By Andrew Saunders Friday, 23 November 2012

The twists and turns of Network Rail

Owner and operator of Britain's rail infrastructure (but not its trains), this state-owned private company is never far from controversy. So how well does it manage to run the railways?

Formative years

Network Rail was created by government decree in 2002 after the Hatfield crash in which four people died as a result of maintenance failures by its predecessor, Railtrack. Network Rail was supposed to lay the ghosts of both Railtrack and long-standing national joke British Rail by making the trains run safely and on time.

Its job is to run the UK rail infrastructure - 20,000 miles of track, 40,000 bridges and tunnels and major stations, such as King's Cross - and to provide a 'level playing field', with the various train operating companies (TOCs) competing to run the trains.

We Brits love to moan about our trains and Network Rail has been embroiled in plenty of more serious rows too, from pay and staff disputes to a series of fatal incidents that culminated in January's announcement of criminal proceedings over the Greyrigg crash in 2007.

Recent history

The ravening hordes of commuterdom have plenty to get their teeth into just now - overall train punctuality of only 69.8% in 2011/12 is really not much to shout about. The figure quoted used to be in excess of 90%, but it conveniently counted trains that arrived up to 10 minutes late as being on time.

Now a more realistic ‘within 59 seconds’ rule has been introduced things don’t look so rosy. The aging rail system is struggling to cope. But despite fares amongst the highest in Europe, passenger numbers continue to rise - a record 1.5bn journeys are predicted to be made this year. More capacity is urgently required and although the prospect of the £30bn high-speed rail link from London to Birmingham is a bright spot on the UK rail horizon, it alone will not tackle this underlying problem.

Who's the boss?

Chief executive David Higgins is an Australian-born career quangocrat, who joined from the Olympic Delivery Authority in February 2011.

The secret formula?

What most vexes industry watchers is whether Network Rail is a public good or a private enterprise. The taxpayer foots 40% of the bill to the tune of £3.5bn annually and yet its bosses enjoy lavish rewards akin to those of more genuinely risk-taking private sector firms. It made a profit of around £573m this year, and its levels of accountability have also been called into question - who is to gainsay targets if they are set too low, or salaries too high, ask critics?

Don't mention

Debt. Network has debts of £28bn against assets of around £45bn. That’s a reasonable level for a utility company, as its FD Patrick Butcher pointed out recently. But if Network Rail really is a nice safe utility-type investment, then its management team should be paid by that rather less generous benchmark. You can’t have it both ways…

VITAL STATISTICS*
Miles of track: 20,000
Stations owned: 850
Funding: £12bn (2009-14)
Employees: 35,000

*Source: Network Rail

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