UK: Railway cost-cutting plans to be announced

[John Ashworth]

BBC 8 March 2012 Last updated at 10:40 GMT

Railway cost-cutting plans to be announced

The government is set to outline how it plans to save billions of pounds from spending on the railways.

It follows a review last year by former civil servant Sir Roy McNulty which recommended that running costs should be cut by a third to bring them in line with other European networks.

Sir Roy criticised the level of rail workers' wages and said some ticket offices may have to be closed.

Transport unions have expressed fears up to 12,000 jobs could be lost.

Sir Roy estimated savings of between £700m and £1bn could be made annually by 2019 if his recommendations were put in place.

Transport Secretary Justine Greening will later present a paper containing the government's response to Sir Roy's Whitehall-commissioned review.

Among Sir Roy's recommendations are that the Department for Transport should undertake a "full review of fare policy and structures".

He also calls for a move towards a single rail regulator and suggests rail company franchises should be less prescriptive to allow train firms "more freedom to respond to the market"

Shadow transport secretary Maria Eagle claimed the government's strategy is based on its "inability to stand up to vested interests".

She said: "The rail industry does need reform, but these proposals have a huge accountability gap at their heart.

"A serious plan for reform of the industry would put more power in the hands of passengers and local communities, not the private train companies."

'Bled dry'

The National Union of Rail, Maritime and Transport Workers (RMT) fears as many as 12,000 jobs could be lost.

The trade union's general secretary, Bob Crow, said: "If the government want to cut the costs of running Britain's railways, they could do it at a stroke by returning them to public ownership and eliminating the waste of fragmentation and profiteering that has bled the network dry.

"Instead they are prescribing more of the same."

The Transport Salaried Staffs' Association (TSSA) has launched a campaign to stop the possible axing of hundreds of smaller ticket offices across England and Wales.

TSSA leader Manuel Cortes expressed fears that if local booking offices were closed then "the station itself will not be far behind it".

"We are in no doubt that the government's plans for rail will be cast in the image of their plans for the NHS - smashing up what's left of a national system and allowing the private train companies to run riot in the name of profit and at the expense of passenger safety," he said.

BBC transport correspondent Richard Westcott said: "Britain's railways are booming - more popular than at any time since the 1920s. But, despite privatisation, the taxpayer still pays around 40% of the costs."

Annual rail ticket price rises in January saw the average cost of regulated fares, such as season tickets, increase by 6%.

High fares

Sir Roy told BBC Radio 4's Today programme that his recommendations would not mean higher fares.

He said: "One of the central points of our report is that passengers are already paying fares that are too high.

"Our estimate was that passengers in this country are paying about 30% more than their counterparts elsewhere and the cost reduction is essential if that situation is going to be redressed."

Transport analyst Christian Wolmar said the problem was that the railway industry was too fragmented.

He said: "When it was one industry, British Rail, it was subsidised to the tune of around a billion-and-a-half in today's money and at the moment it's getting four billion pounds of taxpayers' money.

"The thing that has changed is that it has been broken up into lots of little bits, lots of different operators, lots of various engineering companies, all sorts of bits are being privatised and broken up, and that's where the cost is."

McNULTY RECOMMENDATIONS

The Department for Transport should undertake a "full review of fare policy and structures"
Rail industry should be responsible for more strategic planning
Rail industry should establish a group to focus on driving down costs
Franchises should be less prescriptive to allow train companies "more freedom to respond to the market"
There should be a single regulator for the rail industry
Need for "pay restraint" with staff and senior management
There should be an increase in standardisation and "more effective procurement of rolling stock"
Sir Roy also calls for "pay restraint".