Rail strikes cost UK £1bn and settling would have been cheaper, minister admits

Rail strikes have cost the UK economy more than £1bn and it would have cost less to settle the dispute with unions over pay and conditions months ago, a government minister has admitted.

However, the rail minister Huw Merriman said the need for reform to working practices made the standoff necessary, as he told MPs on the Commons transport select committee on Wednesday that the government had not “torpedoed” a deal, nor “interfered in a negative manner”.

Merriman said strikes cost the UK rail industry £25m on a weekday and £15m a day at the weekend, and cited a study saying that the cost of strikes to the wider economy from June to December was £700m.

The committee member and Labour MP Ben Bradshaw asked whether the cost “of over a billion so far … would easily be enough money to have solved this dispute months ago, wouldn’t it?”

Merriman replied: “If you look at it in that particular lens, then absolutely, it’s actually ended up costing more than would have been the case if it was just settled.”

However, he said the government had “to look at the overall impact on the public sector pay deals” as well as the need for industry reform, to introduce more cost-efficient working practices.

Merriman added: “It’s the reforms that will actually pay for these pay deals and also make the railway more efficient in the long run as well.”

Unions and Labour seized on Merriman’s admission, with the RMT general secretary Mick Lynch writing to business groups, including the CBI and UK Hospitality, to highlight his words.

Lynch said the government had “admitted that prolonging the rail dispute was part of a deliberate strategy dictated by the government’s concern to keep down the pay of rail workers, nurses, ambulance workers and teachers.

“The wider economy and the business interests who relied on pre-Christmas trade were just collateral damage in that policy.”

Louise Haigh MP, Labour shadow transport secretary, said the government was now “openly admit[ting] their posturing and failure to take responsibility has cost the taxpayer dear”.

Dame Bernadette Kelly, the permanent secretary at the Department for Transport (DfT), giving evidence alongside Merriman, told the committee: “You’re right about the very high economic costs of disruption on the railway and we’re acutely conscious of those.

“But the logic of that argument would have you settling at any cost, and in the long term that would be very bad for the railway and bad for the economy as well.”

Merriman said he was “really hopeful” of a deal with the RMT soon, with talks continuing between the union and industry this week. Train drivers led by Aslef on Monday called further strikes for 1 and 3 February, but Merriman said he was “encouraged” that the union said it was open to talks.

He did not, however, answer directly when questioned about whether the government had been responsible for inserting controversial last-minute clauses on driver-only operation (DOO) of trains in a pay offer to the RMT, which the union said had “sabotaged” a deal in December.

The minister said the government had not “torpedoed” a deal. Merriman added that DOO had “always been involved [in talks with unions] as a concept”, and said the government wanted to see further reform.

He added: “We’ve not rowed back from the concept of DOO. As far as we’re concerned, if that technology can be rolled it out, we should roll it out … It’s safe and it increases performance.”

He said Downing Street, the Treasury and the DfT were all involved in the direction of the dispute.

“The risk is on government and the funding is on government and indeed the taxpayer,” Merriman said. “A mandate is given to employers in terms of the financial envelope … Of course, government is involved in setting the overall framework in terms of how much … can be afforded, but it’s for employers to negotiate the terms, not least the savings and efficiencies that can be returned.”

He added: “I don’t believe we’ve interfered in a negative manner. I believe that we’ve been able to intervene positively.”

Questioned later on the “current chaos” in northern rail services, Merriman quoted Transport for the North figures saying that failing connections were costing the Manchester economy alone £8m a week.

He said that a visit to Bradford and Leeds “really left its mark on me”, adding: “It breaks my heart to see the performance so poor, because we’re letting people down.”