July 1st News Roundup

A summary of railway news from July 1st.

Network Rail Annual Report and Accounts

Network Rail published their annual report and accounts on June 23 last and commenting on the report’s publication, Rick Haythornthwaite, Network Rail's chairman, said: "The past year has seen some significant progress in driving down the costs of running the rail network but we know that we still have a great deal to achieve. Under our new chief executive, David Higgins, we need to continue to focus intensely on delivering an even better value, more punctual railway for our customers and for passengers”.

Within its report and accounts, Network Rail published details on executive remuneration. For 2010/11 the remuneration committee, with the agreement of the executive directors, decided not to award any annual bonus for the year.

Iain Coucher

Rick Haythornthwaite added: “I would like to pay tribute to Iain Coucher for the very substantial role that he played in the turnaround of Britain's railways. It is easy to forget the grim situation faced by Network Rail back in 2002 with poor performance, a poor safety record and the trust and reputation of the industry in tatters. We now have a far better performing, safer railway with more numerous and more satisfied passengers than ever before.’

Iain Coucher, the company’s former chief executive, left the company during the year. On termination of his contract, he received a total compensation package of £1,075,000. This included contractual payments for pay in lieu of notice (12 months salary) and a negotiated settlement to close out potential long term bonus award rights (£370,000).

Cost Reduction

NR said that it continued to make steady progress in reducing its costs and remains on target to achieve the challenging efficiency savings set out for its current funding period – control period 4 (CP4) – which runs from 2009-2014. In real terms, it has reduced the costs of running the railway by £400m in the year and around £600m since the start of CP4.

Group finance director, Patrick Butcher, said: “The findings of the government-commissioned McNulty value for money review show that there are clear opportunities for the whole industry to make further savings in the costs of running the railway. The message is clear: the rail industry simply has to become more affordable for the users of the railway network and for taxpayers.”

NR continued and said it has taken a number of significant steps during the year in pursuit of delivery beyond our regulatory targets and to position the company for the longer term ambition set out in the McNulty review.

Financial Highlights

Revenue was £5,712m (2009/10 : £5,668m)

Operating profits were £2,028m (2009/10 : £1,981m)

Profit after tax was £313m (2009/10 : £284m)

Capital expenditure was £3,997m (2009/10 : £3,920m)

Net debt at year end was £25,049m (2009/10 : £23,838m)

Gearing ratio (debt to regulated asset base) was 63.4% (2009/10 : 63.9%)


Operating costs, excluding depreciation reduced to £2,467m from £2,546m

Staff costs fell to £1,734m from £1,746m. Staff numbers fell to 35,606 from 37,153 although average salaries rose by 1.5%.

Operating and maintenance costs per train mile in real terms have fallen by 77p to £7.61 during the last year – down from £11.64 seven years ago

An example of how efficiency has been improved is that better use of high-output plant has reduced the cost of track renewal by 6.5%

The maintenance division was restructured, saving over £100m pa

Performance Results

In 2010/11 90.9% of passenger trains ran on time down on the 2009/10 figure of 91.5%

The drop in performance was mainly as a result of the severe winter weather


Finance Director Patrick Butcher said that there has been further progress in the number and scope of vital enhancement projects Network Rail is managing, to add capacity to the railway and drive economic growth. Some highlights include:

Airdrie to Bathgate – a new line built in Scotland, opened in December 2010

A new station building was opened at Newport.

The programme of work for the London 2012 Olympics is largely completed. This includes new lines, new stations and better facilities on the North London Line and East London Line, in addition to works to support the transport links being developed in the Stratford area

The new concourse building at King’s Cross is nearing completion and will open in Spring 2012.

Construction is well advanced on the Thameslink programme – major milestones completed included the track switch at Blackfriars and the installation of the Borough High Street viaduct.

Major milestones have been completed on the Reading project including the Caversham Road bridge replacement.

The Birmingham Gateway project is making good progress – a deal was signed to build a new John Lewis store at the site – this brings £100m of third-party funding

Preparatory work on electrification schemes in the north west and on the Western route has started.

Mr Butcher concluded: “This is a moment of great potential for the rail industry, where real reform for the benefit of user and taxpayer is a genuine possibility. Network Rail has been in the vanguard of change over the past year and will continue to drive for rapid, safe evolution. Examples of our initiatives include moving decision making closer to our customers, partnering with key industry players and setting up the potential for greater competition as a stimulus to further improvements in performance. There can be no turning back for reform – the key question we face is how to deliver at an ever increasing pace.

The Rail Regulator’s Office had a Slightly Different View!

