Transport Committee
Oral evidence: Rail strikes, HC 581
Wednesday 11 January 2023
Ordered by the House of Commons to be published on 11 January 2023.
Members present: Iain Stewart (Chair); Mike Amesbury; Mr Ben Bradshaw; Jack Brereton; Paul Howell; Chris Loder; Grahame Morris; Gavin Newlands; Greg Smith.
Questions 332–399
Witnesses
II: Steve Montgomery, Chair, Rail Delivery Group; and Tim Shoveller, Chief Negotiator, Network Rail.
Witnesses: Steve Montgomery and Tim Shoveller.
Q332 Chair: For the purposes of our records, I invite you to give your name and position please.
Steve Montgomery: I am Steve Montgomery, the managing director of First Rail and chair of the Rail Delivery Group.
Tim Shoveller: My name is Tim Shoveller. I am the managing director for Network Rail’s north west and central region, but for the last 18 months or so I have also been leading in the negotiations around reform.
Q333 Chair: Thank you. You were sitting in the back row for the first panel of witnesses. I will start by putting the same question I put to the trade union representatives. To get a broad sense of where you see things are, on a scale of one to 10, how close do you think we are to getting a resolution to this, one being nowhere near and 10 being very close?
Steve Montgomery: The challenge is that it depends on which trade union you are speaking about. To take the three trade unions that were represented earlier, I believe that we have an opportunity to try to move forward with the RMT. I think we are within reasonable areas of where we can get a deal, but we have to work through it with them. Obviously, as indicated, there are further discussions tomorrow. We will wait and see the outcome of those. TSSA is in a very similar position, where we have further discussions tomorrow.
ASLEF is slightly different. We have been further behind with ASLEF. Obviously, we made the offer last Friday. We have heard the reaction of ASLEF. We need to do more work with them and try to get back around the table. That one is probably further behind than the other two at this moment in time.
Q334 Chair: Thank you. I will come back on the ASLEF point in a moment. First, Tim, where do you see things from Network Rail’s perspective?
Tim Shoveller: There has been further progress. Of course, in December we made the revised offer. It is a 10 for the TSSA and Unite, which are part of the same negotiating group. They are resolved and that is good news. Those members of staff have now had that money for the controllers grade group. As soon as we can resolve with RMT, that will resolve those two unions.
For RMT, 36% of members who are Network Rail employees voted yes for the deal, so we are a bit short of the 50% that we need. It is a couple of thousand people who need to change their vote. We met again with the RMT leadership yesterday for discussions, and we are planning to meet again next week. I would place that at a seven.
Q335 Chair: You are more optimistic than we have just heard from the trade unions that this can be resolved.
Tim Shoveller: On Network Rail disputes with the RMT—the only one outstanding from our perspective—yes. I base that on the fact that 36% of Network Rail members of the RMT voted yes for the deal, so we only need two and a bit thousand people to change their views from an audience of over 20,000 and that deal is then credible. I think there is every chance, by some very carefully targeted discussions, of us achieving that.
Q336 Chair: For those people you want to persuade to accept the offer, is that across the board of union members or are they in one particular sector of the industry?
Tim Shoveller: This is absolutely within the Network Rail part of the population of RMT membership. There are some specific areas of the deal that we are going to focus on. We know that during the referendum that took place in December—because that referendum happened quite quickly—there were some quite complex parts to this deal. It achieves quite substantial change. With hindsight, it is clear that there were a number of questions and issues that people had that were not fully explained during that short referendum. That is our approach.
Q337 Chair: Thank you. Mr Montgomery, I will pick up on the offer that was put out to ASLEF last week. You have heard this morning and in the press that it provoked quite an angry reaction. Could you talk me through why you put out the offer in that way, perhaps in the expectation that the reaction would be what it has been?
Steve Montgomery: The situation with ASLEF, as I indicated earlier, is that it has not moved along as quickly as we would have wanted it to. That has been people’s availability and those types of things. The negotiating teams have been speaking to ASLEF. They have made themselves available at certain times. What has been quite clear throughout is that it is about trying to put something down on paper to describe the wider areas of reform that it would require.
As Mr Whelan alluded to earlier, the enabling framework agreement that we started off with at the beginning had a number of reform areas that we looked at. When we talk about the £2 billion industry shortfall, when the pandemic struck, revenues fell to as low as 5%. They have recovered roughly in the area of about 80%, so that is a shortfall of about £2 billion in what we would normally expect to see in revenue for the industry.
We worked with the trade unions on how the industry could help meet that shortfall, working together and looking at areas where we could self-help—areas of reform. The workforce were part of that area of reform, and there were other areas outside that, looking at different capitalisation of projects and those types of things. That is what we have been trying to work on with the trade unions. Those discussions have moved at various paces. The RMT have probably been more engaged in some of the negotiations. ASLEF have been slightly behind, but we have been talking to them. It is not fair to say that we have not been talking to them.
Over the last number of weeks, we have been trying to lay out exactly what we are looking for. People have said that we have not made an offer. We decided that we were going to make an offer to ASLEF. I tried to speak with Mr Whelan between Christmas and new year. He was looking to try to have a further meeting with the Minister. I then tried to speak to him last week, to turn round and say, “Look, can I have a chat with you so we can start to talk about some of this?” He was unavailable. I tried to phone him on the Friday morning, again to update him that I was going to issue something. Unfortunately, he was tied up in meetings that day and we left it to as late in the day as we could within office hours. Then we put the offer out at 3.15 in the afternoon.
Q338 Chair: So it is fair to say that you have made reasonable efforts to engage with ASLEF throughout this and the offer that you put out late afternoon on Friday was, I don’t want to say at the point of exasperation but—
Steve Montgomery: I would not say it was at the point of exasperation. I think it was to try to lay out all the areas of reform that we needed to do and put everything in one document. It could then allow us to use that document to move forward as a negotiation. What I and the trade unions internally try to do is have that negotiation so that we can try to flush out the areas where we are in agreement or disagreement, and then try to work forward with that, so that we can get some form of settlement to get this dispute off the table.
