By Richard Johnstone | 14 March 2012
Network Rail should cease to be treated as a private company and should have its finances scrutinised by the National Audit Office, MPs have said.
In an examination of the Department for Transport’s budget cuts, the Public Accounts Committee found ‘considerable scope for greater efficiencies’ in the passenger rail sector, the department’s single largest area of spending.But the MPs said there was a ‘lack of proper accountability and transparency’ at Network Rail. The firm, which owns and operates Britain’s railways, receives a subsidy of more than £3bn each year.
There is a poor understanding of why costs in the rail industry are so high, and it is ‘unacceptable’ that Network Rail is accountable neither to Parliament nor the taxpayer, committee chair Margaret Hodge said.
The organisation, which took over managing maintenance and enhancement to the network in 2002, describes itself as a ‘not for dividend’ firm ‘run like a publically listed company’. It has no shareholders and is instead accountable to members, who are appointed from both the industry and the general public. It is also overseen by the Office of Rail Regulation.
The PAC is urging the government to end the ‘fiction’ that it is a private business and introduce greater public scrutiny, including by the NAO.
Hodge said: ‘The National Audit Office must be allowed full audit access as quickly as possible to this organisation which is essentially kept afloat through public funds.’
Overall,
the committee found that the areas the DfT had chosen to cut were backed by good analysis. However, its report, Reducing costs in the Department for Transport, also found
that there were ‘still… concerns that the department needs to address’ about
how it would deal with some cuts.
Its budget is being reduced by 15% to 2014/15, and the PAC warned
that it did not have a ‘full understanding’ of the impact this would have on road
maintenance.
Responding to the report, transport minister Norman Baker said the government was providing £3bn to councils for road maintenance between 2011 and 2015 – more, in cash terms, than the previous four years. ‘We also gave them generous windfall handouts last year following the severe winter which caused major problems,’ he said.
Baker added that the government’s rail reform plans would save enough money to limit future fare rises.
‘At the same time Network Rail unveiled a package of reforms – making its decisions more accountable and developing a transparency code in a similar vein to the Freedom of Information Act,’ he said.
A spokesman for Network Rail said that issues raised by the committee, such as how the organisation is treated by the NAO, were ‘questions for government’.
