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Business Comment

Trains, fines and big claims – Network Rail is way off track


Westminster Outlook If the name Mark Carne sounded familiar a year ago, it was only because it was but a letter short of Mark Carney, the Government’s then newly appointed and anointed Governor of the Bank of England and saviour of the British economy.

Indeed, Mr Carne was hardly a household name even within the oil industry, in which he had spent much of his career as an executive at Royal Dutch Shell and BG Group. The Exeter University graduate was, to put it kindly, an obscure choice to succeed Sir David Higgins as chief executive of the state-backed Network Rail at the start of the year.

But ministers and the Network Rail chairman Richard Parry-Jones, a former Ford Motor Company vice-president, clearly wanted an outsider. They placed a bet that someone without deeply entrenched and perhaps even dated views could bring a fresh pair of eyes to the task of fixing some serious problems at the organisation that runs the UK’s railways and its most important stations.

This week, for example, came confirmation that Network Rail fell more than 5 per cent short of its target to get 92 per cent of trains to stations on time in 2013-14, receiving a £53.1m fine as a result.

Around 3.2 million trains were late between 2009 and 2014, Network Rail’s last completed, Soviet-sounding, five-year “control period”. Simply put, the organisation has struggled to improve a creaking network at the same pace as the growth in passenger journeys, which have doubled since 1995 to more than 1.5 billion. 

An oddball choice is going to have some oddball views and the latest available board minutes, from April, show that Mr Carne’s early observations are off-kilter with industry insiders and observers.

The minutes state that Mr Carne found “the company had achieved a huge level of political support and there seemed to be no real call for transformational change”.

One rail executive looked quizzically at that claim, arguing that our elected masters, of every hue, are broadly “neutral” and certainly wouldn’t be flag-wavers given the punctuality problems.

Perhaps Mr Carne’s words were uttered to soothe a board that has been battered down the years, particularly over executive pay and bonuses. This reached a bizarre nadir last year when Sir David was criticised for a bonus of less than £100,000 when he certainly deserved more.

Maybe Mr Carne believes what he says. Maybe ministers and officials have convinced him of their faith in the company. That would be worrying given that so much of the evidence is quite to the contrary. 

A cross-party ComRes poll of 155 MPs – nearly a fifth of the House of Commons and so a reliable sample – that has been passed to me shows that nearly three in five or our elected Westminster politicians believe Network Rail has failed to provide value for money. Just shy of two-thirds of MPs also think that rail contractors are dominated by just a handful of huge international firms.

Anna Matthews, the chief executive at DeltaRail, which commissioned the research, says these findings “demonstrate that Network Rail is still failing to operate at the standards expected of other publicly funded organisations and is showing contempt for the UK taxpayer”.

Given that DeltaRail is based in Derby, home to the train maker Bombardier, Ms Matthews unsurprisingly argues that Network Rail should stop “habitually handing out contracts to a small group of favoured foreign providers” and buy British.

Despite Parliament’s doubts, Network Rail is to be entrusted with £38bn in the period 2014-19, which includes money to renew or refurbish 7,000 kilometres of track. 

The Transport Secretary Patrick McLoughlin said that “record amounts of government funding” for the railways is part of the Government’s economic plan of building “world-class infrastructure”.

Having been given all that money, it is conceivable Mr Carne felt that politicians really are falling over themselves to support his organisation.

A more natural conclusion is that 12 years after Network Rail was formed out of the ashes of the failed Railtrack, politicians still don’t trust it, are fed up with trains running late, and think British suppliers aren’t getting a fair shout in lucrative contract bids.

There is “no real call for transformational change” because our Westminster leaders have failed to develop any alternatives to Network Rail. Mr Carne is wrong to say it has “achieved a huge level of political support”; it has earned nothing of the sort and is only begrudgingly granted such an eye-watering budget.