Profile of the rail transport sector in the United Kingdom

Profile of the rail transport sector in the United Kingdom

Executive summary

Structure of the railway market

Market volume and development

Players in the railway market

Changes and trends in labour market and working conditions

References

Annex: Note on methodology

This report is available in electronic format only.

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Executive summary

The United Kingdom (UK) represents the most extreme case of privatisation and fragmentation of the railway sector. In contrast to other countries in Europe, the UK no longer has one leading national company. Both passengers and freight services are fragmented among different operators. There are 25 main train operating companies and several smaller operators. Some, such as Virgin and GNER, operate a national service on what was called the ‘inter-city’ routes under nationalised British Rail. The other companies generally provide local services. There are five companies active in the rail freight sector. Employment in the sector has decreased over the past 10 years but due to the fragmentation of the market, reliable figures on present employment levels are difficult to find. Relying on the numbers provided by the major players, around 130,000 people are directly employed in railway services today. The presence of several competitors has led to an increased turnover of workers. Especially skilled workers and specialists are in high demand and tend to change employers quite frequently. Thus, there is an increased pay gap between skilled und unskilled workers, with wages for skilled workers, like train drivers rising much faster than for other categories. There is no sector wide collective bargaining and all agreements are exclusively negotiated at company level leading to more than 100 different agreements. Bargaining is resulting increasingly in long-term settlements, i.e. in excess of one year, including wage bargaining. Working time is an increasingly important issue, with a 35-hour basic week emerging as the industry standard. However, part-time is still low (around 2%) and has not significantly increased in the last 10 years. Other concerns have been to protect final-salary pension schemes, including for new recruits, and to harmonise travel concessions for new and long-serving employees. Furthermore, a slow increase in female employment can be noticed. The influence of trade unions remains high due to a high organisation rate (96% for train drivers), but neither attempts to return to national level bargaining or the campaign for a re-nationalisation of the railways led by the Rail, Maritime and Transport Union (RMT) have been successful so far. Outsourcing has been used extensively for network maintenance but security concerns have led to a reversal of this trend with the decision of Network Rail, the company responsible for network maintenance, to in-source maintenance services in October 2003. The number of accidents involving railway workers has decreased over the past decade.

© European Foundation for the Improvement of Living and Working Conditions, 2006 1


Structure of the railway market

Main public institutions The railway sector in the United Kingdom is currently undergoing a major restructuring process. With the White Paper ‘The Future of Rail’ published by the Department for Transport in July 2004, the UK government has aimed at improving performance and controlling costs while maintaining a high standard of safety in rail transport. For this purpose a new structure for the organisation of railway transport in the United Kingdom has been implemented. According to NEA Transport and research training, the main changes can be outlined as follows : • through the Department for Transport, the UK government takes charge of setting

the strategy for the railways; • Network Rail is given clear responsibility for rail network operation and its

performance; • Network Rail and train companies work more closely together; • the Office of Rail Regulation (ORR) covers safety, performance and cost (see

above). The structural reform concentrates on abolishing the diversity of public institutions which have been responsible for the performance of the UK railway sector so far, namely the ORR, Office of Fair Trading, Strategic Rail Authority, Network Rail, the Health and Safety Executive and the Rail Safety and Standards Board. For this reason the government decided to: • wind up the Strategic Rail Authority (thus far responsible for the overall strategic

direction and leadership for UK railways); • transfer all safety functions to the ORR (which has had the main responsibility of

allocating track capacity); • modify the rail network.

Figure 1: Main public institutions in the rail sector

Department for Transport(setting of national strategy for railways)

Office of Rail Regulation (ORR)

Network Rail(infrastructure operator)

Rail operators(franchisees for transport services)

competition control in the

railway m

arket

direct arrangements on performance and capacity

franchise contracts

fortransportservices

joint working at local levelcharging of infrastructural use

price regulation for rail infrastructure

Department for Transport(setting of national strategy for railways)

Office of Rail Regulation (ORR)

Network Rail(infrastructure operator)

Rail operators(franchisees for transport services)

competition control in the

railway m

arket

direct arrangements on performance and capacity

franchise contracts

fortransportservices

joint working at local levelcharging of infrastructural use

price regulation for rail infrastructure

Source: SCI Verkehr GmbH, 2005

Under this new structure, responsibilities are clearly set. The government controls the strategy for the railways, the ORR ensures a contestable market, Network Rail



provides operational leadership and a single point of responsibility for infrastructural performance and train companies are able to concentrate on their core strengths of rail operation. Financing of the transport services For years, two public institutions have been responsible for the financing of transport services in the UK, namely the Strategic Rail Authority (SRA) (see below) on the one hand and the regional Passenger Transport Executives (PTE) on the other hand. In the financial year 2003–2004, €1,940 million1 in public subsidies was financed through the SRA, whereas PTE financed about €520 million. In addition to this sum of €2,460 million, approximately €5,560 million is accounted for revenues in passenger transport, of which €1,970 million was realised in the market of long-distance passenger transport. Figure 2 gives an overview of the amount and level of subsidies granted to train-operating companies in the UK.

Figure 2: Distribution of subsidies granted to rail operators 2003–2004

million €

162.

8

136.

5

7.4

226.

2

20.4

144.

6

83.2

4.7

117.

7

154.

7

43.8

102.

3

56.1

103.

4

63.2

161.

4

130.

5

0.7

81.4

0

50

100

150

200

250

Arriva

Trains N

orthern

Arriva

Trains W

ales

c2c

Centra

l Trai

ns

Chiltern

Rail

ways

First N

orth W

ester

n

First S

cotR

ail

Islan

d Line

Northern

Rail

ScotR

ail

Silverl

ink

South Easter

n Trains

South Wes

t Trai

ns

Southern TPE

Virgin C

ross

Country

Virgin W

est C

oast

WAGN

Wesse

x Trai

ns

Source: SRA, 2004-2005

Since the UK government is currently implementing a new structure for the UK railway sector (see ‘Main public institutions’), the ORR will have responsibility for financing public transport services. Hence, it is intended that the ORR will enlarge its function as a competition control institution towards the UK public authority funding railway transport. Award of public services To provide passenger services, the government has introduced so-called passenger franchising. Franchises are conferred the right to run passenger services for a specified period (typically seven years). In order to run passenger services, the rail-operating companies bid for franchises on the basis of the amount of funding they

1 All euro equivalents are calculated at an exchange rate of €1.4537 per pound sterling.



would require, respectively, the premium they would be prepared to pay for servicing a specific route. The winning company is the operator seeking the lowest subsidy or offering the highest premium. In contrast, there is no franchising system for freight transport in the UK.

Competition control In recent years, the ORR was responsible for monitoring market developments in context of competition control. The ORR has enforced competition law along with the Office of Fair Trading, which can be characterised as a railway-independent competition and consumer protection institution. With the UK government’s White Paper on ‘The Future of Rail’, issued in 2004 (more see below), a single economic and safety regulator has been created. Following the structural change, the ORR is responsible for ensuring a high level of railway safety as well as for protecting the legitimate interests of customers and investors in the UK railway sector. According to the UK Department for Transport, its specific responsibilities are to: • exercise competition law functions; • assess the cost of the performance outputs and to determine the size of Network

Rail’s income; • license railway-operating companies; • regulate contracts between conflicting interests in the rail transport sector; • investigate and make recommendations on performance problems; • enforce health and safety legislation in respect of the operational railway; • help ensure that the railway provides value for money for both the fare-payer and

the taxpayer, taking into account safety, performance and cost; • act as a single repository for rail industry data. Implementation of EU legislation First railway package – infrastructure package Directives • National legal provisions: Directive 2001/12/EC; Directive 2001/13/EC; Directive

2001/14/EC. • Status: Processed. Second railway package • National legal provisions: Directive 2004/49/EC; Article 8 (2) of Directive

2004/49/EC; Directive 2004/50/EC; Article 2 of Directive 2004/50/EC; Directive 2004/51/EC.

• Status: Not communicated to the European Commission yet. Interoperability Directives • National legal provisions: Directive 2001/16/EC. • Status: Not communicated to the European Commission yet. • National legal provisions: Council Directive 96/48/EC. • Status: Processed. Older adopted railway Directives • National legal provisions: Council Directive 91/440/EEC; Council Directive

95/18/EC; Council Directive 95/18/EC. • Status: Processed.


http://europa.eu.int/cgi-bin/eur-lex/udl.pl?REQUEST=Seek-Deliver&COLLECTION=oj&SERVICE=all&LANGUAGE=en&DOCID=2001l075


Market volume and development

Track length • 16,900 km. • 5,000 km electrified. • 342 km in Northern Ireland. Passenger transport Long-distance passenger transport Operating performance (in millions of train-kilometres):

Figure 3: Operating performance of passenger transport (long distance) in train-km

million train-km

99979586

817973

66

0

20

40

60

80

100

1997 1998 1999 2000 2001 2002 2003 2004

Source: SRA, 2004–2005 Transport performance (in billions of passenger-kilometres):

Figure 4: Transport performance of passenger transport (long distance) in passenger-km

billion passenger-km

13.313.212.913.012.2

0

5

10

15

2000 2001 2002 2003 2004

Source: SRA, 2004–2005 Number of companies: Six.



