HC Deb 05 March 1985 vol 74 cc1140-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Archie Hamilton.]

8.14 pm
Mr. Robin Cook (Livingston)

I assure the House that it is as great a pleasure to me as it is to the House to reach this point in our proceedings. Before proceeding any further with my Adjournment debate, I wish to thank the Government Whip, the hon. Member for Epsom and Ewell (Mr. Hamilton), who at 1.30 this morning had the courtesy to advise me that it would be safe to have a few hours' sleep.

This morning, or in parliamentary terms tomorrow morning, the National Union of Railwaymen submitted to the British Railways Board its pay claim for 1985. The claim highlights the problem of low pay in the rail industry. This is not a new problem for it was identified in 1980 in a report by the Low Pay Unit. That report characterised British Rail as marked by low pay and long hours. Since 1980 the situation has become worse and not better. Under the Government the pay of railwaymen has fallen even further behind that of comparable workers. When the Minister replies, I hope that he will not say that responsibility does not lie with the Government. The Government have a clear responsibility for pay within British Rail. In the first instance, the Government decide the general financial context within which British Rail reaches its pay settlements. The Government decided to lop the public service obligation grant for British Rail by £200 million, which is a cut of about 25 per cent. When the Secretary of State for Transport took office it was almost his first decision to accelerate the period over which the cut was to take place. He brought the time scale forward from 1988 to 1986. This sharp reduction in public subsidy is the main financial pressure on British Rail. It has made it much more difficult for BR to pay a living wage to its workers.

Secondly, external financing limits are set by the Government and they have become increasingly stringent. This means that British Rail is obliged to meet more and more of its investment from internal sources. In effect, British Rail workers are being invited to pay for investment in the future of the industry out of their present wages.

Those are two general observations on the Government's overall responsibility towards British Rail. I shall go further. The Government have a specific interest in and responsibility for the wages that are paid by British Rail. There are many illustrations to hand to show that the Government have taken a close interest in this matter. For example, there is the letter of 22 April 1983 to the British Railways Board about the 1983 rail plan. It was sent from the Department of Transport and signed by Mr. Edward Osmotherly. Paragraph 8 of the letter states: The pay assumptions"— these are the assumptions of the rail plan— also appear to reflect the concept of a 'going rate' of pay increase. But recent experience indicates that widely varied rates of increase apply in different industries according to their ability to pay and their recruitment requirements. When the Board is continuing to reduce staff numbers, what is the justification for large real pay increases for the staff who remain". That passage is important for three reasons. First, it is clear that the Government are taking a clear and precise interest in rail pay. Secondly, in so far as they are taking that interest, it appears that they are clearly suggesting that the settlement should be below the going rate, which is an extremely modest rate. Thirdly, and most remarkable of all, Mr. Osmotherly appears to be suggesting that because British Rail requires fewer workers it can afford to pay less than the going rate. I am bound to say that that argument stands on its head the standard argument of British Rail to the NUR, which is that the best way of achieving high pay increases is the achievement of greater productivity, and that the way to achieve that goal is by reducing manpower levels. The Department of Transport appears to be arguing that, because there is a case for less manpower, British Rail should and can pay less than the going rate.

Under this head I throw in finally a reference to the evidence that we received last summer that the Prime Minister had taken a close interest in last year's rail pay settlement and had required her own specific approval and acceptance of the settlement before it could be agreed by British Rail. It is clear that the Government take a view of pay in the rail industry and intervene to fix the annual increase. That makes it legitimate for us to ask the Government whether they are satisfied with the level of pay within British Rail. Are they prepared to defend that level? Before they seek to do so and before I ask them to do so, I shall explain to my hon. Friends, for whose support I am grateful, some of the features of working for British Rail.

One of the most obvious features is that of unsocial hours. Shiftwork is general in the rail industry and its pattern is highly irregular. Drivers find that their shift starting dates vary from week to week and they do not know from one day to the next whether their starting times will be changed. Weekend work is common in an industry in which repairs have to be carried out during off-peak times. Workers on the permanent way have an agreement with British Rail that they will work 40 weekends out of 60. That agreement must be far more demanding than any other within British industry. Leave entitlement is beggarly. Only 4 per cent. of manual workers in Britain have an annual leave entitlement of less than four weeks. That amounts to one in 25 workers. Among the 4 per cent. are all the rail workers employed by British Rail.

