October 24 2014 Latest news:
Thursday, August 28, 2014
Network Rail directors should get no bonuses next year after this summer’s chaos on East Anglia’s main rail line, according to a senior MP.
Colchester’s Sir Bob Russell said there would be no justification for a bonus of about £50,000 as paid to directors of the state-owned infrastructure company last year.
During the financial year 2013/14, four directors of Network rail earned between £355,000 and £401,000. They also earned bonuses of between £45,000 and £51,000. Three of them also earned an extra £300,000 “retention bonus” that had been agreed in 2012.
The directors also received substantial sums into their pension funds and additional benefits including a car allowance.
Sir Bob said that after three major problems with engineering work over-runs this summer, any bonus for this year would not be justified.
He said: “I would like to see them forfeit some of their salary, but I accept that cannot happen. However it is totally unacceptable for them to get any bonus after this.”
The problem with the rail industry was the fragmentation and privatisation that had happened in the 1990s, he said.
“Effectively we substituted a national monopoly with a series of regional monopolies which are not particularly responsive to local needs,” Sir Bob said.
“What we need in this region is a lot of investment in the track and the rolling stock which is why the East Anglia rail group is so important.”
Ipswich MP Ben Gummer felt that bonuses should only be paid if there was also a mechanism in place to deal with people who did not perform well.
“It’s all very well to have bonuses to reward good performance, but if you have them you also need to have sanctions to deal with people who don’t perform – and we’ve now had three occasions when the Network Rail planning has failed in this area over the summer.”
Network Rail’s bonuses are set by a fixed formula and are applied across the board to all directors as a percentage of salary, they do not affect individual performance.
Mr Gummer said it would be better if the finance director was rewarded for good financial performance and the operations director was rewarded for good performance on the track.
A spokeswoman for Network Rail said this summer’s problems in East Anglia would not have a direct impact on the bonuses.
She said: “Bonuses are only awarded for achievements significantly beyond what is expected of an executive in the delivery of their challenging day jobs.
“Progress on investment projects is one part of the executive directors’ bonus scheme. While the directors have different responsibilities, the bonus scheme is the same for all of them.
“The bonus scheme does not measure specific pieces of work on a day-to-day basis, rather the overall delivery of our investment programme.
“That said, over-runs like the one on Tuesday caused disruption to passenger services and negatively impacts on punctuality, which is also a significant measure within the bonus scheme.”
Derek Monnery from the Essex Rail Users’ Federation said it would be totally unacceptable for any bonuses to be paid.
He said: “What has happened over the last few months is a total failure of project management. They should have looked at all the possible outcomes before undertaking the work, especially after the first failure.
“Frankly we shouldn’t be talking about bonuses for senior directors. We should be talking about those responsible for the problems in this region being sacked for basic incompetence.”
Meanwhile it has emerged that the government has resisted attempts to get Network Rail covered by Freedom of Information legislation, even though it is now effectively a nationalised industry.
A proposal was rejected because of fears it could open the way for private monopolies like water companies to be subject to the same legislation.
Mr Gummer said he understood the reason for the decision – but felt that as an organisation Network Rail had good transparency policies and did not see this as a major issue.
See Paul Geater’s column on P16.