Passenger transport: London and SE-operators Operating performance (in millions of train-kilometres):

Figure 5: Operating performance of passenger transport (London/SE operators) in train-km

million train-km

192185184187184

0

50

100

150

200

2000 2001 2002 2003 2004

Source: SRA, 2004-2005 Transport performance (in billions of passenger-kilometres):

Figure 6: Transport performance of passenger transport (London/SE operators) in passenger-km


21.120.119.7

18.219.2

0

5

10

15

20

25

2000 2001 2002 2003 2004

Source: SRA, 2004–2005 Number of companies: 10.



Regional operators in passenger transport Operating performance (in millions of train-kilometres):

Figure 7: Operating performance of passenger transport (regional operators) in train-km

million train-km

162 163 164 165 165

0

50

100

150

200

2000 2001 2002 2003 2004

Source: SRA, 2004–2005 Transport performance (in billions of passenger-kilometres):

Figure 8: Transport performance of passenger transport (regional operators) in passenger-km


6.9 7.0 6.97.5

7.9

0

2

4

6

8

10

2000 2001 2002 2003 2004

Source: SRA, 2004–2005 Number of companies: Nine.



Freight transport Operating performance (in millions of train-kilometres):

Figure 9: Operating performance of freight transport in train-km

million train-km

161.6 163.4 163.8 164.9 165.0

0

50

100

150

200

2000 2001 2002 2003 2004

Source: SRA, 2004–2005 Number of companies: Four. (Steer Davies Gleave, 2003)

Players in the railway market

At present, 25 railway operators offer passenger transport on UK railways, while freight transport is handled by five private companies. In the passenger transport market, 10 railway undertakings provide long-distance travel and 10 provide regional passenger transport. All operating companies are new entrants since privatisation in 1996. The most important franchised companies include: • Arriva Trains Ltd; • First Great Eastern; • First Great Western; • First North Western Trains; • FirstGroup Keolis; • GOVIA Ltd; • Great North Eastern Railways; • M40 Trains Ltd; • National Express Group plc; • Serco-NedRailways; • Stagecoach Group • Virgin Trains (CrossCountry Trains Ltd); • Virgin Trains (West Coast Trains Ltd). (Steer Davies Gleave, 2003) In addition to these transport companies performing franchise services, there are a few passenger transport operators which are classified as ‘open access operators’, such as Hull Trains Company Ltd, Eurostar Ltd and the Heathrow Express. ‘Open access operators’ have permission to provide commercial passenger transport services outside the structure of franchise services. For such services the prerequisites for



access are the appropriate network capacities, which can only be offered by Network Rail and the ORR in limited volume. Market distribution Market shares can only be provided for operating performance referring to the financial year 2003–2004, ending on 31 March 2004. In this context, Figure 10 is based on the franchise distributions comprising 25 operating companies. The figure illustrates that the market (in train-km) is dominated by National Express, followed by FirstGroup. For the future it can be expected that market shares will develop in favour of FirstGroup as well as new players such as Serco-NedRailways, with a decreasing market importance of National Express.

Figure 10: Market share of passenger transport

Total 2003–2004: 446 million train-km

11% 12%8% 15% 6%

4%9% 32%

1%

2%

Arriva First GNER GOVIA LimitedM40 Trains Ltd National Express Serco/NedRail South Eastern TrainsStagecoach Virgin

Source: SCI Verkehr GmbH, 2004 To give a further overview of the rail market in the UK, important railway undertakings and ‘open access operators’ in the UK market are briefly described below. • Arriva Trains Ltd: With around 4,300 employees, this company currently operates

the Integrated Wales franchise and Arriva Trains Northern. • Eurostar Ltd: ‘Open access operator’ incorporated in the form of a joint venture

between UK, French and Belgian companies (London & Continental Railways Ltd). Since 1994 services through the Eurotunnel and within France and Belgium have been provided exclusively on high-speed tracks. In September 2003, moreover, the first section of the Channel Tunnel Rail Link (CTRL) was added. The operational business of Eurostar is successful. However, as a result of the high infrastructure charges, in particular for the Eurotunnel, it is unable to operate with profit.

• FirstGroup Keolis: Since February 2004, this joint venture, formed by FirstGroup and Keolis, operates the new intercity franchise TransPennine Express. It serves



routes between the cities of Liverpool, Manchester, Leeds, York, Hull, Sheffield and Newcastle.

• FirstGroup plc: First is one of the strongest UK rail transport companies. At the present time, the following franchises are operated: First Great Western, First Great Western Link, First North Western and Hull Trains. Moreover, First succeeded in the invitation to tender for the ScotRail franchise, and since October 2004 has operated around 95% of the rail-based passenger transport provision in Scotland. In addition, First is also active as a goods transport supplier.

• GNER Holdings Ltd: GNER operates the Great North Eastern Railways intercity franchise along the British east coast. GNER is a subsidiary company of Sea Containers Ltd (Sea Containers is a company quoted on the New York Stock Exchange that for the most part is owned by US shareholders). The current operating company contract expired at the start of 2005. The company finds itself in competition with Virgin/Stagecoach, the DSB and First for these services.

• GOVIA Ltd: This is a subsidiary company of the stock exchange-quoted Go-Ahead Group and Keolis SA. The joint venture took over the Southern Trains franchise from Connex in August 2001 and will operate it until December 2009. Go-Ahead is one of the strongest local transport companies in the UK.

• Heathrow Express: Appeared on the scene as an ‘open access operator’ at the start of 2000. It was established as a joint venture between BAA plc (British Airport Authorities) and National Express, connecting Heathrow Airport with London. Furthermore, to offer fast access to the airports of Stansted and Gatwick, the Stansted Express and the Gatwick Express were established.

• Hull Trains Company Ltd: FirstGroup holds the shares in this company. It was formed in 2000 to operate the Hull, Brough, Howden, Selby, Doncaster, Grantham and London King’s Cross line. In June 2002, Hull Trains received 10-year access rights to the network, offering transport services under ‘open access’.

• M40 Trains Ltd: This company is a local supplier of transport services along the M40. At first this company was in the ownership of John Laing plc (26%), the 3I Group plc (23%) and the managing director of the Chiltern Railway Company Ltd (51%). After an interim phase, the ownership of the company in 2002 was completely transferred to John Laing plc. The main interests of John Laing plc lie in the development, financing and operation of infrastructure in the UK and North America.

• National Express Group plc: Operator of the franchises c2c, Central Trains, Gatwick Express, Midland Mainline, ONE, Silverlink, Stansted Express, WAGN and Wessex Trains. This is the strongest stock exchange-quoted transport company in the UK.

• Serco-NedRailways: This joint venture is the new operator of the Northern Rail franchise. Serco-NedRailways is a 50:50 joint venture between Serco services business and Nederlandse Spoorwegen (NS). The previous operators, First North Western and Arriva Northern, had to relinquish the operation. The takeover by Serco-NedRailways took place in December 2004 and runs for eight years and nine months – the subsequent two years are dependent upon the achievement of the performance requirements. While for Serco this is an entry into a new market (which they have been trying to achieve for a long time), for NedRailways this can be notched up as a first important international success.

• Stagecoach Group: This stock exchange-quoted company operates the franchise South West Trains and also the discontinuing operation of the Island Line. In addition, Stagecoach is also active as a joint venture partner with Virgin for its franchises. Here Stagecoach is the actual operator of the Virgin services.



Several years ago, Connex was also active in the UK market. However, in the intervening period the company has lost both its franchises (SouthEastern and SouthCentral). Connex’s lack of financial stability and its failure to produce a precise set of measures for optimisation of performance (in particular, the improvement of punctuality) causing more public financing was named as the main reason for this decision. The UK is one of the rare transport markets in Western Europe where Connex has no business right now. Rail freight transport in the UK is mainly operated by four licensed freight companies: English Welsh & Scottish Railway (EWS), Direct Rail Services Ltd, Freightliner Ltd and GB Railfreight Ltd. EWS is the largest rail freight operator in the UK, transporting more than 100 million tonnes of freight every year. Moreover, EWS is the only freight operator to provide a full nationwide level of service provision, with additional access to continental Europe through the Channel Tunnel. Company profile of the main players Arriva Plc The Arriva group operates bus companies in the UK, Denmark, Italy, the Netherlands, Portugal, Spain and Sweden. Rail transport services are provided in the UK, Denmark, Germany and the Netherlands. In addition, the company is active in the car rental market, with approx. 12,000 vehicles. Market areas:

Figure 11: Arriva Plc – market areas


Shareholder structure: Arriva is listed on the stock exchange. The only substantial shareholdings (equal to or in excess of 3% of the issued ordinary share capital) are Barclays Plc (13.9%) and Legal & General (3.16%). Group headquarters: Sunderland, UK. Associated companies and co-operation partners: • Londonlinks Buses Ltd; • London Pride Sightseeing Ltd; • NoordNed Personenvervoer B.V.; • Prignitzer Eisenbahn GmbH;



• Regentalbahn AG; • SAB Autoservizi S.r.L.; • SAF Autoservizi F.V.G. S.p.A.; • Stevensons of Uttoxeter Ltd; • The Original London Sightseeing Tour Ltd; • Transportes Sul do Tejo S.A.; • Wulff Bus A/S. Turnover:

