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

Discussion in 'UK Railway Discussion' started by pt_mad, 15 Aug 2018.

  1. joncombe

    joncombe Member

    Messages:
    306
    Joined:
    6 Nov 2016
    I don't think there is any justification for any increase at all this year, frankly.
    • Timetables that seemingly don't work (Northern, Thameslink, Great Northern, Southern) or have never been fully delivered, leading to numerous cancellations and overcrowding. Therefore, a very unreliable service.
    • Some TOCs that seem unable to run a reliable weekend service (GWR, in particular).
    • Unable to book Advance tickets more than about 6 weeks in advance now on most TOCs (with no sign of this changing any time soon), often leading to higher fares (and this can have knock on effects for booking hotels and so on too).
    • Even when you can book Advance tickets in my experience the times have frequently changed by the time you come to travel.
    • "Capacity improvements", which I think most passengers would assume means longer trains, or more frequent trains (or both) that actually translates to removing seats (which I don't think most passengers would consider an improvement).
    • Yet more fare complexity which people struggle to understand (e.g. now Off Peak, Super Off Peak and Anytime)
    • Uncomfortable and very narrow "ironing board" seats on most new trains .
    • There seem to be more strikes disrupting services too (SWR, Northern).
    • Removal of buffet on long distance services, in favour of trolleys or sometimes, nothing at all (e.g. GWR).
    • Staff that don't know the restrictions on tickets and insist tickets are not valid when they are (VTWC staff at Euston seem worst for this).
    • Air conditioning that never seems to work (a particular problem over this warm summer)
    • Websites with useful functionality being removed (VTEC/LNER in particular)
    • Closing ticket offices
    • And constantly having to listen to "See it, Say It, Sorted" when on a train or at a station.
    Certainly on my local TOCs (SWR) punctuality and reliability have plummeted over the last year. There are frequent strikes. They seem unable to publish reliable information for engineering works more than a week in advance any more and strikes more than a day in advance. They overcharge (the website will sell "Off Peak Tickets" for journeys when the cheaper "Super Off Peak Ticket" should be valid, yes I've pointed it out, yes they've acknowledged it, and no they haven't fixed it). The new timetable that was supposed to bring improved journey times and more frequent trains (part of the franchise commitment) has been postponed (and will quite possibly be scrapped entirely). Yes I realise many of these problems are outside of the control of the TOC, but they are all industry problems.

    The only upside is that for more than half of journeys I've made this year I've ended up with a full or partial refund, because delays are now so frequent. It feels like we are back to just post Hatfield levels of reliability and punctuality again and that isn't good.

    Passengers numbers are now starting to drop on my routes (I think SWR being a particular case). I think there comes a point (and quite possibly, we've reached it now) where you can't keep increasing fares above inflation year-on-year, promising improvements that aren't delivered or aren't fully delivered and expect people to keep on paying it. Especially when (as has been the case on my local TOC), the quality of service has significantly declined.

    Sorry that was a bit of a rant and I realise there are multiple factors at work here, many of them outside of the TOCs control.. I'm not trying to point the blame. However the TOCs is the name the public see and the company they pay the fares too and I don't think most of the public are interested in getting in a discussion over whether the blame for service failures lies with the TOCs, the DFT, Network Rail, the leasing companies or whoever else.
     
  2. Dr Hoo

    Dr Hoo Established Member

    Messages:
    1,465
    Joined:
    10 Nov 2015
    Location:
    Hope Valley
    Regional Railways was well in step with NSE in seeking to boost off-peak revenue in BR's day but all of the passenger sectors took some pretty aggressive lines on pricing overall.
    From Gourvish's definitive history of BR the increases were:
    1985-6 8.2% (RPI 3.4%)
    1986-7 5.0% (RPI 4.2%)
    1987-8 6.5% (RPI 4.9%)
    1988-9. 9.4% (RPI 7.8%)
    1989-90 9.0% (RPI higher at 9.4%)
    1990-1 9.5% (RPI 5.9%)
    1991-2 7.75% (RPI 3.8%)
    1992-3. 6.0% (RPI 1.6%)
    1993-4 5.0% (RPI 2.5%)
    Several of these over-inflation increases were against service cuts, declining performance and delayed promises of improvement.
    It has never been easy. (And I am not suggesting that staff were well paid back in the day either.)
     
