All estimates of the cost of tube strikes to the London economy are based (knowingly or otherwise) on some research that I did for the then named London Transport in 1995 where I estimated the economic cost of closing the London Underground for a year. It was meticulous research, using modal shift models to work out how exactly people would respond to one mode of transport being shut and then using our model of the London economy to work out how the economy would respond to the increased time spent waiting around. My former colleague Ben Read estimated the cost of the 2009 strike based on extrapolations from this complex modelling exercise at £110 million a day.
The latest estimate is the London Chamber of Commerce calculation that today’s strike will cost the London economy some £50 million.
But London has changed dramatically. The new digital based economy which my colleague Rob Harbron has named ‘The Flat White Economy’ is a new key driving force behind the London economy today and is much more flexible. People can work from home in the modern economy with little if any loss of productivity.
Traffic patterns have also changed. My drive to work today was interesting, as I dodged multiple groups of cyclists, many clearly unfamiliar with the challenge of combining cycling with staying upright. I saw two cyclists crash into each other and exchange the abuse that they normally reserve for mere motorists….
London really now is a seven-day-a-week economy, though we should adjust for the lower levels of activity at the weekends and on Bank Holidays. Cebr forecasts that London’s Gross Value Added (GVA – this is the normal measure of regional GDP) this year will be £318 billion. This gives London’s daily GVA at £1,029 million. So the £50 million estimate is about 5% of daily GVA, which seems way too high.
I would be surprised if the impact is as much as a loss of GVA of 1% which would give a cost to the London economy of about £10 million. Plus there will be some costs from additional fuel use etc.
Of course the economic costs are not the only ones. The biggest single cost will probably be frustration and time wasted in traffic jams. But there might be health benefits from the people forced to walk or cycle who find it a more sensible way to commute.
What is less easy to understand is why the strike is taking place at all. Since TfL have already promised no compulsory redundancies for the staff of the ticket offices that will be shut, the motivation of Bob Crow and his RMT trade union is hard to understand.
My best guess is that this is a preliminary skirmish over the forthcoming introduction of driverless tubes. Bob Crow has managed to extort salaries for his tube drivers that are higher than those paid to budget airline pilots. But given their excessive salaries and their rank disregard for the general public, many will conclude that it is about time London’s dependence on unionised tube drivers is ended.