Network Rail: mixed views from business leaders but all agree on need for change

Business leaders have outlined a range of future models for Network Rail highlighting the challenge facing government as it seeks to restructure the organisation

Bernadette Ballantyne
25 August 2015

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Responding to the Infrastructure Intelligence Pulse survey in association with global software provider Deltek, the most common approach favoured by infrastructure sector leaders was the creation of regional rail businesses through the vertical integration of train, track, renewal and operations companies.

This was followed by calls for an overhaul of senior management, and proposals that major projects are separated from operations and a new body set up to manage this.

Steps towards restructuring are already underway under the current government which has ruled out renationalisation. Funding for Network Rail is already set to be channelled through train operators and a new body established for overseeing station regeneration. High Speed 1 chief executive Nicola Shaw is to advise on the longer-term future shape and financing of Network Rail before the March 2016 Budget.

 “No developed economy runs a fully privatised funded rail network. Some form of renationalisation for rail should be considered,” Pulse respondent

A review of the control period process is also underway and in June it was announced that Transport Commissioner for London Sir Peter Hendy CBE would replace Richard Parry-Jones as Network Rail chairman. The moves follow the decision to ditch £2bn of electrification projects as being a step to far for the capacity of the industry and the organisation.

“A proper trial of vertical integration would be very informative,” said the CEO of a client side organisation. Such a structure should also include bodies for land, property and stations suggested firms.

Other pointed to a need for more benchmarking. “Evidence from across the regulated utilities shows that to drive improved performance requires actual competition, or in the absence of that, at least effective benchmarking between similar operating units,” explained one consultancy CEO.

“Structuring Network Rail around regional track companies would create the ability for senior management, the ORR and government, to compare the performance of different units and allocate funding accordingly, creating a proper incentives-based culture,” he said. But undertaking this would see the need for a national body to oversee standards, timetabling and possession planning, said another respondent. 

It was noted that the sector could learn from the regionally structured and privately owned water industry which relies on private investment, but others said that this would not work for the railways. “No developed economy runs a fully privatised funded rail network. Some form of renationalisation for rail should be considered,” said another respondent.

“I don't think the UK is ready for a fully privatised railway network, the culture needs to change within Network Rail - more transparency is required and better management of the huge budgets they enjoy,” said a manager in a consultancy.

The need for cultural change was pointed out by many respondents who highlighted the need for more collaborative approaches, and more skilled people to drive through projects.

“Network Rail needs to employ more qualified engineers and fewer managers. They also need to streamline their procurement process, so that more time is made available for designing and building projects rather than all the time being devoured by submissions and approvals processes,” said a consultancy director.

Others called for the reform of its process driven culture. “It must move from a process-driven tick box mentality to one that evaluates all aspects of its projects with intelligence, deep understanding and knowledge,” said a consultancy CEO.

“This is a huge challenge and it is doubtful whether the organisation can be transformed in this way without a fundamental restructuring, disbanding some of its departments such as procurement which have spectacularly failed to deliver what the network requires.” 

• The full survey analysis will appear in the September issue of Infrastructure Intelligence

• If you are a senior professional in the industry that would like to participate in the Pulse survey please contact antony.oliver@infrastructure-intelligence.com