for passengers and 22% for freight between 2014 and 2019. The overall increase in rail usage has led to the contemporary rail paradox – rail is attracting more and more passengers, even while fares are continuing to rise and in a tough economic climate; yet the pressure is on to take costs out of the rail network while managing this growth in demand.

5.2. RMT is concerned that politicians want NR to reduce its costs and to generate efficiencies and they are also refusing to stop fares from increasing until the industry has got on top of its cost issues. Railways cannot simply be treated as something needing to pay its way or else be cut; it has to be understood that it adds value to all of society, directly and indirectly, environmentally and socially and therefore must be supported by the taxpayer rather than solely relying on fare revenue. RMT welcomes that ORR has capped the proposed increases in Freight charges below that initially intended, however, the fact remains that there has still been a shift away from charging marginal costs and towards increasing charges overall. We believe both passenger services and freight investment are not an either or decision. Both are vital for the long term sustainable growth of society.

8 6. Rolling Stock

6.1. Whilst the current long term strategy for overall rolling stock requirements is ambitious (an increase in fleet size of 53-99% over 30 years) RMT believes it should stipulate that new trains will be designed to be fully staffed, including guards and on board catering facilities, and should be built in Britain.

6.2. The government has an opportunity to bolster Britain’s train-making skills and industry by ensuring that all new trains are built here using the wealth of engineering skills that still exist. We believe that like other countries in Europe who continue to protect their own manufacturing industries, Britain should adopt a procurement policy that safeguards jobs and train-building capacity.

6.3. The rolling stock strategy clearly depends upon assumptions about continued electrification beyond CP5. Whilst we very much welcome a commitment by government and all sides of the rail industry to continuing electrification, experience suggests that it would be wise to be cautious about the pace of its delivery.

7. Rail Electrification

7.1. RMT believes that the electrification of trains is not only better for the environment, but they are quieter, cheaper, smoother and faster for passengers while causing less wear and tear to the track. Further electrification will also help open up more diversionary routes, helping keep people on trains and off buses as planned rail improvement work is carried out. Electric trains also provide more seats than diesel trains increasing overall capacity, while electric freight locomotives can haul longer trains.

7.2. However electrification should not be an excuse for more job cuts and RMT will continue to defend the safety-critical role of the guards/conductors on trains, who are not only essential to the efficient running of services but who are also trained to deal with safety on board and in the event of an emergency.

7.3. RMT want to see guaranteed dedicated funding to be made available to create a rolling programme of further electrification to be continued well into CP6 so that

9 there are no arguments about funding as currently is taking place in Wales, and no lack of momentum as projects complete towards the end of CP5, in 2019.

8. Future investment

8.1. RMT will continue to support long term investment in the railways as part of a strategy to bring about a modal shift from air to rail and from car to train. An increase in rail capacity is clearly linked to a decrease in car journeys undertaken with the result that there is less carbon emissions. All decisions should be taken to ensure delivery of these outcomes.

9. Conclusion

9.1. RMT remains concerned that ORR and Network Rail continue to get their sums and overall approach wrong. Over the last three Control periods huge government investment masks savage workforce cuts and the on going fragmentation and future privatisation of the industry continues apace. Miscalculation and ill conceived policy has meant massive underspends and maintenance and renewal backlogs. This has not only impacted on passenger services but also resulted in the loss of thousands of skilled rail workers.

9.2. We are concerned that there is no genuine cross industry co-ordination. Whilst NR state publicly “Our approach is to work collaboratively with the trade unions in transforming our people capability…. Fostering open relationships based on trust and mutual understanding of priorities, constructive dialogue, and combined action planning is the spirit behind the creation of our working relationships…” there is no five way (NR/TOCS/ ORR/ Gov / TU) body established to ensure the effective national coordination and oversight of our Railways and the maintaining of public safety and standards. Such a body should be established as a priority.