Finally, the work is dangerous. Danger has always been incidental to railway movements. Every year there are about 30 fatalities within the British Rail system. In addition to what might be described as the standard danger — the expectation of accidents in the course of movements — there has recently been a growing and more distressing danger to rail staff from assaults on them by passengers and other members of the public. Over the past 10 years indictable offences within the rail system have more than doubled. In 1983 British Transport police reported 2,000 incidents of public disorder in the railway network.

What is the reward that workers operating in these difficult circumstances receive? To measure the reward, let us examine what the Government recognise as the poverty level. It is not difficult to do so because the Government, by their nature, are obliged to publish some figures as reference marks for their own benefit.

Currently, a family with two children qualifies for family income supplement if it has a wage of £100 or less. It also qualifies for a unified housing benefit if it has a wage of £101 or less. We can see from these examples that the Government accept the figure of about £100 per week as the poverty level. It is a low pay level which is also officially recognised by the Trades Union Congress which sets it at £104 per week.

By comparison with these figures, I can advise the House that the basic pay in the rail industry is £76.25, a level so patently inadequate that it is necessary for the British Railways Board to introduce a minimum earnings level, which currently stands at £89 per week. The very existence of this guaranteed minimum earnings level is an admission that the basic pay rate is not enough to live on.

Over recent years both these levels have tended to worsen. The basic rate of pay has lost one tenth of its purchasing power since 1975. In 1975, the basic pay of a railman was £4 behind that of a postman. A railman is now £20 worse off than a postman every week.

Ironically, when the railway industry first began, the main source of labour in the rail industry came from the land, as agricultural labourers left farming and went into the rail network, which was then spreading across the countryside. In the past two years, for the first time in history the basic rate of railmen has fallen below the basic rate paid to agricultural labourers.

How then do the workers in this industry make ends meet? They do it by a perfectly simple device. They work long hours to make up short wages. The other side of the coin of working in the industry with the lowest pay is that they put in the longest hours — hours which may be shorter than those worked by Members of the House in circumstances such as we saw last night, but for rewards very much more modest than those received by any Member of the House.

Average hours worked in the rail industry last year were 51 hours per week. Railmen make ends meet by working a six-day week. As hon. Members will have noticed, that is an average figure. It is in the nature of averages that not everybody gets the average amount of overtime. There is no guarantee that workers will get that level of overtime. Those who do not have to live on a pittance. Those who do have to work what by any definition would be unreasonable amounts of time.

In the British Rail census of employment of 1984, we find that in any one week in 1984, 10,500 staff of BR worked over 60 hours. Of that number, 3,000 worked over 70 hours and 700 worked over 80 hours, a figure that can be found in any week of last year. This level is frequently described as excessive. I would not use that term. I would describe it as forced overtime; it is overtime that it is necessary for men to work in order to take home earnings on which they can survive.

It is a matter of regret that to this day British Rail prefers to look for shedding of jobs rather than seeking to cut back on overtime in order to pay its men an adequate basic rate of pay that would remove the need for such overtime to sustain earnings.

Let me give the House a couple of examples which illustrate the points that I have been making. These are not cardboard cutouts invented by me, but examples of real cases operating in the rail industry based on wage slips that have been sent to me. First, I give the House the case of a chargeman working from Norwich. Chargeman is a responsible post. He is essentially a foreman in the industry: he has people below him who work to him. The chargeman in question on his wage slip had no overtime in the week for which I received the wage slip. The gross pay that he received that week was £99.55. The net pay he received was £77. This is a man with responsibility, fulfilling a junior managerial role — a man who, incidentally, joined the rail industry in 1940 and has given it over 40 years' loyal service, in return for which he is left with £77 per week. That is a case in which there was no overtime.

