What a way to run a railway

Yesterday we held a half day debate on the state of Britains railways.

During the course of it Ruth Kelly, Transport Secretary, did tell us Network Rail has apologised for the delays to engineering works at Liverpool Street and Rugby on the West Coast mainline over the Christmas and New Year break. The apology stopped there. There was no apology from Ministers for the performance of their creature company, Network Rail. They told us there would be an enquiry into what went wrong, and they promised Network Rail would learn the lessons from the mistakes. I was far from convinced.

The delays at the start of 2008 were not the first time that Network Rail had misjudged and mismanaged engineering works, leading to substantial cancellations of services. Clearly the company did not learn the lessons on previous occasions. It is also difficult to understand what more they need to learn about the errors. Senior management misjudged how long it would take to carry out the works, and misjudged the availability of skilled labour to perform the tasks they needed done. The cause of the cancellations is crystal clear ?? management mistakes at Network Rail.

Some Labour MPs tried to argue that the cancellations were the result of the ??fragmentation?? of the railway. It is difficult to see how things would have been better and different if the Network Rail management also owned and ran the trains. The same people would still have made the same mistakes over track provision.

Conservatives asked for an assurance that the senior management of the company would not be paid large bonuses for performance, following such a pathetic performance over the holiday period. We were greeted with slippery replies. Ministers seem to think Network Rail is a proper independent private sector company. They want to leave the issue of the bonuses to the Remuneration Committee of the Board.

Any cursory look at the accounts for Network Rail for 2006- 7 and the interim statement for the first half of 2007-8 will show you this company is a creature of the government and a pensioner of the taxpayer. Last year more than 90% of its operating costs were paid for by taxpayer revenue subsidy. Its borrowings attract a government guarantee, which is needed when you discover that the company has net assets of a mere ?6 billion, with ?18 billion of net debt. This is a company where the government on behalf of taxpayers owns all the shares, pays most of the revenue bills, provides borrowing through a guarantee, and appoints the people who run the company.

I proposed that Ministers stop trying to pretend this company is nothing to do with them, and start trying to manage its performance to get value for taxpayers and a better deal for travellers. If the Remuneration Committee of the Board has set up the bonuses in such a way that full ones have to be paid this year to top management despite the performance, then we need different Directors. Ministers do have a responsibility to ensure the railway is run by people who make better judgements on how to control the costs and time taken to implement major capital schemes, as well as wanting people who know how to get a better balance between fare revenue and subsidy, and how to deliver better efficiency to allow cheaper fares.

Labour took great pride in setting up Network Rail as a better kind of Railtrack. On the evidence so far it is not working well. The latest debacle should be a warning to Ministers. It is time Ministers got involved in this, their very own public sector monopoly, with a view to delivering better value for taxpayers and fare payers.

<strong>Click <a href="http://www.johnredwoodsdiary.com/2008/01/09/john-redwood-on-network-rail/">here </a>to read John Redwood’s speech in the half-day debate in the House of Commons on this issue.</strong>

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3 Comments

  1. Brian Tomkinson
    Posted January 9, 2008 at 9:29 am | Permalink

    “They told us there would be an enquiry into what went wrong, and they promised Network Rail would learn the lessons from the mistakes.

  2. Letters From A Tory
    Posted January 9, 2008 at 10:57 am | Permalink

    Network Rail has always been a government body that isn't really a government body – close enough to be monitored carefully but far away enough to be hung out to dry should it perform badly.

    A bit of honesty about the status of Network Rail would be appreciated.
    http://lettersfromatory.wordpress.com

  3. Bazman
    Posted January 9, 2008 at 8:06 pm | Permalink

    The bonus should just be called 'pay' They get paid anyway. Renumeration Committee? "Trebles all round old boy!"
    Network rail is in fact just an organisation paid by the government to run the railways. Just get rid of them. It's like changing your utility company. You don't actually change electricity companies, just billing companies.
    Unlike the spotty Herbert who only answers the phone at the utility company. On The railways he's doing the work. The old hands deemed to be to expensive and not enough of them. Very complicated systems made to sound simple and the work given to fly-by-night contractors employing anyone. Profit, or what should be called fees first and passengers second.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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