Figure 12: Arriva Plc – turnover 2000–2004

million €

2,5342,905 3,030

2,545 2,632

0

1,000

2,000

3,000

4,000

2000 2001 2002 2003 2004

Source: Arriva Plc Number of employees in 2004: 30,000. Group development: Arriva emerged in 1997 from a traditional UK bus company and has expanded strongly since that time, both in bus transport, the company’s original area of activity, and also in the newly developed area of rail transport. Arriva operates the rail franchise serving Wales and the English border counties with a fleet of 116 trains and 1,800 employees. The company also operates buses in London and across England, Wales and Scotland. In 2003 the group began operation of the first rail transport link to be awarded in competition in Denmark. In 1999 and 2001 the company had already gained the bus companies Bus Danmark and Combus in Denmark. In 2004 Arriva took over another bus company in Denmark, Wulff, for €15 million. Thus, in Denmark there are in total 3,800 staff employed, operating 1,400 buses and over 40 trains. The company expanded into Germany in April 2004 with the takeover of 90% of the holding in Prignitzer Eisenbahn for €6 million, which operates short-distance passenger transport in North-Rhine Westphalia, Berlin/Brandenburg and Mecklenburg-Western Pomerania. With the acquisition of a 76.9% stake in the Regentalbahn AG in October 2004, Arriva’s engagement in Germany was expanded with operations in Bavaria, Thuringia and Saxony. At the same time, activities were initiated in the Czech market.



Since 1998 the group has been active in the Netherlands, employing 2,900 staff and serving approximately 20% of the bus market. Moreover, 70 trains are in use, amongst others those for the subsidiary company NoordNed. In Spain the company is active solely in the bus market, the fifth largest in Europe. It operates routes in Galicia and in Majorca, Autocares Mallorca, and employs approximately 500 staff. In Italy Arriva is the largest private supplier of travel by bus, since the group possesses two large subsidiary companies: Autoservizi Srl (SAB) and Società Autoservizi FVG SpA (SAF). SAB and its subsidiary companies operate in the Lombardy region and provide urban and regional links with 2,000 staff, as well as airport transport services in Bergamo, Brescia and Milan. In April 2004 Arriva gained 49% of the SAF group, together with the option of taking over a further 11% at the end of 2006. SAF comprises five regional companies and employs 600 staff. In 2004 Arriva Italia was formed in order to be able to take part in invitations to tender for rail transport links in Italy. In Portugal the company is active with bus routes in the Lisbon conurbation and Oporto, and in Sweden the group operates bus links in the Malmö and Jönköping regions. FirstGroup plc FirstGroup is active in the UK, the USA and Canada in the areas of transport by buses and trams, and also in rail passenger and goods transport. In the rail passenger sectors, the company is not active as a route operator only, but also in transit contracting and management. The company also operates and maintains vehicle fleets. Market areas:

Figure 13: FirstGroup plc – market areas


Shareholder structure: 95.6 % individuals; 3.9 % banks and nominees. Group headquarters: Aberdeen, UK.



Associated companies and co-operation partners • Anglia Railways Train Services Ltd; • FirstInfo Ltd; • First/Keolis TransPennine Ltd (55%); • GB Railfreight Ltd; • Great Eastern Railway Ltd; • Great Western Trains Company Ltd; • Hull Trains Company Limited (80%); • North Western Trains Company Ltd. Turnover:

Figure 14: FirstGroup plc – turnover 2000–2004

million €

2,609

2,985 3,146 3,3303,603

0

1,000

2,000

3,000

4,000

2000 2001 2002 2003 2004

Source: FirstGroup Number of employees in 2004: 67,000. Group development: FirstGroup emerged in 1995 from the merger of two UK bus companies, Badgerline Group and Grampian Regional Transport. FirstGroup is the largest bus company in the UK. Eighty per cent of the transport services are on urban routes. In its financial year April 2003 to March 2004, the bus division generated a turnover of €1.315 billion and achieved a profit of €160 million. The companies First Great Western, TransPennine Express and Hull Trains operate intercity links, while First Great Western Link is active in London commuter transport and First North Western in regional transport. The rail division in the UK produced a profit of €72.5 million on a turnover of €1.37 billion. The North American business contributed a turnover of €900 million in the financial year April 2003 to March 2004 to the overall result, while at the same time achieving a profit of €92 million. National Express Group The National Express Group is active in bus and tram transport in the UK and in bus transport only in the US, Canada and Australia.



Market areas:

Figure 15: National Express Group – market areas


Shareholder structure: National Express Group is listed on the stock exchange (since 1992), with 92% of shares held by individuals. Group headquarters: London, UK. Associated companies and co-operation partners: • Airlinks; • c2c Rail Ltd; • Central Trains Ltd; • Eurolines; • Eurostar; • Gatwick Express Ltd Ltd; • London & Continental Railways (LCR); • National Express Ltd; • ONE; • Prepayment Cards Ltd (PCL); • Silverlink Train Services; • Stansted Express Limited; • Trainline Holdings Ltd (THL); • Travel Coventry; • Travel Dundee; • Travel London; • Travel Midland Metro; • Travel West Midlands; • Union Railways (South) Ltd (URS); • Wales & West Passenger Trains Ltd (trading as Wessex Trains); • West Anglia Great Northern Railway Ltd (WAGN).



Turnover:

Figure 16: National Express Group – turnover 2000–2004

million €

2,911

3,739 3,729 3,7213,582

0

1,000

2,000

3,000

4,000

5,000

2000 2001 2002 2003 2004

Source: National Express Group Number of employees:

Figure 17: National Express Group – number of employees, 2000–2004

50,000 45,61243,883 42,95242,819 41,222

40,000

30,000

20,000

10,000

02000 2001 2002 2003 2004

Source: National Express Group Group development: National Express evolved out of the National Bus Corporation and was privatised in 1988 in the form of a management buyout. Since that time the group has achieved dynamic growth through a strategy of acquisitions in both the bus and rail transport sectors. While in 1994 a profit of €23.6 million was achieved on a turnover of €250 million, in 2004 it was €4.5 million on a turnover of €3.72 billion. The company has been quoted on the stock exchange since 1992. It annually transports around 1 billion passengers in the business sectors of bus, local or long-distance transport, as well as in airport transport services. In the core markets of the UK, Australia and North America, the company enjoys a leading market position. Over 25% of its turnover is



achieved in North America and Australia. The UK rail transport services contribute €46.4 million profit to the group results. The companies Travel-Coventry, Travel-Dundee, Travel Midland Metro, Travel West Midlands and Travel London offer local and regional bus connections, while long-distance bus journeys are provided by National Express Limited, National Express Shuttle, National Express Airport, Eurolines and Airlinks. These two divisions produced a profit of €90 million in 2003. The bus transport services in Australia contributed €4.9 million profit in 2003 and the North American bus division achieved a profit of €54 million in the same period. English, Welsh & Scottish Railway The English, Welsh & Scottish Railway (EWS) is active in freight haulage, rail industry services, rail passenger charter services and non-freight operations. Market areas:

Figure 18: EWS – market areas

Nationwide and cross-borderoperator of freight transportservices. Prepared accessfor thepassenger market




Shareholder structure: 31% Canadian National (CN) following the Wisconsin Central Transportation Corporation (WCTC) in 2001. No information about further shareholders. Group headquarters: Doncaster, UK. Associated companies and co-operation partners: • English Welsh & Scottish Railway International Ltd; • English Welsh & Scottish Railway Ltd; • Rail Express Systems Ltd. Turnover in 2004: Approximately €7,407 million. Number of employees in 2004: 5,800. Group development: EWS was launched in February 1996 after the company acquired four divisions of British Rail’s rail freight operations – Rail Express Systems, Loadhaul, Transrail



Freight and Mainline Freight. For the moment, EWS looks for partners and to support a continental market access. EWS plans to enter the French market with their subsidiary company, Euro Cargo Rail, in 2005. Furthermore, EWS plans entering the passenger market. In co-operation with the Danish government railway DSB, they built up the joint venture Capital Trains. Capital Trains has been created to bid for, win and professionally manage the new Thameslink/Great Northern franchise. The franchise starts in April 2006 and runs for four years.

Changes and trends in labour market and working conditions

Analysis of industrial relations Typology of actors There are three trade unions in the railway sector in the UK: • The Associated Society of Locomotive Engineers and Firemen (ASLEF) has

about 16,000 members. It mainly represents drivers, drivers in training and some ex-drivers in supervisory grades. The union represents around 96% of rail drivers. There have been no relevant changes since privatisation.

• The National Union of Rail, Maritime and Transport Workers (RMT) has a total membership of around 70,000. Approximately 50% are employed in the rail sector as onboard train staff, maintenance workers and station staff. Membership density has been in decline since privatisation as a result of increased levels of labour turnover in the private companies.

• Transport Salaried Staffs’ Association (TSSA) represents administrative staff and has 32,000 members, around 18,000 of them in the rail sector.

