Network Rail bonuses criticised by transport minister
- 24 June 2010
- From the section Business
Network Rail has been criticised for paying senior management a total of £2.4m in bonuses last year, despite a warning from the rail regulator.
Transport Secretary Philip Hammond said he was "very disappointed", and called for a "far-reaching" review of pay.
Outgoing chief executive Iain Coucher received a £641,000 bonus on top of his £613,000 salary.
The rail regulator had warned the government-subsidised infrastructure company about management pay.
Earlier this year, the Office of Rail Regulation (ORR) demanded "clear evidence" to justify any bonuses paid to company bosses.
Network Rail chairman Rick Haythornthwaite, defended the payouts, saying the bonuses were "only rewards for success".
"This is measured against what matters most to passengers - a better railway with more trains on time," he explained.
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Transport Secretary Philip Hammond, backed by Prime Minister David Cameron, said the decision was inappropriate in the current times.
"Network Rail is of course a private company," he said. "But one that is dependent on taxpayer funding.
"In the week when everyone has been asked to share the burden of reducing Britain's deficit, people will rightly be asking how Network Rail's top executives feel this is appropriate."
The transport secretary, who had written to Network Rail urging constraint, called for the upcoming review of the management incentive plan to be "far reaching and fundamental".
The bonus decisions come as Network Rail seeks a successor to Mr Coucher to take over the negotiation of the next funding round.
Mr Coucher is set to leave after eight years with the firm, and three years as chief executive.
The RMT rail union's general secretary, Bob Crow, expressed outrage at the decision to pay such a large bonus to an outgoing manager.
"It is nothing short of a national scandal that... Iain Coucher is walking out of the door with a golden-handshake bonus of nearly two thirds of a million pounds," he said.
"While this new government tell low paid workers that they've got to stomach a two-year pay freeze and attacks on their pensions, they are sitting back while Network Rail, to all intents and purposes a public company, fills up the coffers of the highest paid public sector boss in the country."
The ORR, which sets Network Rail's level of public funding, said it was now up to Network Rail to "fully justify how it has reached its decisions".
Earlier this year, it criticised parts of the operator's performance, highlighting the death of three railway workers in the past year.
In its annual assessment of Network Rail it said: "We consider that the level of our intervention and the pressure we needed to apply went above what should have been required."
The ORR also said it was "not yet convinced of the efficiency gains the company is claiming".