Net­work Rail chief nears end of the line as pres­sure mounts over pay and per­for­mance

The Sunday Telegraph - Money & Business - - Front page - By Christo­pher Wil­liams

THE man in charge of Bri­tain’s rail­ways is un­der pres­sure in White­hall to step down, amid frus­tra­tion about the slow pace of change and crit­i­cism of his £820,000 pay pack­age.

It is un­der­stood that the Gov­ern­ment wants Mark Carne, the chief ex­ec­u­tive of Net­work Rail, to leave when there is a “nat­u­ral break” in his con­tract this year.

His de­par­ture could be sealed as soon as the spring, ac­cord­ing to White­hall sources, with fur­ther months re­quired to find and ap­point a new leader to steer the rail­ways through a cru­cial pe­riod of ris­ing de­mand and pub­lic in­vest­ment.

There is no for­mal process un­der way to iden­tify suc­ces­sors, but min­is­ters are un­der­stood to be keen to see Net­work Rail make a fresh start and ac­cel­er­ate im­prove­ments to tracks.

An in­sider said: “He has strug­gled with parts of the re­la­tion­ship with gov­ern­ment.” It is un­der­stood that ten- sions have in­cluded Mr Carne’s re­mu­ner­a­tion, which is among the high­est in the pub­lic sec­tor and has pro­vided am­mu­ni­tion to gov­ern­ment crit­ics.

Chris Grayling, the Trans­port Sec­re­tary has pub­licly crit­i­cised Net­work Rail for fail­ing to im­prove ef­fi­ciency. Mr Carne’s al­lies this week­end pointed out that Mr Grayling had no di­rect power to oust the former Shell ex­ec­u­tive. The chief ex­ec­u­tive of Net­work Rail is ap­pointed by a board led by Sir Peter Hendy, the former com­mis­sioner of Trans­port for Lon­don. Sir Peter was trav­el­ling this week­end and could not be reached for com­ment. Mr Carne, 58, has led Net­work Rail since April 2014, al­though he took up the role early to over­see win­ter track re­pairs af­ter the main line into Devon and Corn­wall col­lapsed into the sea.

White­hall sources paid trib­ute to his ef­forts but sug­gested new man­age­ment could help Net­work Rail de­liver on am­bi­tious up­grade pro­grammes, in­clud­ing in­te­gra­tion of ex­ist­ing in­fra­struc­ture with the HS2 line.

The Gov­ern­ment in Oc­to­ber agreed to boost Net­work Rail’s bud­get de­spite con­cerns over the or­gan­i­sa­tion’s progress un­der Mr Carne.

A source com­mented: “He could step down with a strong record in­tact and al­low some­one to come in with fresh ideas to de­liver the next stage of im­prove­ments.”

A Net­work Rail spokesman called White­hall dis­cus­sion of Mr Carne’s fu­ture “ru­mours and spec­u­la­tion”, and said he had no plans to step down.

It’s hard to re­mem­ber a time when rail com­muters were happy. Like the weather, the NHS and the bins not be­ing emp­tied on time, com­plain­ing about the state of the rail­ways tops the list of na­tional gripes. Right now, sat­is­fac­tion with the train sys­tem feels at an all-time low. Tracks, bridges and sta­tions are hor­ri­bly in need of mod­erni­sa­tion, our crowded trains are burst­ing, yet rarely run on time, and com­muters have just been whacked with yet another in­fla­tion-bust­ing hike in fares.

To add in­sult to in­jury, dis­rup­tion to the net­work is at an all-time high. South­ern Rail users have suf­fered two years of con­stant de­lays due to in­dus­trial ac­tion. Sim­i­lar ex­am­ples of abysmal ser­vice ex­ist all around the coun­try.

Mean­while, the bail-out of the £3bn east coast line has se­verely dam­aged the case for pri­vate own­er­ship while reignit­ing calls for re­na­tion­al­i­sa­tion. The en­tire sys­tem is a dis­grace and in des­per­ate need of an over­haul.

