Is it time to break up Network Rail?

The ex-rail regulator thinks so - and even its chairman seems to have doubts about the current set-up...

Last Updated: 25 Nov 2010

If, like MT, you're likely to spend some of the bank holiday weekend stuck on a train somewhere, you'll have a special interest in the fate of Network Rail, the company that looks after our railway infrastructure (i.e. the tracks, signals etc). It has always been a complex beast: technically a private company, but without any shareholders or competition. like a public sector body. Now Tom Winsor, the former rail regulator, has called for it to be broken up. And with Network Rail still reeling from the row over CEO Iain Coucher's perks, and senior bosses up in arms about some implied criticism from their chairman Rick Haythornthwaite, perhaps there's no time like the present...

Talking to the Telegraph today, Winsor suggested Network Rail was a 'beast ripe for the slaughter' and should be split into 'three or four regional companies' (presumably one for Scotland and then two or three others). The theory is that this would create more competitive pressure on pricing and standards - because they could be benchmarked against each other, as per the power and electricity industries. He thinks it will also help to bring the management closer to their end users, i.e. train travellers, and make the companies more responsive to their needs.  And if you think this sounds like a step towards full privatisation, you may be right - though Winsor doesn't think this should happen immediately.

Network Rail has been in the news for all the wrong reasons lately. First there was the row over the hefty rewards on offer to outgoing boss Iain Coucher (who has run Network Rail since its inception but has just announced his plan to step down - see here for our exclusive interview with him last year). The TSSA union claimed that he was receiving all kinds of extravagant undeclared benefits, although the board has since cleared him of all the allegations. But it reflects the degree of discomfort that Coucher earned a private sector salary (including a £641,000 bonus last year, much to the Government's chagrin) for running what's effectively a public sector body.

Then the consonantally-blessed Haythornthwaite went on record in the FT apparently criticising the company's 'militaristic' management style - while the article also cast doubt on the future of HR boss Peter Bennett (accused by one MP last year of presiding over 'a culture of fear and bullying') and corporate affairs chief Victoria Pender. Not surprisingly, senior management are apparently distinctly unamused by all this.

Coucher claims this style was necessary to deliver the cultural change required to raise standards at Network Rail. And judging by the latest punctuality figures, it worked. But the chairman clearly thinks this top-down, centralised style is no longer appropriate – and nor is paying hefty incentives to the top brass, particularly when the incentive structure is so hard to devise.  Perhaps breaking it up into smaller, regional companies would help to achieve both aims?

Then again, one of the biggest problems we have with our railways is that the train operators aren't able (because of the length of their contracts) to take the long view, which inevitably limits investment. Changing the way the infrastructure is managed will do nothing to resolve that.

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