The main employer (trade) association is the Association of Train Operating Companies (ATOC). It represents the interests of the TOCs but has little or no employment remit. It also co-ordinates their services, e.g. by ‘through-ticketing’ (buying a single ticket which operates for several lines), issuing railcards and running the National Rail Inquiries phone line. The Rail Freight Group is the representative body of the UK rail freight industry. Its objective is to increase the volume of freight carried by rail both within the UK and to and from it. RFG is also a member of the European Rail Freight Customer Platform, the representative body of rail freight customers throughout Europe. Companies are represented in the industry by the Railway Forum. This association has no industrial relations role. There are no sector-level industrial relations structures. Collective bargaining Industry/frame wage contracts and according agreements Since the privatisation in the 1990s, national collective bargaining does not exist for the railway sector. Instead, bargaining takes place on the company level. Each company is responsible for its own arrangements, even where they form part of a



larger rail-operating group. The duration of agreements varies between companies and for different staff groups. There are now over 100 different bargaining groups (the complete list of bargain agreements for train drivers is provided below). The so called ‘renationalisation’ of Railtrack in Network Rail and the decision to take maintenance ‘in house’ has again created a de facto national pay structure in the infrastructure sector. The issue of collective bargaining for the railway sector is closely linked with the campaigns aiming to renationalise the railway sector. The fact that South Eastern Trains (SET) is currently run in the public sector with positive results while preparing a new franchising is giving steam to the trade union campaigns working in this direction.2 Working time is an increasingly important issue, with a 35-hour basic week emerging as the industry standard. Other concerns have been to protect final-salary pension schemes, including for new recruits (for example, Network Rail permits entry only after five years’ employment) and to harmonise travel concessions for new and long-serving employees. Companies have been concerned to consolidate various shift and rest-day allowances into basic salary and to reduce levels of overtime working. Such ‘restructuring exercises’ have proceeded most comprehensively for drivers, but other occupational groups, such as signalling grades, are now following suit.

The RMT and ASLEF have drawn up co-ordinated pay submissions in pursuit of their campaign for a return to national bargaining arrangements, but the major operators have shown little appetite shown for this.

Company-specific contracts and according agreements The main income conditions for train drivers in the different companies are shown in Table 1, where all agreements between ASLEF and the operators are described. Under the Additions column, there is a list of planned increases and/or special allowances for part of the driving staff connected with special tasks or qualifications.

2 South Eastern Trains (SET), a subsidiary of the SRA, was brought in after the previous franchise holder, Connex, was sacked in November 2003 to run services from Kent and East Sussex into London stations. The SRA has now issued official invitations to tender to the four companies shortlisted to take over the new Integrated Kent Franchise. The new franchise covers the services from Kent and East Sussex into London stations and from 2009 it will be responsible for running high-speed domestic services on the Channel Tunnel rail link. The operator receives about £80 million a year in government subsidies. Bob Crowe, general secretary of the Rail Maritime and Transport Union (RMT), described the decision as unnecessary and unjustifiable and pointed out that train punctuality had improved under public ownership, from 79.6% to 85.1%. His view was echoed by Gerry Doherty, general secretary of the Transport Salaried Staffs’ Association (TSSA). South Eastern Trains is clearly working and there are no discernible benefits to the passenger or taxpayer in reprivatising the service. Keith Norman, acting general secretary of the train drivers’ union, ASLEF, commented: ‘We now face an unseemly scramble to turn the Integrated Kent Franchise into a money-making machine for transnational companies whose bottom line is profit.’ The four shortlisted bidders were South Eastern Railways, a joint venture between Stagecoach and Danish group DSB International; FirstGroup’s First Kent Integrated Railways; London & South Eastern Railway Ltd, a joint venture between Go-Ahead and Keolis of France; and Great South Eastern railway, a joint venture between GNER and Hong Kong’s Mass Transit Railway Corporation.



Table 1: Income development of railway operators in the UK Company Current

pay (£) Next claim Additions

c2c 27,058 01.07.2007 June 2003 £32K; 2004 £33K; 2005 £34K; 2006 £35K.

Midland Mainline 33,600 01.01.2005 London allowance 3%. Nexus 24,880 01.10.2005

First Scotrail 29,120 01.01.2007 4% increase from 1 January 2006 = £30,285. Sunday and rest day min, payment will be improved in line with % increase.

Silverlink 30,680 05.04.2005 wef 4 July 2005 driver £32,000, driver instructor £33,650, 2nd year £29,650, 1st year 26,000, Tr. Dvr £16,500.

Southern 31,050 01.10.2007 + Regional allowances. £31,515 from 3 April 2005. 4% or RPI + 0.5% from 2 October 2005. 4% or RPI + 0.5% from 1st October 2006.

South West Trains 34,469 01.10.2006 + Regional allowances. £35,676 Oct 05.

First Great Western Link 30,649 01.07.2005 4% without strings.

Thameslink 32,000 06.2005 Driver trainer allowance £1,395. Driver instructor allowance £1,760. pre DRI Depot Driver salary £27,455 and DRI £25,580 Trainee.

Transplant Infraco JNP (Tubelines) 35,246 01.04.2006

Virgin Cross Country 37,692 28.05.2005 Monthly reports to GS.

Central Trains 31,110 01.04.2005 Driver instructor + £1,726 pa. WAGN 30,000 03.04.2006 Up to £1,750 location allowance. Arriva Trains Wales 28,850 07.2007 Jul 2005 and 2006 RPI or 3%.

Gatwick Express 30,500 05.12.2005

GB Railfreight 37,845 01.04.2007 wef 01.04.06 £40,000 annual salary increases linked to increase in line with RPI. Where 1st April rate exceeds 3.75%, a joint review will take place.

Wessex Trains 28,850 01.04.2006 Jul 2005–Mar 2006 + 3% or RPI.

Merseyrail 29,680 01.2005 2006 to increase to £31,000, 2007 to increase to £32,000, 2008 to increase to £33,000, all from the last Sunday in January.

Hull Trains 33,000 05.2006 May 2005 £35K.

GNER 37,460 01.04.2005

London allowance £1,913 (pensionable), lodging allowance £20.80 + 1 add rd for every two lodges. Driver trainer £1,685 technical driver £1,123 new rates for trainees.

Heathrow Express 29,180 01.04.2006 RPI + 0.75 from April 05. Freightliner HL 36,071 05.10.2005 £36,071 (from Oct 2004). Island Line 27,851 01.10.2005 4% or RPI from October 2005.

ONE Anglia 29,498 01.04.2005 Plus London allowance £1,608. Harmonisation talks with three former TOCs as part of pay talks.

London Underground 34,880 01.04.2006

wef April 2005 – an unconditional increase of the February 2005 RPI plus 0.5% or 3% (whichever is the greater).

ONE Great Britain 30,023 05.2005 £745 pa attendance allowance.



Maintrain 23,937 01.04.2006 (Depot operator). Depot driver operator = £21,633 (both inclusive of 20% shift allowance) wef 1 April 2005.

ONE West Anglia 28,980 07.04.2005 Up to £1,800.75 location allowance. TransPennine Express 30,081 04.2005 £30,081 (ex ATN) £28,000 (ex FNW).

South Eastern 33,500 04.2006 Up to £2,358 allowance, March 2005 £33,500.

Freightliner 31,170 31.12.2006 EC awaiting further info on driver graduate scheme from company.

Northern Rail (formerly FNW) 28,000 01.04.2005 Formerly First North Western.

Northern Rail Ltd (formerly ATN) 31,254 01.04.2006 Formerly known as Arriva Trains Northern.

Virgin West Coast 37,692 28.05.2005 Monthly reports to GS.

Chiltern Railways 34,198 01.04.2006 Trainee new entrant £16,504, trainee driver (passed Stage 2) £18,005, driver instructor assessor (£36,198) driver Shift supervisor £14.98.

Eurostar Train Managers 27,972 01.11.2005 TM + 3 years: £27K, TM2 + 2 years: £25,769, TM +

1 year: £24,556, TM1: £23,343. DRS 38,024 01.04.2007 £32,139 basic salary + £4,000 retainer + £564 bonus.

Eurostar 42,724 01.11.2005 International premium (£4,000) domestic premium £2,500, language premium £1,000.

EWS/EWSI 30,342 01.04.2006 Regional allowances.

First Great Western 33,280 01.04.2005

London weighting allowance: £1,865 pa. Outer London weighting allowance –:£839 pa. South-east allowance: £400 pa. Companion driver allowance: £1,775 pa.

Source: ASLEF, 2005 Pay varies from £27,058 in a small local company like c2c to £42,724 for Eurostar train drivers.

Table 2 shows the average earnings for train drivers and other categories between 1991 and 2002. It is interesting to note that in 1992 a train driver earned the average amount of all men, but by 2002 train drivers earned 16% more.

Table 1: Average earnings for train drivers and other categories in pound sterling per week, 1991–2002

Source: ASLEF, 2003

Year Train drivers Bus and coach drivers Fire officers Average full-time male

1991 322 222 312 319 1992 339 235 322 340 1993 389 239 342 354 1994 380 240 349 362 1995 387 244 352 375 1996 428 250 376 391 1997 465 266 394 409 1998 509 272 401 427 1999 506 286 431 442 2000 515 291 428 464 2001 572 311 441 490 2002 595 324 463 514



In 2002 the other categories of railway workers started to claim for ‘catch-up issues’ in order to close the pay gap with the category of the train drivers. For example, Arriva Trains Northern was offering a 4% increase for other employees despite the 18% accorded to drivers. After a season of conflicts and strikes in 2002 and 2003, a combination of pay increases and working hours moving from 37 to 35 hours was agreed. Industrial conflicts According to the Office for National Statistics, the relevant figures for strikes are only collected at the broad level of ‘transport, storage and communication’ (SIC 60-64), though most of this is likely to be accounted for by rail. The latest figures, published in 2004 (Labour Market Trends, June), refer to 2003.

