Key Takeaways:
- The rail minister has suggested that railway leaders should reconsider outsourcing contracts and focus on improving services.
- Research by the RMT union found that six major private suppliers made £150m in profits last year, with an average profit margin of 11%.
- The RMT union is campaigning to end the outsourcing of jobs such as cleaning, security, and catering, arguing that it leads to worse conditions for staff and profits being taken out of the railway.
- Labour has promised to bring in a wave of insourcing of public services, but it is unclear whether this will extend to rail services beyond passenger train operations.
- The government has not yet committed to ending outsourcing in the rail industry, despite criticism from unions and concerns about the impact on taxpayers.
Introduction to the Issue
The rail minister, Peter Hendy, has suggested that railway leaders should "think afresh" about outsourcing contracts and focus on improving services. This comes as research by the RMT union found that six major private suppliers made £150m in profits last year, with an average profit margin of 11%. The RMT union is campaigning to end the outsourcing of jobs such as cleaning, security, and catering, arguing that it leads to worse conditions for staff and profits being taken out of the railway. The union’s analysis found that companies such as Mitie, OCS, Bidvest Noonan, Churchill, Carlisle, and ABM have made significant profits from their contracts, with some passing on extra costs to the government.
The Impact of Outsourcing
The outsourcing of jobs in the rail industry has been criticized for leading to worse conditions for staff and taking profits out of the railway. The RMT union argues that staff employed by third-party companies have worse conditions and that profits could be reinvested in the railway. The union’s research found that the six companies mentioned earlier have made £152m in profits in the past year, with some of this money going to directors and shareholders rather than being reinvested in the railway. For example, Mitie’s chief executive, Phil Bentley, has been paid £20.5m over the past two years. The RMT union is calling for an end to outsourcing and for the government to bring services back in-house.
Government Response
The government has not yet committed to ending outsourcing in the rail industry, despite criticism from unions and concerns about the impact on taxpayers. Labour has promised to bring in a wave of insourcing of public services, but it is unclear whether this will extend to rail services beyond passenger train operations. The rail minister, Peter Hendy, has said that he would support Great British Railways (GBR) making "some real choices about what the best thing to do for customers in the railway is, in a way that hasn’t been done for over 30 years. Including whether things are best outsourced or not." However, the government has not yet made any firm commitments to ending outsourcing in the rail industry.
Company Responses
The companies involved in outsourcing in the rail industry have responded to the criticism from the RMT union. A spokesperson for Mitie said that the company is "proud to support the UK’s rail network by providing essential services that keep operations running safely, securely and efficiently." ABM disputed the figures cited by the RMT union but said that it is "committed to a collaborative relationship" with the union. OCS, Bidvest Noonan, and Churchill were approached for comment but did not respond. Carlisle Support Services, which is ultimately owned by the former peer and Tory donor Michael Ashcroft, did not comment but noted in its annual report that it is "comforted that it is widely accepted that the supply chains … will remain in place for the foreseeable future."
Conclusion
The issue of outsourcing in the rail industry is a complex one, with different perspectives from the government, unions, and companies involved. While the RMT union is campaigning to end outsourcing and bring services back in-house, the government has not yet made any firm commitments to doing so. The rail minister’s suggestion that railway leaders should "think afresh" about outsourcing contracts is a positive step, but more needs to be done to address the concerns of unions and taxpayers. The RMT union’s research has highlighted the significant profits being made by private suppliers, and it is clear that the current system is not working in the best interests of passengers or staff. As the government considers the future of the rail industry, it is essential that it prioritizes the needs of passengers and staff and considers the impact of outsourcing on the railway as a whole.