Network Rail - Network Rail Private Versus Public-Sector Status - L

Network Rail - L

Network Rail Private Versus Public-Sector Status

In 2001, the then Labour government denied that it had nationalised the rail network in order to prevent Railtrack's shareholders claiming, via the European Court of Human Rights, the four-year average price of Railtrack, about £10 per share. Instead, Railtrack's shareholders were given only £2.60. The Times reported that Gordon Brown's aide, Shriti Vadera e-mailed Stephen Byers in July 2001 asking: "Can we engineer the solution through insolvency, and therefore avoid compensation under the Human Rights Act?"

Railtrack plc was placed into railway administration under the Railways Act 1993 on 7 October 2001, following an application to the High Court by the then Transport Secretary, Stephen Byers. It was reported in November 2001 that a further £3.5 billion might be needed to keep the national railway network running, a sum disputed by Ernst & Young, the administrators.

To get Railtrack out of administration, the government had to return to the High Court and present evidence that the company was no longer insolvent. The principal reason given by the government to the court for this assertion was the decision of the rail regulator in 2002 to carry out an interim review of the company's finances, with the potential to advance significant additional sums to the company. The High Court accepted that the company was not insolvent, and the railway administration order was discharged in October 2002.

Until 2013, there was discussion over whether Network Rail should be classified as a public-sector or a private-sector entity. Although it was officially a private sector organisation, the fact that its debts were underwritten by the government, and it was partly funded by the government, led to the description of "nationalisation in all but name".

It was also claimed that the government is keen for Network Rail not to be classified as a public-sector organisation, as this would mean that the company's debt would be counted as public expenditure liabilities.

The Office for National Statistics (ONS) repeatedly clashed with the National Audit Office and the Statistics Commission over whether the successor to Railtrack should be considered a private company - as the ONS believed - or included on the Government's books, as the National Audit Office argued. The NAO said that as the Government is bearing the risk that would normally be borne by equity capital, and as it can appoint, through the SRA, a director who cannot be removed by members, Network Rail is effectively a subsidiary of the Government-controlled SRA.

In December 2013, the ONS announced that Network Rail would be classified as a "government body" from September 2014. As a result, the company's debt of £34 billion was added to the national debt. In the 2016-17 financial year, Network Rail's net debt rose from £41.6 billion to £46.3 billion.

Network Rail Photography Competition

Network Rail organises the Landscape Photographer of the Year competition. Shortlisted photos are displayed at London Waterloo and other major stations.

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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