Network Rail has made progress over the past year including successfully delivering a number of major rail projects, however some performance setbacks mean that the company has big challenges ahead, says a report published by the Office of Rail Regulation (ORR) today.

The regulator's Network Rail monitor and annual assessment 2010-11 provides an overview of Network Rail's performance over the past year. Progress includes the successful delivery of project milestones including the completion of the Airdrie-Bathgate line and important progress on King's Cross and Reading stations. The company has also developed improved plans for managing its assets, which the regulator now needs to see being effectively delivered.

ORR’s expectation, reflected in its settlement with Network Rail for the current funding period which runs from 2009-2014 (CP4), is that the company will become more efficient, improve its operational performance, and develop the rail network year-on-year. Network Rail needs to pick up momentum if it is to meet key targets for the rest of CP4, as the report also highlights performance setbacks and failures over past year. These include:

• Safety - weaknesses in Network Rail's safety culture have been recognised including the exposure of flawed injury reporting. ORR is often frustrated by the slow pace of necessary safety improvements, and a number of enforcement notices followed failure to make timely progress.

• Operational performance - Network Rail missed many of its targets for the year including for delays and punctuality. ORR has determined that exceptionally severe winter conditions were a major factor, and the company has admitted that despite its efforts it could have performed better. In addition, a recent upward trend in delays is concerning and the regulator has required Network Rail to submit plans for improvement, including how it will better cope with winter weather conditions in the future. Network Rail also breached its licence for poor implementation of its new integrated train planning system for which the regulator imposed a financial penalty as a strong incentive to consider better the interests of customers.

• Efficiency – Network Rail’s efficiency is analysed across its maintenance, operating and renewals costs. While it is ahead of plan for delivering maintenance and operating cost efficiencies, the regulator cannot confirm the overall position yet as there are still questions about its assessment of renewals efficiency which need to be answered.

ORR's chief executive Bill Emery said:

"Network Rail made good progress in some important areas last year - delivering improvements to many railway stations and lines across the country. However, we have also seen performance setbacks and failures which mean that Network Rail faces big challenges if it is to meet the increasingly demanding targets it is funded to achieve.

"Network Rail missed the majority of its operational performance objectives for areas like punctuality, and it quickly needs to take steps to improve its safety culture. We want to see Network Rail learn quickly from its problems and to focus on improving performance that matters most to passengers.

"With targets getting increasingly tough year-on-year, ORR is pressing Network Rail not to fall off the pace of all its regulatory commitments - and to act now."

Phil Marsh Comments for Rail.co.uk

There is clearly a difference of opinion between NR and ORR as to how NR performed in their last financial year.

For example, last month an internal NR business briefing was reported to have said that less than 20% of projected savings had been achieved in the five year Control period after two years, or 40% of the five year period completed. It is not clear as to how the projected savings demanded by ORR will be achieved by NR in the remaining time, under three years.

NR’s debt is over £25 BILLION pounds which will take some repaying! Its debt measured against its asset base was reduced by just half of one percent in the last financial year and this is in a period of historically low interest rates. If this trend continues, it would presumably take 200 years to clear the debt!

NR says that its performance was hit by severe winter weather. It undoubtedly was but given that last winter was the third severe one in a row, why did the bad weather affect network availability again so much? Why were lessons not learned from the previous two winters and revised recovery plans implemented?

On a minor scale, Newport (South Wales) station modernisation was identified as a successful project completed in time for the Open Golf Championship last Autumn. It was not officially opened until January this year and the roof is now being investigated as it leaks and the ticket barrier line has to be upgraded as it is not big enough! The timetable posters were taken down in September and not replaced! An information point was built on the platform but is not always open. Why?

At the other end of the scale, the NR Chairman says that: ….with more numerous and more satisfied passengers than ever before.’ NR does not have many direct passengers, only a few customers. The latter are the train operators and the Government who are clearly not impressed with NR!

Train companies have direct customers called passengers and Train Operators’ [lack of] satisfaction was identified in the McNulty report as one of NR’s key failings due to their unresponsiveness!

NR Directors are not taking their bonuses this year. Why? And why did Iain Coucher suddenly leave and collect a £million compensation? A years pay in lieu of Notice is cited, but this could be deemed to mean he was sacked, but this area has not been really clarified in many railway employees’ opinions!

The major projects such as the Olympics, Reading and Thameslink are good successes and should be applauded. The Cambrian Coast resignalling with ERTMS has not gone well though being very late and seriously over budget.

Two Car Voyager at Crewe!

A two car Virgin Voyager was seen at Crewe on June 25 stabled in platform 8. Number 221 144 would normally comprise of five vehicles and is thought to have been going to or coming from the Central Rivers Voyager Depot near Burton.

