Outrage at Network Rail chief's bonus gaffe

The chairman of Network Rail provoked outrage yesterday by claiming that what the travelling public felt about the controversial bonuses awarded to the company's directors was "irrelevant".

Ian McAllister responded to a barrage of hostile questioning on pay at the state-backed company's annual meeting in Cardiff by insisting it was a requirement of Network Rail's licence that it had annual and long-term incentive schemes for its top executives.

Last year, Network Rail paid £1.8m, including more than £450,000 in bonuses, to its five executive directors, led by its chief executive John Armitt, even though the company missed its target for the number of trains running on time. It is now introducing a long-term incentive scheme which could see those bonuses doubled provided the organisation meets cost reduction and punctuality targets.

Despite attempts to suppress a revolt over pay among its 115 members by limiting questioning on the remuneration report to the last five minutes of the scheduled meeting, public members who managed to speak were overwhelmingly hostile.

One member, Patricia Steel, said the incentive payments were "absolutely inappropriate", while another said that when he asked friends what sort of bonuses Network Rail directors should get, "they spluttered on their food and said zero".

Mr McAllister responded: "You may be public members but you were appointed to act in the best interests of Network Rail. What other members of the public think or tell you is irrelevant."

The remuneration report was approved by an 83 per cent majority of the 83 members who voted. But 20 per cent of the company's 70 public members voted against the board on pay.

Mr McAllister told the meeting that quarterly reports on the company's performance, based on in-depth reviews carried out by the Office of Rail Regulation, would be made public. The company is also beefing up its board with the appointment of two new non-executive directors.

Network Rail will complete the task of taking all maintenance of the railways back in house this weekend along with 16,000 staff. Ian Coucher, the deputy chief executive, said it had discovered that in some parts of the country the private contractors it has replaced had vacancy rates of up to 30 per cent, with an average across the country of 10 per cent. The company is planning to recruit about 500 front-line maintenance staff to cut down on having to employ expensive sub-contractors or pay overtime. But Mr Coucher also said there was "huge scope for rationalising" maintenance, meaning that hundreds of back-office jobs will be relocated or abolished as part of the 2,000 staff cuts the organisation announced last year.

Punctuality for July is up by 20 per cent on last year, making it the 10th month in a row when the network's performance has improved. Mr Armitt said that taking maintenance in house had been an important factor but he also conceded that the "benevolent weather" the railways had enjoyed last autumn and this summer had played a major part in improved punctuality.