29 July 2023
RMT Press Office:
RMT has found that rail companies are being indemnified against any losses to the tune of £1bn on the same day there is a national strike on the railways.
Notes
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The total annual cost of a ticket office worker’s job, including salary, National Insurance Contributions and Employer’s contribution to the Railways Pension Scheme is around £30,000. 2,300 jobs are at risk under the employers’ proposals totalling a saving of £69 million.
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The TOCs’ annual management fees are estimated at around £110 million. The government has not updated information on its fee payments since September 2021, but RMT produced forecasts on the basis of payments made. See https://www.rmt.org.uk/news/public-document-library/toc-pandemic-profits-060123/toc-pandemic-profits-top-300-million-and-show-industry-leaking-cash-for-dividends.pdf ) All of this profit is available to be turned into dividends. Historically, the TOCs have taken at least 65% of their profits before tax out in dividend payments and invest almost nothing in the railways (see https://www.rmt.org.uk/news/rail-companies-raking-in-profit-and-stripping-the-railways-of/ )
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The cost of indemnifying he TOCs against the loss of ticket revenue is likely to be almost £1 billion now. In May, the Daily Mail claimed to have seen ‘internal industry analysis’ estimating the direct cost as £900 million, since when there have been four further days of action by the RMT. RMT’s analysis of the private TOCs alone (discounting LNER, Northern and Southeastern) gives a figure of £725 million. Questioned in Parliament about RMT’s methodology, Steve Montgomery from the Rail Delivery Group said it was likely to be broadly right but probably higher. Both calculations point to a figure that’s likely to be around £1 billion in direct taxpayers’ subsidies to the TOCs for the strike action. (https://www.dailymail.co.uk/news/article-12137327/Strikes-set-cost-railways-1billion-union-bosses-accused-wrecking-industry.html?ico=topics_pagination_desktop )
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The total cost of the dispute is calculated by adding the £950 million in taxpayers’ money used to bankroll the TOCs, with the cost in terms of Gross Value Added lost by other workers not coming into work. This was estimated by the CEBR in December at £500 million. Using their estimates of the daily impact of rail strikes of £26 million, we can estimate the cost now at £840 million. In addition, in May, UK Hospitality estimated their industry’s lost footfall at £3.25 million. This is likely to be higher now, giving a figure in excess of £5 billion.
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