Northern pay negotiations - deal agreed

[Tetchytyke]

However if you are the person finding your wage progressively getting worse against inflation, it is little consolation that your employer and/or share holders aren't turning the profit they would like.

And in most cases it is the bit that I have highlighted in bold. Next have just issued a profits warning, with all the doom-and-gloom talk of "belt tightening" and job cuts, because they made a measly £790m profit last year, rather than the forecast £810m.

Arriva's profit last year rose to £350m, a 7% increase. Why shouldn't the people who do the grafting get rewarded for it?

In my sector, we've been offered 1% this year "as there's no money". The average boss in my sector has just been given a twenty grand payrise, up to an average of about £350,000 a year. My arse there's no money.

 

[HH]

And to prevent another NXEC the DfT put cap-and-collar arrangements in for most other TOCs, so where a TOC gets their sums wrong it is the taxpayer who gets to write a giant cheque out to compensate them. East Midlands Trains got £46m off DafT in 2012 to cover a £25m six-month loss.

Wrong. Cap and Collar pre-dates NXEC and hasn't been in use on new franchises for some time. Even when it does exist there is a nil band and support is 80% of the remainder, so it's no guarantee of a profit.

 

[Tetchytyke]

Even when it does exist there is a nil band and support is 80% of the remainder, so it's no guarantee of a profit.

It's a guarantee of not making a loss though, as Stagecoach have so handsomely proven (and look like they're going to get another bumper payout because VTEC isn't doing as well as they want).

So much for profits being the reward for taking capital risk.

All this government does is privatise profits and nationalise losses, and we're supposed to believe a Northern guard on £20,000 wanting a fair payrise is the greedy one. Yeah right.

 

[HH]

It's a guarantee of not making a loss though, as Stagecoach have so handsomely proven (and look like they're going to get another bumper payout because VTEC isn't doing as well as they want).

So much for profits being the reward for taking capital risk.

No, it's not a guarantee of not making a loss, as Stagecoach have proven on East Midlands... (the other thing is it doesn't kick in until around year 4).

 

[Bantamzen]

It does beg the question, if franchises like Northern are such bad loss makers that have to be propped up by grants / subsidies, why on Earth do companies line up to bid for them let alone offer substantial investment?

Call me a cynic, but if these really are loss makers with no hope of profits and the risk of future subsidies being lowered or removed, no company would touch them with a barge pole. Unless of course there is a bit of <cough> creative accounting going on, a bit like those poor energy companies who struggle so to make a profit (unless you dig a little deeper and find the accounting trail). Three decades of public service, often working with private sector partners, has taught me not to listen to the headline figures. That's all I'm going to say on that....

 

[Tetchytyke]

no company would touch them with a barge pole. Unless of course there is a bit of <cough> creative accounting going on

Cynic.

Arriva are no strangers to "creative accounting", it has to be said. Arriva's Northumberland bus services apparently made a loss for years. It just so happened that they would have made a significant profit if they hadn't had to pay so much money to Germany in "administration expenses"...

 

[theblackwatch]

The Government set the benchmark by increasing the National Minimum Wage. That makes anyone else's wages, for work which maybe worthy of a premium over the NMW, worth less.

Or maybe someone who works a shop till, or cleans an office, should be paid the same as someone who is reponsible for the safety of thousands of lives every day.

I don't think this 'benchmark' is connected to the National Minimum Wage - I'd be surprised if any of the RMT people being balloted are on the NMW, but I'm happy to be corrected if that is the case.

I'm unsure what this "benchmark that the union has set elsewhere in the rail industry" as the RMT describes it is - is it an expected % pay rise, or a minimum salary, or something else? Maybe someone who knows could advise?

 

[Barn]

I don't think this 'benchmark' is connected to the National Minimum Wage - I'd be surprised if any of the RMT people being balloted are on the NMW, but I'm happy to be corrected if that is the case

I think the point being made was, if the NMW goes up, everyone's salary should also go up proportionately.

As I understand it, the fear is that, unless this happens, the NMW creeps up as a proportion of the RMT members' salary so they don't command such a premium over poorer people that they used to.

This is of course the opposite of the socialist ideal that the RMT say they support. I've heard RMT supporters describe this type of thinking as "kicking out at people on the lower rung of the ladder". It seems apt.

 

[coxxy]

Think the issue is more to the fact that Northern staff are being offered a 4 year pay deal in a franchise that is probably going to end up going the same way as Southern etc. Staff would be daft to accept a 4 year deal with that amount of uncertainty.

