Saturday 13th August 2022
Let’s take stock.
The battle for TfL is ominously sliding towards a possible nuclear option of bankruptcy and Government “taking back control”…… Rail strikes are continuing with more trains in the sidings than on the tracks today with ASLEF drivers’ turn to stop work and RMT and TSSA members out again on Thursday and Saturday next week…… Strikes are also impacting London Underground next Friday and some London Buses on Friday and Saturday while a number of strikes have seen bus networks in Yorkshire and the North West disrupted for weeks with more ballots in other areas underway…… Avanti West Coast has scaled back its timetable, alleging drivers are pursuing “unofficial industrial action” because they have the audacity not to volunteer to work a rostered rest day…… As the countdown to the withdrawal of Bus Recovery Grant heads towards next month’s deadline more bus routes are being cut back or deregistered……Last week brought news of two bus companies going bust while another was sold…… A takeover bid for First Group has been given more time, for Stagecoach has completed and for Go-Ahead has been recommended to shareholders while Arriva still can’t attract any bidders…… Long standing experienced managers are leaving First Bus, demoralised by the misplaced reorganisation I blogged about last month …… and on top of all this the impact of inflation is hitting the industry with a predicted recession just around the corner inevitably leading to people travelling less and a consequential reduction in passenger numbers. Against this background Buses Back Better brings Government money to fund a number of ‘innovations’ in 34 lucky areas including improved frequencies and extra evening and Sunday services, cheaper fares as well as DRT services which have no chance of long term survival. And there’s still the proposed £2 maximum bus fare from October, now subject to sign off by the new Prime Minister no doubt.
All this turmoil makes the two year pandemic period seem like a calm interlude in the business of running buses and trains when, aside from the devastating impact of Covid on people’s health, what seems now almost like halcyon times when there was no shortage of funding support for public transport and everything ran reliably; it’s just there were precious few passengers to enjoy it all. Now, in many parts of the country, at a time of still precarious recovery from the pandemic, passengers are being impacted with unpleasant and unreliable travel experiences which do nothing to inspire confidence.
If some of the aforementioned challenges aren’t resolved in the immediate future, the outlook for the bus and train industry looks very unsettled …. along with much else in the country at the moment.
Taking these issues in turn. I last blogged about funding negotiations between the DfT and TfL on 14th July, the day following the eleventh deadline for funding support inevitably got extended for another can-kicking-down-the-road extension for the twelfth time adding a further fortnight’s funding to 28th July. Even that deadline passed without agreement on a longer term deal, with another (thirteenth) deadline of Wednesday 3rd August agreed as being the absolute final deadline. On that day, DfT funding for TfL ceased, despite it needing another £927,000 to see it through until next April after which TfL reckons it will be self sufficient for day to day running expenses. I have my doubts on that claim not least with a recession around the corner.
A statement from TfL advised “we have today (28 July 2022) agreed with the Government that our existing funding agreement will be extended until midday on 3 August 2022 while we continue to discuss the draft funding proposal from the Government.”
Other than a tweet from Grant Shapps referring to “an additional £3.6bn worth of projects and matches the Mayor’s own spending plans from 2019” these “finding proposals” haven’t been made public.
It seems the DfT is playing hard ball on these “draft funding proposal” (which will only last for a period of 20 months in any event – hardly what I’d call ‘long term’) and has rejected TfL’s calls for the funding it says it needs. For the last ten days (since 3rd August) TfL has been using its own reserves to keep going. That situation clearly can’t continue.
The stakes couldn’t be higher. A special TfL Board Meeting was held on Tuesday to appraise the Board about what Board papers call this “pivotal moment in TfL’s recovery”.
Board papers confirm “TfL officers have been engaged in multiple collaborative clarification discussions with HMG officials. There have also been detailed discussions on multiple elements of the proposal, some of which are still ongoing. At the time of writing, TfL does not have a final draft proposal from HMG. Therefore, it is not possible to recommend a proposal to the Board at this time.”
So after all this time, with no funding currently being paid and our capital city’s so called “world class” transport rapidly running out of cash from its reserves, there’s still no “final draft proposal” on the table, let alone in the public domain. What on earth is going on? This all makes the sudden demise of Yellow Buses look like a proverbial tea party. The “multiple collaborative clarification discussions” about the “multiple elements of the proposal” sound fascinating and are almost certain to be code for cuts and “efficiencies” unpalatable to TfL. I don’t doubt they’ll also include commitments to reduce the burden of pension costs for London Underground employees, a matter stoking the current dispute with the RMT and leading to another strike next Friday.
Ominously the report to the Board refers to “the position that would apply if we no longer have certainty of Government support or other funding” explaining the process and implications of what’s known as “section 114 of the Local Government Finance Act 1988 (s114)”. This requires the Chief Finance Officer to prepare a report in which “consideration would need to be given to what services TfL is able to continue to run within available funds, taking into account our general financial obligations and our core statutory duty to provide safe and efficient public passenger transport services as well as those services specified in statute and the significant contractual and statutory consequences which would be presented to Members to consider.”
It is said the only services TfL have a duty to provide by statute are the Woolwich Ferry and regulation of taxis. Buses and the Underground are not statutory services. But it would seem highly unlikely we’ll see London devoid of its buses and Tubes, there’ll inevitably be yet another funding deal which must come in the next week or so, if not days, to prevent TfL effectively declaring itself bankrupt and dramatically cutting services. What price the DfT secures for securing that deal, or whether it reaches for the nuclear button, we await to see.
It’s not just TfL where the DfT is playing hard ball. One reason strikes are continuing between rail unions and the Rail Delivery Group/Train Operating Companies/Network Rail is because behind the scenes the DfT are pulling all the strings by controlling what the employers can and can’t agree. It’s no coincidence where there’s no DfT control, in Scotland, ScotRail has agreed a deal with ASLEF although RMT strikes are still impacting trains north of the border because its dispute with Network Rail continues.