  3. HH

    HH Established Member

    Messages:
    4,161
    Joined:
    31 Jul 2009
    Location:
    Essex
    They haven't risen by more than RPI for some years (2013 was the last). I won't answer your first question...
     
  4. HH

    HH Established Member

    Messages:
    4,161
    Joined:
    31 Jul 2009
    Location:
    Essex
    I actually wonder if DfT have primed Grayling and the reason they may have done so is that there are very definite signs that the long period of underlying rail growth has ended. The constant increase of fares above inflation cannot have helped that.

    This desire to make passengers pay a greater % ignores the economic benefits and the high fares are probably accelerating the growth of the part-time commuter (i.e. those who no longer commute every day), especially for longer journeys.
     
  5. The Ham

    The Ham Established Member

    Messages:
    6,733
    Joined:
    6 Jul 2012
    The easy way to do away with RPI pay increases is to just stop publishing RPI inflation figures, or only do so later on (say 9 months after the event) so that the data is not very useful for pay negotiations.

    However given that the data is used for various things which are unlike to stop any time soon (IIRC some of the early student loans are) including, as others have pointed out, rail franchises which have just been let would be based on an RPI inflation on ticket prices. Making it not that easy to do.

    The government could of course just announce that ticket prices are to be frozen for 5 years of they liked.

    Personally I would break down the level of support which the railway received so that of the £4.2 billion X was operating support (including NR maintenance costs) and Y was investment in new infrastructure.

    The reason for doing so is so that political the subsidy of the railway would be seen as money for improvements rather than money for people (depending on which side of the political fence depends on whether some view that as money to greedy fat cats while some others view it as money to greedy union members).

    I would suggest that chances are the sums would show that the railways cover their costs (probably and a bit of the improvements) and so the government can claim that they are no longer subsidising the railways and that they only money the railways are now getting in support from government is to improve services for the county.

    This would mean that those opposed to rail funding would have to criticise infrastructure projects. For instance is often cited that we now have a higher subsidy for the railways than under BR, but BR wasn't building a major project like HS2 or before that Crossrail on top of other significant projects (like Thameslink, the electrification of the GWML, the rebuilding of Reading station, etc.).
     
  6. yorksrob

    yorksrob Veteran Member

    Messages:
    21,831
    Joined:
    6 Aug 2009
    Location:
    Yorks
    Although this was also the case during the noughties, long before the current slew of major infrastructure projects.

    Personally I think that this has been a sort of "annus horriblis" for the railway, the likes of which haven't been seen since the post Hatfield "nervous breakdown", and the Government should scrap fare rises this year and have done with it.
     
  7. The Ham

    The Ham Established Member

    Messages:
    6,733
    Joined:
    6 Jul 2012
    I don't deny that, however I do think that things have changed but people's perceptions of rail funding hasn't kept up.
     
  8. Dave1987

    Dave1987 Established Member

    Messages:
    4,387
    Joined:
    20 Oct 2012
    I’m not opposed to the principle especially for those of us at the higher end of the pay scales relative to other grades. Those at the bottom of the pay scales deserve larger percentage pay increases. What I am fiercely opposed to is Grayling trying to directly link staff pay increases to the ticket price increases and his attempt to pitch passengers against staff to deflect attention away from himself.
     
  9. HH

    HH Established Member

    Messages:
    4,161
    Joined:
    31 Jul 2009
    Location:
    Essex
    Objecting to politicians behaving like politicians sounds like Einstein's definition of insanity.

