Rail bosses will miss out on six-figure bonuses this year after Network Rail said that it would withhold the taxpayer-funded annual payments from its executive team.
The announcement came a week after the rail regulator warned that the private company, which has no shareholders and receives £4 billion a year from the Government, would miss all of its key targets on punctuality, delays and cancellations.
The decision to withhold the bonuses was welcomed by unions and the Transport Secretary, Phillip Hammond, who was angered by bonus payments of more than £2 million paid to Network Rail bosses last summer.
A new chief executive, David Higgins, took over the railway operator last month and pledged to rebuild trust in the organisation.
A leading QC specialised in asset-tracing is investigating allegations of misuse of public money at Network Rail during the period between 2002 and 2009. The previous chief executive, Iain Coucher, accepted bonuses totalling £641,000 last year despite an appeal from Mr Hammond to be “sensitive” about taxpayer-funded bonuses at a time of public austerity. The £1.45 million he earned last year made Mr Coucher one of the highest paid public servants.
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The chairman of Network Rail’s remuneration committee, Steve Russell, said that the nine top officials would receive no bonus this year.
“All recognise that the public expect consistently high network reliability and overall service delivery within a strong safety culture before the top leadership of the company should become eligible for payment under any annual incentive scheme,” he said.
All other staff would receive bonuses, however. Union leaders welcomed the announcement. Gerry Doherty, leader of the TSSA white collar union, said: “NR’s new chief executive David Higgins has started to recognise that NR are living and operating in the real world.”
Mr Hammond said: “Excessive bonuses for NR executive directors are not appropriate, particularly in the current economic climate. There is an urgent need to tackle the costs of the railways and the Government remains clear that bonuses should be awarded on the basis of long-term performance, and then only where there has been exceptional performance.”
The Government has commissioned Sir Roy McNulty to seek ways of improving efficiency on the railway. He has identified possible savings of £1 billion from a publicly funded budget of more than £5 billion each year. The Government will set out major reform of Network Rail in a White Paper in the autumn.