The DfT’s meddling hand can be seen for sure in the public messaging being used by the Train Operating Companies, not least Avanti West Coast where its tweet on Monday linking reduced timetables from tomorrow (cutting London Manchester to hourly and ceasing ticket sales) with the repeated controversial allegation this is partly due to “unofficial strike action by ASLEF members”.
No coincidence this line was regurgitated by Secretary of State Grant Shapps after it first appeared from Avanti at the end of last month.
Rail industry legend Graham Eccles published a fascinating thread on Twitter on Tuesday referring to “the mess Avanti have got themselves into over rest day working and rostered Sundays” being “about management (and the DfT) not heeding the lessons of history”. He pointed out at privatisation “the more farsighted TOCs … renegotiated the working week … to encompass all seven days. Establishments were reset so they could cover all foreseeable needs and commitments made by management to recruit to establishment”. He continued “the wiser franchises had 15 years of IR peace with their drivers, others (like London Midland) were regularly in trouble over reliability. The secret was keeping the establishment under review and having a recruitment plan that kept the establishment full.”
The irony over this spat is seeing ASLEF reaffirm in a letter on Wednesday to Shapps “it has been ASLEF policy for decades to bring Sundays into the working week. It’s something our negotiators try to achieve, and have achieved, in many companies. It’s not ASLEF preventing this from happening, it’s the companies you have handed contracts to over the last couple of years”.
ASLEF points out “they’ve made the calculation that operating a railway on overtime is cheaper than employing enough train drivers to run timetabled services, even if that means services are unreliable”.
And so it seems, as it’s reported Avanti West Coast are receiving the same contract payments despite slashing its timetable and overseeing serious unreliability.
The DfT is keen to see what it calls “modernisation” and an end to inefficient restrictive practices as part of a pay deal. But it hadn’t counted on the RMT’s Mick Lynch proving to be a very effective communicator, outperforming politicians and interviewers on the media round which has boosted the union’s position with the public.
There’s absolutely no sign of an agreement between rail unions and the employers and in turn the all controlling DfT. Sadly the damaging strikes look set to continue into the autumn.
Meanwhile there’s also no sign of a resolution to a three week strike by Unite and GMB members employed by Arriva North West over a pay deal. This follows another four week strike in June and July by Arriva staff in West Yorkshire. Ballots for strike action over pay are also currently underway among Arriva staff in Kent and Essex and at Arriva London North. Meanwhile drivers at RATP’s London United will be out on strike this coming Friday (the day of the Underground strike) and Saturday (another rail strike day).
With inflation now in double figures further industrial unrest over pay claims is inevitable.
It’s also inevitable rising costs will tip more bus routes over into loss making ventures with bus companies unable to continue running them commercially. Cash strapped local authorities in many cases are unable to provide funding for their continuation and withdrawals are inevitable. These routes are being used by passengers, albeit not enough, but it makes no sense to withdraw routes being used while at the same time kite flying service expansions are being planned with Bus Service Improvement Plan funding because that cannot be used to keep existing services going.
The whole Bus Back Better come Bus Service Improvement Plan scenario needs a rethink. The idea of a ‘bus strategy’ was dreamt up pre pandemic, launched a year into it, in March 2021, and called for plans to be submitted later last year. All this was before the impact of post pandemic passenger numbers was known as well as more recent experience of rising inflation and the predicted recession. Nice though it is to have £1.5 billion (or whatever the precise figures is these days) of new money for exciting developments, time has moved on and priorities need to change. And quickly.
I’ve ridden on enough new service initiatives over the last few years thanks to dollops of funding to know most simply aren’t sustainable and are a waste of such vital funding. DRT is the classic of this genre and there are many more which are going to hit the road in the next few months while at the same time bus routes actually being used by passengers are disappearing. A good example is in Kent where a raft of little used bus routes will soon be withdrawn for good (as I blogged about back in March) to save the Council over a third of its annual bus service support budget (£2.2 million from £6.1 million) yet these routes are much valued by the small numbers travelling. I’ll report further on this with specific examples from my recent travels on the routes impacted in an upcoming blog. Meanwhile Kent County Council are lined up for a windfall receipt of £35.1 million towards its Bus Service Improvement Plan. Try explaining that to those using the routes about to be withdrawn and being told there’s no funding.
Finally those takeovers and bus company failures coupled with management reorganisations. It’s sadly inevitable there are going to be further business failures while others looking at a bleak future decide now’s the time to sell up and quit. What concerns me is just at the time when industry experience and knowledge will be vital for companies to navigate the perilous economic conditions that lie ahead, some of the large Groups seem content and almost pleased to be reorganising and seeing long respected experienced managers prepare to leave the industry in favour of importing people in with absolutely no knowledge of what makes our industry tick.
Aside from the more recent recession (itself 14 years ago) arising from the 2008 financial crash you have to go back 32 years to 1990 and before that 42 years to 1980 when five consecutive quarters of falling GDP last impacted the UK economy. I recall both periods vividly not least inflation reaching 18% in 1980 (it hit 9.5% in 1990). It was a scary time to be running a bus company, not least in 1990 having not long entered a management buy out. Interest rates hit a high of 17% in 1980 moving down to 9.6% in October 1982. In 1990 they peaked at 14.8% at the start of the recession falling to 5.9% by the end. Passenger numbers went into serious decline as the need to travel reduced. Now is not the time to be ditching career long industry managers. To survive the coming months transport groups and their bus companies are going to need all the experience they can get.
Strategy awaydays just won’t cut it.
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