Q339 Chair: Having listened to what they said earlier in this session, what is your next move to try to engage with ASLEF?
Steve Montgomery: I think Mr Whelan alluded to the fact that he is going back to his board and his executive committee. I believe they will look at that document next week, and they will come back to us after that with a response to that document, or maybe not a response but they will come back in some shape or form. I would surmise that they will then say whether it is acceptable, or reject it, or whether they want to enter into further talks to understand it more. That is what we want to encourage. We want a further discussion with ASLEF so that we can try to go through the document in more detail and then try to work towards a solution.
Q340 Chair: I think I am quoting him accurately when he said that there was not one line in it that he could possibly accept. That does not sound terribly hopeful. If that is the reaction when they have spoken to their executive, what comes next?
Steve Montgomery: Again, they have to take it away. They have to read through it. I would say that there are a number of areas where we can get common ground. The thing we have to be quite clear about is that we are not cutting people’s wages or increasing their hours. What we are trying to do is work within the frameworks that we have in the companies so that we can then get greater productivity that provides a more punctual and reliable railway. That is what we are trying to work towards. It then makes us more cost-effective. These types of reforms will make us more cost-effective, less reliant on rest-day working and those types of things. That makes a railway better. We can deliver that service for customers who, let’s be fair, through all this process have been the people most affected. Obviously, staff are impacted by the strike action. We have to work together to try to resolve this.
Q341 Jack Brereton: My questions are predominantly for Mr Montgomery. In terms of making an improved offer to RMT and TSSA, what is the improved offer? Are you planning to make an improved offer to them?
Steve Montgomery: Obviously it is a negotiation, and it is confidential at this moment in time, so I would not like to talk about what we are going to discuss tomorrow. I do not think that is respectful to the trade unions. No disrespect to the Committee, but I think you understand my position. It is important that we have that discussion with the trade unions tomorrow and try to see if we can get common ground and move forward with a deal.
Q342 Jack Brereton: What is your understanding of where that common ground might be and how you can move these negotiations forward?
Steve Montgomery: Again, I would rather take that and discuss it with the trade unions than debate it in the room here.
Q343 Jack Brereton: In terms of the ASLEF union, we heard earlier from the representative Mick Whelan. He basically said that he does not even recognise your existence and the existence of RDG. Do you think that attitude has been helpful?
Steve Montgomery: We have worked very closely with all the trade unions since the start of the pandemic through the Rail Industry Recovery Group. We have sat together and come up with enabling framework agreements that have allowed us to look at these different areas of reform. There is a recognition that, as that body, we have been doing the role of RDG/RIRG. It gets a bit confused. I am the chair of RDG. They have used me as the chair of RDG to sit on the RIRG—I am sorry about all these acronyms—to try to help facilitate the discussions between the trade unions.
As I alluded to earlier, Tim and I are very experienced railway people. We have a lot of knowledge of how the industry works. We are using that knowledge to try to work with the trade unions to get the best outcome for passengers. That is what we are really trying to look for. Particularly during the pandemic, with how we had to deal with staff and all the restrictions that were applied, it has been a really important forum. We have tried to continue that forum to lead into the pay discussions that we have had, taking the reforms that we have talked about in the Rail Industry Recovery Group and turning them into a package.
Q344 Jack Brereton: Do you think the approach that ASLEF have taken could be partly why, as you say, they are much further behind in those negotiations than the other two unions that you have been negotiating with?
Steve Montgomery: I think it is a combination of things. We just have to get more time in the room and try to work through the detail a bit more. I think the document we put out helps that situation. It is more open, and everybody then sees the key areas where we believe reform can help drive the funding that we need to give our staff a pay increase. It is important that we get all those items on the table, and then we can discuss them with ASLEF.
Q345 Jack Brereton: What do you see now as the next steps in how you are going to move these negotiations forward? How long do you think it is going to take?
Steve Montgomery: We are seeing the RMT and TSSA tomorrow. Again, depending on how those discussions go, it will dictate where we go with the next stage. As I say, we are waiting on feedback from ASLEF next week. Once we get that feedback, we will obviously try to re-engage as quickly as we can so that we can try to debate these areas of reform and, hopefully, get to something that we can move forward with quickly. I accept that there are a number of challenges in that.
Q346 Jack Brereton: We heard from Mr Lynch that he has a ballot for a further six months. We have heard from ASLEF that they are planning for up to two or three years, potentially. Are you going to allow it to go on for that long?
Steve Montgomery: Certainly, we do not want it to. We have been quite clear that we want to try to get resolution of these disputes. It takes both parties. We want to sit down with RMT, TSSA and ASLEF to try to resolve this as quickly as we can. This is hurting the industry. We have to be quite clear that this is hurting the industry. In some of the questions that were asked earlier, we are seeing customer confidence in this industry ebbing away every day. We see it when strikes happen, and in the disruption with action short of strikes when people do not become available to cover turns at short notice. These things are all impacting, and customers are starting to use other modes of transport. We have to sit with the trade unions and try to get ourselves sorted out so that we can then start to provide a service for customers. That is really important. That is what Tim and I are really focused on. It is getting the dispute resolved as quickly as we can, so that we can restore the services.
Q347 Grahame Morris: Good morning, gentlemen. We have covered some of the areas. In relation to the ASLEF offer, I think you were here for the earlier session. In relation to the offer that was made on Friday, Mick Whelan explained to the Committee that, because of the fragmented nature of the rail industry, he is dealing with various bargaining units in Scotland, Wales, Merseyrail and so on. It is understandable that there are many time pressures, and that is even without the freight side of things, where the disputes have been resolved, so perhaps he is not instantly available. It does seem to have caused some angst. I made a note of the time. I think he said it was 15.38.