 

[takno]

I think the point being made was, if the NMW goes up, everyone's salary should also go up proportionately.

As I understand it, the fear is that, unless this happens, the NMW creeps up as a proportion of the RMT members' salary so they don't command such a premium over poorer people that they used to.

This is of course the opposite of the socialist ideal that the RMT say they support. I've heard RMT supporters describe this type of thinking as "kicking out at people on the lower rung of the ladder". It seems apt.

Would you prefer that they gauged their pay rises against the rises of the top 1% of the population? If they did this they would be asking for RPI+70. The RMT as an organization may have "Socialist ideals", but only really extreme forms of Socialism believe in equal pay for all, and in any case the RMT are first and foremost a union dedicated to acting in their members interests, not a socialist campaign group.

 

[HH]

It does beg the question, if franchises like Northern are such bad loss makers that have to be propped up by grants / subsidies, why on Earth do companies line up to bid for them let alone offer substantial investment?

Call me a cynic, but if these really are loss makers with no hope of profits and the risk of future subsidies being lowered or removed, no company would touch them with a barge pole. Unless of course there is a bit of <cough> creative accounting going on, a bit like those poor energy companies who struggle so to make a profit (unless you dig a little deeper and find the accounting trail). Three decades of public service, often working with private sector partners, has taught me not to listen to the headline figures. That's all I'm going to say on that....

Nothing to do with creative accounting. Arriva will have bid for a grant that allows them a small profit; at least providing the revenue holds up and the costs don't increase. The latter is actually pretty hard to achieve because they will have bid costs fairly low already.

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Think the issue is more to the fact that Northern staff are being offered a 4 year pay deal in a franchise that is probably going to end up going the same way as Southern etc. Staff would be daft to accept a 4 year deal with that amount of uncertainty.

This makes more sense. Certainly DCO was mandated.

 

[74A]

What about ASLEF and the drivers. Have they been offered a better deal ?

 

[northwichcat]

Arriva's profit last year rose to £350m, a 7% increase. Why shouldn't the people who do the grafting get rewarded for it?

Agreed the people who worked for Arriva in the previous financial year should be rewarded for helping Arriva to achieve that level of profit. Arriva bus drivers, Chiltern workers and XC workers, and other Arriva staff including staff in other countries will have helped. However, Northern workers haven't yet spent a full year working for Arriva so a pay increase of RPI for the current year backdated to the date the pay review was due would sound very reasonable to me.

It should also be noted Arriva have streamlined their bus operations to be more profitable and if they hadn't done that their overall profit would have been lower.
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The Government set the benchmark by increasing the National Minimum Wage. That makes anyone else's wages, for work which maybe worthy of a premium over the NMW, worth less.

Or maybe someone who works a shop till, or cleans an office, should be paid the same as someone who is reponsible for the safety of thousands of lives every day.

I do think there's a risk of the gap between pay for skilled jobs and unskilled jobs being too little if people earning above the minimum wage for skilled jobs don't get suitable pay rises but safety critical railway staff are paid a lot more than the £14,000 for a 37.5 hour week than minimum wage workers over 25 get under the new improved minimum age. Even looking at some of the non-safety critical office based roles Northern are currently advertising they look to be well paid compared to office based roles with other employers.
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It does beg the question, if franchises like Northern are such bad loss makers that have to be propped up by grants / subsidies, why on Earth do companies line up to bid for them let alone offer substantial investment?

It allows them to get a steady income from day 1 even if it's not a large income. Setting up new commercial operations could be loss making at first and the company has to take a risk as to whether to continue with the loss making operation and hope it turns profitable or to axe the operation and write it off as a loss - look at Grand Central.
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Northern is a loss-making franchise that has to be supported by a grant. It's hard to see how it could ever be a financial success.

The 'financial success' of the old Northern franchise was that it was let as a 'no growth' franchise but saw exceptional growth meaning the part of the grant was repaid in the form of 'revenue share.' However, the new franchise is let on terms more suitable for the current climate and Northern are expected to deliver more with a much lower level of support meaning the franchise holder generating £30m profits is extremely unlikely.

