Does the railway pay deal mean strikes are over? Don’t count on it…

Difficult though it may be to believe, industrial peace is about to descend on Britain’s railways. The government and the leaders of the train drivers’ union, Aslef, have agreed a “no strings” pay rise of 15 per cent, and the union’s members are expected to vote to accept it.
It is not quite as generous as it sounds. The offer comprises a rise of 5 per cent for 2022-2023, 4.75 per cent for 2023-2024, and 4.5 per cent for 2024-2025, which would not match inflation. The pay will be backdated and pensionable, but it’s fair to add that train drivers have not received a pay increase for five years. The deal would see the average salary of a train driver, without overtime, rising from £60,000 to £69,000.
It’s not entirely clear, given that there are 16 separate train-operating companies – and all are heading, eventually, for nationalisation – but it will no doubt mean higher fares than would otherwise be the case for travellers, and, one way or another, some funding from the taxpayer, and possibly from the remaining private shareholders of some train operators.
The total absence of any plan to end restrictive practices and improve productivity on the railways does rather suggest that. Tories have lined up to accuse the transport secretary, Louise Haigh, of giving in to her “union paymasters” as a reward for the handsome financial support Aslef gave to Labour’s election campaign. Indeed, Haigh went straight in to set up pay talks directly with Aslef, bypassing the remaining private train operators (many routes having fallen into public ownership already).
Helen Whately, the shadow transport secretary, said: “We have to make our railways more efficient – but instead, Labour has just caved to the unions. Ditching working-practice reforms leaves a hole in the finances that can only be filled by higher fares or higher taxes.”
Of course. This was a political choice, and presumably, one approved by the prime minister and the chancellor (who will have to fund at least some of it). Haigh could have followed the same policy as her Conservative predecessors, but with the same results, those being continuing aggro and disruption to services. Eventually it becomes unsustainable – as we saw in 2023, when the Conservative railways minister admitted that the wave of rail strikes was costing the UK more than it would have cost to settle the disputes months earlier.
To deal with this challenge, the last government passed legislation aimed at imposing a “minimum service requirement” on a striking union in key sectors such as the railways. That would have taken the edge off the strikes, but the rail operators didn’t want to make industrial relations even worse by forcing strikers back to work, while the law could have been circumvented simply by declining to work overtime as opposed to holding a formal strike. Labour is committed to repealing the act.
There is a bit of pattern here, as Reeves has recently committed around £10bn to ending strikes by teachers and junior doctors. That, undoubtedly, made the “black hole” in the public finances worse (and the Tories claim they’d not have paid up without at least some big productivity improvements).
However, as Reeves pointed out, the strikes have also been costing the taxpayer money – for example, in the cost of finding cover for striking NHS staff; clearing backlogs; loss of income due to parents having to look after children during school strikes; and lost passenger fares when the trains aren’t running. The Treasury estimates that the teachers’ strikes cost the economy £300m because of lost working hours, while industrial action in the NHS cost £1.7bn in total to the taxpayer.
It is true that certain groups have great negotiating power, but a more fundamental factor in the driving up of wages is that there is a shortage of labour generally, and certainly in these skilled jobs, where retention has also become a significant factor in the breakdown of service provision. In short, the country couldn’t go on with non-stop industrial disputes, trying to keep wages down to unrealistic levels at time of high inflation (which has only recently eased).
As when governments have tried to run policies to keep pay and inflation down, eventually the lid will blow off. You can’t buck the market for ever.
A pessimist would say so. The doctors are already making noises about their next steps, and the unions’ recent successes will surely teach them that uncompromising industrial militancy can, eventually, bring its own rewards – even if pay is lost on strike days. With inflation now back to around 2 per cent, however, the pressures on union members’ budgets have abated somewhat.
The next clash will probably be between the combative Wes Streeting and the health unions as the new secretary of state seeks to push through a radical but as yet unspecified programme of reforms.
History also tells us that the unions are, in reality, no more sympathetic to a Labour government than a Conservative one, and can even go so far as to help topple a Labour administration. Industrial peace is never quite permanent.