Industry facing cuts of £2bn as a result of Covid passenger exodus
THE substantial downturn in passenger numbers throughout the Covid-19 pandemic, allied with the heavy financial support for passenger services of around £800m per month from the Treasury, is likely to lead to cuts in services and cuts in staff.
While the fixed costs of running the railway have remained roughly the same, passenger revenue via the fare box has fallen by 80%, leaving a massive and unsustainable funding gap.
Having made it clear Government support will not be unlimited, representatives from across industry – the four rail unions, Network Rail and the train operators who form the Rail Industry Recovery Group – have agreed to work together to address a future with fewer passengers. The aim is to make cuts of around £2bn.
If and when passenger numbers begin to grow, train operators will look at using existing services to carry more passengers before introducing new ones.
While service reductions along with frequency changes will inevitably play a key part of cost cutting, so will a voluntary redundancy scheme.
Forefront
However, rail unions have made it clear they will not accept compulsory redundancies or changes to pension rights. In addition, they will be expecting a generous voluntary redundancy scheme which is likely to be aimed at staff over the age of 55.
With more passengers buying tickets online, changes in ticket office opening hours or even closure could be at the forefront of the cuts.
With train operators on emergency contracts, it is understood the Government will not fund outstanding pay rises for 2020 or 2021, other than a £250 rise for the lowest paid staff.
Detailed proposals of where the costs savings will come from is expected in the autumn.
Steve Montgomery, chair of the Rail Delivery Group, which represents train operators and Network Rail, said: “The Covid-19 pandemic has led to the biggest drop in passenger numbers since records began … To build back a railway which is sustainable in the long-term and addresses changing passenger needs, we must change the way we work and not take more than our fair share from the public purse.
“We face tough choices. We have to adapt and we want to retain as many jobs as we can.”
■ The difficulties facing train operators in winning back passengers will not be helped by budget airline EasyJet introducing 12 new domestic routes, including Manchester to Edinburgh, Birmingham Newquay and Liverpool Bournemouth.