In an unpublicised move, transport ministers have accepted that private firms seeking to bid for franchises to operate trains will have to take on all existing staff and give them the same wages and conditions. They will also have to grant existing trade unions the same negotiating rights and to safeguard pension schemes.
This is bound to further reduce the already weak interest from the private sector.
The main way in which private companies would be able to reduce costs is likely to be through reducing the number of workers, or cutting their wages, but this legislation prevents them from making this move. Wages represent over half of BR's operating costs.
Technically, a new company would be able to sack all the staff once the contract has been started and reoffer some of them jobs at lower wages. However, since many rail staff need weeks of safety training and jobs such as driving trains involve over a year's training, a new operator will have little room for manoeuvre.
The legislation, the Transfer of Undertakings Protection of Employment Act, introduced in 1981 in response to an EC directive, was initially thought only to cover commercial undertakings and has been widely ignored in a host of privatisations, such as hospital catering and road-sweeping. However, it now appears that the legislation should have applied to all these transfers and many thousands of workers may now have the right to claim compensation.