It is hard to know who will take the political credit for Network Rail’s directors dropping their plan for any annual bonus this year: Ed Miliband or Justine Greening? Both had made clear their concerns about any extra pay-out to the board of the quasi-private company (which receives £4bn of taxpayers’ money every year) ahead of the announcement. Ms Greening, the transport secretary, had even vowed to turn up to a public meeting of the group on Friday to vote against its recommendations. Meanwhile there was growing pressure in the form of an early day motion by former Labour transport minister Tom Harris, signed by 30 MPs.
The news came through some five minutes ago: Not only will Network Rail delay its meetings of around 100 board members, which was due for Friday.
Also chief executive Sir David Higgins and his board will not keep any annual bonus this year if one is decided at a separate meeting in May. Instead they will donate the money to the safety improvement fund for level crossings. (Network Rail pleaded guilty a few days ago to failings which led to the deaths of two teenage girls at a level crossing.)
Sir David said:
“Even if this (annual bonus) situation does arise this year, I and my directors decided last week that we would forego any entitlement and instead allocate the money to the safety improvement fund for level crossings. I can confirm that remains our intention.”
In fact Friday’s meeting had also been to discuss a “long-term incentive plan” – worth much more than the annual bonuses – and this will still go ahead.
Ms Greening had made clear that she was not against performance-related performance per se; but instead she wanted Network Rail to wait for the result of a “control paper” on the group’s corporate governance which will not be published for a couple of weeks.
In other words, her vote would have been as much about timing as it was about limiting the annual bonus. The five-year incentive plan is as likely to remain as ever, even if not quite in its original form.
Greening still wants to “beef up” taxpayers representation at NR and will seek to do so by getting a “special director” on the remuneration committee. This will be recommended in the command paper.
There has been no similar instance of ministers getting involved in NR’s corporate governance since the 2005 dismantling of the Strategic Rail Authority, according to coalition insiders. They point out that Labour ministers always used to wash their hands of final decisions on Network Rail remuneration, telling the Commons repeatedly that it was a “private company.”
Then again Tom Harris tells me that the power to appoint a special director has always been in the DfT’s powers over Network Rail: and therefore ministers could just do it without the command paper.