Pressure on rail bosses to ditch bonuses as firm misses targets

Published on Wednesday 3 June 2009 21:43

NETWORK Rail executives were last night under pressure to forgo bonuses this year after the rail regulator warned that the firm had not met performance targets.

The Office of Rail Regulation (ORR) revealed yesterday that it had written to the NR committee that decides on bonuses pointing out the company's shortcomings.

Chief executive Iain Coucher has already said he will not take a standard, performance-related bonus this year – but is still entitled to an additional windfall as part of a three-year management incentive scheme.

Last year, he received a standard bonus of 305,000 and an additional 205,000 from the incentive scheme.

ORR's criticisms included an "unsatisfactory" performance on the Glasgow to London west coast main line on which a 9 billion upgrade programme has just been completed.

Line operator Virgin Rail Group yesterday voiced its support for the ORR's attack – and called for action from the regulator to ensure that improvements are carried out.

The ORR said it had given NR until the middle of this month to produce a credible plan for improving performance on the line.

It said failure to do so would mean regulators would have to consider whether NR was in breach of its licence – which could mean a fine.

It added that the rail infrastructure company had presided over an increase in delays caused by signalling problems and was perceived by train and freight companies as being "bureaucratic and unresponsive". Also, NR failed – by 4 per cent – to reach its ORR-set target of making efficiency savings of 31 per cent between 2003-4 and 2008-9.

A spokesman for Network Rail told The Scotsman the criteria for bonuses would be the same as those laid out in last year's annual report, suggesting directors would still be entitled to the incentive scheme payout, even if they agreed to forgo the bonus. Details of this year's bonuses are due to be released at the end of the month.

A spokesman for Virgin Rail said: "We welcome Network Rail and the ORR's acknowledgement of the unsatisfactory performance on the west coast main line which is vindication of the warnings we have given both organisations over the last three years."

He added: "We are disappointed that NR have spent 9bn on the 'upgrade' to deliver the worst performing route on the rail network today. This is an unacceptable position for our customers.

"The key now is to address the many failings urgently."

The ORR's attack on NR came as the company revealed that it made a pre-tax profit of 1.52bn last year but added that its net debt rose to more than 22bn. Pre-tax profit for 2008-9 was roughly comparable with the 1.59bn figure achieved the previous year.

Coucher said: "We have had a good year overall and there is always room for improvement. I am acutely aware that customers expect and deserve an ever- improving rail service."