Per­haps cus­tomers will take some so­lace then from the news that one of the fig­ures at the heart of this sorry state of af­fairs is com­ing un­der mount­ing pres­sure to step down. As we re­veal this week­end, Mark Carne, boss of con­tro­ver­sial rail op­er­a­tor Net­work Rail, could be on his way out amid grow­ing ten­sion with Trans­port Sec­re­tary Chris Grayling over its short­com­ings.

Like the pub­lic and the train op­er­a­tors them­selves, min­is­ters are fed up with Net­work Rail, which took over re­spon­si­bil­ity for tracks, sig­nalling and in­fra­struc­ture from Rail­track in 2001. Its stew­ard­ship is widely seen as a dis­as­ter, its in­com­pe­tence when it comes to de­liv­er­ing projects on time and within bud­get no­to­ri­ous.

Rail bosses de­spise the firm, con­trast­ing its short­com­ings with the ef­fi­ciency of the Lon­don Un­der­ground, which has forged the op­po­site rep­u­ta­tion: com­plet­ing con­tracts without over-run­ning or over­spend­ing.

But what really ce­ments its sta­tus is that while com­muters keep get­ting whacked by higher fares, Net­work Rail ex­ec­u­tives con­tinue to top the civil ser­vant pay league.

Carne has the big­gest salary of all, a whop­ping £750,000, and another six Net­work Rail bosses make the top 10. It is this re­ward for fail­ure that Grayling is un­der­stood to be los­ing pa­tience with.

Still, per­haps there’s a sil­ver lin­ing. The Trans­port Sec­re­tary is des­per­ate to re­form the set-up so maybe a shake-up looms. One op­tion is to re­unite wheel and track, hand­ing con­trol back to the train op­er­a­tors.

Another is to re­turn the com­pany to the pub­lic mar­kets. That seems un­likely but it would mean much greater scru­tiny and ac­count­abil­ity. Ei­ther would surely be a dra­matic im­prove­ment on the cur­rent state of af­fairs.

‘The en­tire rail­way sys­tem is a dis­grace and in des­per­ate need of an over­haul’

Worth sav­ing at all?

This week­end, gov­ern­ment min­is­ters, bankers, lawyers and turn­around ex­perts are scram­bling to pull off one of the big­gest and most com­pli­cated cor­po­rate res­cues of re­cent times: a bailout of con­struc­tion gi­ant Car­il­lion.

It will take a mir­a­cle to save some­thing of this scale and in so much tur­moil. Debts are at £1.5bn, its pen­sion deficit is £600m and it is sit­ting on more than a bil­lion pounds of losses at last count. Mean­while, the com­pany’s share price has sunk to just 15p from 230p in the last year. In short, share­hold­ers don’t think it is worth much.

The chal­lenge for its lenders is work­ing out whether Car­il­lion is worth sav­ing at all. At this crit­i­cal stage, with time quickly run­ning out, they have two op­tions: agree to a painful and high-risk debt-for eq­uity swap, con­vert­ing piles of loans and bonds into shares that wipe out ex­ist­ing share­hold­ers, ef­fec­tively dou­bling down on a highly trou­bled out­fit; or, hav­ing al­ready put up £140m in res­cue funds only months ago, to cut and run. This means crys­tallis­ing huge losses and the like­li­hood of be­ing blamed for its col­lapse.

As we went to press, the chances of a res­cue seemed to be re­ced­ing. Car­il­lion’s banks are said to be un­con­vinced by its fu­ture prospects without gov­ern­ment sup­port. Ad­min­is­tra­tion, fol­lowed by a fire sale of as­sets, may beckon, trig­ger­ing tens of thou­sands of job losses, and leav­ing some of the UK’S big­gest pub­lic sec­tor projects in dis­ar­ray. Yet the real vil­lains here are the bosses who steered it off a cliff. I un­der­stand a year ago ad­vis­ers were con­fi­dent that a £500m rights is­sue was pos­si­ble. Why on earth didn’t man­age­ment pur­sue one?

Mark Carne, the chief ex­ec­u­tive of Net­work Rail, is un­der grow­ing pres­sure to quit his role, ac­cord­ing to White­hall sources

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