Network Rail: What other issues is the rail company facing?

Image copyright Getty Images Image caption The Mayor of London, Sadiq Khan, was backed in 2015 by more than 80% of voters in favour of rail privatisation

Network Rail, the organisation that manages and operates the UK’s rail infrastructure, has been criticised for holding board meetings in Hong Kong, working in Barbados and was prevented from naming its chief executive on social media.

The organisation’s employees travel to all-inclusive resorts in Barbados, while Dame Julie Myers was barred from posting links to payoffs on LinkedIn because they are “a secret”.

Prime Minister Theresa May has led an attempt to renegotiate Network Rail’s terms and conditions.

But the move could kill off the lucrative UK-to-UK rail ticket “tracker” offering.

What does Network Rail do?

In it’s terms, it is the national company that manages the UK’s railways.

The Department for Transport (DfT) told the BBC that the government employs Network Rail for £7bn.

It carries out maintenance, refurbishment and also has responsibility for passenger services and the network itself.

It also manages the tracks, switches and overhead line.

DfT and Network Rail are separate but joint bodies, and Network Rail’s board of directors, which represent a range of functions including governance, planning and investment, is responsible for chief executive Sir David Higgins’ £600,000 salary.

As well as managing the rail infrastructure, Network Rail also runs the country’s UK-to-UK rail tickets that offer 24-hour tracking for 48 trains and are known as “tracker tickets”.

Tracking is vital for avoiding delays and large ticket errors. But the ability of Network Rail to track the tickets, which are pre-installed on its network, has always been something of a problem.

What else is wrong with Network Rail?

This week, the BBC looked at the accounts of the Department for Transport , which had to write off more than £2bn in 2016/17 as a result of a spending cap on Network Rail

Between April and December 2017 alone, Network Rail recorded an operating loss of £204m, around four times more than the preceding year.

While that deficit is unusual, Network Rail is being prevented from covering the loss with any further debt.

Its losses are being “lost to taxpayers,” according to the DfT .

Last year, train operators reported a further £330m in costs, in addition to Network Rail’s carrying out the infrastructure work.

After years of upgrades, a rise in poor punctuality and overcrowding has made Network Rail responsible for major upgrades of the railway.

A further £6bn is planned by 2020/21. The government is coming under pressure to stop this.

Network Rail has previously said the planned spending is necessary in order to meet customer demand and reduce delays.

Members of the National Audit Office (NAO) and the parliamentary Public Accounts Committee have criticised Network Rail for its high level of debt.

The DfT says the Network Rail deficit is around £4bn a year and covers the cost of Govia Thameslink’s franchise and maintaining a level of reliability on the network.

All these projects, which are aimed at making railway more efficient, will mean billions more in debt for Network Rail.

That debt has been predicted to go up from £6.8bn at the end of 2017 to £8.6bn in 2022/23.

But according to the Transport Select Committee , Network Rail has already agreed to borrow £2.8bn for upgrading the network from the government to pay its staff salaries and on it goes – known as “contractual termination liability” which will also be funded by the government.

The NAO and PAC said the current system of metering Network Rail’s finances needed to be reformed .

However, they also said it is not clear that Network Rail has a “solid, long-term business plan” to control its spending and repay its debt.

Since the election of the Conservative government in 2010, UK rail has undergone a number of dramatic changes.

From May 2014 the franchise system was disbanded and renamed Network Rail and all contracts were handed to the organisation.

Subsequently, the government has made rail privatisation a big part of its agenda.

After the latest contract changes, the government is hoping to minimise costs on the rail network and free up investment money.

But speaking to the BBC , a DfT spokesman said: “This process will provide better efficiency and transparency, so the public and government know how the money is being spent and what investment it is supporting.”

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