Steve Montgomery: It was 15.18.
Q348 Grahame Morris: He did make a comment that he thought it had undermined good faith in the process to make that offer directly to the members. I just point that out.
Given that you were in agreement with the £2 billion figure that Mick Lynch and the whole panel agreed with in terms of reducing costs, could you give the Committee some insight as to how the modelling works—for example, the plan to close the ticket offices? That might be Mr Shoveller’s area. How much saving would that bring about?
I have heard Mr Shoveller on the TV talking about the need to improve safety and not to have workers exposed to risk, and so on. Some of the new technologies—such as driver-only operation—will surely require significant investment in signalling and so on. How does the cost modelling reflect this £2 billion-worth of savings?
Steve Montgomery: Without getting into the mega detail of it all, the workforce reform areas have various packages. We talk about the rationalisation of ticket offices. I do not know how much money we will save on that at the moment because we have to go through a public consultation document, should we go ahead with it. When we complete that public consultation, it has to be submitted to the DFT and somebody has to opine on whether that booking office can close or whether we can reduce the hours in it. That is how the process works at the moment. Until you go through that whole process, you do not actually know how much money you could potentially save.
To be clear, with a lot of booking offices we are not talking about un-staffing stations. This is one point we need to be quite clear on. It is about moving people out from behind the ticket office window on to platforms, able, hopefully, to give a greater service to customers, but you want to make sure that people are there to deal with more vulnerable individuals. The individuals we take out from behind the glass can sell the same types of ticket through the ticket vending machines, or they can help customers get a ticket if it is a unique thing, which is about 1% of tickets. If it is something unique, they can help the customer out.
When they are out from behind the glass, if they see a vulnerable individual or somebody needing assistance—be it a child on and off a train or wheelchair assistance—they are there, rather than behind the glass.
Q349 Grahame Morris: I understand that, but surely there must be some costings as to what the cost-benefit is of repurposing, if that is the term you are using, or however we describe the closure of the ticket offices. How many ticket offices are we talking about?
Steve Montgomery: There are roughly 990. That is the figure we mention in documentation.
Q350 Grahame Morris: I understand that the trade unions have submitted a complaint to the Central Arbitration Committee on the grounds that you are refusing to disclose information that relates to the modelling of costs, not just in relation to ticket offices but in relation to the anticipated cost reductions of driver-only operation as well. How are you responding to that?
Steve Montgomery: We are dealing with it at the current time. It is something that is live. We are dealing with it at this moment in time.
Q351 Grahame Morris: We heard previously from the trade unions, and indeed we have the Rail Minister coming next week. We had the Secretary of State giving evidence to the Committee. He was quite definite. He told the Committee on 21 December: “I am encouraging the trade unions and employers to get round the table and hammer out that deal on workforce reform which delivers some of the financial savings that can help make a better pay offer.”
We have heard that really your hands are tied through the mandate in the contract. What kind of interaction are you having with the Secretary of State in relation to the preconditions that have been placed on you?
Steve Montgomery: Obviously, Government have the overall funding of the industry. On the contracts that are now set up, particularly for train operating companies, we are very much reliant on going back to Government. As was alluded to earlier, we have to ensure that we seek permission before we do anything that becomes what they call a disallowable cost. That is why I and the negotiating team for the train operating companies are trying to do this centralised framework agreement, so that we can go to Government and say, “Look, we believe that we have negotiated these areas of reform. We believe that it could be worth X, Y and Z. We believe this could result in a pay increase of”—whatever that pay increase is. “We want to be able to offer that to the trade unions.” That is submitted to the DFT, and then if people believe that that is the case—people have to check these things—we will get a mandate back on what we believe is a sensible offer.
Q352 Grahame Morris: I am grateful for that response. I want to put something to you from previous evidence sessions when we have had other train operators, notably Northern Rail, the principal rail operator in my area, and indeed Avanti.
When we asked them about their view on driver-only operation, particularly for Northern Rail, where many of the stations, including those in my constituency, are unmanned, it is not something that they think is either desirable or that the network is currently formulated for and would support. Is there pressure from your own membership in relation to this precondition on accepting driver-only operation, or is it something that has been specified by the Secretary of State and the DFT?
Steve Montgomery: Driver-only operation or driver-controlled operation is something that we have been speaking to the trade unions about for many years, as you know. Approximately 45% of services that currently operate driver-only operation are driver-controlled operation. I am sorry about these two terminologies. There is a distinct difference in a lot of these cases, as there is a second person in the back of the train who deals with the customer service element. With some pure driver-only operations you might not have a second person on the train.
It is what we have been talking to the trade unions about, right from the outset, from the enabling framework and over many years. Driver-only operation or driver-controlled operation is not something new. These discussions have always happened and will probably continue to happen in the future.
The key area for us is: where can we make it more reliable and more punctual for customers? The example is that we are sitting at Waterloo and are bringing in new trains, potentially, to South Western Railway. If we have driver-only operation, or driver-controlled operation, can we get trains out that are more punctual and more reliable without disruption of the network? If the guard has been delayed, could we put that train out on time and get the guard to join the train at another point? That is the type of area, the flexibility that we are trying to do, but it can only happen where the infrastructure and the trains are able to cope with it. The industry across a lot of the network is not in that shape yet because the trains are not capable of doing it. It is only where the trains and infrastructure are able to do it, and the trains are equipped, bought and brought in to do that, that we will use that type of equipment.
Grahame Morris: My last experience—last Friday on a Lumo train from Newcastle—was that it was delayed two and a half hours because of camera failures on the train. I will hand back, Chair.
Q353 Chris Loder: Good morning, Steve and Tim. It is nice to see you. Steve, I want to briefly ask you about the DOO/DCO point and then I will move on with Tim to talk about the RMT negotiations.
