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Network Rail to split into regional companies

Network Rail is unveiling sweeping measures to split the company up by creating new powerful devolved business units run by managing directors which will be regionally-based, the firm announced today.

Network Rail intends to devolve more power, responsibility and accountability onto the new business units which include transferring responsibility from the centre to the new role of route managing director.

Scotland and Wessex routes will be the first to make the change, devolving power from the centre to the routes. This change will start in April. As the changes prove successful in delivering a better service to customers and passengers, the other routes will follow as soon as possible.

Functions expected to be transferred includes planning and delivering maintenance, renewals and enhancements, asset management and safety.

“Network Rail has saved money and transformed the railway through central control but to make further improvements in all areas we now need to increase responsiveness at a local level,” said Network Rail chief executive David Higgins.

“We’re devolving accountability to the route level so that we can get closer to our customers and be in a better position to deliver improvements to passengers and freight users, while reducing costs.”

“Each new route managing director will, in effect, be running their own infrastructure railway business with significant annual turnover and resources.”

Job adverts for the route managing director role have been published, with a “significant six figure salary”.

The advert states that Network Rail’s “focus will be on providing greater levels of safety, accountability and transparency while devolving our organisation to a number of key routes”.

Each of the devolved business will have around 3,000 staff, and will report to Network Rail director of operations and customer services Robin Gisby. The advert states that rail industry knowledge “is not a requirement”, but calls for “an impressive track record in large general management positions in a safety-aware industry”, adding that “strong commercial and customer relationship skills in a business-to-business context are essential”.

The Department for Transport said that it welcomed the initiative. A spokesman said: “Sir Roy McNulty’s value for money study interim report published in December highlighted working between Network Rail and the operators as a key way to deliver reduced costs and increased efficiencies.”

In response to the announcement, the Association of Train Operating Companies chief executive Michael Roberts said the moves represented “a positive first step in line with the reforms to deliver a better railway which train companies and ATOC have been calling for”.

“Creating devolved business units at route level is potentially good news for passengers and taxpayers,” he said.

However, he said that the announced changes needed to be part of a wider programme of change, with devolution extended to all routes. “These changes should start moving decisions about investment and operations away from Network Rail’s centre and closer to passengers. It should also help to drive cost savings by allowing the new units to be benchmarked against each other for efficiency.

“The Government also needs to remove a number of technical obstacles which will otherwise hinder the devolved units and train operators coming together to form new partnerships to save costs and deliver improvements. The momentum of change must now be maintained to ensure that passengers in all parts of the country can benefit sooner rather than later,” he said.

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