UK: all aboard the gravy train for rail bosses

[John Ashworth]

It's all aboard the gravy train for Network Rail bosses

While European train users get exemplary service, British rail bosses splash out on Highland estates

o Nick Cohen
o The Observer, Sunday 31 January 2010

Anyone who loves the beautiful Argyll coast south of Tayvallich will know that the Edinburgh estate agents Rettie & Co were not exaggerating when they described the peninsula's Keills Estate as "a rural idyll". With Loch Sween on one side and the sea on the other, with views from its beaches to Islay and Jura, with deer-stalking and fishing rights open to negotiation, Rettie confidently expected a wealthy buyer to snap up the property.

They were not disappointed. Iain Coucher already had a company flat in central London and a comfortable house in the Midlands, but he couldn't resist adding to his property portfolio. For just under £1m, he bought three-quarters of the estate, including a solid home, complete with boathouse, jetty and 173 acres of surrounding land, and two little islands.

No surprise there. Ever since the Clearances, the nouveaux riches have aped the aristocracy and paid to play the highland gentleman. Coucher stood out from his predecessors, however. The new laird of Keills, the monarch of his very own glen, was, to all outward appearances, an undistinguished civil servant on a second-rate railway board.

JK Galbraith complained in the 1950s of private affluence flourishing amid public squalor. Modern Britain goes further and allows private affluence at public expense. The bailed-out, bonus-bloated bankers are the most egregious example of state capitalism, but Coucher's Network Rail is a close second. It isn't a private company whose managers are accountable to shareholders and independent directors. On the contrary, it receives £4bn a year of public money, and its entire £28bn, five-year investment programme in track, stations and signalling will come from the taxpayers. However, when he created it after the collapse of the privatised Railtrack, Gordon Brown was determined that it would not be a publicly owned either.

As slippery as ever, Brown wanted to engage in Enron accounting and keep the railways' debts off the government accounts. As important as his desire to play games with the national debt was his fear of right-wing newspapers accusing him of being an old Labour socialist. Instead of restoring the former nationalised British Rail, Brown set up Network Rail. As his adviser, Baroness Vadera, explained at the time in an email to ministers, the organisation would be so complex the tabloids wouldn't understand it.

Complex Network Rail is, but not so complicated that MPs cannot look at Brown's hybrid and wonder whether it is a public service, private company or a cabal. Coucher, now Network Rail's chief executive, and his colleague, Victoria Pender, the corporate affairs director, began their involvement in public transport as directors of off-the-shelf company Coucher Pender Ltd. They hired themselves out as freelance bosses for the Tube Lines maintenance company on the London underground. Brown rewarded Coucher Pender Ltd with a success fee for its help in setting up Network Rail and gave them jobs with the company. Iain Coucher has done well. In 2008, he was the highest-paid public official in the UK with a pay package of £1.24m.

Jim Devine, a Labour MP and friend of the rail unions, asked in the Commons whether that was the limit of the public's contributions to his bank account. He wondered whether any other fees had gone through the freelance Coucher Pender Ltd. Ministers could not answer for Network Rail's behaviour because it was a private company, even though it depends almost entirely on public money. The sham private status also means that journalists cannot submit freedom of information requests. As far I can see, the only real check on Coucher and his colleagues is the Office of Rail Regulation. When I put Devine's questions to Network Rail's press officer, he referred only to the Strategic Rail Authority's payment to Coucher Pender Ltd when Brown set up Network Rail.

Last year, the Mail on Sunday gave a taste of life in Brown's complex organisation when it revealed that Network Rail had paid millions of pounds to shut up dozens of workers, who were threatening to go to employment tribunals. Women employees were getting payments of up to £950,000 on condition they signed confidentiality agreements after making complaints about an executive named in Parliament by Devine as Peter Bennett, the head of human resources. Bennett allegedly called one woman a "silly *** black bitch", told another she had a nice arse, and asked her to take off her top to show her bikini strap marks, and dismissed a third even though he knew she was in the middle of IVF treatment. Three times, Jim Devine put the allegations to ministers in the Commons that Network Rail had made 155 payouts with gagging clauses. Ministers could not talk about them, but when I asked the press officer he said that Bennett had not been fired and payments and confidentiality agreements were common to all companies.

Not on this scale they aren't, and in any case Network Rail is not like any other company. When the Mail on Sunday was investigating Bennett, Network Rail called in Schillings, the libel lawyers Russian oligarchs and British celebrities turn to when they want to silence critics. Managers charged with the boring but essential job of maintaining railway lines and keeping station platforms clean were imitating Jonathan Ross and Alisher Usmanov by hiring one of the most expensive firms of libel lawyers in the world.

You are paying, of course, and getting very little in return. The nationalised British Rail, in its last year of operation in 1994, cost the taxpayer £950m. The private rail operators cost the taxpayers £5bn in 2008, £4bn of which went direct to Network Rail. All that money has produced a pathetic dividend.

We are the only the European country to allow a fragmented privatised rail network. Last year, state-run Spanish rail opened a high-speed line between Barcelona and Madrid. The two-and-a-half-hour journey costs £52 return. The European public sector is delivering prices and speeds which are beyond the dreams of British passengers. But I suspect Spanish railway managers are not buying country estates or hiring the attack-dog lawyers of the super-rich, but using public money to provide public services.