NETWORK RAIL chief executive John Armitt this week admitted that the transfer of some rail maintenance contracts in-house would be delayed if compensation cannot be agreed with contractors.
He insisted that if the price demanded by contractors was too high he would let contracts run to their natural end leaving maintenance of parts of the rail network under private sector control until 2006.
'We will not be held to ransom over this, ' said Armitt. 'We have encouraged contractors to come to a solution with us - but if they want to stick out for sums of money that do not make financial sense to us, we will just let the contract run.'
So far three contracts have been taken back in house - Reading, Wessex and East Midlands. It is expected that Jarvis' contract on the East Coast Main Line will follow in April. Armitt insisted that he was still hoping to transfer all 18 contracts by mid-summer.
But he emphasised: 'The right level (of compensation) will vary from company to company and is quite simply what is due under the contract. But it is not going to be the end of the world if out of 18 there are a few areas in which the work is still being done by the contractor.'
Armitt said he was happy with the results seen in the areas where maintenance was back in-house.
In the Reading and Wessex areas he claimed performance improvement was twice the national average.
Cost saving would also start to be seen, he said.
'We are looking to take out £200M or £300M across 18 contracts - that's £3M a year per area, ' he explained.
Industry speculation about staff reluctance to leave private firms to join Network Rail was, said Armitt, so far unfounded: 'Only a handful of people have not come across - it has not been a problem.'