BBC: Chris Grayling suggests future rail industry wage rises should be linked to lower CPI, not RPI

[pt_mad]

Article here, also as being featured as one of the main stories on BBC news broadcasts this morning with Chris Grayling appearing.

https://www.bbc.co.uk/news/uk-45191501 :

Quote from BBC article, linked to above:

A suggestion that rail fare and wage increases should be linked to a lower inflation measure has sparked an angry response from unions.

Transport Secretary Chris Grayling wants future increases to be based on the lower Consumer Prices Index, rather than the higher Retail Price Index.

The RMT union accused him of trying to impose a "pay cap" on its members.

It comes as the government announced that RPI now stands at 3.2%, the figure which will set fares in January.

Under the current system, July's RPI sets the maximum rise for regulated fares in January.

The CPI rose to 2.5% in July from 2.4% in June - the first increase since November 2017.

How would Chris Grayling's proposal have affected annual season ticket costs in January 2018?
A Brighton to London ticket would have been £39 cheaper (£4,293 instead of £4,332)

Gloucester to Birmingham: £37 cheaper (£4,071 instead of £4,108)

Woking to London: £30 cheaper (£3,218 instead of £3,248)

Liverpool to Manchester: £29 cheaper (£3,123 instead of £3,152)

Maidenhead to London: £26 cheaper (£3,066 instead of £3,092)

Mr Grayling said he wanted to see "lower levels of increases for passengers in future".

He also said that - if a lower measure of inflation is used to calculate ticket price increases - then it should be used for costs, including annual pay rises.

Mr Grayling told the BBC the lower inflation measure was "used by pretty much the whole of the rest of the public sector and much of the rest of our economy".

He said he was "very disappointed" by the unions' immediate reaction.

He acknowledged that - due to existing pay deals for rail workers - any changes would "not happen overnight".

Bank of England governor Mark Carney recently argued that the index had "no merit".

Article continues........


What could the potential implications of this be if this suggestion is serious and if he intends to try and roll it out to the private train operators and/or Network rail etc?

 

[dctraindriver]

Article here, also as being featured as one of the main stories on BBC news broadcasts this morning with Chris Grayling appearing.

https://www.bbc.co.uk/news/uk-45191501 :


Article continues........


What could the potential implications of this be if this suggestion is serious and if he intends to try and roll it out to the private train operators and/or Network rail etc?

Well it will save an utter fortune, about £30 a year on a season ticket. Blokes a total twonk, appears blaming the staff for the high cost of fairs is the latest deflection tactic.....

 

[Jonfun]

Well, for a start the profit forecasts will be straight out the window which will probably mean at least one TOC going back to the DfT explaining they can't pay what they committed to because revenue isn't as high as expected.

 

[Bantamzen]

Well it will save an utter fortune, about £30 a year on a season ticket. Blokes a total twonk, appears blaming the staff for the high cost of fairs is the latest deflection tactic.....

Its quite normal for government to seek the easiest route to drive down wages. In parts of the public sector CPI has been used for years, then with additional pay caps when CPI rates don't suit.......

 

[whoosh]

He has no business in interferring with private sector pay.

Pay rises are negotiable, and often contain productivity changes to term and conditions - they often aren't straight "no strings" rises.

 

[Darandio]

A thread was started last night here.

 

[Chester1]

I think we might be approaching the point where the government is prepared to alter premium and subsidies to link fare rises to CPI, at least until after the (theoretical) date of the next general election in June 2022. The backlash to last years fare rise was much more severe than ussual and will be bigger this year.

 

[dctraindriver]

Its quite normal for government to seek the easiest route to drive down wages. In parts of the public sector CPI has been used for years, then with additional pay caps when CPI rates don't suit.......

Precisely. Although the public sector had no pay rise in essence for years. Disgraceful how they’ve been treated by this govt.

 

[TPO]

Presumably he will apply the same reasoning to (a) his own salary (b) the salaries of the senior "policy advisors" and senior managers and the like in his dept and (c) his junior ministers ?

Will we also see the same limitations being made on the pay of rail industry top management (anoter article out today puts top management/Board level pay increases across all industries at 11%)? Of MPs and govt ministers?

Of course one of the reasons rail fares have gone up is decreasing "subsidy" to the industry......

I also heard comments on a radio news article along the lines "why should we pay rail subsidy when I don't use the trains?" Soooooo....... on that basis....... can I not have to pay for schools or maternity care as I don't have kids and so don't use the schools? Can I have a rebate on defence spending? I don't support nuclear weapons and would never agree to their use- so I want not to pay towards that.

It's a pity the RDG is so supine as there's a really important case to be made for direct funding of rail as a key public service..... not just for passengers but for freight too. But no, the govt instead continues it's dog-whistle summer politics by having a pop at the front-line staff who do their best ot make things work in spite of all the managerial/govt mistakes and bad policies over the years.......

