Rail fare increases: a change to CPI?

[HH]

Rail fares: Grayling urges inflation change to slow rises

The rail industry should change how it calculates fare rises and staff wages to cut costs for passengers, Transport Secretary Chris Grayling has said.

He has asked train operators and unions to use a different inflation measure, the Consumer Prices Index (CPI), to determine rail fare and wage increases.

This is lower than the current tool used, which includes mortgage costs.

But the RMT union said it opposed Mr Grayling's call - made hours before January's rail fare rise is announced.

A hardly surprising move, given that the Regulator has stipulated CPI for CP6. Mick Cash's reply is unlikely to shock either:

This is a basket-case government and a lame duck transport secretary continuing its all-out war on staff and passengers alike

Full story here.

 

[greyman42]

So do I understand it correctly in that rail unions use RPI to negotiate pay deals?

 

[sprunt]

Regardless of the merit of the argument, publically casting the staff against the passengers like that is a rotten trick.

 

[Gareth Marston]

It's the DFT aka Secretary of State that has used RPI to determine rises on regulated fares since privatisation.

Grayling trying to wash his hands of blame again.

 

[Fawkes Cat]

Regardless of the merit of the argument, publically casting the staff against the passengers like that is a rotten trick.

- quite. Is the level of fare rises anything - at all - to do with the unions?

If it is, I look forward to the civil service unions soon having the right to set the level of Income Tax...

 

[HH]

It's the DFT aka Secretary of State that has used RPI to determine rises on regulated fares since privatisation.

Grayling trying to wash his hands of blame again.

It was hardly Grayling who introduced it. We can blame him for many things, but that isn't one of them!

Currently RPI (although not the same RPI in most cases) is used to determine:

• Fares (variously + or - on top in the past)
• Network Rail Charges
• Staff Wage Rises (often with an addition on top)
• Franchise Premium Payments

It's surely one reason why the railways are as expensive as they are. Note that if fares started to use CPI, but costs didn't, then DfT would end up footing the bill, which will never fly with the Treasury.

 

[HH]

- quite. Is the level of fare rises anything - at all - to do with the unions?

If it is, I look forward to the civil service unions soon having the right to set the level of Income Tax...

There's a logical fallacy there. The main reason that the rail unions get RPI related pay awards is that the TOC's revenue is also flexed by RPI. The same is not true of civil servants and income tax.

 

[transgeek]

I think the union's issue is the suggestion that CPI should be used for pay rises

 

[HH]

I think the union's issue is the suggestion that CPI should be used for pay rises

Of course. Anyone would prefer to use RPI, because it is, 9 years out of 10, about 0.77% greater than CPI. But the real point is whether it is sustainable to use RPI (or in many cases RPI 'plus') for year after year after year.

 

[Darandio]

This is a basket-case government and a lame duck transport secretary continuing its all-out war on staff and passengers alike

I guess he misplaced the thesaurus/phrase book again then. I'm also now wondering if he is a big fan of Green Day.

 

[Gareth Marston]

It was hardly Grayling who introduced it. We can blame him for many things, but that isn't one of them!

Currently RPI (although not the same RPI in most cases) is used to determine:

• Fares (variously + or - on top in the past)
• Network Rail Charges
• Staff Wage Rises (often with an addition on top)
• Franchise Premium Payments

It's surely one reason why the railways are as expensive as they are. Note that if fares started to use CPI, but costs didn't, then DfT would end up footing the bill, which will never fly with the Treasury.

Yes but he's trying to make out that the TOC's are the ones who have chosen to use RPI rather than successive Governments.

 

[Silverlinky]

My TOC has just given pretty much everyone, management and non-management an across the board 3.85% pay increase......that's before the news of a possible 3.5% fares increase was announced today.Does this mean that they are worse off?

 

[mrmatt]

The RMT cannot have it both ways - in the same breath saying passengers are being ripped off opposing shifting the measure which would reduce both costs and fare rises. There simply does not exist a universe where fare rises are tied to a lower inflation measure than pay deals as all that happens then is the subsidy will rise.

The main issue I see with his proposal is that it will take years for all the franchises to be relet with CPI in the contracts - so either Grayling has to accept fares tied to a lower rate while that happens (and premium increases in future bids reduced) or frankly we're stuck with RPI.

I also thought the RMT had toned down their more out of touch rhetoric recently - it's a shame to see the return of basket cases and lame ducks as it really does detract from their message and makes them seem incredibly out of step with the modern world.