So that we are clear on the whole DCO/DOO proposition, it is fair to say that there is a lot of concern from members of the public—born of what they have heard from what the unions have had to say—that there is a proposal to make the entire railway DOO. Hearing what you have just had to say, that is absolutely not the case. Could you be a little bit more explicit as to the conversations you are having about it, and maybe what sort of percentage of the railway, if you can put it in those terms, you are potentially seeking to have conversations about in that respect?
Steve Montgomery: Again, to be clear, even with any of the proposals, the thinking on a lot of routes is not to have only the driver on the train. We have seen a lot of occasions where we would see a second person for customer service and revenue protection. It is not to take people off the train fully. It is about punctuality and reliability of the trains themselves. The only way that you can move this forward is for the trains to be fitted to operate with cameras so that the driver can see all the doors.
At the moment—I do not have the exact figure—there are a number of trains in service that we could probably use more effectively. If future trains are ordered with that type of equipment, and the infrastructure is capable of coping with it, we would like to use that to drive punctuality and reliability. It has been proven that with the driver opening and closing the doors, it saves the on-train person having to run away from a customer to go and operate the doors.
Q354 Chris Loder: I understand that. For example, on the Waterloo to Weymouth line, or the Waterloo to Exeter line, where the trains are not accommodated to do it and the infrastructure does not exist, there is no appetite whatsoever to do it.
Steve Montgomery: There will be no change. We have a lot of trains that are not equipped to be able to do that at this moment in time.
Q355 Grahame Morris: Could I come in? I just want to be clear. You told my colleague, Mr Loder, that there is no plan to do it on every train. Yet the proposal says that driver-only operation will be the default mode on every train. That is the proposal that you are giving to the trade unions.
Steve Montgomery: Where the train is equipped to be able to do it. There are a lot of trains that are not equipped to be able to do driver-only operation.
Q356 Grahame Morris: Is there that qualification in the agreement?
Steve Montgomery: Yes. Clearly, the trade unions understand that. A train that was built in 2000 does not have cameras fitted in the cabs. It does not have the cameras outside the doors. You could spend a lot of money and convert the train, but in these circumstances what we are saying is that where the trains are currently equipped to be able to do that, or there are new trains brought into service, we would look to try to use that facility on the train, again to drive punctuality and reliability.
Q357 Grahame Morris: And that is reflected in the agreement, or in the proposal?
Steve Montgomery: The understanding is certainly there with the trade unions. I do not think there is any misunderstanding in that area.
Q358 Chris Loder: Tim, can you give us an update from your perspective, please, on the situation with negotiations with the RMT as it is today?
Tim Shoveller: We met yesterday with the leadership of the RMT, with Mr Lynch and Mr Dempsey. We are having discussions because the offer that we made in December was a substantial offer. As I mentioned earlier, it has been accepted by two of the three trade unions.
We wanted to hear from the leadership of the RMT their views on why the RMT have been unable to support and recommend the deal, as we hoped they would have done when we made the offer in December. They sent it out with a recommendation to members to reject the deal, which we know caused some people to vote no. We wanted to understand any other details that they particularly wanted to feed back on that had been causing concern.
We were also able to suggest some areas where, based on discussions that we have been having with our staff members, we had feedback after the referendum in December. People had said to us, “I didn’t quite understand this point. Could you explain this to me again? I have a question about it.” As I said, because it was quite a short referendum and there was little time to prepare for it, it did not give time for some of the materials and some of the briefing that we both wanted to do to make sure that both representatives and managers could have answered the genuine questions that our employees had. That process did not work effectively at all.
What we would like to do is really understand—we have been doing that over the Christmas period, and hearing from the union yesterday—which of those areas we should specifically go back on to provide further discussion and confidence for our employees, with the objective of being able to have a further referendum at the right moment.
Q359 Chris Loder: Do you currently have any insights as to what the specific remaining issues are that require resolution?
Tim Shoveller: Yes, I do. There are two or three areas that have become very clear, based on the feedback that we have had from employees. They are broadly similar to the things that I am hearing from the RMT as well. That allows us to target very clearly the things that we can perhaps provide some further guidance on and some areas that perhaps we did not explain very well. Therefore, doing that better gives our employees a better opportunity to understand just how good this deal can be for them.
As we have said, you are aware of the 5% offer that we made for 2022, but, as the trade unions and general secretary of the TSSA agreed, that comes with an underpin of £1,750. For some of our employees who are on £30,000 or less, that means that the deal is worth over 10%, not 9%, and more the further you go down the pay scales. Especially for the lower-paid members of staff, this is a valuable deal. Of course, it comes with all the other things we have talked about that the union have asked for, like a guarantee around no compulsory redundancies until January 2025 and discounted rail travel for the employee and their dependants, which, again, is something that the unions have been asking for for a long time.
As well as the cash, there are a number of other elements to this deal which we think recognise the challenging environment that we are in. It recognises the economic circumstances, the cost of living issues and inflation. It is making it an affordable deal, but also making it an attractive deal. We are trying to look after those who need the support.
Q360 Chris Loder: You probably heard me ask the general secretary of the RMT earlier about how rock-solid his members were in the strikes over the last five or six weeks. I wonder if you have any insights or observations that you might be able to offer in respect of the question I asked earlier.
Tim Shoveller: Yes. The strikes have been under way now for a very long period of time, but in the last set of strikes, and especially after Christmas, we have seen that there has been a return to work by a number of employees, both in maintenance and operations. It is very localised. It tends to be groups of people that will come back in rather than individuals on their own. Nevertheless, yes, there is clearly a pattern of that which we can see emerging.
Q361 Chris Loder: Would you say that some employees, who are also members of the RMT in this example, are now in the situation where they want to come back to work, and maybe the shortened referendum period that we saw last month might not have given them enough time to properly digest what was on the table, so we might be in a position of real optimism here?
