TRANSPORT SECRETARY Justine Greening has dubbed the latest proposals for Network Rail directors' bonuses as 'unacceptable', and is calling on the company to 'exercise restraint'.
Network Rail's 120 'members', who play the part of non-existent shareholders, are due to consider the latest round of bonuses on 10 February. These are set to be 60 per cent of directors' annual salaries, resulting in a payment of £336,000 to chief executive David Higgins and other six-figure payouts to his colleagues.
Ms Greening has entered the fray following criticism of the bonuses by the opposition. She said: "These latest bonus proposals are unacceptable. Network Rail needs to be responsible and exercise restraint.
"Labour designed a system where Ministers have no powers to block Network Rail executive pay and which in 2008 saw bonuses of over half a million given out to the chief executive [Iain Coucher] even when there were serious failures. This is clearly a flawed system which we have already addressed as part of our forthcoming Rail Review, which will make Network Rail more accountable.
"In the meantime the Labour Party should apologise for creating this system in the first place."
Network Rail was set up by the Labour government following the placing of Railtrack in Railway Administration in October 2001. NR took over from Railtrack a year later as a theoretically private sector company which is not, however, owned by shareholders nor listed on the stock exchange.
The structure of NR means that, as a 'not for profit' company, it is still run by its directors and members rather than the government, which used to be able to directly influence British Rail before privatisation because that was a state-owned corporation.
One NR member, Tony Berkeley, has tabled a motion calling for bonuses to be capped at 30 per cent of each director's annual salary.
28 Labour MPs have also signed a Commons Motion tabled by former rail minister Tom Harris urging Network Rail directors to reject their bonuses entirely.
It notes that 'Network Rail has been found by the Office of Rail Regulation to be in breach of its licence and that, according to the ORR, "major asset failures, congested routes and poor management of track condition" contributed to poor performance of the UK rail network in 2011.'