Here’s a happy new year thought. At least there’s one part of Britain’s rail network that’s not on strike: HS2, the zippy £100 billion extravaganza that’s yet to be built. Maybe the government would have a bit of spare cash to fix problems on the existing railway if it wasn’t blowing so much on that.
Instead, transport secretary Mark Harper keeps insisting there’s “not a bottomless pit of money” for the railways, while urging the unions to get “around the negotiating table”. What about him? He should have been eyeball-to-eyeball weeks ago with the pantomime villain-in-chief — the RMT’s Mick Lynch. The dispute isn’t that tricky to solve. But both sides are equally intransigent and similarly culpable for the mess.
Harper likes to pretend the RMT is at loggerheads with Network Rail and 14 private train operators. But that’s a myth. Network Rail, which owns the tracks, signals and stations, is state-owned, while the micromanaged train groups, also in a scrap with driver’s union Aslef, can’t move without ministers’ say-so: the result of Covid killing off the clapped-out franchising system and replacing it with heavily prescribed, thin-margin operating contracts. This is a government dispute.
To boot, the goal should be clear. Covid working from home has left journeys at 80 per cent of pre-pandemic levels, cutting the annual £11 billion farebox by £2 billion. So there’s a need for productivity gains to fill the gap. But they shouldn’t be hard to find when Network Rail is sitting on £76 billion of railway assets. Harper should offer workers a decent share of the efficiency gains from modernising operations.
Instead, anyone would think he — and PM Rishi Sunak — don’t even want a deal. Bizarrely, under government instructions, Network Rail and the train groups have offered the RMT different settlements. The latest for the 20,000 members that make up half of Network Rail’s workforce is a sub-inflation 9 per cent pay rise over two years linked to new maintenance practices, with a higher increase for junior staff. But the train operators have only been allowed to offer 8 per cent over two years. On top, the government made that deal dependent on the RMT signing up to driver-only operated trains that remove the guard’s control over the doors: a red line for Lynch, who claims that “ministerial interference” has hamstrung talks.
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Badge Lynch a luddite if you like. But the split offer looks designed to annoy him and prolong the strikes. Only two sets of workers can bring the network to a halt: RMT signallers in Network Rail on an average £56,000 a year; and Aslef train drivers on about £60,000. But if Lynch merely agrees a deal with Network Rail, he loses all leverage in the dispute with the train groups, where he represents the guards. The trains can run without them, with 45 per cent of services already driver-only operated. Lynch would be handing control to rival Aslef.
Why would he do that — unless forced to by a vote of RMT members in Network Rail? Yes, people may have little sympathy for some rail workers already on a far better whack than the nurses. And maybe the government’s goal is miners’ strike-style attrition that breaks rail union power. But if that’s its agenda, Harper can’t really moan about the union “harming the industry” and deterring rail travel. And don’t ministers want to shift people from cars to trains anyway to meet net zero targets? There’s a deal to be done here, offering Network Rail and train company workers the same pay rise and incentives to modernise the railways. Always assuming the government wants to get them moving again.
Reit old mess
What a shock. Home Reit’s been forced to suspend its shares at 38p. Even auditor BDO didn’t seem to hold much hope of meeting the New Year’s Eve deadline for signing off the full-year figures: senior statutory auditor, Edward Goodworth, had already clocked off “on holiday” by December 21.
Short-seller Viceroy Research, whose demolition job forced an “enhanced audit” on the housing for the homeless group, also saw what was coming. On the same day, its co-founder Fraser Perring tweeted that he’d covered his short position thanks to the “lack of options after suspension”: the prelude to a cocky tweet about how he’d “upgraded the Lamborghini”, complete with follow-up snaps from a beach.
Home Reit had also told investors on December 12 that suspension could be the way to bet. But then it said the accounts would be “published as soon as practically possible” and “no later than January 31, 2023”. Spot the difference now: confirmation of suspension but no date for the accounts, just the phrase “as soon as practicable”.
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Does that mean BDO’s audit may extend into February and beyond? Home Reit isn’t saying. But its auditor has quite a job on: sorting out why buying properties involves them being flipped three times in the same day, all at different prices; why a pad in Hove turned up on Booking.com; whether Home Reit’s charity clients really are 100 per cent up to date with their rent and so on. Suspension of belief is the least you’d expect from BDO.
Tasty Apple
Think you presided over some lousy investments last year? Spare a thought for Tim Cook. The poor bloke lost $1 trillion of value: the sort of thing few bosses even get the chance to achieve.
The company he runs, iPhone-maker Apple, has shrunk in a year from the world’s only ever $3 trillion group to sub-$2 trillion — hit not just by the tech rout but by recent fears over production at its Covid-hit Chinese factories and falling consumer demand. Still, at $124 it now trades on just 20 times earnings. Long term, worth a bite.