I now share with the House a case in which a man on a lower basic rate was obliged to work overtime in order to earn the income at which he and his family could subsist. He is a railman at Watford. He worked 12 hours overtime plus eight hours on Sunday. In other words, he worked 20 hours over and above the basic minimum of 39 hours, that is, a 59-hour week. What did he receive for 59 hours' work? It was broadly half as much again as the average in British industry. He received a gross pay, even with 20 hours' overtime, of £146 which left him, after deductions, with £106 net. This is a young man with two young children and a family to support on that wage, with which he is left after working excessive hours, including all Sundays. I do not think that any hon. Member could reasonably say that that represents a fair reward for working half as long again as the average manual worker in British industry.

There are few women employed in British Rail. About 5 per cent. of the work force are female. In passing, I will say that, as always, it is the women we find at the bottom of the pile; it is the women in industry who have to do the most menial jobs and who in turn receive the most miserable rates of pay, even lower than the examples that I have shared with the House.

Let me sum up my argument. Employees of British Rail have difficult working conditions of a kind which I suspect many Members of the House would not tolerate. They work excessive hours. At the end of those long hours in difficult conditions, they are left with poverty wages. Moreover, the poverty of those wages is worsening as they are left further behind other groups in society and as the purchasing power of their wages declines. Ministers cannot escape their share of the responsibility for this situation arising; nor should they seek to evade their responsibility for remedying it.

I end by referring to the current promotional programme of British Rail, which lays great stress on public relations. Many members of British Rail who come into contact with the public have been fed through a charm school as part of this promotional exercise, no doubt in order to be better able to explain to the members of the public why, as a result of Government cuts, the service has been reduced. Emphasis in the promotional exercise has been placed on the role of guards in particular. The basic pay for guards in British Rail is £6.30 less than that of a labourer in the Rover factories. Those labourers have no contact with the public. I suspect that the management of Rover would be aghast if it were suggested that people on that level of remuneration should be expected to support the public relations profile of their company.

Stress is currently being placed by British Rail on customer care. I am glad that it has mounted a promotional exercise, but if the Government and the British Railways Board want that exercise and that promotional campaign to be taken seriously, they may wish to reflect that customers may find it difficult to be convinced that they will be taken great care of by British Rail when it so conspicuously fails to take care of its own employees.

8.28 pm
The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell)

It is normally the practice for the Minister replying to the debate to congratulate the hon. Member who has initiated it on being selected in the ballot. I shall not depart from that time-honoured practice and I do, indeed, congratulate the hon. Member for Livingston (Mr. Cook). However, as the hon. Gentleman knows very well—since he is sponsored by the National Union of Railwaymen—this very day, the British Railways Board will have heard, in formal session, the pay claim for the year ahead submitted by the NUR, the Associated Society of Locomotive Engineers and Firemen and by the Transport Salaried Staffs Association. The hon. Gentleman also knows very well that pay negotiations are always delicate and sensitive matters and that there is nothing which we in this place could or should say or do which could in any way prejudice those discussions. The rest of my remarks will respect that principle.

It seems to me that there are two ways in which pay negotiations can be conducted. They can take place within the straitjacket of rigid pay policies, such as those deployed by the last Labour Administration — with all the inequalities, anomalies and confusions which they engender — or they can take place, as they should, between employer and employee directly. This is absolutely fundamental. The hon. Member for Livingston knows enough about business to understand that it must be for individual managements to judge the correct level of remuneration for their employees. They must make those judgments against the background of a wide range of factors; such as what can be afforded, what rates of pay are needed to retain existing staff in employment, what wages are needed to recruit new entrants where they are required, and the trade-off between expenditure and charges for goods and services. It is against the background of precisely those sorts of factors that British Rail will now have to judge the rates of pay which should be applicable in its industry. It will have to make the judgments, it will have to conduct the negotiations and it will have the responsibility, in consultation with the rail unions, for whatever settlement emerges. That is the way in which pay matters should be handled and that is the way in which they have been handled since the Government took office. It is not the role of the Government, or of anybody else outside the railway industry for that matter, to decide what pay rates the industry can or cannot afford.

