Network Rail to reveal £1m payoff for Iain Coucher

• Transport secretary says deal ‘sticks in the gullet’ • Departed chief executive warned over pay last year Transport secretary Philip Hammond has condemned Network Rail for handing former chief executive Iain Coucher a £1m payoff, warning that it will “stick in the gullet” of taxpayers and farepayers. The government-backed owner of Britain’s rail tracks and stations will stoke the row over public sector pay by announcing a payoff of more than £1m for Coucher on Thursday. Coucher stepped down as chief executive last year after a three-year reign that was peppered with complaints from trade unions and politicians about the company’s remuneration regime. Network Rail’s annual report, published on Thursday, will reveal that Coucher received just over £1m as part of a package that included a year’s pay in lieu of notice and a settlement related to the company’s long-term incentive plan. Fellow executives are also expected to receive sizeable payments under the plan. Hammond weighed into the debate on Wednesday in apparent fury that his public warnings last year over Network Rail bonuses had been ignored. He said: “This payoff will stick in the gullet of every farepayer and taxpayer who think they pay too much to use our railway. The payoff is based on his contractual rights but most people will feel it doesn’t sit well given the difficult times most families are facing. “I will be seeking assurances that this is the last chapter in the sorry saga of the old Network Rail as set up by Gordon Brown. We have made clear that any future incentive system should focus on rewarding exceptional and sustained long-term outperformance and be based on the principle that bonuses are not an automatic right.” Network Rail relies on the taxpayer for its funding and received £3.7bn from the Department for Transport last year in a financial arrangement that regularly exposes its executive team to pay rows. In 2010, Coucher received a salary and bonus package worth £1.25m, drawing an intervention from Hammond, who questioned whether it was “appropriate” for Network Rail executives to share more than £2m in bonuses when the rest of the population was entering a period of austerity. However, Coucher has consistently argued that Network Rail needed to reward managers charged with turning round a railway system that was on its knees when the company inherited Railtrack’s responsibilities in 2002 following the botched privatisation of the rail network. The announcement comes a month after Coucher was cleared of misusing public funds following an independent investigation. Antony White QC, an expert in asset tracing and employment law, was appointed by the company to investigate allegations that public money had been spent illicitly on perks. White severely criticised the “astonishing” behaviour of Peter Bennett, Network Rail’s head of human resources, who called an employee complaining of sex discrimination a “silly cow”. Network Rail’s chairman, Rick Haythornthwaite, has moved to answer concerns over the company’s governance by requesting another review. The review’s author, Saratha Rajeswaran, a former adviser to rail minister Theresa Villiers, said the company had a “real problem” with accountability to the rail industry and government, adding: “Network Rail has been insulated from real-time economic and political concerns – leading to criticisms that it is arrogant or out-of-touch with the reality for the industry, passengers, the government and taxpayers.” However, the review does not recommend radical changes to the governance of Network Rail, which is technically a private business as a company limited by guarantee, meaning that it has no share capital or shareholders. The role of the latter is performed by Network Rail’s 92 “members”, who are drawn from the transport industry and the public. The Rajeswaran review does not call for an enhancement of members’ powers over pay, instead leaving their role as a purely symbolic one with a vote on the remuneration report at the annual meeting. Nonetheless, the review warns that bonuses will continue to be a “contentious” issue. Meanwhile, Network Rail is now beginning formal discussions over its next funding settlement under its new chief executive, Sir David Higgins, former chief executive of the Olympic Delivery Authority. The company is under pressure to reduce costs following an independent report into rail industry expenditure by Sir Roy McNulty, former chair of the Civil Aviation Authority, who has recommended cutting £1bn from the sector’s annual expenditure by the end of the decade. Nonetheless, Network Rail is optimistic that it can secure a funding settlement for 2014-2019 that is similar to the £30bn it won for 2009-2014 at the height of the previous government’s public spending largesse. Network Rail Executive pay and bonuses Travel & leisure Transport Dan Milmo guardian.co.uk

Posted by on June 22, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.