    Besides there is clearly a causal link between Fares being linked to RPI and Operators being able to pay their staff RPI-linked pay rises; it's not direct, but it is real.
     
  10. aformeruser

    aformeruser Veteran Member

    Messages:
    30,637
    Joined:
    23 Jan 2009
    Fares rise by the rate of July RPI. The +1 bit ended at the 2015 General Election, with the Conservative promising to drop the +1 and Labour promising a full review of rail fare increases and a 12 month fare freeze while that's undertaken.
     
  11. DarloRich

    DarloRich Veteran Member

    Messages:
    23,356
    Joined:
    12 Oct 2010
    Location:
    Work - Fenny Stratford(MK) Home - Darlington
    Top trolling! It seems your idea is to punish the very people who are left to try and sort out the mess and deliver a service rather than those responsible for creating the problems. How does that work then?
     
  12. aformeruser

    aformeruser Veteran Member

    Messages:
    30,637
    Joined:
    23 Jan 2009
    So do you want DfT to control the purchase strings or not? If not then you have to accept TOCs are private businesses and when private businesses fail customers they either have to do something to re-attract the lost business or alternatively they have to cut costs.
     
  13. squizzler

    squizzler Member

    Messages:
    1,001
    Joined:
    4 Jan 2017
    I would be hard pressed to describe the detailed post you partially quote as any sort of troll. Besides, it is not clear whether it refers to ticket price increase or wage increase.

    The DfT needs to show leadership and put its money where its mouth is by cancelling the premium payment increases (or revenue support decreases) most franchises have committed to.
     
  14. DarloRich

    DarloRich Veteran Member

    Messages:
    23,356
    Joined:
    12 Oct 2010
    Location:
    Work - Fenny Stratford(MK) Home - Darlington
    That is all fine. However not giving the bloke on the gate line a pay rise wont fix the issues. He or she isnt responsible or accountable for them. The people who are should be held to account.

    I agree. I simply point out, again, that not giving the person cleaning the platforms or trains a pay rise wont resolve the issues.
     
  15. t0ffeeman

    t0ffeeman Member

    Messages:
    271
    Joined:
    11 Jul 2008
    My company has had a fares freeze by the London Mayor. Wages have increased by RPI. The two aren't linked
     
  16. dctraindriver

    dctraindriver Member

    Messages:
    250
    Joined:
    9 Jan 2017
    No my point was a £30 a year season ticket saving is paultry, the passengers pay far too much and it’s well out of order, however for Grayling to lay the blame at the hands of staff is wrong, the amount taken out in regards to other operating costs are significant......
     
    Last edited: 16 Aug 2018
  17. Starmill

    Starmill Events Co-ordinator

    Messages:
    14,017
    Joined:
    18 May 2012
    Location:
    Manchester
    This is exactly what should happen. There should be a deadline after which it's illegal to use RPI any more. Unfortunately because of the issue with using it for some government bonds, this isn't the most likely.
     
  18. Dave1987

    Dave1987 Established Member

    Messages:
    4,387
    Joined:
    20 Oct 2012
    The link is weak at best. Grayling is very calculating and I'm sure he and his assistants eyed a prime opportunity to take the string out of the annual fare rise announcements for them and deflect the blame for rises on staff. And of course getting a pop in at the unions is of course part of the course for him.
     
  19. hwl

    hwl Established Member

    Messages:
    5,061
    Joined:
    5 Feb 2012
    TfL not having any money now is linked though! see massive cuts to the bus network and cancelling more Northern and Jubilee Line trains for starters.
     
  20. Economist

    Economist Member

    Messages:
    306
    Joined:
    24 Feb 2013
    The reality is that RPI, with it's inclusion of house price inflation, is a more accurate figure than CPI in my book. Ultimately, the super-rich own a considerable amount of land and/or residential property. If wages increase by RPI, then an kncrease in their asset value is closely linked to wages, which are a cost. If CPI is adopted, then it's possible to enable land/property price inflation without increasing wages by a linked amount. That's my tuppence anyway.

