Network Rail today admitted its debt mountain soared past £30 billion and its post-tax profit dropped 8 per cent in the past year, just days after it handed five directors bonuses worth more than £350,000.
The company, which runs everything on Britain’s railways apart from the trains, saw its net debt jump by some £3 billion to £30.4 billion in the year to April.
Network Rail claimed that was because it is investing more, spending £14 million a day on tracks, signalling, and expanding Britain’s railways.
This includes the Thameslink programme, which has so far seen new stations at Farringdon and Blackfriars.
But the taxpayer already pays some £4 billion a year into the rail network, and the heavy cost of Network Rail’s debt, which is guaranteed by the Government, is a concern to industry analysts.
A report published in April by the Office of Rail Regulation revealed that servicing Network Rail’s debt in 2011-12, a period when the debt pile stood much lower at £27 billion, cost taxpayers and passengers £1.5 billion.
That is the equivalent of more than £1 in every £10 spent on the railways, and will be higher for the past year.
Despite the investment, Network Rail’s punctuality in the year slipped back too: only 90.9 per cent of trains ran on time, which was down from 91.6 per cent a year earlier. The firm claimed that passenger satisfaction levels were at a record high of 85 per cent, but added: “It’s been a challenging year on train performance.”
Post-tax profit was £699 million in the 12 months, down from £761 million a year earlier.
Network Rail did, however, say it is on track to deliver more than £5 billion of cost savings for the five years to 2014.
This will be good news for directors, whose planned bonus scheme means they could be paid twice as much for saving money as making trains run on time.
The firm’s top five bosses could receive more than £1 million for hitting cost-cutting targets for the three years to 2015, compared with just over £500,000 for boosting punctuality.
Those plans still have to be approved by Network Rail’s public members — 40 independent individuals drawn from the British public and from the Department of Transport, who effectively act as shareholders — in July.
But last week Network Rail’s five top executives were awarded bonuses of more than £350,000.
It would have been higher had the firm hit punctuality targets.
Chief executive David Higgins still pocketed a £99,082 bonus on top of his £577,000 salary.
Finance director Patrick Butcher, who is on an annual salary of £394,000 and secured a £67,658 annual bonus, said: “The challenge we have faced over the last year, and will continue to face, is one of success — more people wanting to use more trains, more of the time.”