Railtrack to cut 1,000 managers' jobs

Railtrack is to sweep away 1,000 jobs over the next two years, many of them in management positions, after concluding that its present organisational structure is unable to cope with the demands on the rail network. Michael Harrison examines how Sir Bob Horton, chairman, is getting to grips with the bureaucracy inherited from the old BR.

The cutbacks are the equivalent to 10 per cent of Railtrack's 10,600- strong workforce and will see whole layers of management abolished. So far this year 300 jobs have disappeared, many of them managerial posts, and the target is to reduce manning at a rate of 500 a year.

Two entire layers of management have already been stripped out of Railtrack's property division and its engineering and production division as part of the restructuring, which goes by the name of the C-Change programme. Sir Bob said Railtrack could not expect to demand efficiency improvements from its suppliers such as the infrastructure and track renewal companies, it did not tackle its own over-bureaucratic structure.

The changes were also vital if Railtrack were to meet its pounds 10bn investment programme in the rail network and respond to the challenge set down by the Rail Regulator, John Swift.

Gerald Corbett, Railtrack's new chief executive, said: "Future challenges placed on us by the growth in the network, the demands of our customers, the demands of other stakeholders and the scale of our investment programme are such that as currently configured, we would be unable to cope.

"We have to increase the responsiveness of our organisation and push decision making downwards and outwards to where the customers are. The organisation is too rigid, too hierarchical. We tend to look inwards and upwards, not outwards."

He was speaking as Railtrack announced a 10 per cent rise in pre-tax profits in the first half of the year to pounds 190m, an 8 per cent increase in the dividend and a 38 per cent increase in investment to pounds 520m.

Costs involved in the redundancy programme and tackling the millennium computer timebomb were pounds 18m in the fist six months and Mr Corbett said he expected the Year 2000 date change to cost it pounds 30m-pounds 40m in total.

After the harsh criticism meted out in the past by the regulator and the Government over its investment performance, Railtrack said spending would be on target by the turn of the year.

Investment on station improvements would reach pounds 150m by the end of the year while spending on track renewal was now well ahead of the programme agreed with the regulator.

In contrast to his caustic comments at the time of Railtrack's final results announcement last summer, Mr Swift was almost praiseworthy of the company's performance, saying that its interim results showed improvements were under way.

Mr Corbett cast doubt on whether Railtrack would take part in the high- speed Channel Tunnel Rail Link, saying it was cautious about the project, which is expected to cost pounds 3.5bn-pounds 4bn before financing costs.