Network Rail loss is 'progress'

NETWORK Rail, the 'not for dividend' successor to Railtrack appeared to City watchers to be 'not for profit' either as it slumped to a massive full-year operating loss today.

The company, responsible for the UK rail infrastructure, even managed to echo the lacklustre customer announcements of some of the country‘s train operators by insisting that the year to the end of March had still been one of 'substantial progress'.

The group claimed numerous operational improvements during the period, including a 7% reduction in delays caused by Network, a 2% increase in the proportion of trains classified as arriving on time and a reduction in broken rails to 334 from 444.

But the figures will be little consolation for thousands of train passengers struggling to work by 'alternative means' thanks to massive engineering work on the West Coast mainline this week.

Network Rail‘s £758m operating loss compares to a profit of £80m last time. Of the loss, £544m is due to a change in the phasing of network grant income from the Strategic Rail Authority. Nevertheless, there was little disguising the extent of the downturn at Network Rail.

There was some good news in the form of debt, down to £12.6bn, £1.3bn lower than forecast in October 2002 when it succeeded Railtrack. This was put down to a 'rigorous' approach to cash management.

The company said it had laid substantially more rail, sleepers and ballast than in the previous year and renewed more switches and crossings.

It had also completed the installation of the Train Protection and Warning System, made progress in bringing rail maintenance in-house, and saw a successful conclusion to the interim review process.

Chairman Ian McAllister insisted: 'Last year was one of substantial progress. Significant strides were taken towards delivering Network Rail's vision of the safe, reliable and efficient railway everyone wishes to see.'

Despite the large losses Network Rail's executives, including chief executive John Armitt, will pick up substantial bonuses.

In a nod to public hostility towards payment for perceived failure - and for most Network railway users punctuality is the key issue - the overall bonuses were reduced from a potential 32% of salaries to 24%%.

A potential award of up to 32% of basic salary for achieving 'asset stewardship' and 'financial efficiency' targets was reduced to 24% by a committee overseeing the scheme.

The bonus scheme is cascaded down through the organisation and, as a consequence, all Network Rail employees will receive a bonus this year.

This might help defer some allegations of 'fat cattery' but it is unlikely to make commuters and train passengers between London and Birmingham who are forced onto buses and cars while the rail lines are out of service.