Network Rail looking to appoint boss from outside industry

Network Rail is looking to appoint a chief executive from outside the transport industry, suggesting that the government-backed owner of Britain’s railway tracks and stations is considering radical changes to the way it operates.

It is understood that Network Rail’s chairman, Rick Haythornthwaite, is interested in candidates who are not employed in the rail business or the wider transport world. Haythornthwaite, a former executive in the oil and cement industries, shocked senior colleagues at Network Rail recently when he referred to the organisation’s “slightly militaristic approach”.

The chief executive, Iain Coucher, is due to step down this year and is understood to have been surprised by his chairman’s comments. However, Haythornthwaite’s interest in an outsider indicates the organisation is braced for a challenging few years, amid pressure on costs and criticism from the industry regulator. The two internal candidates, Robin Gisby, director of operations and customer services, and Simon Kirby, director of investment projects, are believed to be out of the running. Network Rail declined to comment.

Last week the Office of Rail Regulation (ORR) published research showing that Network Rail was up to 40% less efficient than its European peers – including Ireland and Germany – when carrying out tasks such as track replacement. Network Rail is committed to spending £30bn between 2009 and 2014 and must achieve efficiency savings of 21% over that period – in effect delivering the work for £5bn less than it should cost.

Bill Emery, chairman of ORR, said: “As Network Rail is a national monopoly, we benchmark the company against its international counterparts. Our work confirms there is a significant efficiency gap.”

Network Rail said the research confirmed that Britain is an expensive place to carry out maintenance and engineering work, and did not indicate endemic profligacy at the company. However, the government is keen to reduce its £3.7bn annual grant to Network Rail as soon as possible, although the company’s funding settlement is technically ring-fenced by the Railways Act. That has not stopped the transport secretary, Philip Hammond, from voicing a need to “drive out inefficiencies and reduce costs”.

The former chairman of the Civil Aviation Authority, Sir Roy McNulty, is leading a review of the rail industry’s costs and is due to report initial findings this year. Hammond has refused to rule out higher-than-expected fare increases in January. Passenger Focus, the rail user watchdog, said last week that Network Rail’s high cost base feeds into fare increases, which are set to rise by at least 5.8% next year. However, Hammond has declined to guarantee that that the cap will be kept at that level.

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