Chairman Pip's Railway Thoughts

Ball crunchingly expensive

Posted in Great Britain, Infrastructure, Philip Hammond, Politics by Chairman Pip on 25 June 2010

The day you get Mr Potato Head and the Roads Man agreeing on something, you know that what they’re agreeing on must be pretty bad. Thus it was with the announcement that the outgoing Chief Executive of Network Rail, Iain Coucher, plus five other directors, are to receive bonuses totalling £2.25m. This is despite criticism from the Office of Rail Regulation, a report condemning the seemingly uncontrolled levels of debt the company is building up, and a fall in profits of 75%. Given that a large proportion of Network Rail’s income is derived from the taxpayer, and given that most public bodies are being urged (or forced) into financial restraint, you might have thought that the Chairman and the board might have thought discretion was the better part of valour. Philip Hammond urged Network Rail not to pay out the bonuses; the ORR urged Network Rail not to pay out the bonuses; the unions (in their nationalise everything way) urged Network Rail not to pay out the bonuses. But because Network Rail is a private company (albeit one whose debts are guaranteed by the government, and whose income is in large part derived from the government), not directly answerable to the public, and so can do what it likes with its money. Therein is the problem with Network Rail, because its debt is underwritten by the government, but it is not a government body, therefore its debts do not show up on the government’s balance sheet. As a consequence, public money gets pumped in, but the public (through the government) has no say really in how it is spent. And so Iain Coucher et al can be paid their £2.25m in bonuses, and thus of us footing the bill can’t do a thing about it.

“Network Rail warned not to award excessive bonuses this year”
“Hammond condemns Network Rail bonuses”
“Railway industry to be told to put the brakes on its ‘unsustainable’ costs”
“Network rail profits slide as charges capped”


One Response

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  1. Claire said, on 30 June 2010 at 5:41 pm

    Whether they deserve bonuses or not, the figures are just ridiculous. These people may do important jobs but there are thousands of people around the country – around the world, actually – who do mundane jobs that are just as important but what reward do they get?

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