The simple fact of the matter is that BR can pay out in staff wages only what it can afford. If BR is to pay higher wages, it must increase the amount of money it can make available for its paybill. Now how could it do that? There are two ways, really. It could reduce unit costs or it could increase revenue. BR has, in fact, made considerable efforts to reduce unit costs. In that, it has always consulted the unions. In particular, it has sought the co-operation of the NUR and ASLEF in a number of measures designed to improve operating efficiency. It has even offered "specific rewards" in the form of supplementary payments to the unions in exchange for these measures. But, notwithstanding all this, the NUR and ASLEF seem to have an extraordinary blind spot and have tried to obstruct BR at nearly every turn. For example, in 1983 the NUR put a block on productivity talks which remains to this very day. There are those who would say that if pay rates in the railway industry are low—and that is always a judgment of relativities — the unions should stop blocking the management's attempts to make the money needed to pay higher wages.

What of the other means by which the railways could increase their resources, such as by increasing their revenue? BR is of course trying to do just that. But there is a limit, as in all other cases, to what the market will bear. Would the hon. Gentleman like to see BR charging its customers more? Is he suggesting that passenger fares should be increased by more than is strictly necessary, so that passengers decide that rail services are simply uncompetitive when compared with, say, coaches, or motor cars, or with any other sector of the transport market in which British Rail has to compete? If he is suggesting that, the ultimate effect, as the hon. Gentleman knows, would be to reduce the attractiveness of the railways. There would be fewer passengers, and fewer manufacturers and distributors using railway freight services to carry their goods; revenue would fall, and so charges would have to rise to cover the shortfall—and so on. It is an upward spiral. The net effect would be to damage the future of the railways and, implicitly, to reduce employment prospects. Is that what the hon. Gentleman proposes — to diminish job opportunities? I doubt it. I know that some Opposition Members would disagree with that analysis. They would claim, as does the NUR, that the way to increase revenue is to reduce fares. But all the evidence points to the opposite. The hon. Gentleman will probably be aware that BR has, in fact, considered whether a substantial across-the-board reduction in rail fares would encourage more users and increase revenue. As a result of careful analysis the board concluded that it could not attract sufficient extra custom to compensate for the reduction in revenue received from its existing passengers. The problem is that one cannot have reduced fares only for additional passengers. One must reduce the revenue from existing passengers. That would not improve the board's overall financial position. I know that arguments for fares cuts are in the main well meant. The trouble is that they simply do not hold water.

As I have already made clear, I do not propose to say anything today that could prejudice the formal railway pay talks that have just started. However, I should say something about the board's financial position.

Mr. Cook

I am most grateful to the Minister for that last reference. I intended to draw his attention to the fact that the options that he outlined curiously overlooked the other option, which would be for the Government not to require British Rail to have the reduced subsidy that the Government are offering to it. Will the Minister acknowledge that it will be much more difficult for British Rail to respond to the problem of low wages in industry if at the same time it loses a quarter of its public support?

Mr. Mitchell

The hon. Gentleman knows that the objectives that were set for the British Railways Board and accepted by it were based on the board's plans. The board simply brought forward the timing of the delivery of those plans in terms of a reduction of the PSO grant. My point is that the railway industry has it within its own gift to achieve the additional resources required to pay higher wages by improving productivity and seeking to improve revenue. I have demonstrated that, most regrettably, the unions have not sought to help the board to increase its income and to reduce its costs by increased productivity. If they did that, they would create the extra money which would then be available to help to increase pay in the industry.

That is the nub of the problem. BR's task has been made no easier, indeed quite the opposite, by the effects of the miners' strike. BR would normally have carried about 90 million tonnes of coal during the past year. The effect of the miners' strike has been to reduce revenue by about £240 million. Of that, a substantial sum — more than £60 million—is a direct result of ASLEF and the NUR insisting that their members black coal traffic. Many people in the House and elsewhere would argue that the NUR and ASLEF have a considerable nerve in putting to the board a claim for substantial increases in pay now, while during the past year they have cost the railways so dear. By my calculations, the money that BR has lost because of the blacking action called for by those unions is equivalent to a general pay increase of 3.5 per cent. Instead of getting extra resources into the railways to enable extra pay to be achieved, the unions chose to cost the railways lost revenue which is equivalent to a 3.5 per cent. pay increase in the industry. If the NUR and ASLEF truly believe that their members are underpaid, they should have told them to do everything possible to improve customer confidence in the railways, and to show that the railway unions can work together with BR management to promote an efficient railway industry. I hope that as the miners' strike is finished and as coal traffic is returning to normal the rail unions will seek to join with BR management to repair the damage done to the railway's revenue and resources.