 

[ForTheLoveOf]

The self-interested RMT are quite clearly showing their colours here. I have nothing against unions - in fact, I am just in the process of joining one myself - but fighting against lower fare increases for passengers (because it would mean less excessive wage increases for their members) is just plain wrong. If I were in the rail industry I would be embarrassed to be a member of the RMT and to wear their badge.

This is especially the case given their vocal opposition every time RPI is announced, as if it's a surprise, to the resultant fare rises. It's totally perverse - also perverse to claim that the government is imposing a wage cap. Train staff are some of the best paid workers in the country given their hours of work and responsibility, training etc. - Mick Cash has no place to be piping up as if they're in poverty. He can be happy they're getting a pay increase at all, unlike most people paying the fares.

A change to CPI is well overdue - there is no justification for increasing something that's an unavoidable cost for many people, by a rate of inflation that has been consistently higher than the increase in the cost of most goods and services they buy. Not to mention the many reports etc. which have slammed RPI as an inaccurate measurement of inflation.

 

[deltic]

Mick Whelan effectively admitting that his members are far better off working for private sector companies rather than a nationalised BR on radio this morning

 

[Gareth Marston]

The self-interested RMT are quite clearly showing their colours here. I have nothing against unions - in fact, I am just in the process of joining one myself - but fighting against lower fare increases for passengers (because it would mean less excessive wage increases for their members) is just plain wrong. If I were in the rail industry I would be embarrassed to be a member of the RMT and to wear their badge.

This is especially the case given their vocal opposition every time RPI is announced, as if it's a surprise, to the resultant fare rises. It's totally perverse - also perverse to claim that the government is imposing a wage cap. Train staff are some of the best paid workers in the country given their hours of work and responsibility, training etc. - Mick Cash has no place to be piping up as if they're in poverty. He can be happy they're getting a pay increase at all, unlike most people paying the fares.

A change to CPI is well overdue - there is no justification for increasing something that's an unavoidable cost for many people, by a rate of inflation that has been consistently higher than the increase in the cost of most goods and services they buy. Not to mention the many reports etc. which have slammed RPI as an inaccurate measurement of inflation.

So you advocate that Government can impose a (CPI) pay cap on the entire private sector then?

In case you haven't noticed GTR, Northern etc are all private sector companies......

 

[dk1]

So do I understand it correctly in that rail unions use RPI to negotiate pay deals?

Yes. For example we are often offered a two year deal. The second year is wordered as say a 2.5% pay rise or RPI + 0.5% whichever is the greater. We have often come out very nicely when RPI has been high.

 

[mpthomson]

Yes but he's trying to make out that the TOC's are the ones who have chosen to use RPI rather than successive Governments.

No he isn't, he's saying it's the wrong way of calculating the rises and asking the rail companies to use a different measure. That's all. there's a lot to criticise Grayling for, this isn't one of those things. It's a sensible decision that will be welcomed by passengers.

Cash's response is, well, his typical Dave Spart out of touch with passengers type rhetoric.

 

[mpthomson]

So you advocate that Government can impose a (CPI) pay cap on the entire private sector then?

In case you haven't noticed GTR, Northern etc are all private sector companies......

No, nowhere does that post advocate that. But I don't know a single private sector organisation outside railways (or many public sector ones) that use RPI or CPI as a way of determining wages/salaries, it's another rail anachronism.

Most in the public/private sector have had way below even CPI pay rises for the last ten years or so.

 

[Alfie1014]

Mick Whelan effectively admitting that his members are far better off working for private sector companies rather than a nationalised BR on radio this morning

Indeed if the railways had been nationalised pay increases since 2010/11 would have been capped at a much lower rate with likely parity to civil servants, be careful what you wish for!

Railway pensions however have increased by CPI in line with state and other pension providers.

That said it’s somewhat ironic that a party which claims to be a champion of the private sector and the free market chooses to be command and control when it suits?

 

[Kite159]

Changing to the lower CPI makes sense in a way, at least the staff are still getting a decent pay rise compared to some of their users.

Why do I have a bad feeling that for the January price changes there will be a token 1.5% rise (with a larger rise postponed to May) but at a cost of more restrictions being placed on tickets (i.e. time changes where off-peak tickets are valid) so the TOCs don't lose out so much.

