Leaves on the line for Network Rail as debt tops £30bn

Debts have risen by £3bn since last year - despite the fact that the rail regulator reckons its assets aren't in a good state.

by Emma Haslett

Troubled rail operator Network Rail, which is responsible for maintaining the nation’s rail tracks and signals as well as operating several major stations including King's Cross and Edinburgh Waverley, has racked up another £3bn of debt in the past year. This brings its grand total to £30.35bn, up from £27.28bn in 2011-12, according to figures published this morning.

And despite the trickle-down effect of hefty fare rises across much of its network, profit after tax has fallen since last year, from £761m to £699m – although revenues edged up slightly to £6.2bn, from £6bn last year.

The bad news for consumers is that despite those fare rises, the number of trains running on time has dropped from 91.6% to 90.9%, which it blamed on extreme weather (a bit stronger, admittedly, than leaves on the line).

At the moment, this is all sort of ok – but now the Office of Rail Regulation says it might downgrade the value of Network Rail's assets by as much as £1bn because its bridges, tunnels, signals etc are in a less-than-adequate state. The final assessment comes later this year, but if it does downgrade them, the full value of Network Rail’s assets will fall to £45bn – although the company reckons it would still be ‘comfortably within regulatory asset base to debt gearing ratio’. Just a bit less comfortably than it was before...

Still, not an awful lot of justification there for chief exec Sir David Higgins’ £100,000 bonus, announced last week. Apparently it was paid because the company met customer satisfaction targets (as a regular rail user, that isn’t an easy one for MT to believe) and targets on efficiency savings. Although judging by the ORR’s assessment, that might be more accurately described as ‘corner cutting’.

Finance director Patrick Butcher put it lightly when he said the last year has been ‘one of operational and financial challenges’. On the bright side, at least there was no mention of the wrong kind of snow…

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