Tim Shoveller: Absolutely. I am perpetually optimistic. In these types of roles, despite all of the challenges, we have to keep searching repeatedly for an area where we have alignment and something we can build on. I think this is a particular area now. Yes, it is quite clear from the discussions that I have when I go around talking to my team, my staff, and from what I see from my email inbox and contacts that I receive that, yes, there was a general feeling from a lot of people that before Christmas the referendum was too short. It did not allow people time to ask the questions they had. I think it has been a substantial thing for those employees or groups that have come back into work. It is not done lightly.
It is not the way that we want to resolve the dispute, either. We did not set out to break the strike. We set out to run a train service safely and reliably, even on days when the RMT were not at work. We will continue to do that and, indeed, should there be more strikes—I sincerely hope there are not—we will look to run more trains next time. Our capability to do that is growing. Our main effort is to make sure we try to find a way of clarifying the questions that people have, so that we can find a way of resolving it.
Q362 Chris Loder: Tim, finally from me, it is clear that you have made a lot of progress and indeed resolved the dispute with the TSSA and Unite in terms of Network Rail’s relationship. Would you like to briefly share any insights as to why it may have been quicker or easier to come to a settlement with those unions rather than the RMT, where you have not come to a conclusion yet?
Tim Shoveller: There is no doubt that the fact that the TSSA, for example, recommended its members to vote yes for the deal helped. I really feel for our employees. We have all been there, actually. These are very confusing times. They receive messages from management and from unions, and understanding the detail of a deal or a proposal is complex.
Therefore, sometimes, employees listen very clearly to what the union is saying. When a union suggests, “Yes, we think this is a deal that you should support,” that clearly brings with it a weighting. TSSA did, and we had a high very positive response from the TSSA members. That was not the case with the RMT. We had hoped that the RMT would support the deal. They were not able to support the deal. In fact, they recommended members to vote no. Despite that, 36% of members voted yes. I think that is quite significant. That is one of the things that gives me optimism to think that we are on the right track.
Chair: Grahame, do you have any supplementaries on this point before we turn to Mike and Gavin?
Q363 Grahame Morris: I was wondering about the additional costs, particularly on strike days, of accommodating people in hotels and, as we heard from the earlier panel, of supplementary sums being paid for replacement train drivers. Is there an estimate of the costs that the employers are incurring in such additional expense?
Steve Montgomery: I do not have any estimate of the cost, but obviously the reason why we do that is to try to provide a service for customers on strike days. There is a cost for that, but there is an even bigger cost if we were not to do that in the lost revenue that we would see. It is really important that we try to provide as many services, albeit limited, as we can by using these staff to come out and do these additional duties.
Q364 Grahame Morris: Presumably, they would often be managers who had previously done those roles in the past.
Steve Montgomery: Predominantly, yes.
Q365 Grahame Morris: Are you very confident about the safety aspect of using managers and others in these positions?
Steve Montgomery: Those individuals have to be trained to a certain standard. On the day, we put additional people out to monitor and to make sure that the people are doing what they are meant to do. Obviously, we have to work with the Office of Rail and Road to make sure that we have a sensible and safe method of operation during strike days.
Tim Shoveller: I would like to build on that. A comment was made earlier that people who are not qualified have been used to run signal boxes. That is absolutely and manifestly not the case. There is no circumstance in which we would allow that to happen. I am absolutely sure through assessment and independent validation that our managers who are working in signal boxes are competent. They have done a super job.
Building on that, because there is protected critical national infrastructure—supplies of freight to power stations—if we think back to June, when we were having the first discussions, there was a real concern around how freight and critical national supplies would be impacted. Biomass to power stations is a particular example. I am very pleased that, while it was a shame that it was necessary, we managed to make sure that those trains ran, and that critical national infrastructure has been protected. That is why we have been investing in making sure that managers can do that competently and safely.
There are incidents on the railway every day, both on strike and non-strike days. They are all investigated in the same way to the same standard. Finally, recognising that some of those managers perhaps would not have been in those posts for some years—it is a long time since I have worked a train—one of the reasons why we reduced the number of trains on those days was so that managers were not under the same pressure as a normal member of staff would be. One of the reasons why we thinned the service out a bit was to make sure that they had the ability over the, now, 19 strike days to refamiliarise themselves with those roles and become not only competent but proficient in dealing with situations that have occurred. We have a lot of evidence that that has been the case.
Q366 Grahame Morris: Would those safety incidents all be documented?
Tim Shoveller: Absolutely.
Q367 Grahame Morris: I am thinking back to Friday. It was a non-strike day when I travelled, and there were only two trains running in the north-east. The one I got was two and a half hours late.
Tim Shoveller: We investigate any incident that occurs in the same way on a strike day as on a non-strike day. It is independently reviewed. Of course, the objective is always to understand why, so that we can help people improve. That is the same whether there is a strike or not.
Chair: We now want to turn to the role of the Government. Mike and Gavin have some questions on that.
Q368 Mike Amesbury: Hello to you both. I will start with Tim. Have the new Secretary of State and Rail Minister taken a different approach to their predecessors in the negotiations, or are they still throwing a spanner in the works?
Tim Shoveller: Network Rail is in a slightly different position from the train companies. As an arm’s length body, we are governed by the public sector pay arrangements. Nevertheless, throughout this we have kept the Department for Transport fully aware of the changes and the proposals that we have been making, and indeed asked their support on, as the public sector pay guidelines required.
The most notable difference, of course, is that the current Secretary of State and the current Rail Minister have physically met with the trade union leaders, which did not occur before. Other than that, I can see no difference. Throughout the process, as I have said a number of times to this Committee, there is enough money in the railway to do what needs to be done. The challenge is to create efficiency and to do that safely so that we improve the service to passengers and focus on that.
