UK government should end rail outsourcing ‘racket’, says union
Railway leaders should “think afresh” about outsourcing contracts and try to run services better, the rail minister has said, as union research indicated six major private suppliers made £150m in profits last year.Rail unions are campaigning to end the widespread outsourcing of jobs such as cleaning, security and catering, arguing that staff employed by third-party companies have worse conditions and that profits could be reinvested in the railway.Analysis by the RMT union estimated that six of the biggest UK outsourcing facilities management companies in rail – Mitie, OCS, Bidvest Noonan, Churchill, Carlisle and ABM – have profit margins on contracts averaging 11%, aggregating profits of £152m in the past year across the national railway and the London Underground.The RMT said many contracts have clauses passing on extra costs, such as increases to the minimum wage or employers’ national insurance contributions, back to the government – in effect, it says, meaning “the outsourcing firms’ profits are protected at the expense of the taxpayer”.One of the companies, Carlisle Support Services, is ultimately owned by the former peer, Tory donor and tax exile Michael Ashcroft.
Another, Mitie, has paid its chief executive, Phil Bentley, £20.5m over the past two years.Labour promised to bring in “the biggest wave of insourcing of public services in a generation” before the 2024 election.However, while passenger train operations will be nationalised under the reformed Great British Railways (GBR), the government has so far not looked to go further in rail.Carlisle Support Services did not comment but in its annual report it noted: “Whilst train operating companies have been advised that their contracts will transfer over the coming parliamentary term, we are comforted that it is widely accepted that the supply chains … will remain in place for the foreseeable future.
”However, Peter Hendy, the rail minister, said: “The railway is absolutely stuffed full of big and small contracts, all with different terms, all producing real confusion about how we serve customers and passengers better.And I’m strongly in favour of getting individual people to get hold of bits of the railway and run them better for customers and for the economy of the country.”He said he would support 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.”Lord Hendy said the trade unions “make some interesting points, but it would be for the management of GBR to take that on board and think afresh about how we serve customers best”.
The RMT said it was “a historic opportunity”.Eddie Dempsey, general secretary, said: “Outsourcing on the railway is a racket that needs to be brought to an end by a comprehensive programme of insourcing.Since 2016, contractors have siphoned over £1.6bn out of our railway, including £152m in the last year alone.“This is money meant for staff and services to benefit passengers, not to line the pockets of hedge funds and private equity firms.
They suppress wages and shift costs on to the taxpayer while their directors cash in.“GBR is a huge step forward, but the Labour government must fulfil their manifesto commitments and undertake the biggest wave of insourcing in a generation, including on rail.”A spokesperson for Mitie said: “We are proud to support the UK’s rail network by providing essential services that keep operations running safely, securely and efficiently.“Leveraging our expertise, we bring true innovation to ensure a high-quality service while delivering value for taxpayers.”ABM disputed the figures cited by the RMT but said it was “committed to a collaborative relationship” with the union.
An ABM UK spokesperson said: “Our team members have a vital role in keeping the London Underground clean, and we are proud of the service they offer millions of commuters every day.”OCS, Bidvest Noonan and Churchill were approached for comment.
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