Table 3: Working days lost in strike action, 2000–2003

Year Working days lost (000s)

Working days lost per 1,000 employees

Workers involved (000s) Stoppages

2003 125.5 82 52.2 45 2002 95.8 61 33.3 51 2001 107.0 69 69.1 94 2000 97.1 63 39.1 116

Source: Various labour market trends In June 2004 the first national rail strike in a decade was averted. The dispute involved RMT maintenance and signal workers. The company, Network Rail, had wanted to close the final salary scheme to new employees and offer what the union believed to be an inferior option. After a strike ballot, which the company contested on grounds of alleged irregularities, a compromise was reached enabling employees to switch to the final salary scheme after five years’ employment. Other recent major disputes have involved train guards and drivers and workers on the London Underground. Views of actors on EU regulation and dialogue No statements regarding the views of railway employers could be found. However, the issue of railway reform in Europe is an important issue for the trade unions. For example, ASLEF supports the activities and position of the ETF, and in a submission in August 2004 to the DfT consultation exercise over the ‘third railways package’, the RMT made the following statement3:

Council Directive 91/440/EEC Our disagreement with the European Commission’s policy of liberalising the European rail market, as expressed in their first two rail packages, is well established. In December 2002 following an International Transport Workers Federation European Section meeting in Budapest, Hungary, we adopted policy which opposed the ‘Second Railway Package’. We believe that far from representing a proposal to integrate the European railway system, the measures proposed in the package would lead to the privatisation and fragmentation of national railway systems, replacing them with high speed freight and passenger

3 See http://www.rmt.org.uk/C2B/document_tree/ViewAdocument.asp?ID=278&CatID=45&Search=true.


http://www.rmt.org.uk/C2B/document_tree/ViewAdocument.asp?ID=278&CatID=45&Search=true

http://www.rmt.org.uk/C2B/document_tree/ViewAdocument.asp?ID=278&CatID=45&Search=true


lines dedicated to servicing ‘just-in-time’ production methods for the globalised economy. The RMT is firmly of the view that this Third railway package marks a further acceleration in the liberalisation and privatisation process and will simply induce competition between employers intent on introducing into the industry the lowest pay and conditions possible. The unelected European Commission is pressing ahead with liberalisation and privatisation under direct pressure from the World Trade Organisation, the International Monetary Fund and World Bank. The proposals contained in the third railway package are also in line with the policies of the General Agreement on Trade and Services (GATS). Given the horrendous domestic experience of privatisation, the RMT is certain that the proposal to amend Council Directive 91/440/EEC on the development of the Community’s railways to further open up the European rail network to private sector interests will be hugely detrimental to passengers and the rail workforce. Train crew certification The consultation document sets out proposals for a Directive which will require train crew to hold a mutually recognised licence identifying key competencies which include education and fitness as well as an additional certificate identifying that the driver is competent in the train operators safety management system including rolling stock and infrastructure knowledge. The licence would be issued by the national safety authority and certificates would then be issued to drivers by their employers. The proposal will affect almost all train operators, although Government has the power not to extend the requirement for train crew licensing to the London and Glasgow Underground networks. The proposed timetable for implementation requires the setting up of a register by 2008, licensing of drivers who operate cross-border services by 2010 and the licensing of all other drivers by 2015. In light of these proposals, the 2004 RMT Annual General Meeting re-affirmed the unions’ opposition to the proposed European Train Drivers’ license. Our position is not based on issues of cost relating to the establishment and administration of the licensing scheme. Rather, we believe that the licensing system would lead to an increase in cross-border working by train crews without any real social protection for rail workers. The RMT is of the view that this would lead to the kind of social dumping that has occurred in the road freight industry. RMT members in the shipping industry have had first hand experience of widespread social dumping where unscrupulous ship owners have taken advantage of legislative loopholes in the Race Relations Act to lay off UK seafarers and then employ non-UK ratings at appalling low levels of pay. This has encouraged the view that the Red Ensign is in danger of developing into a flag of convenience. Freight The RMT has, via the European Transport Workers Federation (ETF), previously registered our opposition to EC legislation which allows the complete opening up of the freight market by 2007. It is our view that the proposal to introduce a regulation which sets out mandatory



contract requirements between freight operators and their customers should be seen in this wider context. Our view remains that rail freight should form a central part of a publicly owned, fully integrated, environmentally sustainable European rail network. We would therefore oppose proposals and regulations designed to consolidate rail freight liberalisation. Conclusion In relation to the initial Regulatory Impact Assessment on the impacts of the implementation in the UK of the EC Package, we note with particular interest the Department for Transport’s conclusion ‘that the Commission has not supported its proposed measures with convincing evidence that they would be effective in achieving the stated objectives of stabilising rail mode share by 2010 and why alternative measures (including measures addressing other modes of transport) would not be more effective’. Given the lack of convincing evidence we can only conclude that the Commission is pursuing its agenda for purely narrow, ideological reasons. The RMT remains strongly of the view that steps to integrate the European railways should only be taken on a safe and structured basis, in the interests of the passengers and the rail workers who provide the service, through a planned growth of co-operation between publicly owned European railway systems. We firmly believe that international railway co-operation should be based on best practice in terms of health and safety and that the best terms and conditions of employment, pension provision and rates of pay should be harmonised internationally.

Analysis of labour market Relation between nationwide total employment and railway employment A reduction in employment in the railway sector was taking place before the privatisation in the 1990s. Employment levels declined throughout the 1980s and 1990s in the government-owned British Rail (BR) from 244,084 in 1979 to 154,748 in 1990 and 121,052 in 1994. The privatisation has accelerated this phenomenon, with a dramatic decrease in 1997 and 1998 to reach 48,000 employees. Since 1998 the employment in the railway sector is stable at around 49,000 working units.



Figure 19: Relation between national and railway employment

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1996 1997 1998 1999 2000 2001 2002 200325,000,000

25,500,000

26,000,000

26,500,000

27,000,000

27,500,000

28,000,000

28,500,000

29,000,000

29,500,000

30,000,000

employment railways (official statistics) total employment (official statistics)

0.33

%

0.21

%

0.17

%

0.18

%

0.18

%

0.18

%

0.18

%

0.18

%

Relation between railway- and total-employment

Source: National Statistics 2005

Employment in the railway sector (official statistics)

85,000

1996

200

1997 1998 1999 2000 2001 2002 2003

Tota

l red

uctio

nof

17%

-30,000

-9,000

3,000

-1,0001,000 1,000 -1,000

Source: National Statistics 2005 (calculations by SCI Verkehr GmbH)



Relation of railway core employment, outsourcing employment and reduction of employment

Figure 20: Core employment and outsourcing in the railway sector

19.8%19.3%15.6%

16.0%18.3% 18.4% 18.9%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1996 1997 1998 1999 2000 2001 2002 2003

employment railways (official statistics) share of outsourcing employment

10.7%

Source: National Statistics 2005 (calculations by SCI Verkehr GmbH)

Outsourcing has been most extensively used in the maintenance side of the sector. The other major issue of outsourcing concerns call centres. In October 2003 plans were unofficially released to relocate the rail enquiries service to India, threatening 1,700 jobs at call centres in Cardiff, Derby, Newcastle and Plymouth. In light of a number of accidents, the safety implications of maintenance outsourcing and sub-contracting became a concern. The practice was terminated by Network Rail’s decision to dispense with the services of the contractor Jarvis, implicated in the fatal derailment at Potters Bar in 2002, and eventually to take maintenance activities back in house. In October 2003 Network Rail said its decision to in-source railway maintenance will bring ‘an end to the use of casual labour and ensure that a full-time, permanent work-force is created to complement the existing operations and signalling staff’. Network Rail said that its decision ‘will unify the core functions’ of Britain’s rail infrastructure provider, representing ‘the most fundamental restructuring of Britain’s railway since British Rail was reorganised in 1994’, two years before privatisation. At the time the structure of outsourced rail maintenance involved seven infrastructure maintenance contractors (IMCs) and 20 contract areas, with considerable management duplication and complex reporting and inspection procedures. The transfer involves some 18,500 people, and was intended to reach completion by the end of summer 2004. Only the specialised activity of rail renewals will use third-party contractors. Network Rail said it intended to achieve significant efficiency savings – up to £300 million – from the annual maintenance budget (£1.2 billion in 2002–2003) as well as continued improvement in track-side safety standards. A spokesman for the Strategic Rail Authority said: ‘This is not the beginning of renationalisation. It is simply a sensible rationalisation of Network Rail's core function – that is, maintenance. Private sector contractors will continue to play a



massive part in the delivery of Britain’s railways.’ In contrast, Bob Crow, general secretary of the Rail Maritime and Transport Union (RMT), said: ‘This is a major step towards the complete renationalisation of the railways which the RMT has been campaigning for years.’ However, the government said it remains committed to the principle of ‘public-private partnership’, with the government providing the public service framework within which private companies could operate. Relation of railway core employment and main players There is no longer a leading railway company in the UK; passenger services are fragmented through 25 companies. There seems to be no available data on the employment among the different players. SCI Verkehr asked for these data from DfT, ONS, ATOC, ORR and SRA, without positive results. For the same reasons, detailed research among the TOCs is complicated. Apart from the high number of railway operators, one must consider that several operators also provide bus services and do not provide disaggregated data concerning employment in the railway sector. As a result, there would be a high risk of comparing and elaborating data which are not sufficiently validated. The most important group, National Express Group, currently controls eight railway companies and has 11,536 employees in the railway sector, which is around 22% of the total. Employment structure and composition of the workforce Total new appointments The first effect of the privatisation process has been a strong reduction of employment, even considering that part of the workforce has changed sector (this mainly affected around 15,000 maintenance workers transferred from rail to construction). Typically, railways operators have encouraged cuts of between 10–20% of the workforce. Table 3 shows examples of reductions in train drivers in 1997.

