Rail privatisation set to put 20,000 jobs on the line

INDUSTRY VIEW

The Rail, Maritime and Transport Union believes 20,000 to 30,000 jobs are at risk as a result of railway privatisation. Privately, many investors in the 42 rail businesses that have already been sold off would probably agree.

It is hard to think of a better reason, from a purely investment perspective, to put money into the Railtrack flotation in May or into one of the many sales of BR subsidiaries that are under way.

A crude rule of thumb in the City is that whatever the job cuts achieved in an industry while it is in the public sector, there is usually at least another 30 per cent of efficiency gains to be found once the privatisation has taken place, and much of that is likely to be achieved by a reduction in headcount.

Apply that percentage to the railways, and the numbers put forward by the RMT look perfectly reasonable. In the longer term, they might even prove on the low side.

It is a curious fact, however, that railway jobs are hardly ever discussed in public by ministers, government advisers or the owners of newly-privatised rail companies. It is like a phoney war, with the real campaign unlikely to begin until the main privatisations are through.

The signalmen's strike in 1994 underlined how much damage could be done to the industry by a dispute between a national union and a centralised management.

There is little benefit for the Government in reminding investors of this fact of life by boasting publicly about the potential for job saving and stirring up the anger of the unions. Indeed, until recently ministers have been claiming unconvincingly that the sell-off could create additional jobs.

Government advisers say that nobody in Whitehall has even attempted to calculate the possible impact of privatisation on jobs right across the railways, and now the railways are so fragmented the exercise may never be possible again.

Labour, too, has less to gain than appears at at first sight from making the potential for job losses a central part of its anti-privatisation campaign. Digging in its heels against job cuts and efficiency gains would make New Labour sound just like the old.

The organisation that probably has the least potential for immediate large job cuts is probably Railtrack, though one insider claims it should still be perfectly possible to weed out 10 to 15 per cent of the 11,000 headcount over the next couple of years.

As the only truly national organisation left in the rail system, Railtrack remains the most vulnerable to strike action because if it is brought to a halt so is the entire railway network.

For Labour, the reality is that this would make renationalisation into a poisoned chalice because in government it would be on one side of the table in any dispute. The signalmen's strike got rid of some old Spanish customs in Railtrack and tidied up a mass of union agreements, some dating back to 1919. But Bob Horton, Railtrack's chairman, has good reason to tread softly when seeking further staff reductions.

Apart from the risk of strikes, there is the question of safety, which has been a highly sensitive issue since the Clapham disaster in 1988. According to British Rail, that was partly responsible for a rethink of the rate of contraction and a modest increase in rail jobs up to 1993 (see chart.)

The biggest potential for job reductions is to be found elsewhere in the system. Railtrack took the absolute minimum of staff out of the old British Rail, leaving all its service functions to be privatised separately. The intention was to make industrial relations easier to handle by splitting the behemoth of British Rail into many smaller and more manageable parts.

When Railtrack was separated from BR, Mr Horton left 40,000 people in BR operations such as maintenance and track renewal which are essential to the company's functioning.

The result is that all the really big economies are to be found in the bits that Railtrack left behind, and especially the British Rail Infrastructure Services Companies, which at the end of the last financial year had 22,000 staff.

These are the companies that employ the maintenance and construction workers who keep the track, bridges, tunnels and signalling in order.

Not only have the BR businesses been splintered by dozens of management buyouts and takeovers by construction firms, but smaller sub-contractors are splitting it still further. The RMT cites cases of track and signalling employees taking redundancy from British Rail on a Friday and coming back as sub-contractors the following Monday.

The balance of industrial relations power has shifted firmly towards employers.

Although track renewal work will receive a boost from a stepped-up investment programme, including the West Coast main line and the ThamesLink 2,000 project, staffing in the Bris companies as a whole looks set to decline sharply over the next few years.

The same pattern is expected in many other former BR subsidiaries. It has already been seen at the former British Rail Engineering works, which were taken over by ABB with 8,500 employees, and are now down to 5,000.

Insiders claim that there is even bigger potential for job cuts among the train operating companies, which employ 47,000 people, including most of the drivers. They, too, have been fragmented, into 25 separate companies.

Stagecoach, the bus company that runs South West Trains - one of the first two train operating franchises let - has so far told the RMT of 125 job losses and is expected to announce several hundred more among the rail operator's 4,000 staff. There is no sign yet that Stagecoach is about to confront the powerful drivers' unions, where the scope for improving working practices is said to be just as great as it was with British Airways pilots a decade ago.

But job cuts are as central to the economics of the railway privatisation as they were with electricity and water, and the process has hardly begun.