TPO

 

[nellystew]

My company (non-rail business) deceided to tie payrise to CPI in 2014, their justification at the time was so wages would always increase in line with prices (although at the lower rate).

I'm sure that the CPI rate at the time was 0.5% had nothing to do with it................

 

[DynamicSpirit]

I wonder when Grayling is going to suggest that fuel duties should only increase at CPI not RPI so that motorists don't face such big rises in their travel costs each year.

Oh, hang on.....

 

[4-SUB 4732]

Chris Grayling is a crook...

 

[DynamicSpirit]

This article from several years ago on the Royal Statistics Society website suggests that the CPI is a more accurate measure of inflation.

a) Accuracy. It has been strongly argued that CPI is a more accurate measure – its maths is truer. It actually reflects the inflation that most people experience. The maths that works out the RPI has been described as ‘bonkers’.

b) The RPI does not meet international standards. It doesn't match what other countries do.

I don't know enough to be certain of those claims, but I'd assume something about this area on the Royal Statistics Society website should be reliable If correct, that would imply that the Government should be using CPI instead of RPI for a huge range of things - not just rail fares - and that CPI, not RPI, ought to be the basis for wage claims. I imagine that would be politically very difficult though.

 

[Gareth Marston]

Grayling's doing jack all hes rising them by RPI whilst trying to spin a line hes looking at changing it to CPI...

 

[Up_Tilt_390]

"Lower levels of increase" as Grayling puts it, does not do much for the passenger when fares are still somewhat affordable for a good amount of people. It also doesn't matter if the rest of the public sector wages stick with the lower level of inflation, cause didn't they take the train operations off the public sector in the mid-nineties? I'm just saying, Grayling isn't exactly doing us a big favour, since these cheaper tickets are still very expensive for the average passenger. Quite funny actually.

 

[Bantamzen]

I don't know enough to be certain of those claims, but I'd assume something about this area on the Royal Statistics Society website should be reliable If correct, that would imply that the Government should be using CPI instead of RPI for a huge range of things - not just rail fares - and that CPI, not RPI, ought to be the basis for wage claims. I imagine that would be politically very difficult though.

Sorry I had to chuckle at the idea of a statistical group being reliable.....

As for wage rises as I said earlier, many public sector wages are already determined by CPI now, and then when CPI is too high they use another method over the top known as ALAWPC (As Little As We Possibly Can). Thanks to these changes in methodology, my average annual increase for the last decade has been around the 0.5% mark, as low as CPI ever gets, and rarely does in reality meaning a net loss more or less year on year.

But I'm not bitter, no not me, quite happy with my lot....

 

[al78]

Can I have a rebate on defence spending? I don't support nuclear weapons and would never agree to their use- so I want not to pay towards that.
TPO

I'm not convinced that is an appropriate analogy. We all benefit from both the deterrent effect of being a country with nuclear weapons and the ability for the country to defend itself against foreign invasion. You would struggle to argue that getting rid of all the military would have no detrimental effects, either direct or through increased risk and vulnerability to the population (and you are a subset of the population). The army is also called out to assist with major natural disasters where assistance for the emergency services is required, and they have been called out in the rare case of fire service strikes.

In any case, the point is that just because any one individual doesn't see a direct tangible benefit to a service, doesn't mean that service doesn't benefit them indirectly, or should not be funded or subsidised by central government. The problem is that some people are very individualistic and egocentric, and don't look beyond their teeny tiny narrow view of the world (because that requires thinking, which is far too much effort). This is why it is very easy to frame issues in a way that will influence the population in the direction of whatever agenda a politician or media wants (e.g. Brexit and the fake immigrant problem).

 

[al78]

Sorry I had to chuckle at the idea of a statistical group being reliable.....

People who say things like that either are not competent in statistical analysis, or just have the hump because the results haven't produced the results they wanted.

 

[SPADTrap]

Essentailly what Chris Grayling was meaning when he said 'What it means for people in the rail industry, it means treating them the same as employees elsewhere...." on LBC was

|"We're jolly well annoyed we've not entirely broken you yet like employees elsewhere and this is part two of our attempt to do so, oh and it nicely deflects from our majestic failure"|

 

[Bantamzen]

People who say things like that either are not competent in statistical analysis, or just have the hump because the results haven't produced the results they wanted.

Or the third option:

"People who say things like that have to work with people in statistical analysis, and constantly adapt to their ever changing methodologies when previous ones either don't work, or more likely don't suit....."

 

[SPADTrap]

Or the third option:

"People who say things like that have to work with people in statistical analysis, and constantly adapt to their ever changing methodologies when previous ones either don't work, or more likely don't suit....."

