...a blog by Richard Flowers

Wednesday, September 05, 2007

Day 2437: Dinosaur Stops Tube


No, this is not about Dr Who and the Invasion of the Wobbly Rubber Monsters.

Large, Placid & Stupid
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This is the Tube strike by the RMT or Really Mean Transport Union.

The fault – unsurprisingly – can be traced back to the Prime Monster. Yes, it was Mr Frown who insisted on flogging off the Tube to one of his CRAZY off-balance-sheet PPP schemes, against the wishes of Londoners who had elected Mr Mayor Ken to OPPOSE the government (yes, look how well THAT worked out).

Back in 2003, nine of the twelve London Underground tube lines were handed over to a company called "Metronet" who promised to spend seventeen billion pounds improving them. (The other three tube lines – the Northern Line, the Pick-a-dilly Line and the Julie Bee Line that goes to the BIG TENT in Greenwich – were given to a different company called "Tube Lines" who are going to be sending four-and-a-half billion on similar upgrades).

Earlier this year, though, Metronet suddenly announced that they had OVERSPENT rather a bit. To the tune of one BILLION pounds, it turned out. And could they have the money back, please.

Well, the reaction of most people was: "TOUGH!" After all, wasn't the whole POINT of these "Public Private Partnership" schemes SUPPOSED to be that the private company would get the REWARD in return for accepting the RISKS? The government would agree to pay over the odds prices making profits for the companies involved… so long as those companies controlled the costs. If they started overspending, then the extra would come out of their profit NOT out of the government's pockets. Which are – of course – YOUR pockets.

So Metronet were told: "you're NOT getting any more money! Oh, all right, have a-hundred-and-twenty-one-MILLION-pounds… but that REALLY is it!"

"Okay," said Metronet. "In that case… we're BUST!"

This, of course, is the point where the whole PPP idea is shown to be not worth the paper that Mr Frown scribbled it down on. When it comes down to it, companies like Metronet do NOT have to take the risks: they just go BUST and dump the problem back in the government's lap.

It is not like the government can REFUSE to RESCUE the London Tube: the entire economy is supported by the profits of the City, and most of the rest of the business in the UK gets done in the Capital too. (Yes, that IS a really dumb idea and we should encourage people to move businesses to the north and the west where life is cheaper and happier, but unfortunately that is the opposite of what has actually happened under the Labour and Conservatory governments.) So the country RELIES on the infrastructure that gets most of its businesses to work in the morning… and that means the Tube.

On the other fluffy foot, that very reliance means that ACTUALLY the jobs of the Metronet workers ought to be a lot SAFER than other people's – these jobs are VITAL!

(Whereas jobs in RETAIL disappear all the time, especially with the rise of home shopping on the Wibbly Wobbly Web and DOUBLE especially when some MANIAC shuts down the Underground for a day and costs all the shops millions in lost sales!)

But even so, the RMT wanted a copper-bottomed assurance that their jobs would be guaranteed COME WHAT MAY.

Now, in order to avoid ACTUAL bankruptcy – in which case the Union Workers would have NO JOBS AT ALL – Metronet had gone into what is called ADMINISTRATION, which is like the LIFE SUPPORT WING for companies. This means that the company gets a bit of a reprieve from the people it owes money while it tries to EITHER arrange new finance from the bank or shareholders OR it finds a "white knight" who will buy it up, pay off its debts and start again OR, in the worst case, comes to some kind of arrangement with the creditors to pay some part of their bills and try to limp on. If none of those work, then it's time for the old pearl-handled revolver in the board room.

Judging from their press release, there were TWO main sticking points for the union.

The first was about the pension scheme, and whether all their members would get the pensions that they had been paying for. Now, under the law brought in after Cap'n Bob took the Mirror Group Pension Fund swimming with him in the Med that really ought not to be a problem because the scheme ought to be completely separate from the company anyway. But the union wanted a promise that that was so.

And the other issue is that it looks like Metronet were thinking of making savings by cutting the workforce BEFORE they went bust, and the union was not happy that the administrator was only promising their jobs were safe so long as the company actually was in administration. They wanted the administrators to promise that their jobs were guaranteed even when the administrators were no longer in charge.

So, after hours of negotiations, they were finally promised that even in the event of the ACTUAL END OF THE EARTH there will still be jobs for them the following morning. With this sworn in blood by the Mayor and the administrators, the RMT finally agreed to call off what was left of their strike.

As a promise it is obviously WORTHLESS. If the union makes it IMPOSSIBLE for the administrator to find a buyer or a new loan from the banks then ALL their jobs will cease to exist. Certainly, the government will have to set up a new Tube maintenance company – but they will start hiring from scratch and will employ as many or as few of the RMT workers as they think they need. Or maybe they will hire some Polish plumbers instead.

Maintaining the London Underground is dirty and difficult and dangerous work, and the people who do it would have a lot of sympathy if it were not for the fact that they make millions of other people's jobs just impossible by going on strike for completely ridiculous promises.

Actually, as a service industry, Metronet basically IS its workforce: they do not OWN the tubes, they do not MAKE things, all they have is the people who do the work. As the largest stakeholder – if not shareholder – perhaps the RMT should think more about RUNNING the company, instead of just RUNNING IT DOWN.

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