 

[yorksrob]

Its purely a political decision to continue raising fares at this level, stemming from a desire some time back to change the funding of the railway from 1/3 revenue, 2/3 subsidy to 1/3 subsidy, 2/3 revenue.

As I understand it, this was achieved some time ago, so perhaps its time this was reviewed.

Plus this increase will merely feed inflation and contribute to damaging interest rate rises when the economy is comparatively weak.

 

[Gareth Marston]

Its purely a political decision to continue raising fares at this level, stemming from a desire some time back to change the funding of the railway from 1/3 revenue, 2/3 subsidy to 1/3 subsidy, 2/3 revenue.

As I understand it, this was achieved some time ago, so perhaps its time this was reviewed.

Plus this increase will merely feed inflation and contribute to damaging interest rate rises when the economy is comparatively weak.

Blair's Government wanted to re balance 50/50 to 75/25 and your correct were about there now. Of course "make the passenger pay more" failed to address the reasons why costs had gone up in the first place......

 

[Gareth Marston]

No, nowhere does that post advocate that. But I don't know a single private sector organisation outside railways (or many public sector ones) that use RPI or CPI as a way of determining wages/salaries, it's another rail anachronism.

Most in the public/private sector have had way below even CPI pay rises for the last ten years or so.

However in the Private sector those deals have been determined between the private sector organizations, their staff (and unions if relevant) not by Government Ministers. Grayling cant pretend that the railways are in private hands and the problems are nothing to do with him and then on the other hand impose pay restraint.

 

[Gareth Marston]

No he isn't, he's saying it's the wrong way of calculating the rises and asking the rail companies to use a different measure. That's all. there's a lot to criticise Grayling for, this isn't one of those things. It's a sensible decision that will be welcomed by passengers.

Cash's response is, well, his typical Dave Spart out of touch with passengers type rhetoric.

CPI is on thing and welcome, but Grayling has tried to shovel the blame for the use of RPI onto the TOC's by the way he has phrased his letter. Regulated fares have been determined by Government since 1993 not by the TOC's - how can he exhort them to use CPI when they have no choice in the matter?

 

[virgintrain1]

The self-interested RMT are quite clearly showing their colours here. I have nothing against unions - in fact, I am just in the process of joining one myself - but fighting against lower fare increases for passengers (because it would mean less excessive wage increases for their members) is just plain wrong. If I were in the rail industry I would be embarrassed to be a member of the RMT and to wear their badge.

This is especially the case given their vocal opposition every time RPI is announced, as if it's a surprise, to the resultant fare rises. It's totally perverse - also perverse to claim that the government is imposing a wage cap. Train staff are some of the best paid workers in the country given their hours of work and responsibility, training etc. - Mick Cash has no place to be piping up as if they're in poverty. He can be happy they're getting a pay increase at all, unlike most people paying the fares.

A change to CPI is well overdue - there is no justification for increasing something that's an unavoidable cost for many people, by a rate of inflation that has been consistently higher than the increase in the cost of most goods and services they buy. Not to mention the many reports etc. which have slammed RPI as an inaccurate measurement of inflation.

Best paid in the country?? Really! Embarrassed to be a member? The RMT has shown the power of good trade union where working together with the members has gained us very good terms and conditions. I would argue the RMT is one of the best unions there is and I am very proud to wear their badge. Having worked in other industries where the union has been very weak with poor sign up rates other unions have a lot to learn but other industries seem to be in a race to the bottom. I admit we are well paid but would argue this is fair given the shift work, abuse and general chaos that regularly occurs. My friends can only dream of having a union that would stick up for them as well as the RMT.

 

[yorksrob]

Blair's Government wanted to re balance 50/50 to 75/25 and your correct were about there now. Of course "make the passenger pay more" failed to address the reasons why costs had gone up in the first place......

Ah thanks. I knew it was something along those lines. It seems the destination of that policy has been conveniently forgotten.

 

[SPADTrap]

Regardless of the merit of the argument, publically casting the staff against the passengers like that is a rotten trick.

Modern politics. It is the only way to stimulate the race to the bottom.

 

[Clip]

Modern politics. It is the only way to stimulate the race to the bottom.

Out of interest can you explain how say, a 3.5% pay rise is part of this magical 'Race to the bottom' everyone talks about?

 

[DarloRich]

So do I understand it correctly in that rail unions use RPI to negotiate pay deals?

they use whatever measure is in your contract of employment and/or collective bargaining agreement