RMT writes to Merseyrail owners with “fair” proposal

RMT writes to Merseyrail owners with “fair” proposal

2 October 2017

RMT Press Office:

RMT writes to Merseyrail owners with “realistic and fair” proposal to resolve dispute

RAIL UNION RMT has written to Merseyrail’s joint owners – in advance of two days of strike action next week – with what the union called a “realistic and fair” proposal to resolve the Guards’ dispute. The union has also written to Metro Mayor Steve Rotheram urging him to support the initiative.

Merseyrail’s joint owners are the Dutch Government, through Abellio, and corporate giant SERCO. Rail bosses have alleged that the annual cost of keeping the Guard is £5 million.

In the letter RMT General Secretary Mick Cash has highlighted that Merseyrail’s owners have already paid out an eye watering £108.2 million in dividends and in the future they can expect to pay out an additional £142 - 215.3 million by the end of the franchise in 2028.

Mick Cash has proposed that the owners each pay a contribution to keep the Guards, whilst also being able to continue to pay out substantial dividends to shareholders.
 
The union has calculated that on a conservative estimate – based on predicted passenger growth and inflation – both Abellio and SERCO can expect to pay out annual average dividends of £6.7m each. This would mean each company could make an annual payment of £2.5 million to keep the Guard while still making an annual dividend of £4.2 million each.

A more realistic estimate based on previous profits earned predicts an annual average dividend of £10 million. This would mean each company can make £7.5 million in annual dividends each, even after paying for the Guards.
RMT General Secretary Mick Cash said,

“Merseyrail’s owners stand to make hundreds of millions of pounds out of this contract on the back of passengers’ fares and Merseyrail’s workforce. Their accounts show they have already paid out an eye watering £108.2 million in dividends and on this basis, our calculations show they can expect to pay out an additional £142 - £215.3 million by the end of the franchise in 2028.

“So we think it is a fair and reasonable offer, which says if you want to carry on paying out big dividends, in return, then we also want you to make a contribution to pay for the Guards. We are saying cut your profits so we can keep our Guards.”
“We hope that Merseyrail’s owners can respond positively to this proposal, especially as one of the owners is in effect the Dutch government, and we also hope that Steve Rotheram can publicly say he supports this initiative.”


Ends.


Notes to Editors
 
Calculations are attached.
 
Letter to Dutch Transport Minister below. A similar letter has been sent to SERCO.
 
Removal of guards/conductors from Merseyrail services
 
As you know Merseyrail is jointly run by Abellio, which is owned by you as the Dutch Government,  and also by SERCO

I am writing to you in respect of the serious concerns we have regarding the proposals by Merseytravel to remove all guards and introduce Driver Only Operation on all their services on Merseyrail.  

I am also seeking your support for what would I believe be a very realistic and fair proposal to the current dispute.

As you will be aware the shortfall identified by Merseytravel’s business case for the purchase of the new rolling stock just happens to be about the same as the annual cost of retaining the Guards of about £5 million a year.

If this £5 million figure is correct then I believe both you and SERCO can easily afford to each make an annual contribution of £2.5m each year to meet the cost of keeping the Guard whilst continuing to pay substantial dividend payments to your shareholders.

The next organisation, be it yourself or other companies who take over the franchise in 2028 would also easily be able to continue to make a contribution to keeping the Guard whilst still making substantial dividend payments.

My proposal is based on an examination of the Merseyrail accounts for the whole of the length of the contract from July 2003 until the end of 2016. The total amount of dividends to shareholders that has been paid out to date is £108.2 million representing £54.1 million each to Abellio (Dutch Government), and to SERCO.
 
From your profits to date we can make a reasonably accurate estimate of your anticipated dividends in the future to the end of the franchise in July 2028. These estimates are based on the fact that to date you have paid out 93% of your profits as dividends.
 
A very conservative estimate of what your dividend payments in the future will be is based on profit increasing at the rate of 2.5% per year. This is the figure in the Business Case report setting out the increase in passenger growth into the future and is also a fair indication of the likely average inflation increase.

On this basis total projected dividends to the end of the franchise will be £142 million. Split between yourself and SERCO you can expect to pay further dividends of £71million each or £6.7 million a year each, over the next ten and a half years.

That annual average dividend of £6.7m each would mean you could each annually pay £2.5million to keep the Guard whist still paying out an annual dividend of £4.2 million each.

A more realistic estimate would be based on the existing average rate of increase in profits on each full year to the end of 2016. The average rate of increase in profits is 9.52% and on this basis, we can assume further dividends of £215.3 million in total or £107.6m each or £10 million a year over the next 10.5 years to the end of the contract.
That annual average dividend of £10 million would mean you will still each receive £7.5 million as an annual dividend even after paying for the guards.

I attach the full set of calculations and I hope I can meet you so you can respond positively to this proposal to cut your profits we can keep our guards.

I have written a similar letter to SERCO look forward to hearing from you.


Yours sincerely,
 
Mick Cash
General Secretary

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