 

[Robertj21a]

Maybe so, but not necessarily always. If someone, for example, relies on additional credit to either be within commutable distance of their work, or indeed in the case of the S/E in particular just to be able to afford the commute, what do they do? Look for lower paid work, move to another part of the country, perhaps away from family or friends? Just scratching a living in 21st century Britain is becoming increasingly expensive, especially when it comes to housing. Even where I live, a long way from the S/E commuter belt prices for buying / renting are still increasing way beyond the rate of inflation and people's wages. One can only cut the cloth so far before there is none left.

Sorry, no. If anyone is using personal credit to their maximum limit then there's something wrong with their priorities. If it's truly at the maximum there will be no real chance of ever making enough repayments to reduce it.

 

[furnessvale]

Would you prefer that they gauged their pay rises against the rises of the top 1% of the population? If they did this they would be asking for RPI+70. The RMT as an organization may have "Socialist ideals", but only really extreme forms of Socialism believe in equal pay for all, and in any case the RMT are first and foremost a union dedicated to acting in their members interests, not a socialist campaign group.

That statement does not sit well with recent utterances from RMT and its officers concerning the death of Fidel Castro and a desire to overthrow the democratically elected government of the UK.

 

[Barn]

The RMT as an organization may have "Socialist ideals", but only really extreme forms of Socialism believe in equal pay for all

There's a difference between equal pay for all and wishing to stay the same distance ahead of the poorest workers out of a sense of prestige.

If the rest of the economy marches in lockstep with the NMW, then the poorest never actually get any richer in relative terms and we all just suffer inflation.

For what it's worth, I agree that the RMT's mission should be to get the best deal for its members. But there is a bit of hypocrisy between its supposed ideals and its behaviour.

 

[tbtc]

I suppose you could argue that the above-inflation increases to the National Minimum Wage have been a "race to the top"?

'Race to the bottom' is a term used by the most stupid union leaders who don't know a thing about the operational side of a business and then their members start repeating it like sheep. How can you be racing to the bottom when your pay is increasing?

Agreed - I wish we could have one of these threads without the "race to the bottom" cliché being trotted out.

Northern's statement says it is 2% this year followed by RPI+0.1% for two/three years after that.

From yesterday:

RMT General Secretary Mick Cash said:“British passengers are paying the highest fares in Europe to travel on rammed services while the private train companies are laughing all the way to the bank. Companies like Southern Rail and their French owners are siphoning off cash to subsidise rail services in Paris and beyond.”"It's a national scandal and will only be stopped through public ownership of our railways."

https://www.rmt.org.uk/news/rail-fare-increases030117/

So they are complaining about fare rises and the subsidies for rail franchises being too high one day and then demanding better pay rises for one of the most heavily subsided franchises the next day. :roll:

It is the April 2016 pay deal that they put forward in September/October (not sure exactly when).
The offer is rpi +0.1% for each year, for 3 years with an option for a 4th year.
The first year is stated as 2% because rpi was 1.9% in 2016, I think they say it's whatever rpi is in January of each year.

Can't speak for anyone else but I don't think it's a completely terrible offer but no one wants 3 or more years.

I'm not in the rmt so can't vote in their ballot, but I'm in favour of action short of a strike, but would vote against full strike

An annual pay rise of RPI +0.1% sounds reasonable to me - it's guaranteed to see pay increase faster than inflation, it'd avoid the predictable hassle of renegotiating salary each year (with the threat of strikes).

But then, if you have pay negotiations settled for the next three years then that removes some of the need for Unions to argue on their members behalf on an annual basis, so is this partly because the Union would rather have an argument each year (than get their members signed up to something giving guaranteed RPI + 0.1% for future years, which means less requirement for Unions)?

As a non-rail employee, I think that it sounds a reasonable enough figure, and is in line with ticket prices. Makes sense to me.

Arriva's profit last year rose to £350m, a 7% increase. Why shouldn't the people who do the grafting get rewarded for it?

...so if Arriva's profits go down then staff should take a lower than inflation settlement, or even a reduction in pay?

Be careful what you wish for.

It does beg the question, if franchises like Northern are such bad loss makers that have to be propped up by grants / subsidies, why on Earth do companies line up to bid for them let alone offer substantial investment?

Call me a cynic, but if these really are loss makers with no hope of profits and the risk of future subsidies being lowered or removed, no company would touch them with a barge pole. Unless of course there is a bit of <cough> creative accounting going on, a bit like those poor energy companies who struggle so to make a profit (unless you dig a little deeper and find the accounting trail). Three decades of public service, often working with private sector partners, has taught me not to listen to the headline figures. That's all I'm going to say on that....