What we have done throughout this is to identify the changes that we want to make. In this case, maintenance particularly is the area where it was important to save money and to improve the reliability of the railway as well through the use of technology. That means we need fewer people. Undoubtedly, that was one of the things at the beginning of the dispute that the RMT were particularly concerned about. We made the business case. We demonstrated to Government that reducing by 1,850 members of staff would allow us to achieve the savings that we needed to make and would provide a package for pay. We asked for Government support and approval to make that package. That was given back in June. We did it again in December, and it was given in early December for the offer that we made. I hear the tone, but in terms of the practical process, no, the process has not changed much.
Q369 Mike Amesbury: You say there is a difference in tone.
Tim Shoveller: Obviously, in so far as the current Secretary of State and the current Rail Minister have met the trade unions directly on a number of occasions. That did not occur before. That did not help me resolve the disputes with the TSSA or Unite. It is not preventing me from resolving the dispute with the RMT.
Q370 Mike Amesbury: Steve?
Steve Montgomery: I have a similar response. The fact that the Ministers have met with the trade unions and general secretaries of the trade unions, and that the Rail Minister is now acting in the role of trying to facilitate further discussions, is allowing the employer and the trade unions to go away and try to understand the areas of difference. Ultimately, it is back to me and Tim to lead the discussions with the trade unions and to try to get the deal on the table. Yes, there is greater engagement, but, ultimately, it is up to Tim and me to sort it out.
Q371 Mike Amesbury: You refer to closing ticketing offices, driverless trains and a whole set of demands around the terms of reference. It seems to be driven by the DFT and ultimately Ministers, yet by your own admission you seem to be pretty clueless as to how much that would save you. The work has not been done, yet the Minister seems to be claiming that that is where the money will come from. Is that putting a spanner in the works? Is that a hindrance or helpful?
Steve Montgomery: First of all, it was me who came up with the areas of reform in the industry and the financials of that. What I alluded to earlier was that we do not know the final number because we do not know how many booking office staff would be repurposed to other roles and so on. There are overall figures that we have, but we cannot tie it down to a final figure until we go through the areas of reform. We have put numbers against different areas of reform. We talk about these large-ticket items, which are DCO, DOO and so on. There are a lot of smaller areas of reform that could generate just as significant amounts of money as DCO/DOO, but we need to go through them with the trade unions and try to resolve some of them.
Again, it is not about people working longer. It is about trying to get greater efficiency within the hours that we have people in the workplace. That is just about tweaks in terms and conditions, not about a wholesale throwing out of everything.
Q372 Mike Amesbury: Moving on slightly, on the Floor of the House yesterday, we had a statement on the draconian legislation to effectively try to ban strikes—that is what it is—known as minimum service levels of agreement. The previous Bill, and the previous impact assessment, came back saying, “Look, this would aggravate matters. It would lead to further industrial action.” Steve, what is your assessment?
Steve Montgomery: I have not seen the detail of the legislation, and we have not been privy to what it will really mean. Is it 30%, 40% or 50% minimum service levels? We have not seen that detail. When, or if, the legislation gets through, we will work with it once we understand it. At the moment we do not have any other insight into what has been announced.
Tim Shoveller: I am in the same position. There is a difference between how a minimum service might be applied in a signal box and, for example, on a train. The signal box is either open or shut. It is binary. With trains, you can have more or less of them. We need to understand how legislation would apply in those types of circumstances. We have not seen the detail yet to be able to do that.
Q373 Mike Amesbury: Can you run a safe railway with this form of provision in place, curtailing the right for employees to withdraw their labour?
Tim Shoveller: We only ever operate a safe railway. If it is not safe, we will not do it. What I can say is that, from previous experience much earlier in my career when I used to work for Eurostar, I saw on a number of occasions in France—not through legislation but through the way their trade unions are structured differently—how, when there was industrial action there, some train services would run, but not all of them, depending on which trade unions were at work and which were not. I have to say that was quite a frequent event at that particular time back in the 1990s. It was caused by different things, but nevertheless the effect was the same, which was that some trains ran and other trains did not. I have no reason to see why that in itself creates an issue of safety.
Q374 Mike Amesbury: Have you had any discussions with Ministers about this?
Tim Shoveller: I have not been involved in any discussions with Ministers, no.
Steve Montgomery: On minimum service levels? No, I have not.
Q375 Mike Amesbury: No discussions whatsoever?
Steve Montgomery: They told us that legislation was coming, but not the detail of it in any way at all, no.
Q376 Gavin Newlands: I had a number of questions, but I realise that I will trample all over my colleague’s question 15, so I will refrain and keep my questions fairly tight.
I will start briefly on this point, for clarity. Mr Montgomery, with the industrial action over the past months, how much have the train operating companies been indemnified against the cost of these strikes?
Steve Montgomery: The contracts are set out over the year, depending which contract you are on, whether it is a national rail contract or an emergency measures agreement. You are measured over the year. You are given a small percentage to operate the service, and then there are performance fees. On strike days you would exclude that. They would be excluded from the performance days, but you are still measured over the other 300 and X days when strikes are not happening. That is how it is measured, and it is done by an independent body at the end of the year to evaluate how you have delivered.
Q377 Gavin Newlands: Can you give a rough percentage of who meets the cost? Is it the DFT and the taxpayer or the TOC? What percentage do the TOCs meet, or are you totally indemnified and it is the taxpayer who pays for it?
Steve Montgomery: The cost of it—the staff salaries and loss of revenue—all now sits with Government. When we moved from the franchising arrangements to the emergency agreement, and now NRCs, all the risk of cost and revenue sits with Government.
Q378 Gavin Newlands: That was my understanding. Thank you for putting that on the record.
You may have heard me ask the previous panel this. From a TOC or RDG perspective, what is your take on the difference in approach to negotiations and disputes by the Scottish Government—or, indeed, other devolved Administrations—and the UK Government?
Steve Montgomery: I am not involved in discussions with those other Government bodies. I do not deal with them.
Q379 Gavin Newlands: Do you chat to colleagues about them?