    As for Grayling, thks is the second portfolil that he's held which isn't going too well. His time as justice secretary was marked by implementing some very questionable principles into the justice system.
     
  21. aformeruser

    aformeruser Veteran Member

    Messages:
    30,637
    Joined:
    23 Jan 2009
    Problem is if a business is trying not to increase costs due to poor performance everyone suffers unless they've got a pay rise condition written in to their contract.

    Those responsible are a combination of those in DfT, TOC management and RMT leadership. Whether you like or it not the RMT starting a dispute well in advance of any possible DOO/DCO being implemented and then immediately calling strikes unless the TOC gives a guarantee that there will be a guard on every service for the duration of the franchise, causes more problems than it fixes. Someone in TOC management could be sacked, but then they'd only be replaced by someone else and if they want a good competent replacement trying to get a replacement manager on the cheap wouldn't be a good path to go down.
     
  22. DarloRich

    DarloRich Veteran Member

    Messages:
    23,356
    Joined:
    12 Oct 2010
    Location:
    Work - Fenny Stratford(MK) Home - Darlington
    So to be clear: Your view is that people working hard to deliver a service should be punished while those at the top who are actually responsible and accountable for the mess should simply carry on?
     
  23. aformeruser

    aformeruser Veteran Member

    Messages:
    30,637
    Joined:
    23 Jan 2009
    You need a new pair of reading glasses. I stated you could sack those responsible for the mess but it would be unwise to employ someone on the cheap to replace them as you'd probably end up with someone not capable of doing the job and how does that fix the original problem?

    Are you of the opinion it would be better to make people (who haven't done anything wrong) redundant so that everyone else gets a pay rise? If not how do you afford the pay rises? Sacking and not replacing management would mean lower paid employees finish up doing the work of a manager but aren't paid a manager's salary (completely unfair.) If they are promoted to manager or new managers are brought in then where does the money for pay rises come from? Or maybe you think passengers should be punished instead?
     
  24. DarloRich

    DarloRich Veteran Member

    Messages:
    23,356
    Joined:
    12 Oct 2010
    Location:
    Work - Fenny Stratford(MK) Home - Darlington
    oh dear.

    You, and most other posters here, know that rail staff pay rises have a negligible impact on season ticket prices. You also know that every member of staff could be removed and replaced by a robot and your ticket price would not fall by a single penny.

    (BTW - my last pay rise was a real terms cut. I would love some of the settlements suggested in the media! CPI v RPI and date of comparison can have a big impact)
     
  25. aformeruser

    aformeruser Veteran Member

    Messages:
    30,637
    Joined:
    23 Jan 2009
    We went off on a tangent from the original post

    You're avoiding answering questions.

    So question 1 is do you want DfT to have control over the TOC purse strings?

    If the answer to question 1 is no then where does the money for pay rises come from if the business is making a loss? If it's through increased income where does that income from from? If it's through making cuts elsewhere where do you make the cuts?

    Only if the answer to question 1 is yes, then does the point about Grayling wanting to use CPI instead of RPI become relevant again.
     
  26. joncombe

    joncombe Member

    Messages:
    306
    Joined:
    6 Nov 2016
    I was actually referring to ticket price rises. Sorry if I didn't make that clear.
     
  27. joncombe

    joncombe Member

    Messages:
    306
    Joined:
    6 Nov 2016
    Whilst it is probably true operators would not pass on savings, Chris Grayling did say on the BBC news last night that salaries account 50% of the cost of running the railways. Now I'd take anything he says with a pinch of salt BUT if it is true then I don't think it's unreasonable to say that an increase to those costs, if they are 50% of the total costs, is going to have an impact on ticket prices.
     
  28. DarloRich

    DarloRich Veteran Member

    Messages:
    23,356
    Joined:
    12 Oct 2010
    Location:
    Work - Fenny Stratford(MK) Home - Darlington
    The DfT set the level of the fares increases. They have decided to transfer more of the cost of running the railway to the passenger. They can manage this situation any time they wish. The fact is they are trying to blame evil unions and disgustingly over paid railway staff for their own inadequacy.