Table 4: Employment of train drivers in 1997 Company Jan 1997 Dec 1997 Difference (%) Anglia 137 125 –8.8% Great North Eastern (East Coast) 340 275 –19% Great Eastern 310 237 –24% Great Western 299 244 –18% LTS Rail 159 106 –32% Midland Main Line 99 80 –19% North London 253 230 –9% West Anglia & Great Northern 450 400 –11% West Coast 357 345 –3%

Source: ASLEF, 2003

Quota part-time and shift workers Part time was already present within the railway sector and has not been much influenced by the privatisation. 1.6% of men and 3.2% of women employed in the railways sector worked part time in 1996. Only 2.1% of men and 2.1% of women were employed with part-time contracts in 2003. About 50% of part-time workers are



women. The average part-time employment in the UK economy stands at around 25%.

Distribution of male and female employees Female employment was at 17.2% in 1996 and reached 18.7% in 2003 with an absolute of about 2,000 employees. Three per cent of all drivers are female. Employment per age No information. Provenance Thirteen per cent of employees are ethnic minorities. Table 4 shows the main companies’ policies in the field of proactive recruitment of women, ethnic minorities and other groups which are currently under-represented.

Table 5: Recruitment strategies of rail companies Company Proactive recruitment of members of those groups, e.g.

women and ethnic minorities, which are currently under-represented among the Driver Grades in the industry

Arriva Trains Wales No progress. c2c / Central Trains Equal opportunities policy very proactive. Chiltern Railways No problems. DRS Under negotiation. Eurostar High proportion of women and ethnic minorities recruited. Eurostar Train Managers High proportion of women and ethnic minorities recruited EWS/EWSI Part of 2005 pay review. First Great Western Slow – monitoring ongoing. First Great Western Link Yes. First ScotRail No movement until franchise finalised. Freightliner / Freightliner HL Active recruitment. Gatwick Express Good. GB Railfreight / GNER Company Council Consultation. Heathrow Express / Hull Trains Under review. Island Line No progress. London Underground Proactive monitoring– good progress. Maintrain N/A Merseyrail Ongoing campaign. Midland Mainline Ongoing proactive recruitment. Nexus N/A Northern Rail (formerly FNW) Some slight improvement. Northern Rail Ltd (formerly ATN) Waiting outcome of meeting with SRA. ONE Anglia / ONE Great Britain 10 new entrants 19/04/04. ONE West Anglia No more recruitment until after split. Silverlink Agreement on equal opportunities monitoring. Difficulty obtaining

statistics. South Eastern Problematic. South West Trains Active recruitment of women and ethnic minorities.



Southern Yes: Attend training school to meet all new recruits into the driving grade.

Thameslink Joint commitment to proactive recruitment. TransPennine Express Yes. Transplant Infraco JNP (Tubelines) No women drivers. 14% ethnic minorities in transplant. Virgin Cross Country Company training. Virgin West Coast Company training. WAGN Yes. Wessex Trains Ongoing recruitment without (positive) discrimination.

Source: ASLEF, 2005 Educational level and qualifications No information. Field of activity A significant example of employment developments in the rail transport sector is offered by Central Trains, a major rail operator controlled by National Express Group. In 2004 it achieved 1,428 million pkm (+ 1.5% compared to 2003), 40.5 million passenger journeys (+ 5.2% compared to 2003) and 30.9 million tkm (+ 3.6% compared to 2003). It operates on a 2,145 km network serving 193 stations. In 1997 Central Trains employed 2,515 workers, of whom 543 were drivers, 499 conductors and 394 were engaged in maintenance and cleaning. In 2003 Central Trains employed 2,314 staff, of whom around 750 were drivers and nearly 600 were conductors. Hence, over 400 people are employed by Maintrain, a company which maintains the Central Trains fleet. The staff reduction has been contained by around 8%, without considering that train maintenance has been externalised. In 2003 Central Trains employed 1,983 males (85.7%) and 331 females (14.3%). Sixteen per cent of employees are under 30 years old (24% of women); 17% of employees are between 31 and 40 (33% of women); 34% of employees (26% of women) are between 41 and 50; and 33% of employees (16% of women) are over 50. Ninety-seven per cent of staff have open-ended contracts, 1% have fixed-term contracts and 2% work part time. Fifty-three per cent of part-time workers are women. Monthly income The reduction of employment has not been accompanied by a further reduction of train services and transported passengers in 1997/1998. As a result, new operators started to face a shortage of personnel. This problem was particularly relevant for train drivers, because the problem was not to be solved rapidly due to the long training needed to qualify train drivers. The presence of an external validation of the mandatory driving test has facilitated an increasing turnover of drivers towards the companies offering better pay. The problem has mainly affected regional operators not able to provide attractive offers. One known example is Arriva Train Northern. In 2002, 17 drivers switched to freight operators offering a salary level around £5,000 higher in the space of a fortnight.



These facts have put the trade unions, especially ASLEF, in a very strong position. Train operators have mainly been forced to offer higher salaries and also to agree better working conditions, such as 100% rent schemes and 35-hour working weeks. Further benefits in the form of loyalty bonuses have also been introduced. For example, in 1999 Gatwick Express introduced a bonus payment worth £1,000 a year for train drivers and maintenance fitters. Analysis of working conditions Training and learning opportunities One of the main consequences of the privatisation process has been the lack of professional workers such as drivers and track engineers. On the other side, train and maintenance companies were not willing to pay the costs of long training. Table 5 shows skill shortages in the whole industry (manufacture, consulting, etc.) connected with the rail sector (250 companies with 130,000 employees) in 2001.

Table 6: Skill shortages in the railway transport industry Skill Population Shortages % Train driving 19,000 855 4.5 Signal operation and control 6,500 795 12.3 Electrification 1,800 522 29 Track laying and maintenance 10,000 1,200 12 Signal engineering 9,000 720 8 First line/middle management 18,650 755 4 Graduate and professional staff 20,000 1,638 8 Other occupations 45,050 Total 130,000

Source: SRA 2002 According to the Rail Industry Training Council (RITC), the rail industry as a whole (250 companies and 130,000 employees) needs to recruit and train 5,000 new people every year. That represents around 4% of the workforce yearly. In order to provide the railway sector with adequate profiles, a number of initiatives at national and cross-company level has been established. Some examples include the following. • ATOC Engineering Council has developed a cross-TOC Graduate Training

Scheme for Mechanical and Electrical Engineers. • Newham College has created a Centre of Vocational Excellence (CoVE) in

railway engineering. • SRA has been working with RITC and a number of train operators have

established a driver training school. • The first-ever Learning Resource Centre opened in Glasgow, promoted by

Scottish University for industry, rail companies and Clackmannan College. • RITC, supported by rail trade unions, is leading work on a Rail Sector Hub for the

University for Industry. • RITC developed a Civil Engineering Graduate Apprenticeship and a two-year

Foundation Degree. • Network Rail has developed a conversion programme for equipping engineers

from other sectors with rail-specific know-how. • The Yorkshire Rail Academy has been established.



It is worth noting the ‘Framework for Skills for the Rail Industry’ sponsored by the Strategic Rail Authority and the Department for Education and Skills (DfES) with the goal to increase the skills in the railway sector. Six key themes have been set: • overcome obstacles to recruitment and trade supply; • improve training for people in the industry; • increase the number of people gaining nationally recognised qualifications; • employ the regulatory and franchising arrangements to improve skill levels; • ensure high-quality training and assessment; • improve training, development, qualifications and the external validation of

competences for priority occupations. Enhanced training for train drivers is provided by only a few companies and is mainly concentrated in the field of conflict avoidance, as by South West Trains, Wessex Trains and Chiltern Railways. Working time Even if theoretically there is not a national standard for working conditions in the rail sector, differences among the companies are mainly connected with different services. The risk of employees’ turnover and the ‘social benchmarking’ guaranteed by the trade unions looks for comparable conditions in the rail sector. Table 6 shows the main aspects concerning train drivers.

Table 7: Development of working conditions Company 35-hour week 35-hour/four-day week Improved holiday Arriva Trains Wales

Yes: 35-hour week since May 2001

35 hours JWP for Sundays inside. Not looking good.

