Wednesday, June 22, 2022
HomeEconomicsShowdown on Britain’s railways portends a summer of strife

Showdown on Britain’s railways portends a summer of strife

The National Union of Rail, Maritime and Transport Workers is nowhere near being one of the UK’s biggest trade unions. But this week the RMT, as it is known, aims to show that it is all muscle. Strikes by 40,000 of its members largely shut down Britain’s railways on Tuesday and are set to do the same on Thursday and Saturday, causing widespread disruption in between and inconveniencing millions of people.

Although these rail strikes will be less of an encumbrance than they were before the pandemic for some businesses, they will still impose a significant cost. Plenty of workplaces cannot work remotely. City centres, which were ravaged by the pandemic, will take a further beating — and this week is the high season for school exams.

With inflation set to hit 11 per cent, all employers face problems with pay-setting. The Treasury faces a complicated version of this conundrum: it needs to keep control of public sector pay, a key driver of the cost of state services. The government is worried about every pay settlement it agrees becoming a benchmark for the next negotiation.

Pay rises also have consequences for inflation, which are particularly alarming at the moment. Public sector pay policy has to fill jobs so that public services can be delivered, but the government also has responsibility, along with the Bank of England, to avoid a wage-price spiral.

Ministers have indicated they want to aim for 2 per cent pay rises. But from 2010 to 2021, public sector pay dropped in real terms by 4.3 per cent, before the latest rise in inflation. The Treasury has stored up a problem for itself by spending a decade trying to squeeze the public sector pay bill.

This is, at root, why the public sector unions are getting ready for industrial action. Some services — particularly care, schools and hospitals — were already stretched before 2020, and routinely struggled to recruit enough staff. They also spent two years at the sharp end of the pandemic.

Conservative ministers clearly relish a railway battle and have tried, rather unconvincingly, to blame Labour for the strike. They may calculate that the RMT, which has a tradition of robust confrontation, is a harder opponent than many unions, so this fight is one to pick and win.

The government is right to have taken a tough initial stance. The principle it should seek to establish is that each pay deal should be treated on merit, with service quality and staff retention kept in mind, as well as cost. In this case, there is a deal to be done: the RMT has a point that the employers’ offer, which works out at a 2 to 3 per cent rise, hardly looks generous after two years of freezes. The cost of living crisis makes it particularly tough for the union’s long tail of members on low-paid jobs.

But in return for any improved offer, the RMT must make concessions on productivity and modernisation. Commuter demand for rail transport is uncertain as more people work from home, and railway technology has advanced: drones and sensors can now replace some engineers walking up and down the lines to check rails. After talks on Monday still failed to reach agreement, Network Rail wrote to the RMT with plans to consult on 1,800 job losses and changes to working practices; it said it hoped the majority of job redundancies could be voluntary. As part of any settlement, the union has to accept the reality that the industry is changing.

It is part of the government’s responsibility to impose fiscal control on behalf of taxpayers, but it also needs to minimise disruption to passengers and businesses, and to keep public services running in the long term.



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