Week of June 19, 2000
  Snapshot from the Field

Shades of Amtrak: Watchdog Report Blasts
Britain's Rail Privatization

From 1995 through 1999, Railtrack (www.railtrack.co.uk) received US$208,246,729.12 million in performance bonuses. That's a pretty sweet payout. It might spur one to think that it must reflect some sterling work at Railtrack, one of the largest UK real estate owners, with assets that include bridges, tunnels and crossings, as well as related stations, depots and offices.

One, however, would not have heard from Britain's National Audit Office (NAO). A government agency that serves as a watchdog on public-sector spending, the NAO recently blasted London-based Railtrack, which in April of 1994 took over infrastructure responsibilities from British Rail.

Rail infrastructure "is in worst state in years," in worse shape than before Railtrack's 1994 takeover, the NAO charged. The group's report, for example, charged that the number of broken rails in Britain's rail system had increased. Railtrack was also responsible for nearly half of all the passenger train delays in Britain, the NAO alleged. (The delays noted in the report average some 70 seconds per train.)

In one of the report's more potentially damning findings, the NAO report found that passenger train delays that were caused Railtrack's maintenance and renewal of the network had fallen by 26 percent since 1995-96. Yet despite that apparent decrease in maintenance work, passenger traffic on Britain's rail system has increased by 27 percent since 1995-96.

The NAO report also charged that it found no evidence of any existing system to monitor Railtrack's performance. Railtrack and the British Office of the Rail Regulator (ORR at www.rail-reg.gov.uk) never reached an agreement specifying what work Railtrack should do from 1995-2001, the report charged. (The ORR is the independent government department responsible for regulating Great Britain's railways.)

Consequently, the ORR is not able to measure Railtrack's work against any mutually agreed-upon baseline.

David Davis, chairman of the House of Commons Public Accounts Committee, said as the report was released. "Today's report shows how weak regulation has enabled Railtrack to earn substantial bonuses despite being responsible for half of delays to passenger trains -- and while at the same time the condition of the track is not up to 1994 levels." Davis added that 3 percent of the track system was now rated as "very poor," a situation he called "wholly unsatisfactory . . . The whole system for awarding bonuses to Railtrack for these (train-delay) reductions is flawed," he continued.

Prior to the NAO report, Rail Regulator Tom Winsor, who heads the ORR, had set tough new targets for reducing train delays. If Railtrack fdoesn't meet those targets, it will face fines in its fiscal years for both 1999-2000 and 2000-01.

NAO Recommends Guidelines, Timetables

Noted NAO chief Sir John Bourn as the report was released in Parliament, "The Rail Regulator needs to overcome the difficulties experienced up to now in monitoring Railtrack's performance and setting effective incentives. "I therefore welcome the action he is taking to secure that Railtrack maintain, renew and improve the national railway network on which the public and industry depend."

The NAO report put forth a number of recommendations. The report said the ORR should:

  • Set out clearly what it expects Railtrack to deliver from maintenance and renewal.
  • Establish and maintain a timetable for "removing deficiencies in its information" on the condition of Railtrack's assets. (One would imagine that this would be a particularly galling comment for an organization that manages more than 40,000 property units, including a considerable chunk of prime office space.)
  • Secure Independent verification of the monitoring information that the ORR receives from Railtracks.
  • Develop targets and "clearly predictable incentives" for Railtrack to improve its performance on punctuality, cancellations and track conditions.

ORR Head 'Welcomes Thoroughness'

Winsor's office issued a statement commenting on the NAO report: "The [NAO] report recognizes what has been achieved since Tom Winsor took over in July 1999," the statement read in part. "The Regulator particularly welcomes the thoroughness with which the NAO has produced the report, which will be studied carefully and from which appropriate lessons will be drawn."

As for Railtrack, public sentiment already seemed to be leaning heavily toward stripping the company of its responsibilities for rail safety in the wake of last year's Paddington rail crash, which killed 31. Now under way, the public inquiry into the Paddington tragedy may be the blade that totally severs the relationship.

As the estimable "Economist" (www.economist.com) observed, "For those who regularly travel the country, the congestion on Britain's roads and the parlous state of our rail network have become depressingly familiar."



©2000 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.