Network Rail - Governance Structure and Accountability - I

Network Rail - I

Governance Structure and Accountability

Formal Governance Structure

The company is accountable to a body of members through its corporate constitution, to its commercial train operator customers through its contracts with them (the contracts are subject to regulatory oversight), and to the public interest through the statutory powers of the Office of Rail and Road (ORR).

Since Network Rail does not have shareholders, its members hold the board of directors to account for their management of the business. From 1 July 2015 all the members were removed leaving the special member, the Secretary of State for Transport, as the sole member of Network Rail.

Previously at any one time there were around 100 members in total, drawn from a wide range of industry partners and members of the public. There were two general categories of membership, industry members comprising any organisation holding a licence to operate on the railway or preferred bidder for a railway franchise, and public members who were drawn from the wider stakeholder community.

Members were appointed by an independent panel and served a three-year term. They had a number of statutory rights and duties which included attending annual general meetings, receiving the Annual Report and Accounts, and approving the appointment or re-appointment of Network Rail's directors. Members had a duty to act in the best interests of the company without personal bias. They received no payments other than travel expenses.

Setting the strategic direction and the day-to-day management of Network Rail is the responsibility of the company's board of directors. That direction must be consistent with the regulatory jurisdiction of the ORR, and with the requirements of its contracts. The ORR in turn operates within the overall transport policy set by the UK Department for Transport and the Scottish government, including as to what the government wants the railway industry to achieve and how much money the government is prepared to put into the industry.

This means that the degree of government influence and control over the company is higher than it was before these enlargements of the powers and role of the government were introduced by the Railways Act 2005.

Monitoring Network Rail's Performance

The Office of Rail and Road (ORR) monitors Network Rail's performance on a continuous basis against targets established by the regulatory authority in the most recent access charges review (2003), against obligations in the company's network licence and against forecasts in its own business plan. If performance is poor, the company will face criticism and possible enforcement action from its commercial customers (under their contracts) and from the ORR (enforcing the company's network licence). It may also be criticised by its members in general meeting.

In the annual report 2014/15, the ORR reported that the Public Performance Measure (PPM) was 89.6%, 1.4 percentage points (pp) below target in England and Wales, and PPM in Scotland was 90.5%, 1.5pp below its regulatory performance target of 92%.

Network Rail Overview

Network Rail Type: Government-owned company/non-departmental public body

(incorporated as a private company limited by guarantee without share capital)

Network Rail Industry: Rail infrastructure and asset management

Network Rail Predecessor: Railtrack

Network Rail Founded: October 2002, 21 years ago

Network Rail Successor: Great British Railways (from 2024)

Network Rail Headquarters: 1 Eversholt Street

London

NW1 2DN

Network Rail Key People:

Lord Hendy of Richmond Hill (chairman)

Andrew Haines (CEO)

Ric Scott (Highland Area LOM)

Network Rail Products: Public transport

Network Rail Revenue: £6.6 billion (2019)

Network Rail Owner: HM Government (Department for Transport)

Network Rail Number of Employees: 42,099 (2020)

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