Network Rail has returned to the "bad old days" of inflated salaries and bonuses, according to industry sources shocked by the £1m-plus pay package of the state-backed group's new chief executive.
The former Royal Dutch Shell executive Mark Carne beat Network Rail veteran board member Simon Kirby to the crown yesterday, but critics immediately seized on his £675,000 salary. This is £84,000 higher than the current chief executive Sir David Higgins, while Mr Carne is also entitled to an annual bonus of up to 60 per cent under Network Rail's existing executive pay structure.
That Network Rail is willing to breach the £1m barrier is a surprise, given that Sir David was so castigated by unions in May for receiving a bonus of just £99,000 after the owner of Britain's track and 17 major stations missed some key performance targets. These criticisms are believed to have at least partly led to Sir David's decision to quit next year, far earlier than most in the industry had expected.
Sir David's pay was attacked even though it paled in comparison to his own predecessor, Iain Coucher, who received a £613,000 basic and a £641,000 bonus that triggered a ministerial backlash. Sir David was considered a catch, having been knighted for successfully overseeing the construction of the London 2012 Olympic Park. The Australian has been praised for attempting to commercialise the heavily indebted organisation by hunting out lucrative advisory work overseas.
A rail source who had been considered a likely candidate for the job said: "This is like the bad old days of Coucher, particularly given all the political flak. This seems like a huge amount of money. I would have done it for less."
The Transport Salaried Staffs' Association union also seized on Mr Carne's pay. Its general secretary Manuel Cortes said: "At a time of ever increasing rail fares and falling wages, we think this is an insult to rail passengers who have seen price rises of 20 per cent since May 2010. It is passengers who should be rewarded with lower fares, not directors for joining a gravy train paid for by every taxpayer in the land."
Mr Carne joins at a crunch time for Network Rail, as it is about to enter its next five-year "control period", which sets out how much the body can spend on maintenance and upgrades between 2014-19. Network Rail had been looking for £40.1bn, but the Office of Rail Regulation has ruled that must not exceed a "stretching, but achievable" budget of £37.9bn.
Mr Carne is unknown in the rail industry, having worked in a variety of roles at Shell, including vice president for the Middle East and North Africa. Network Rail's chairman Richard Parry Jones praised his "skill and global experience" as the organisation faces an "unprecedented growth in demand".
Mr Kirby, the head of Network Rail's infrastructure projects unit, had been widely regarded as the leading internal candidate for the top job.