Steve Montgomery: Again, I do not deal with them. I do not have an opinion on it because I do not have enough knowledge of it, if I am perfectly honest with you.
Q380 Gavin Newlands: Obviously, as a former MD of ScotRail you will be more aware of these situations. It is now nationalised, but in general terms the ScotRail agreement that is now in place is made up of a percentage that is being paid by ScotRail and a percentage that is being paid by the Scottish Government or Transport Scotland, a Government agency.
As a former MD of ScotRail, would you agree that, if ScotRail’s significantly inflated track access charges were in line with the rest of the UK rail industry, they would be able to pay more of that settlement from their own resources?
Steve Montgomery: I do not know what ScotRail’s track access charges are, to be perfectly honest with you. That is a matter for the Scottish Government. With Network Rail, as the chair of RDG, I do not get involved in that element of it.
Q381 Gavin Newlands: I am not playing poker with you, Mr Montgomery.
I have a last question for Mr Shoveller. The point was made in the last session about the service that is offered on strike days and the days in between strike days, whereby the network outwith the south-east and perhaps the spine of southern central UK largely does not get a service at all, or gets a very poor service. Scotland and the northern regions are very poorly served compared to other parts of the UK. Why is that?
Tim Shoveller: It is a question that has been asked a number of times. The approach to how each area is going to be served is driven by a number of things. I have talked about the critical freight routes, for example. I have talked about making sure that, for every manager we have, they can control the largest possible area of the most critical infrastructure.
Obviously, you have the key route between London and Scotland, and into Glasgow, for example. That is a priority and has been open throughout. Within Scotland itself, my colleague Alex Hynes is responsible. He has decided how to use the managers he has to open that network. That is not a matter for Network Rail overall. It has been locally decided. It is the same in my region, where I have decided how best to use my competent managers to protect the things that are the most important.
Typically, the things that have weighted on that for me, as I have said, have been critical national freight that has to be moved. Where we are opening passenger lines, it is how we can move the largest number of passengers with the fewest managers. There is no doubt that where you end up with more modern signalling installations, for example, one person can control many miles of track because the signalling largely runs automatically, and it is supervised. Of course, in more rural locations it sometimes typically requires one person to do five miles of track and physically move points and signals. On that basis, you are going to open a much smaller part of the railway if you deploy your managers to those locations. It is all being led by what is the right thing for freight and passengers.
Q382 Paul Howell: To build on my colleague’s comments, in the north-east, we have seen some massive disruption. When the Network Rail strike went on last week my constituents were left without a single train service. Why is it that strikes in Network Rail have shut down local rail services in the north-east but have not done so elsewhere? Why is it as dramatic as that?
Tim Shoveller: We apologise to all the passengers who were inconvenienced by that, but I do not think there is a difference. The situation described in the north-east, in some parts of Scotland and in my area in the north-west, and even in the south, is exactly the same. The focus has been on offering a service to the largest number of people and the largest number of freight companies. That typically means that the main lines stay open, but the secondary routes—the routes that are serving communities but do not have critical freight on them—are much less likely to be opened. Typically, on those local lines, the number of signallers required to operate each section of route is much higher than on the main lines. Unfortunately, it is a function of the prioritisation of freight and passengers, and getting as much mileage open as we can for each person we have.
Q383 Paul Howell: There is possibly another consideration. It should be about the criticality of the user as opposed to the volume that you are putting through, but I am conscious of time so I will push on.
I have a similar comment to Steve. They were going to shut Sunderland station down completely, and then there was a local outcry and all of a sudden it got changed. Surely, you should be in the best place in the first place. You should not need local kickback to get to that situation.
Steve Montgomery: As Tim alluded to, it is how we try to serve the masses. That is very difficult. A lot of decisions have to be made. Again, it is what infrastructure can be made available. It is difficult to balance it. I know that Network Rail has done a huge amount of work to try to get as many signal boxes as we can, and to continue on every strike day to enhance the service. It is where we prioritise and work with Network Rail to make sure we provide the best service. We are trying to do our best with it. As I say, Network Rail is getting more and more people starting to be available to open these areas.
Q384 Paul Howell: I am conscious that we are tight on time, but I would like you to make sure that you have a good look at what people need as opposed to just the volume game.
The one point that I really want to put from the Committee point of view is that, when you listened to the first session, there were some quite robust discussions about the fact that the Secretary of State was actively blocking improvements and that this was a DFT-led frustration that was going on. The RMT said that the Government are simply not giving a mandate to Network Rail. Do you recognise that?
Tim Shoveller: I think there may be a confusion. The Government gave a mandate to Network Rail, and did again in December. We have had a mandate from the DFT.
Q385 Paul Howell: Does it need a new mandate? Does it need something different to get past where we are now?
Tim Shoveller: No. I think the mandate we have is the one that I asked for and is the one that I can afford. As I have explained, we funded this deal through efficiencies. I cannot ask for a mandate that I cannot afford to pay.
Q386 Paul Howell: You do not recognise Government interference deliberately trying to frustrate the deal, which was the implication from the first session.
Tim Shoveller: It has not been an issue that I have had visibility of.
Q387 Paul Howell: Steve?
Steve Montgomery: I have received a further mandate, which will be used tomorrow in talking with the trade unions. Again, for obvious reasons of confidentiality, that is something I cannot talk about. As Tim says, we have to put proposals forward to Government, using our expertise in areas of reform, so that we can then put forward a sensible proposal, which ultimately Government sign off on and give us a mandate. We have a revised mandate for this week for TSSA and RMT.
Paul Howell: I could talk for a while, Chair, but I will hand back to you.
Chair: Thank you. Jack has a very quick supplementary, and then over to Ben for the last question.
