Network Rail must be mutualised to ensure good governance for the future

Joe Fortune calls for Network Rail to be mutualised, in an effort to ensure not only short-term good management, but long-term good governance.


By Joe Fortune, parliamentary officer of the Co-operative Party and SERA executive member

Pleasing though it may be, the pressure mounted by politicians and the public over Network Rail’s overly generous bonus allocation is not a long term fix. If the governance of this organisation is left alone the next bonus allocation will be banked and many taxpayer pounds will find their way into high flying managers’ bank accounts.

The reason senior rail managers continue to get away with such sky-high remuneration is that Network Rail is not properly accountable to the travelling public.

We will not be able to lessen the amount of spending Network Rail gets through for the foreseeable future. Oddly, the McNulty Review into the cost of the rail industry focused in on increasing costs, but suggested higher ticket prices and a cut to terms and conditions was the answer rather than looking further and needed changes to the infrastructure manager.

The Labour government did well to construct Network Rail from the ashes of Railtrack. However, over time the company itself has shown that its corporate governance structure has not been good enough and is in need of reform.

It is not accountable enough to the public, which will continue to fund the organisation and has funded it through the last few years even while it carried the tag, given to it by its regulator, as being 30 per cent inefficient.

Not only has the current management structure presided over this inefficiency, but it has happened alongside high profile and harrowing preventable deaths and serious misconduct issues within senior staff.

Many politicians, whether it be parish councillors or Secretaries of State, utter sentences along the lines of ‘I just can’t get Network Rail to listen’ or ‘I have tried Network Rail but haven’t had much of a response’, and this needs to change.

The transport select committee, the coalition government, the opposition, trades unions, PwC, the Department for Transport and Network Rail all understand this need for change. It is the paucity of the radical, ultimately democratic and transformative proposals that hold us back.

Indeed both the chair of the transport select committee and the Labour Party’s shadow transport minister with responsibility for infrastructure called upon the government to look again at the Co-operative Party’s people’s rail proposal in Westminster last Thursday.

One aspect of the campaign calls for all citizens to be given the right to become individual members of a mutual Network Rail. This would allow rail passengers to have a say in how our rail system is run and hold the Network Rail leadership to account.

The mutual model we have advocated is one which recognises that we, the public, own the asset (in this case the rail infrastructure). Members of the public therefore put themselves forward for election; the elected members (who are currently selected by Network Rail management) then in turn elect the non-executive directors, who then elect the directors.

This allows true accountability to flow right through the organisation.

Good governance means that organisations are being managed effectively, goals are being met and decisions are being taken in the interests of those who matter – in this case, passengers.

While organisations with good management and poor governance may succeed in the short term, in the long run they remain vulnerable to poor performance, decision making in hock to managerial interests and possible collapse.

Network Rail is too important to be unaccountable and badly managed. We need a new mutual approach that puts passengers before bonuses. We need a People’s Rail.

See also:

All signals are go for HS2Alex Hern, January 10th 2012

Rip-off Britain: Our train fares are triple those on the continentSophie Allain, January 3rd 2012

Serious concerns over transport commissioning – how will Greening respond?Matt Dykes, December 16th 2011

Scotland needs to get its transport infrastructure in orderKen Macintosh MSP, October 27th 2011

Train journeys from Hell: What is to be done?Alexandra Woodsworth, March 23rd 2011

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