£139m paid to Railtrack in bonuses attacked as 'unjustified'

Performance bonuses of £139m paid to Railtrack by train operators in the haste of privatisation were "possibly unjustified", a Commons watch- dog said yesterday.

Performance bonuses of £139m paid to Railtrack by train operators in the haste of privatisation were "possibly unjustified", a Commons watch- dog said yesterday.

Railtrack was handed the money "for reducing delays" between 1995-96 and 1998-99. And the company is also expected to be paid further bonuses for 1999-2000, despite failing to meet a target for improving consistent delays.

The number of broken rails had also increased since privatisation, said the report by the House of Commons Public Accounts Committee. The Tory MP David Davis, the committee chairman, said: "It is fundamentally wrong that Railtrack is receiving generous bonuses for reducing delays, despite missing the regulator's targets for exactly that. The problem stems from the use of flawed information on which to base the bonuses.

"The regulator must ensure Railtrack gets rewards only if it meets challenging performance targets. People should not have to sit in delayed trains reading about Railtrack receiving bonuses it does not deserve."

MPs sharply criticised the Office of the Rail Regulator (ORR) which is in charge of ensuring Railtrack maintains and renews the rail network. They said Railtrack was privatised with a licence that did not set out clearly its obligations to do maintenance and renewal work. After privatisation, the ORR had inadequate information on the condition of the assets making up the rail network.

"Railtrack's licence at privatisation contained serious shortcomings because of haste in privatising Railtrack," said the report. "As a result, passengers have seen poorer quality track, weak contracts between Railtrack and train operators and possibly unjustified performance bonuses to Railtrack.

"We are concerned that this haste contributed to serious deficiencies in the subsequent regulatory regime." The report said the regulator's office had since changed the Railtrack licence, but further changes were needed.

The MPs were also concerned that Railtrack's performance in reducing delays had varied considerably between regions. In the Great Western zone, delays caused by Railtrack had actually increased.

Penalties imposed on Railtrack by the regulator are set at a national, not regional level, so serious delays can persist on individual lines, suggesting the incentive regime should be targeted to achieve improvements in all parts of the network.

Railtrack has suffered a barrage of accusations of incompetence since the Paddington rail disaster last year in which 31 people died and hundreds were injured. The accusations are likely be reflected in the report of Lord Cullen, chairman of the inquiry into the disaster, to be published later this year.

Archie Norman, the shadow Transport Secretary, said: "The railway industry is vital for the nation's future. Sadly, over the last three years, the continuous political exploitation of the railway by John Prescott - his endless carping and a campaign of denigration - have all deterred investors and talented people from joining it."