Peak-Rail Connection Opens

Peak Rail opened their newly-refurbished Platform 2 at Matlock station, as Peak Rail returned heritage steam and diesel train services between the station and Rowsley South for the first time in 43 years.

The platform has been disused since 1970 and has had the retaining platform wall rebuilt and raised by almost 10 inches to comply with safety regulations. It has been fitted with authentic Midland Railway lamp-posts, seating, garden areas, and a ‘Matlock’ station running-in signboard to welcome visitors.

The opening celebrations started on July 1 and carried on for four days. The first

passengers carried over the new ½ mile extension from Matlock Riverside halt

to Matlock station were Peak Rail plc shareholders and supporting members from

The Peak Railway Association during a private celebratory event on Friday 1 July.

The public re-opening was the following day and the first public carrying train departed Matlock station at 11.07am, launching an exciting new era in the history of Peak Rail.

Sainsbury’s has been an important partner organisation in the project and has long

been supportive of Peak Rail’s ambitions to re-establish a regular train service into

Platform 2 at Matlock. The previously derelict platform has been refurbished assisted by a grant from Derbyshire County Council towards the refurbishment costs.

On Sunday 3 July, the official opening of our Engine Shed at Rowsley South took place performed at by members of the Rowsley Association, which includes a number of former members of staff who worked at Rowsley Shed when it was operated by British Railways prior to the closure of the railway.

More details are available on www.peakrail.co.uk.

DB commence Planning for ICE services to and from St. Pancras

In March, the European Railway (Safety) Agency (ERA) approved Deutsche Bahn’s (DB) ICE trains to operate through the Channel Tunnel despite objections from the French Rail operators.

Their report cleared trains with distributed traction (motors slung under the train powering many axles) for use in Channel Tunnel which resolved the first of two issues for the German ICE train. The second issue is likely to be resolved by the Inter-Governmental Commission (IGC) in the next few months. The IGC governs safety regulations through the Channel Tunnel.

The ERA decision is an important milestone towards the introduction of ICE-trains in the Channel Tunnel and supports plans by the Tunnel Safety Authorities (the IGC) to amend their safety rules that permit what equipment operators can use in the Channel Tunnel.

The decision took a year to reach and was challenged by Alstom, the French TGV manufacturers when Eurostar ordered the German ICE trains in preference to the French TGV trains. Following the proposed new safety rules, the use of trains with distributed power, rather than with an engine at each end as with Eurostar trains, is no longer prohibited in the Channel Tunnel.

Also, no objection was raised to use shorter and coupled trains in contrast to todays 400m TGV trains with a through corridor. The formal implementation of the new safety rules by the IGC could occur at any time now.

DB has now started planning for services via the Channel Tunnel to the UK and Ulrich Homburg, Member of the DB Management Board for Passenger Transport, said: “This is an important stage in securing the technical clearance we need to deliver new high speed passenger rail services to and from London on Europe’s liberalised rail network.

DB said “That the report confirms that we are heading in the right direction with the IGC as we work towards clearance of our ICE-trains for the Channel Tunnel. Moreover, the report showed that the evidence we agreed to provide the IGC is sufficient to demonstrate the safe operation of our trains. However, we are only half way there to delivering the proposed services from 2013.”

Further work by DB will focus on the characteristics of shorter and coupled trains. Two coupled 200m ICE-trains were successfully evacuated in October of last year in the Channel Tunnel. In addition to that an independent Swiss Engineering Consultancy is currently compiling a risk assessment which will be handed over to the IGC shortly. This is the same Consultancy which assessed the safety of the longest rail tunnel in the world, the 57km long Gotthard-Tunnel in Switzerland.

“Due to the positive ERA Report and our ongoing collaboration with the IGC we are optimistic to obtain clearance for our ICE-trains by early summer this year and before the August break. Subsequently we will expect to start full implementation later this year of our project to connect London to mainland Europe from 2013” DB also said.

Shunters and Wheeltappers Work to Rule

RMT Members at the North Yorkshire Moors Railway are to impose an overtime ban and work-to-rule from a minute after midnight on Friday, June 10, in a dispute with the heritage line over allowances for carriage- and wagon-fitters.

Members voted overwhelmingly for action after the company refused to entertain increasing the pay of fitters who faced a marked increase in undertaking “fitness to run” examinations on trains, many of which are expected to run on Network Rail infrastructure.

RMT general secretary Bob Crow said: “This is a straightforward case of fitters being expected to shoulder additional work and responsibility having the right to be rewarded properly for it. “The company knows that we are ready to talk to resolve the issue, but simply refusing to entertain an increase in pay for an increase in workload and responsibility is not an option.”


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