Lots of government tenders are "loss making" but see a number of companies bid to do them - emptying bins is loss making, building schools is loss making, maintaining highways is loss making - it just depends what "premium" you can charge above the expected cost of providing the service required in the contract.

And, as running a railway franchise is a lot more complex than some things that the Government tender for (e.g. office cleaning), there are fewer organisations capable of meeting the requirements, which means they face less competition.

No need for conspiracies.

I don't think this 'benchmark' is connected to the National Minimum Wage - I'd be surprised if any of the RMT people being balloted are on the NMW, but I'm happy to be corrected if that is the case.

I'm unsure what this "benchmark that the union has set elsewhere in the rail industry" as the RMT describes it is - is it an expected % pay rise, or a minimum salary, or something else? Maybe someone who knows could advise?

Good question.

I personally think that something guaranteeing a real terms pay increase each year is a sensible benchmark (RPI + 0.1%?).

There's an argument for linking pay to ticket prices.

But, otherwise, the RMT are going to pick the highest increasing figure out of dozens (the rise in the National Minimum Wage, the rise in profits at the parent company, the increase applied to other TOCs...).

It's a bit like the ticket price arguments. It's not great to be increasing ticket prices faster than average wages are increasing, but something around RPI seems a fair unarguable benchmark. If you want to increase ticket prices in line with wage rises, then are you okay with ticket prices going up faster than inflation when the economy is booming (which is bad news for pensioners/ students/ economically inactive people who aren't seeing inflation busting increases in their incomes).

 

[GT4E]

Sorry, no. If anyone is using personal credit to their maximum limit then there's something wrong with their priorities. If it's truly at the maximum there will be no real chance of ever making enough repayments to reduce it.

Unfortunately the economy as is is hugely reliant on credit. Has been for years. The year to come will be very telling for the economy, huge political movements, coupled with pretty stagnant wages at the lower end of the economy could prove too much.

 

[Robertj21a]

Unfortunately the economy as is is hugely reliant on credit. Has been for years. The year to come will be very telling for the economy, huge political movements, coupled with pretty stagnant wages at the lower end of the economy could prove too much.

I'm well aware of that. The point made was '.......people are maxed out to death on personal credit'.

There's an enormous difference between using credit facilities sensibly and being 'maxed out'.

 

[takno]

That statement does not sit well with recent utterances from RMT and its officers concerning the death of Fidel Castro and a desire to overthrow the democratically elected government of the UK.

The RMT president (which is a largely ceremonial role) said they wanted to push the elected government into collapsing, resulting in elections. That's exactly what happened in 1979. It's got nothing to do with "overthrowing the democratically elected government of the of the UK" unless you think Thatcher was some kind of fascist guerilla.

 

[Bantamzen]

Lots of government tenders are "loss making" but see a number of companies bid to do them - emptying bins is loss making, building schools is loss making, maintaining highways is loss making - it just depends what "premium" you can charge above the expected cost of providing the service required in the contract.

And, as running a railway franchise is a lot more complex than some things that the Government tender for (e.g. office cleaning), there are fewer organisations capable of meeting the requirements, which means they face less competition.

No need for conspiracies.

The bottom line is companies do not take on contracts that will generate them a loss. Whether a profit is derived from creative accounting, which is a very common occurrence especially in public tenders, through subsidies or just actually doing well they, as we are often reminded on here, do not do it for the betterment of humanity. So if companies, even if there were only 3, lined up to bid for the Northern franchise then there is clearly a profit to be made, otherwise none would have bothered. Arriva, as has been pointed out, isn't doing too badly, and since the referendum vote DB have backed away from partially floating it so they must be sure that it isn't going to be a loss to their group, and are able to keep it on rather than take a possible lower floatation price for it.

I never understand why some people feel the need to back big business over the people actually delivering the service and helping generate the profits. Northern staff may not yet have contributed much to those profits, but many of them helped the previous franchise shoehorn in up to 25% more punters onto their ever-aging trains, whilst actually managing to improve the service from the previous owners (ironically Arriva). They have managed despite lots of bad publicity over trains, capacity etc to deliver more than might have been otherwise expected.

