The threatened four days of rail and Tube strikes starting this weekend will deliver a £120 million blow to London’s economy just as the country faces the growing threat of a long recession, City forecasters warned on Thursday.
The travel misery is due to start on Saturday when train drivers’ union Aslef stages a walkout which will disrupt nine networks across the country — including London Overground, Southeastern and Greater Anglia.
Most of the national rail network is then due to shut down on Thursday, August 18 and Saturday, August 20 when workers belonging to the RMT union go on strike. About 10,000 members of the same union working for London Underground and London Overground have voted to go on strike on Friday, August 19 — guaranteeing 72 hours of transport misery for commuters.
Simon French, chief economist at City brokers Panmure Gordon, said the scale of the stoppages means national GDP would face a £475 million hit with losses worth £150 million a day during the national rail shutdown and £100 million on the Friday in between. London will take the brunt with the impact totalling around £100 million over the three days. The Aslef walkout on Saturday will add a further £75 million of losses with £20 million of that in the capital, Mr French added. The Tube strike will cost Transport for London about £5 million in lost fares.
More than 1,600 London bus drivers are also going on strike on Friday August 19 disrupting dozens of major routes across the capital in a dispute over pay. The strikes come after last week’s bleak forecast from the Bank of England predicted that the UK is likely to start slipping into a 15-month recession later this year. GDP figures for June are due to be published tomorrow with economists expecting to see a reversal of May’s growth of 0.5 per cent.
Transport Secretary Grant Shapps called on the unions to “think again”, adding that the industrial action was a “cruel blow” for the capital’s leisure and tourism industry.
“It’s clear, from their co-ordinated approach, that the unions are hell-bent on causing as much misery as possible to the very same taxpayers who stumped up £600 per household to ensure not a single rail worker lost their job during the pandemic,” Mr Shapps told the Standard.
“Sadly, union chiefs have short memories and will be repaying this act of good faith by ruining millions of hardworking people’s summer plans. Businesses too will suffer, with the capital’s leisure and tourism sectors, which have been banking on that summer trade, set to lose millions. A particularly cruel blow given how hard many worked to stay afloat during successive summers of lockdown.” The UK’s rail network ground to a halt on July 27 when about 40,000 rail workers walked out in a dispute over pay and working conditions — one of the biggest one-day rail strikes in decades. Only 20 per cent of services ran with some lines cut off completely, forcing millions to return to working from home and severely damaging the tourism and leisure sectors. For London business leaders it was another setback just as the capital tries to bounce back from the damage caused by the pandemic.
Adam Tyndall, programme director for transport at lobby group BusinessLDN, said: “Businesses in the capital are facing a triple whammy. Commuters and domestic leisure visitors are being put off and obstructed by strike action, international visitor numbers are still down, and many of those who do make it will be cautious with their spending due to the cost-of-living crisis.
“It’s therefore crucial that everyone gets back round the table and thrashes out a deal. The businesses hit hardest during the pandemic — from retail and hospitality to galleries and theatres — will suffer hugely if political posturing is prioritised over sensible solutions.”
Des Gunewardena, chief executive of dining group D&D London, said he was braced for a downturn in bookings totalling £1 million over the three days. That will cost the company about £600,000 in earnings. Simon Thomas, chief executive of the Hippodrome casino in Leicester Square, said: “This displays a breathtaking contempt for London as tens of thousands of businesses work harder than ever before the rebuild. Fortunately this great capital city of ours is much bigger than the RMT.” Richard Burge, chief executive of the London Chamber of Commerce, said: “London’s economy relies in no small part on a well-functioning rail system connecting it to all corners of the UK. The short-term impact of rail strikes on the economy are obvious and concerning — a recent rail strike cost one of our members around £500,000 in lost bookings — but longer-term, the rail strikes erode London’s global reputation as a major draw for visitors to do business and have fun. The strikes must be resolved as a matter of urgency.”
Talks between the unions and Network Rail are expected to ramp up in the coming days as the RMT action gets closer. But it is understood there is little hope of reaching a breakthrough before the walkouts start.
The RMT last month rejected Network Rail’s offer of a four per cent basic pay rise this year, backdated to January, with a further two per cent next year and a further two per cent if they meet modernisation targets. The deal also included 75 per cent discounted travel for employees and family and a £650 cash bonus.
But with inflation now forecast by the Bank to rise to more than 13 per cent, RMT general secretary Mick Lynch rejected the offer saying it represented a real-terms pay cut. The union has also expressed concern that Network Rail’s modernisation plans could lead to redundancies. An RMT spokesman said: “We do not want to cause any business hardship from our strike action. It is Grant Shapps who is prolonging the national rail dispute by hamstringing Network Rail and train operating companies from reaching a deal with the RMT. Our members need a deal on job security, pay and working conditions and we are determined to reach a negotiated settlement.”
Mick Whelan, general secretary of Aslef, added: “All we are asking for is an increase in line with the increase in the cost of living — soaring inflation is not the fault of working people in this country, it’s the fault of this Government and its inept handling of the UK economy.”
Andrew Haines, Network Rail chief executive, said: “It saddens me that we are again having to ask passengers to stay away from the railway due to unnecessary strike action, when we should be helping them enjoy their summers. We have made a good and fair offer but, with the exception of our TSSA management grades who accepted the deal, our unions are refusing to let our employees have a say, and sadly that means more disruption on the rail network.
“We’ll run as many services as we can next Thursday and Saturday, but it will only be around a fifth of the usual timetable, so please only travel if absolutely necessary and if you must travel, plan ahead and check when your last train will be.” Minister for London Paul Scully said: “We need constructive talks, realistic expectations and modernisation not more strikes.”
A row has also broken out between unions and Avanti West Coast over its decision to cut the trains running from London to northern cities. From Sunday it is expected to run just four trains an hour from Euston to Glasgow, Liverpool, Manchester and Birmingham — one going to each city.
