RMT welcomes MPs support for SWR campaign

RMT welcomes MPs support for SWR campaign

18 December 2020

RMT Press Office:

RMT welcomes MPs support for campaign to protect all catering jobs and services on South Western Railway.

RAIL UNION RMT today welcomes support from cross-party MPs who have tabled a parliamentary Early Day Motion calling for the Government to urgently intervene and reverse South Western Railway’s reckless decision to axe its on-board catering provision.

SWR’s decision puts over 130 jobs at risk of redundancy in January 2021, and shows no regard for passengers who now risk losing the catering provision across SWR services. Thousands of passengers have already signed an online petition calling for catering services to be retained and protected on SWR.

At the same time as SWR is axing this vital service, its operations continue to be fully publicly funded under its Emergency Recovery Measures Agreement (ERMA). RMT analysis reveals that SWR could receive over £24m in ‘management fees’ under the terms of its ERMA, money which can be used to fund profits and make dividend payments.

SWR has said it consulted the DfT over its decision to axe this vital service. RMT is demanding that the Government intervene as a matter of urgency to reverse this damaging decision, and to ensure all catering jobs and services on SWR are protected.

RMT General Secretary Mick Cash said;

“We welcome this support from MPs who have recognised that catering services on the SWR network must be protected.

“It is downright scandalous that SWR has axed its catering contract; putting over 130 jobs at risk come January whilst its operations are being fully funded by public money under its Emergency Recovery Measures Agreement. Had SWR retained the contract, these jobs could have been protected under the Job Retention Scheme until at least April 2021.

“The DfT cannot sit by and allow SWR to make these damaging cuts, while at the same time agreeing to pay it a management fee that could be worth in the region of £24m overall.

“Passengers and taxpayers will be shocked to hear that SWR stands to make a profit from its publicly funded management fee whilst axing a key service that will worsen the passenger experience and put more than 130 people out of work in a matter of weeks.

“The Government must take action now to permanently protect all catering jobs and services on SWR. All future public funding for SWR must be dependent on retention of on-board catering. ”


Notes for Editors
·         Early Day Motion 1266 reads: 
Catering services and jobs on South Western Railway
That this House notes that South Western Railway (SWR) has terminated its on-board catering contract with Elior and that this decision puts over 130 catering workers at risk of being made redundant in January 2021; believes that the Job Retention Scheme, which is in operation until March 2021, should have been used to protect these jobs in the short term; is concerned that this decision will lead to the removal of catering services across the SWR network; believes that this will be detrimental to passengers and that the provision of on-board catering services must be protected across the network as part of rail’s recovery from the covid-19 pandemic; notes that the cuts to catering are being made despite the SWR franchise being fully funded by the Government through an Emergency Recovery Measures Agreement (ERMA); further notes that the ERMA pays SWR a fee which can be used to fund profits and make dividend payments; and therefore calls on the Government to intervene to ensure this catering service and all at-risk jobs are protected.
·         RMT’s online petition is available here - https://www.megaphone.org.uk/petitions/protect-catering-services-and-jobs-on-south-western-railway
·         SWR’s expenditure is calculated using the ORR’s financial information from 2018-19 as the most recent year’s data indicating the cost base of franchises before the Covid-19 crisis began. Franchise payments to government have been deducted from this cost base as it is assumed these will not be being paid. https://orr.gov.uk/rail/publications/economic-regulation-publications/uk-rail-industry-financial-information/uk-rail-industry-financial-information-2018-19
·         On 15th June Rail Minister Chris Heaton Harris said: “Franchisees will be paid a maximum of 2% of the cost base of the franchise before the COVID-19 pandemic began, payable as a lump sum at the end of the initial 6-month Emergency Measures Agreement period. A proportion of the fee will be conditional on operators meeting performance, passenger experience and efficiency targets.” https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2020-06-09/57184/
·         On 21st September, the Transport Secretary confirmed that maximum management fee payable under the Emergency Recovery Measures Agreements was ‘1.5% of the cost base of the franchise before the pandemic began.’ 
·         The SWR ERMA has been in place since September 2020, and is in place to the end of March 2021. It can be extended by a further half year at the DfT’s discretion, bringing the total possible ERMA period to 12 months. The calculations for management fee, below, have been made on the basis that the ERMA will run for 12 months. 
Cost base minus franchise payments to Govt 2018-19
6 months 2% (EMA)
12 months 1.5% (ERMA)
Source: ORR Rail industry financial information 2018-19 
·         In response to a parliamentary question, the Rail Minister stated recently, ‘Franchisees will remain in ‘lock-up’ for the duration of the Emergency Recovery Management Agreements (ERMAs), meaning that payment of dividends may not be made without the Secretary of State’s consent. Consent to the payment of a Permitted Dividend will not be unreasonably withheld or delayed, subject to franchisees fulfilling their financial obligations under the ERMAs to the satisfaction of the Secretary of State and complying with their Companies Act obligations. For any franchisee year the Permitted Dividend will be limited to the value of the fees paid to the franchisee net of Corporation Tax.’  https://questions-statements.parliament.uk/written-questions/detail/2020-09-23/94390

Want to receive updates from us? Subscribe to a mailing list

Tagged with: South Western Railway, SWR, Elior, On-Board Catering,