On face value, the offer may look reasonable, being a fraction above inflation. But I don't know what they are actually on, the full nature of the offer, or the nature of previous deals. But even if it was a reasonable one, simply testing the waters with a ballot isn't some despicable act of greed. Unions use this all the time to see if there is any flexibility in the employers. They must at least get a sense, as will Arriva if the staff are unhappy with the current deal they have and if the offer will make up anything lost previously. Perhaps those staff actually working for Northern might offer some insight as to how they are feeling about their pay and T&Cs, rather than some board members simply huffing and puffing about how terrible it is that some people want better?

 

[GT4E]

I'm well aware of that. The point made was '.......people are maxed out to death on personal credit'.

There's an enormous difference between using credit facilities sensibly and being 'maxed out'.

Well if you are low paid the ratio to which you are 'maxed out' is a lot less than it is for high earners. Im sure you can appreciate the financial pressures low earnings families have a Christmas. Also credit tends to be a lot more expensive for low earners as they are considered high risk by financial institutions. But this does not get away from the fact that an economy that relies on people spending on credit is not a healthy one.

 

[WatcherZero]

Train Drivers currently the 26th out of 350 best paid profession, that's the same as Senior Emergency Services Manager, NHS Directors and Senior Managers, Specialist IT Managers, Manufacturing Directors and Senior Sales Managers. Guards are 57th same as Police Officers, Chartered Accountants, IT Professionals and Production Engineers.
Rail construction workers are 90th around the same as Journalists and Secondary School teachers, Aircraft Maintenance, Telecoms Engineers, Vets and Chartered Architects. Non guard rail staff like travel assistants are 97th.

http://www.thisismoney.co.uk/money/...5-Compare-pay-UK-average-350-professions.html

 

[Solent&Wessex]

The information I have from Northern colleagues is:

All Unions together rejected the deal at the joint negotiating forum.
There is some suggestion that the each of the subsequent year's increases was based around an RPI figure from the PREVIOUS year, so not what is happening at the time.
With all the upcoming uncertainty in the franchise around DOO etc, nobody wanted a 4 year deal.
The unions were happy for a 2016 pay award of 2% and then to discuss subsequent years as a separate negotiation, and possibly agree a multi year deal once the economic outlook and franchise plan was more certain.
Northern said "it is a 4 year deal or nothing at all, we are not prepared to agree to anything less than a 3 to 4 year multi year deal".
Aslef are also balloting for industrial action.

 

[coxxy]

What about ASLEF and the drivers. Have they been offered a better deal ?

Aslef are also being balloted I believe.

 

[175001]

Think the issue is more to the fact that Northern staff are being offered a 4 year pay deal in a franchise that is probably going to end up going the same way as Southern etc. Staff would be daft to accept a 4 year deal with that amount of uncertainty.

Indeed, well said. They can sweep it under the carpet for 4 years then.

 

[Bantamzen]

The information I have from Northern colleagues is:

All Unions together rejected the deal at the joint negotiating forum.
There is some suggestion that the each of the subsequent year's increases was based around an RPI figure from the PREVIOUS year, so not what is happening at the time.

So no creative accounting there then.....

With all the upcoming uncertainty in the franchise around DOO etc, nobody wanted a 4 year deal.
The unions were happy for a 2016 pay award of 2% and then to discuss subsequent years as a separate negotiation, and possibly agree a multi year deal once the economic outlook and franchise plan was more certain.
Northern said "it is a 4 year deal or nothing at all, we are not prepared to agree to anything less than a 3 to 4 year multi year deal".
Aslef are also balloting for industrial action.

That ask seems reasonable. If there are likely to be major changes to working practices, T&Cs etc I wouldn't want to commit to a four year deal without at least understanding what future practices would be like. Hopefully Arriva will move towards the unions to reshape the offer, maybe meeting halfway at a 2 year deal, with future multi-deals sorted once everyone knows the score.

 

[mtbox]

Aslef are also being balloted I believe.

Yes they are, but striking over this matter is the wrong way of going about it.

An official work to rule will be much more effective. No rest days, no extra Sundays, no overtime, no favours.

 

[AlterEgo]

Yes they are, but striking over this matter is the wrong way of going about it.

An official work to rule will be much more effective. No rest days, no extra Sundays, no overtime, no favours.

Indeed. A strike over pay alone is very unlikely to be well received.

 

[Carlisle]

All Unions together rejected the deal at the joint negotiating forum.
.
Aslef are also balloting for industrial action.

Ah well, no need for us usual suspects to start suggesting things like tougher strike laws, the unions seem to be doing a good enough job there themselves