Let us make no mistake about where the money comes from to pay for wage increases. It comes from the till, the receipts, customers' payments and efficiency. It comes from reliability and a spirit of co-operation. It does not come from political gestures made under the banner of trade union solidarity. I sincerely hope that the leaders of the NUR and ASLEF will have borne that in mind when they sat with the Railways Board this morning.

The only sensible way to secure increases in rail earnings is through improved economic performance. Unrealistic pay settlements increase employers' costs and put jobs at risk. The responsibility of trade union leaders is clear. Moderate union pay claims help to preserve the jobs of their members and may also lead to the reduction in unemployment which we all wish to see.

As with virtually every other industry, some people are paid more than others in the railway industry. That is understandable and reasonable. Different skills demand different earnings. The differential pay structure in British Rail means that, according to figures that I have from the board, signalmen on the top of the scale earn an average of about £246 a week—almost double the average gross earnings of the lowest paid member of BR staff. As the pool of money that BR has available for staff remuneration is limited, perhaps the hon. Gentleman thinks that the more highly paid members of BR staff would be willing to forgo some of their pay to ensure that additional money goes to those to whom he referred as low paid. I doubt whether that is what he has in mind.

Mr. Cook

I assure the Minister that he is wrong. At no point did I argue that someone in British Rail is paid too much. The technicians to whom he referred are highly trained and BR is in the same market as British Telecom and has to pay that rate.

Mr. Mitchell

The hon. Gentleman ought not to overlook the fact that, if there are given resources available for increasing pay, they must be shared between the highly paid and the low paid and as he is not suggesting an alteration in the mix he must concentrate on how the earnings of BR can be increased. That is not achieved by losing customer confidence and driving them away through strike action and refusing to carry their goods. The unfortunate legacy of actions in the industry has resulted in it losing trade. We beg that it will come back. A potential £60 million equivalent to a 3.5 per cent. pay increase has been lost through union action.

The hon. Gentleman has expressed an obviously genuine concern for the lower paid grades in the railway industry. He and I would like to see railwaymen getting more pay, and I can understand his point of view, but where is the money to come from? I have already demonstrated that BR cannot generate more for itself than what the market will allow. So is the hon. Gentleman suggesting that the taxpayer should provide more and that we do not give BR sufficient financial support through the public service obligation grant? I reject utterly the notion of increasing the PSO grant. I say that not because the Government are mean, or because I want to do the railways down — quite the opposite. I want to see a flourishing, vigorous railway industry competing successfully in the transport market, and so does the BR board. That is why it has embraced the objective of reducing the PSO grant from just about £1 billion now to £635 million in 1983 prices by 1986. The board's acceptance of that objective is a statement of faith in the future of the railways. It judges that it can reach it through greater efficiency and reliability, without having to embark on any major programme of closures. Does the hon. Gentleman agree that a more efficient and more reliable railway is worth striving for? I hope that he does.

The simple truth is that the future of the railways, and thus the remuneration of railwaymen, is in the industry's own hands. The Government do not seek to meddle in matters of pay. Of course, the Government must take an interest. With the public purse contributing so heavily to the railways, and with manpower costs being by far the largest single item of BR expenditure, it is only right and proper that the Government should have regard to the cost of employing the work force. That is reasonable and necessary. The taxpayer — who contributes so substantially to the running of the railways — would be quite justified in accusing Ministers of fiscal negligence if they did not take such an interest, but taking a responsible interest is hardly the same as interfering—

The Question having been proposed after Ten o'clock on Tuesday and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at sixteen minutes to Nine o'clock.