26 days

c2c Yes: 1,680 annual hours + 120 hours ‘as required’

Annual hours = 35-hour week including rostered Sundays

Central Trains 36-hour week from 27 Sept. 2004

36 hours; Sundays outside 35 fours from 1-06-06/4 week

16 days rostered and eight days by request. One day extra leave if rest day falls on Xmas day

Chiltern Railways


35 hours Sundays outside/No.5 (Sundays outside)

31 days annual leave + any additional bank holidays. Normal bank holidays incorporated into 31 days annual leave

DRS 35-hour week + annualised 1,820-hour working year

35 hours Sundays inside/4 dependant on diagram’s lengths

25 days + eight public holidays

Eurostar Yes: 35-hour average four-day week

35 hours average four-day week Sundays inside

Annual leave to be incorporated into roster

Eurostar Train Managers

Yes: 35-hour average four-day week

35 hours average four-day week Sundays inside

EWS/EWSI Yes, rostered over average 52.17 hours

Annual hours 35 hours rostered over 52.17 weeks Sundays inside

Regain annual leave when falling on rest days

First Great Western

Yes: 35-hour week since April 2001

35 hours Sundays outside/5 + block weeks

32 days annual leave

First Great Western Link


35 hours/Sunday outside/four-day week




First Scotrail Yes: 1,601 annual hours (36-hour rostered week plus 1 week extra leave)

35 hours Sundays outside/four main depots>five@small/rural

31 days annual leave + 4 bank holidays. Min 75 rest days p.a.

Freightliner Yes: 35-hour week since May 2002

35 hours Sundays inside/four-day week

Maternity leave at 24 weeks full pay. 8 days paternity leave.

Freightliner HL Yes: 35-hour week since establishment

Yes

Gatwick Express Yes: 35-hour week since May 2001

35 hours Sundays outside 32 days leave annual leave

GB Railfreight Yes: 35-hour four-day week with Sundays inside working week

35 annual hours four-day week Sundays inside

5 days paternity leave.

GNER Yes: 35-hour week since April 2001

35-hour week Sundays inside 34 days – 25 rostered annual leave

Heathrow Express

40 hour week negotiations underway as part of revised recognition

40 hours Sunday inside Statutory

Hull Trains Yes: 35-hour week-Sundays inside from may 2005

35 hours Sundays inside from May 2005/five-day week

5 rostered weeks + 7 rostered lieu days

Island Line 39 hour week from May 2002 39 Sundays inside 34 annual leave London Underground


35 hours Sundays inside 43 days

Maintrain 1,800 annualised hours (37-hour week) still in discussions

37 NEG agreement

Merseyrail Yes: 35-hour week since winter timetable 2002

35 hours Sundays outside/five days

30 days annual leave (20 rostered, 10 floating)

Midland Mainline

Yes: 35-hour week summer timetable 2002

35 hours 32 days

Nexus 36-hour week by May 2004 at earliest

4 day mainline working week

Northern Rail (formerly FNW)

Yes: 35-hour week since winter timetable 2001

35 hours Sundays outside/four-day week

Northern Rail Ltd (formerly ATN)

Yes: 35-hour week since October 2000/4.5-day week

35 hours Sundays inside JWP on true reflection

ONE Anglia Yes: 35-hour week since summer timetable 2001

35 hours Sunday outside/ five JWP

5 weeks annual leave, 7 days lieu leave, 34 days max

ONE Great Britain

Yes: 35-hour week since Jan 2001

35 hours Sundays outside/five-day week

ONE West Anglia


35 hours Sunday outside/ four-day week


Silverlink Yes: 35-hour week since Jan 2000

35 hours Sundays outside/max five

24 days annual leave + bank holidays. Rep leave.

South Eastern 35-hour, four-day week under negotiation

Reduced to 37 hours/4.8 day by 2005

32 days p.a. Additional 3 free days from March 2005

South West Trains

38-hour week (hour reduction in the working week 1st hour in Dec 04 and 2nd hour in Dec 05)

37-hour, four-day week Sundays inside by Dec 05

30 days. Parental/family- friendly/part-time leave.

Southern Yes: 35-hour week since June 2001

35 hours Sundays outside JWP to examine/four-day week

6 weeks p.a.

Thameslink Yes: 35-hour week since January 2000

35 hours Sundays outside/four-day week

24 days annual leave + bank holidays



TransPennine Express

Yes Yes ATN. No Ex FNW. Sundays outside/None

5 wks rostered + floating days (9 ) ex ATN

Transplant Infraco JNP (Tubelines)

Yes: 35-hour week from October 2002

35 hours/four-day average 7, 4 shifts p.a.

Virgin Cross Country


35 hours Sunday outside/four-day week

5 weeks + 10 floating days

Virgin West Coast



5 weeks + 10 floating days

WAGN Yes: 35-hour week since May 2000



Wessex Trains Yes: An average 35-hour, four-day week achieved

35 hours Sundays out working week + pd at time + ¼ for train work, basic rate for safety training when undertaken on Sundays /Yes: average two rest days per week Sun outside

26 day annual leave (reflecting four-day week)

Source: ASLEF 2005 For drivers, 35 hours are a general standard with few exceptions. The most relevant one (40 hours) is Heathrow Express, a company owned by British Airports Authority and realising a specialised service (airport connection). The last column shows travel benefits granted by railway operators to its employees. This benefit is sometimes important because railway workers often use different networks in the daily home-work movements. Health and safety at work

Figure 21: Fatal injuries among railway employees and contractors

0

5

10

15

20

25

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Number of fatal injuries Rate per 100,000 employees Source: HSE, 2004

The Health and Safety Executive (HSE) is the national health and safety authority sponsored by the Department of Work, responsible for several industries including the rail industry. The following bodies are specifically concerned with the rail industry.



• HM Railway Inspectorate (HMRI), with offices in various parts of the UK, inspects and controls the observance of the health and safety law.

• The Rail Policy and Cullen (RPC) develops policy on health and safety on rail. • The Health and Safety Laboratory (HSL) provides scientific and technological

support, e.g. in the investigation of rail incidents. • The Railway Industry Advisory Committee (RIAC), with industry and passenger

group representation, advises on rail health and safety issues.

Figure 22: Major injuries among railway employees and contractors

0

50

100

150

200

250

300

350

400

450

500

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Number of major injuries Rate per 100,000 employees Source: HSE, 2004

According to the HSE report, in 2003/2004 there were nine employee fatalities, of which six were track workers. In 2004 there were 263 assaults on staff, which is a decrease of 26% compared with the previous period.

Figure 23: Injuries affecting railway employees and contractors (over 3 days)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Number of over 3-days injuries Rate per 100,000 employees Source: HSE, 2004



Figure 23 shows how injuries to railway employees and contractors are definitely less frequent since 1996–1997.

Two main parameters for the evaluation of the health system for train drivers are job security and protection for medically restricted drivers as well as improved health and safety and work environment for staff.

Table 8: Health system benefits Company Job security and protection for

medically restricted drivers Improved health and safety and work environment for

staff Arriva Trains Wales

80% of substantive rate. Ex-gratia payments under chain of care. Up to two years’ salary if permanently removed from driving.

Ongoing

c2c Central Trains Medically restricted drivers retain

current salary in any grade that’s paid less. No insurance scheme.

Paid release for TUC stage 2 courses

Chiltern Railways Green Card Link. Ongoing. Generally good. DRS 12 months’ sick leave on full pay. Under negotiation Eurostar 100% 6 months, 90% 6 months, 80% Ongoing monitoring Eurostar Train Managers

100% 6 months, 90% 6 months, 80% Ongoing monitoring

EWS/EWSI Ongoing welfare scheme 75% retention of driver’s salary. Almost impossible to get places for medically restricted drivers.

Ongoing

First Great Western

Most depots accommodate restricted drivers.

Ongoing


New depot driver grade salary reduced in stages for medically restricted drivers.

Ongoing concerns

First Scotrail As per DRI provided vacancies exist. Good Freightliner Slow progress on insurance scheme. Satisfactory Freightliner HL Driver insurance scheme agreed in

2001 but HH still stalling on question of who pays.

Need for H&S reps at all locations currently 4 reps in 4 locations

Gatwick Express PHI scheme in place. Generally good GB Railfreight GBRf agree to participate in joint

assessment of Driver Insurance Scheme.

/

GNER Medically restricted drivers/Ins company council consultation.

Satisfactory

Heathrow Express No reported problems. / Hull Trains TBA on individual basis, alternative

employment at 83%. Training

Island Line Concerns. Satisfactory London Underground

Sickness 39 weeks’ full pay plus package medically restricted drivers.

Dealt with at JSC

Maintrain No agreement. N/A Merseyrail One position at present (Birkenhead

shed). Satisfactory

Midland Mainline Yes: Medically restricted drivers’ salary protected for three years.

Some problems

Nexus Job security: Protection for medically restricted divers – only for ex-BR staff.

Problematic


100% rate of pay protection for medically restricted drivers.

/

Northern Rail Ltd Medically restricted drivers: Protected Satisfactory



(formerly ATN) salary introduced without prejudice. Now management pressure on medically restricted drivers due to length of franchise.

ONE Anglia Yes: 90% for medically displaced staff in driver grades.