Q388 Jack Brereton: Thank you, Chair. This relates to what we were saying a minute ago about the service on strike days. Stoke-on-Trent is another of those areas that does not have any service at all on strike days. I have had to drive on a number of occasions to East Midlands Parkway to get the train down to London. Are you going to look more, as Paul was saying, at the actual economic impact that this is having? Obviously, it is having a severe economic impact on areas like Stoke-on-Trent, which is a city without any services at all on strike days. Could you please look at and consider more the economic impacts of a lack of service on strike days?
Tim Shoveller: That is absolutely a good point. Hopefully, there will not be more strike days, but if there are more strike days we are working hard with our colleagues to try to open more of the network and see if we can man more trains. However, if opening Stoke-on-Trent meant closing somewhere else, it is robbing one to pay the other. The assessment we have made so far is that critical national freight flows, for example, that have a value to the whole country are the things that have been leading our priorities.
Q389 Mr Bradshaw: Are either of you aware of any other country in Europe that has now suffered eight months of travel disruption because of an unresolved industrial dispute on their railways?
Steve Montgomery: I am not aware of any at this moment in time.
Tim Shoveller: No.
Q390 Mr Bradshaw: We have heard that disputes have been settled in Scotland, Wales, Merseyside and London. Why do you think that, uniquely, the bit of railway in Europe that the UK Government are responsible for has not been able to resolve an industrial dispute?
Tim Shoveller: We have been able to resolve some industrial disputes with Unite and with TSSA for the same grade group that we are talking about with the RMT, and, of course, with our managers back in the summer. I think there has been progress.
It has been very difficult and complex. So much of this goes back particularly to covid and the way that—
Q391 Mr Bradshaw: Every other country in Europe suffered covid, and so have Scotland and Wales.
Tim Shoveller: Yes, but from an infrastructure perspective the thing that we are clear on is that we needed to save some money. It was clear that the efficiency of the railway was—
Q392 Mr Bradshaw: It is not really answering the question. Mr Montgomery, do you want to have a go at that?
Steve Montgomery: Let’s be fair. Scotland suffered a large number of strike days before it was resolved. It has not been a simple process. How do we protect the railway for the future? How do we economically protect it? It is by making sure that we work together with the trade unions. That is a really important thing. We have to work with the trade unions to try to secure the long-term future of the industry and the employees in the industry. That is where we are trying to move towards at this moment in time.
Q393 Mr Bradshaw: Why do you think the disputes have been settled in Scotland, Wales, London and Merseyside but not in England?
Steve Montgomery: I think it has been negotiation and compromise on both sides. That is why they have a settlement. We are still at the stage of trying to get compromise and settlement between ourselves and the trade unions. Look, we paint a picture. It is a long period of time. None of us likes to see what is happening to customers at the moment.
Q394 Mr Bradshaw: Can you see that an ordinary member of the public looking in on this, and looking in on the fact that this ongoing dispute, which is still not resolved, is a uniquely England problem in the bits of England where the Department for Transport are responsible, is going to reach the conclusion and agree with the unions that this is a UK Government problem? It is a problem with Government, not with the unions.
Steve Montgomery: I can only talk about the discussions that we have with the trade unions. It takes both teams to operate together and to try to get to a solution. Whether it is the UK Government or whatever Government, we have to deal with what we have in front of us at that moment in time. We are working with the trade unions to try to get a resolution on this, but it takes both sides. We have to continue to make sure that the railway is sustainable for the future. That means that both sides—the trade union and management—have to thrash out a sensible deal so that we can then obviously give our employees a pay increase at the end and make the railway more sustainable for customers in the future, as well as everybody else.
Q395 Mr Bradshaw: Can you put a figure on how much the Government will have to reimburse you for losses on strike days?
Steve Montgomery: We don’t receive any payment for losses on strike days.
Q396 Mr Bradshaw: You are indemnified, aren’t you, for the costs of the strike by the Government?
Steve Montgomery: The Government have revenue with them and have cost with them, so the operator, as in each of the train operating companies, does not own the cost or the revenue.
Q397 Mr Bradshaw: What is that figure? Do you know what that figure is?
Steve Montgomery: The loss of revenue on the day? It varies. I do not have the exact figure for you.
Mr Bradshaw: You have no idea what the total is.
Steve Montgomery: I have a very headline figure. I could not give you an exact figure.
Mr Bradshaw: I think one of the unions wrote to us suggesting it was £318 million so far.
Steve Montgomery: Over all the strike days that number will be quite high. Yes, it would be in the region of £300 million to £500 million.
Q398 Mr Bradshaw: That is quite a sizeable amount of money that might have gone to help resolve this dispute in terms of offering the workers a better deal, isn’t it?
Tim Shoveller: Lost revenue is not the same as increased costs, obviously. It is a tragedy to lose the revenue, but of course that is money that has not come into the industry, whereas the increase—
Q399 Mr Bradshaw: But the money that the taxpayer is having to fork out because of the Government’s failure to reach a deal with the unions is money that could have been put into that offer and resolved this dispute months ago.
Steve Montgomery: I think we have to come back to the situation where we started this whole process. The industry is at only 80% of the revenue that it had previously, yet it has 100% of the costs. How do we work together with the trade unions to try to ensure that we can reduce some of the costs of the industry and then regrow the revenue? That is the challenge for us.
We have to be clear that the industry over the last 20 years has grown and grown. There are more people employed in the rail industry in the UK. There are greater revenues. As Tim said, the pandemic affected everybody and all businesses. We are looking at the railway and how we start to grow that back now. We have to take measures to self-help because we cannot keep taking taxpayers’ money all the time. We know the pressures on the other sectors. It is how we work with the trade unions to try to achieve those savings within the cost numbers that then allow us to grow forward.
My own opinion, having been in the industry for a long time, is that we have seen peaks and troughs. Yes, this is an extremely difficult and different situation that we have experienced, but the industry does come back again and we can grow passenger numbers.
Chair: Thank you very much for your time this morning. We appreciate that there is lots still going on. We hope that the ongoing negotiations will come to a satisfactory conclusion.