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Network Rail came under attack today for risking a repeat of the Potters Bar or Hatfield fatal disasters despite apparently being hugely profitable.
The state-backed tracks, signalling and rail stations company today reported pre-tax profits for the year to the end of March of £1.52 billion, just marginally down on the prior year.
That was as a result of the cost-cutting, which has seen Network Rail pare back plans for renewals and maintenance. The figures show that Network Rail's revenues rose £200 million to £6.1 billion in the year, much of it via taxpayer subsidy. At the same time operating costs rose just £68 million.
Workers' leader Bob Crow, general secretary of the Rail Maritime and Transport union, slammed the figures. "If Network Rail are running more trains and are so flush with cash, why are they taking the risk of another major disaster like Hatfield or Potters Bar by cutting back the vital track renewals programme by 28% and axing key engineering jobs?" he said.
The fatal derailments resulted from underinvestment or shoddy work blamed largely on the regime at Network Rail's predecessor, the quoted company Railtrack, which was put into administration by the Labour government.
Railtrack was widely criticised for paying its City shareholders hundreds of millions in dividends. Network Rail was specifically set up to pay no dividends but reinvest all its annual surplus.
The structure of Network Rail, however, has also been criticised as it has been forced to raise huge amounts of money which investors will only commit to so long as the Treasury stand behind the debt as guarantor.
Today's figures reveal those debts are continuing to soar, up from £19.7 billion a year ago to £22.3 billion.
The company also revealed its shares of pension liabilities to hundreds of thousands of rail workers is also turning into a deepening black hole.
The value of rail pension fund assets fell 25% in the year and Network Rail's share of the pension fund deficit has nearly doubled from £370 million to £664 million.
Chief executive Iain Coucher has attempted to head off a row over his pay by forgoing his bonus this year at a time of staff cuts and service levels which have notably been criticised by Virgin Trains over the teething troubles on the overrun, over-budget £9 billion West Coast Main Line high-speed upgrade out of and into Euston.
Last year Coucher's bonus topped £305,000 but he may yet be eligible for the firm's long-term executive incentive scheme, which last year was worth £205,000 to him.
Coucher said Network Rail had delivered good results, investing a record £4.7 billion on the railway, up from £4 billion.
He said efficiency gains in the year were worth 4% while recent figures revealed that overall delays attributable to Network Rail had been cut from 9.5 million minutes to 8.9 million minutes, the lowest level for more than a decade.
"Network Rail has met or exceeded almost all its targets and those set by the Office of the Rail Regulator," he said. "Train performance is at an all-time high, the railways have never been safer to travel on, millions of pounds are being saved from the cost of running the network and billions invested to make further improvements.
"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.
"My vision is for a high-performing railway, easy and affordable to access and comparable with the very best railways in the world."
Reader views (6)
Borrowing an extra 2.5 Billion and making a profit of 1.5 Billion adds up to a loss of 1 billion in my mind
- Sukh, London, 05/06/2009 17:40
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If ever the RMT need to strike, then it's now.
None of this day or two stoppage either. A wholesale indefinite walk out is needed.
- Anthony, Esher, Surrey, 03/06/2009 12:58
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More information needed: what does 'profit' mean when the pension fund is in deficit? Charges minus operating costs? How much of their income is subsidy? Who gets the profit? Is normal corporation tax paid to the Treasury? Are we paying inflated ticket prices because of excessive track charges? ES could do us all a favour by setting out how the whole game works: if even Bob Crow thinks that NR run trains we're all in need of a lot of education.
- Mdj E10, london uk, 03/06/2009 12:33
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The status developing country belongs to those that are actually developing: 300kph trains are the Global norm in 2009. They will get much much much faster.
- Gbp, Town, 03/06/2009 12:21
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How can they be showing a profit with debts of £22bn?
- Alan In Bow, London, 03/06/2009 12:07
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It seems The Crow thinks NR run trains. I was under the impression these were run by train operating companies. Poor Bob, pop back to Party HQ and ask somebody to tell you how European rail legislation works. State owned or privatised Notwork rail will always be run by shirkers for shirkers as it was in state hands with no regard for the travelling and paying public.
- Nelly, East London, 03/06/2009 11:55
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