Network Rail: New blood on the tracks

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The Independent Online

Iain Coucher is in Harrogate today, spending his Easter break with his family. Nothing remarkable in that, you may say. But this is something of a luxury for the managing director of Network Rail, the company that looks set to take over from Railtrack.

For three months Mr Coucher has worked seven days a week on the proposals to fix one of Britain's most taxing problems.

Last week the long hours paid off. Mr Coucher solved the enigma that has dogged Railtrack since it was plunged into administration last October. By offering to pay 250p to shareholders, the company could be taken out of administration, the City brought back on side with the Government, legal action dropped, and the minister with nine lives, Stephen Byers, could live to spin another day.

Of course all this hasn't happened yet, but only a brave man would bet against it.

Simon Haslam, of the Railtrack Shareholders' Action Group, says: "If this means getting 250p in shareholders' hands relatively quickly, as opposed to the much more protracted process of going through the courts, then 250p is not a bad price."

Even David James, chairman of Swiftrail, the only serious rival to Network Rail, is resigned to defeat: "I can't complain. This is what we have been urging the Government to do all along."

With all the attention on Mr Byers' U-turn over shareholder compensation, there has been precious little debate about Mr Coucher's plans.

Is Network Rail sufficiently different to Railtrack to solve the problems of the railways?

"We don't have shareholders, we have partners," says Mr Coucher. Sounding like a well-rehearsed Government sound- bite, this is actually critical to Network Rail's success. Financed through bonds, and made up of members of the rail industry, Network Rail won't be subject to the short-term outlook that dogged Railtrack.

Because Railtrack was quoted on the Stock Exchange, it was forced to dabble in higher-risk ventures such as property speculation to boost returns. Network Rail, says Mr Coucher, "will be getting rid of all those distractions". The new company will become an operation, maintenance and renewals business – rather dull, but dull is good for punctual trains.

Large infrastructure projects will be carried out by so- called special-purpose vehicles, fronted by the train-operating companies.

As a result, Network Rail will have about £500m of working capital. Changes are also afoot to the way Network Rail maintains the infra-structure.

Currently, firms like Balfour Beatty, Amec and Jarvis carry out day-to-day work. Mr Coucher says Network Rail is examining a pilot project to shift the balance of power away from the contractor. This will give Railtrack, and eventually Network Rail, full responsibility for safety. All fairly radical stuff. But one of Railtrack's biggest bugbears will remain with Network Rail – the "track access charges" levied at train companies. "We know that the regime has in the past caused conflict," says Mr Coucher.

But he concedes: "Even if we wanted to change it we couldn't because we are buying a company that already has a regulatory framework."

Here, Mr Coucher points to what could be the failing of Network Rail. It's a clever solution to the stand-off between Mr Byers and the City and it goes a long way towards addressing Railtrack's failings. But it is still a halfway house.

That may not be quite good enough for Britain's decrepit rail network.