This is someone who understands statistics.

 

[Bantamzen]

This is someone who understands statistics.

Nope, its from someone who works with statisticians & turns their methodologies into real time applications....

 

[Chester1]

Switching to CPI would be OK if it was part of a universal switch to (H)CPI, which is the new version which includes an element of housing costs. Having two measures of inflation will always result in abuse. CPI probably is more accurate than RPI and the decreasing use of RPI makes it the obvious one to scrap.

 

[bramling]

Article here, also as being featured as one of the main stories on BBC news broadcasts this morning with Chris Grayling appearing.

https://www.bbc.co.uk/news/uk-45191501 :

Quote from BBC article, linked to above:

Article continues........


What could the potential implications of this be if this suggestion is serious and if he intends to try and roll it out to the private train operators and/or Network rail etc?

How about Grayling devotes his time to sorting out the Thameslink Programme shambles rather than stirring up another pointless battle for no gain?

The extent to which this guy is out of touch is simply breathtaking.

 

[andos]

How about Grayling devotes his time to sorting out the Thameslink Programme shambles rather than stirring up another pointless battle for no gain?

The extent to which this guy is out of touch is simply breathtaking.

His main aim for his term seems to be an ideological crusade against unions in the rail industry. Actually running any trains doesn't seem to be a priority.

 

[XDM]

Chris Grayling is not a crook as post 12 claims.
But he is a politician.
They measure their success by the headlines they generate, not by how well things are run.
By Graylings's standards his one day headline grabbing venture is a great success, generating miles of column inches & getting him TV & radio interviews & quotes galore today.

And, from his view point, his greatest success today is in getting the two big rail unions to say no way.

Now he has got them identified in the public mind as the cause of rail fare increases.
That was his objective & RMT & ASLEF have walked right into it, because their leaders are, like Grayling, addicted to seeing themselves in the headlines.

 

[Dave1987]

Grayling may be probably the worst Transport Secretary ever but he has done exactly what he wanted to do in a calculated way. He knows his department has been in the firing line recently and knew he would be in the firing line when the annual fare rises were announced. What better way to deflect attention from yourself than to try and plant the blame for fare rises on staff. Trouble is is when you need the help of staff to assist you when your department has well and truly ballsed up. Grayling knows the cost of everything but the value of nothing.

 

[Starmill]

RPI is, as it should be, on the way out. The only reason that I think it hasn't been rejected totally yet is because it is still used as the index for some government bonds, changing this would require rather a lot of bonds to be re-issued all at once. RPI is a legacy measure which doesn't meet the neccesary international standards, hasn't been the leading measure of price level in the UK for over a decade, and hasn't even been a national statistic for 5 years. The Governor of the Bank of England and the IFS, among others, support the ONS position that RPI is outdated and should no longer be used. Of course, in addition to the DfT, some phone companies are also guilty of using it. Standards are pointless unless they're for everyone, without a very good reason.

There's a separate debate to be had for using CPI and not the more comprehensive CPIH which includes housing costs in its calculations. I agree broadly that CPIH should be the standard for index linked pay deals across the board. Of course it should also be the standard for index linked benefits and State Pension etc etc.

Of course, this doesn't seem to be a debate centered around informed views, only around Mr Grayling's attempt to pit passengers against unions with a dubious comparison that he is drawing. The reaction of the RMT to the attempt by the SoS at 'divide and conquer' is as predictable as it is counter-productive. It would seem that neither the Union or the DfT have anyone onboard who realises that continuing to use RPI is unsustainable regardless of what happens. Maybe I shouldn't be surprised, but I'm still disappointed.

 

[Clip]

Grayling may be probably the worst Transport Secretary ever but he has done exactly what he wanted to do in a calculated way. He knows his department has been in the firing line recently and knew he would be in the firing line when the annual fare rises were announced. What better way to deflect attention from yourself than to try and plant the blame for fare rises on staff. Trouble is is when you need the help of staff to assist you when your department has well and truly ballsed up. Grayling knows the cost of everything but the value of nothing.

He didnt blame fare rises on staff at all - no matter how you try and twist it - he merely stated that wage rises should fall into line with fare rises.

 

[jon0844]

It seems like a clever move by Grayling for reasons already mentioned. Make it sound like the Government cares (perhaps in the budget you can freeze the fare rise and become a hero) and shift the blame on the rail industry for costing so much - in particular staff wages.

Then, as predicted, let the unions look bad by coming out to say they will fight reduced pay rises, thus looking greedy because there's now a seemingly direct correlation to wages and the general public paying them.

It'll certainly increase those comments from passengers to staff that 'I pay your wages'.

You've got to hand it to Grayling really. He, or those around him, are smart.