    You must know this yet seem to want to support them in this - I wonder why. Could it be jealousy and your desire to see railway people brought down a peg or two?

    Ok - fair enough - but that ticket price rise has very little to do with the level of wages paid to staff. It is entirely within the gift of government to control the level of price rise. They choose not to. They could mirror what they have done with fuel duty but chose not to.

    You could take all of that 50% out of the cost stack and fares would not fall a single penny. The issue is that rail fares have risen twice as fast as wages in the UK since 2008. The TUC say fares have risen by 42% over the past 10 years, while nominal weekly earnings have only grown by 18%. That is the bigger problem

    BTW It is also odd that ministerial salaries can continue to rise above inflation year on year. Want pay restraint Mr Grayling? Get your own house in order and set an example.
     
  29. ForTheLoveOf

    ForTheLoveOf Established Member

    Messages:
    5,766
    Joined:
    7 Oct 2017
    It is indeed hypocrisy - but equally so it is unthinkable hypocrisy for the unions (especially RMT) to criticise fare rises, when their demands for ever higher wages are one of the (number of) factors behind this. TOC staffing costs alone make up approximately 25% of the cost of running passenger services (according to NRE, i.e. RDG). joncombe has pointed out that salaries in total make up 50% of costs and this doesn't sound unthinkable to me.

    I am usually loathe to agree with The Telegraph, but I have to say that their article here (sorry, soft paywall) makes a compelling point in that rail staff pay has indeed increased astronomically both in real terms and in absolute terms, since privatisation.

    Now of course we'll get the "so what, are you jealous of train staff having an effective union" brigade, but my point is this - the reason I, and other passengers, care about it is because we are in part bankrolling these massive increases through massively increased fares (as well as increased subsidies from taxation). In many cases, rail passengers have few alternatives - e.g. travelling into and out of London on high speed mainline services, there is simply no equivalent alternative. Therefore saying that it's none of the passenger's business is wrong - they have little choice but to use the services, so it is only fair they have some input into what the money they pay is used for. It's almost like a form of taxation.

    If conditions and pay had merely stayed the same in real terms then the explosion in passenger numbers over the last 20-odd years may well have allowed fares to stay the same in real terms (i.e. increasing by something like CPIH). So there absolutely is a causal link between staff pay and fare rises, and so, whilst Grayling et al pitting staff against passengers is unpleasant and political manipulation, he is absolutely onto a true point. It would be unfair to dismiss the point out of hand merely because it was made for political purposes.
     
  30. jon0844

    jon0844 Veteran Member

    Messages:
    24,389
    Joined:
    1 Feb 2009
    Location:
    UK
    Are staff costs a percentage of the overall ticket cost, or broken down to separate the DfT, Network Rail and the TOCs?

    Given Network Rail manages the infrastructure, by the time you get to the TOC level, you'd expect staff costs to be significant. But if you include the running cost of the railway, I'd expect staff costs reduce as a percentage (although obviously there are staff costs there, but a lot is contracted work which muddies the waters further). So how is it broken down?

    Personally I think Grayling wants to be seen as a saviour of the railway by the end of the year. He'll hope that delaying the next timetable change restores some stability, and get the chancellor to freeze the fare rise, so it will demonstrate that the Government cares about the hard working individuals that rely on using trains to get to work.

    The best way to be seen as a hero is to get it out there that price rises are going to be shocking and something needs to be done, even if you set the RPI+n% formula in the first place.

    It will also make the TOCs look guilty of all the troubles of the year, and unions for having those sky high price rises that nobody else is getting right now (forgetting that if we didn't have all this Brexit nonsense, perhaps our economy would be such that austerity could be nearing an end and people could be enjoying decent pay rises of their own).
     

Share This Page