FC meets with H&S reps twice a year

ONE Great Britain In-house scheme – two years’ salary. Satisfactory ONE West Anglia New deal pending. As per legislation Silverlink Medically restricted drivers’ salary

protected at 90%. /

South Eastern Under negotiation as part of PC 2003. / South West Trains Depot driver positions at five depots.

Salary retention for drivers removed from main line duties.

Training reps and mgrs in chain of care and support

Southern Current medically restricted drivers protected.

Proposals submitted for normal medical requirements

Thameslink ‘Shed’ link at Bedford but nothing at Blackfriars or Brighton. Also an in-house protection scheme in place.

Fans and centre blinds installed, extra break for physical needs

TransPennine Express

No insurance scheme. Yes


No opportunity after PPP. Deteriorating situation. New machinery – unilateral. Trainee scheme.


Concern at slow progress of JWP on insurance scheme.

Ongoing

Virgin West Coast Working party on medically restricted drivers retention of salary has commenced.

Ongoing

WAGN New deal pending. As per legislation Wessex Trains Medically restricted drivers who

perform any form of driving duties receive same driver entitlements including full pay.

No loss of benefits for 60–65 + age group

Source: ASLEF 2005 The first aspect is analysed in detail in Table 7, where information about the different transport policies is provided. Concerning health and safety for staff, the table contains ASLEF evaluations, mainly referred to the category of train drivers. Social protection The main issues in the field of social protections are 100% pensionable pay and the retirement age. Table 8 shows the main implementations in this field concerning the category of train drivers.

Table 9: Social protection measures

Company Pensionable pay Pensions to be 100% of salary Early retirement with

the first stage at 60 years of age

Arriva Trains Wales

100% from January 2003 100% since 1 January 2003 No

c2c 100% (pre DRI drivers – all drivers from July 2005)

100% (pre DRI drivers – all drivers from July 2005) No progress

Central Trains 100% from 1 January 2003 100% from 1 January 2003

Normal retirement age is 65, but can go at 60 if requests

Chiltern Railways 100% from January 100% from January 2001 65 with full benefits.



2001 55–64 with reduced benefits

DRS 100% from DRI 100% from DRI Yes Eurostar 100% fully backdated 100% fully backdated Yes Eurostar Train Managers 100% fully backdated 100% fully backdated Yes

EWS/EWSI 100% forward pensionable pay from 1 September 2004

100% from September 2004 /

First Great Western 100% from July 2002 100% from July 2002 Under consideration


100% from 1 January 2002 100% from 1 January 2002 No

First Scotrail 100% 100% on future service only Franchise delaying movement

Freightliner 100% 100% In pay talks Freightliner HL 100% 100% Not agreed Gatwick Express 100% from DRI 100% since DRI No progress

GB Railfreight 100% 100% Omnibus pension allows for retirement at 60

GNER 100% phased in – fully pensionable from 2004 Yes No

Heathrow Express 100% 100% No progress

Hull Trains 100% (omnibus section) 100% (omnibus section) /

Island Line 96% 96% Under negotiation

London Underground

100% since restructuring 100% since restructuring

Full pensions at 60. Possible retirement at 50

Maintrain 100% 100% No Merseyrail 100% from DRI 1998 100% from DRI 1998 No progress

Midland Mainline 100% from 1 October 2004 100% from 1 October 2004 65

Nexus 100% (local government scheme) 100% 65


100% from June 2002; ongoing issue of backdating

100% from June 2002; ongoing issue of backdating No progress

Northern Rail Ltd (formerly ATN) 100% from May 2001 100% from May 2001 JWP

ONE Anglia 100% from DRI 100% from DRI Under negotiation ONE Great Britain

100% from DRI 1 1996 From DRI I 1996 JWP unlikely to meet

until April 04 ONE West Anglia 100% from DRI 100% from DRI JWP met but no

progress until after splitSilverlink 100% from July 2003 100% July 2005 No

South Eastern 100% from 30 March 2003 100% from 30 March 2003 Under negotiation

South West Trains

100% from April 2000. Full backdating to be achieved

100% from April 2000. Full back servicing still to be achieved

Not yet achieved

Southern 100% from 1 January 2003 100% from 1 January 2003 JWP waiting for

meeting

Thameslink 100% from January 2002 100% from January 2002

JWP in place. Job sharing and reduced hours working



Trans Pennine Express

100% from May 2001 (ex ATN) from June 2002 (ex FNW)

Yes No


100%. New pension scheme to be set up for new entrants

100% /


100% from 7 January 2002 100% JWP

Virgin West Coast

100% from 7 January 2002 100% from 7 January 2002 JWP

WAGN 100% from DRI 100% for DRI Still trying

Wessex Trains 100% from 1 January 2003 100% with effect from 2003 Any time 60–65 + no

loss of benefits Source: ASLEF 2005

If 100% pensionable pay has been substantially achieved, the situation concerning retirement age is more complicated, where only a few companies are giving the possibility of retirement at 60 years with full benefits. In the meantime, 100% pensionable pay is the object of catch-up claims with trade unions now aiming at extending the same benefit to the other categories.

References4

Arriva PLC, Annual report 2004, Annual report, 2004. ASLEF, ‘Companies that have Collective Agreements with ASLEF’, London, 2005, available at: www.aslef.org.uk ASLEF, The impact of the fragmentation of collective bargaining in the rail industry, London, IDA, 2003. A-Train, interview, August 2005. European Rail Shuttle, ‘Facts & figures’, 2005, available at: www.ersrail.com/facts/facts.html Görg, H., ‘Does outsourcing increase profitability?’, Economic and Social Review, Vol. 35, No. 3, 2004. Health & Safety Executive Railway (HSE), Safety annual report 2004, Annual report, London, 2005. National Express Group, ‘Operational facts’, available at: www.nationalexpressgroup.com/nx/oc/op-facts/op-trains/. National Statistics, ‘United Kingdom national accounts’, available at: www.statistics.gov.uk/. Office for National Statistics, Public sector employment, London, 2005. SCI Verkehr GmbH, ‘Database railway technology’, 2005. 4 All links accessed on 21 November 2005.


http://www.aslef.org.uk/

http://www.ersrail.com/facts/facts.html


SCI Verkehr GmbH, European operator market for short-distance passenger transport, Cologne, 2004. SCI Verkehr GmbH, European railway freight transport markets, Cologne 2005. Steer Davies Gleave, ‘EU rail liberalisation – extended impact assessment’, Regulatory Overview of the United Kingdom, Technical Note, London, December 2003. Strategic Rail Authority (SRA), Delivering the framework for skills for the rail industry: progress report, London, 2001. Strategic Rail Authority (SRA), Delivering the framework for skills for the rail industry: second progress report, London, 2002. Strategic Rail Authority (SRA), National rail trends yearbook 2004–2005, 2005, available at: www.sra.gov.uk/pubs2/performance_statistics/Nat_trends_yearbook/Nat_Year.pdf

Annex: Note on methodology

The level of employment in the railway sector is a very important indicator of the consequences of the EU legislative framework governing the railway sector. However, restructuring in this sector has resulted in employment in railway activities being outsourced to sectors other than the statistical definition of the railway sector (NACE Code 60.10). Thus, the employment impact is not measured simply by examining employment levels in what is formally defined as the railway sector – an estimate of the number of jobs that have been created in other sectors must first be obtained. The impact of restructuring on employment in other sectors is estimated by utilising the production data in the national accounts, where the value of production in railways may be expressed as the sum of value added (performed in-house) and the purchase of intermediates (purchased elsewhere). Changes in the ratio of value added and intermediate purchases over time provide a money value indicator of outsourcing trends (Görg, 2004, pp. 267-288). This is calculated for each country in the study using input–output tables. In order to calculate the change in employment that corresponds to shifts in the value ratio, average work coefficients are used.


http://www.sra.gov.uk/pubs2/performance_statistics/Nat_trends_yearbook/Nat_Year.pdf


Methodological process – calculation of total railway employment

definition and accumulation of economic indicators / data:• production value• value-added• purchase of intermediates

ratio calculation and time series analysis:• ratio between value-added and production value

ratio between purchase of intermediates and production value

quantification of changes in production value due to outsourcing-induced changes in ratio betweenpurchase of intermediates and production value

transformation of changes in production value into changes in employment in other economic sectors of the national economy

calculation of balance between employment changes in rail operation (NACE 60.10) and outsourcing-induced employment changes in other economic sectors

definition and accumulation of economic indicators / data:• production value• value-added• purchase of intermediates

ratio calculation and time series analysis:• ratio between value-added and production value

ratio between purchase of intermediates and production value

quantification of changes in production value due to outsourcing-induced changes in ratio betweenpurchase of intermediates and production value

transformation of changes in production value into changes in employment in other economic sectors of the national economy

calculation of balance between employment changes in rail operation (NACE 60.10) and outsourcing-induced employment changes in other economic sectors


• • The results of the estimations are summarised using a survey of the relevant indicators. A balance of the employment will be shown, accounting for the reduced number of workplaces in the rail operation sector and the employment changes in other sectors. The methodological approach developed aims at combining a scientific-substantiated state of knowledge and simplicity of statistical solution. The methodology is based on disaggregated data (national accounts), the compilation of which demands thorough research for each of the countries selected, since data is not always readily available at EU level.


Documents

Profile of the rail transport sector in the United Kingdom