The last few weeks have not been happy ones for Railtrack. First a leaked letter from the Health & Safety Executive to the Scotsman newspaper set off a round of stories over the persistently poor and unsafe condition of railway lines. Then it emerged that the company is looking to make a 25% saving on its annual track maintenance budget.
With so much bad press in such a short space of time, you might think the company would be carefully tweaking its Network Management Statement before publication next week. The document considered as the rail networks bible will, after all, outline spending plans for the next 10 years.
But Railtrack says that no such last minute changes will be made. In fact, in a letter to The Times last week, chairman Sir Robert Horton hotly rebuffed any suggestion that the company underspends, has a backlog of work or fails to manage contractors effectively.
In 1987 there were 73 passenger collisions and derailments; in 1997 there were 18. In 1987 there were 40 accidental passenger fatalities; in 1997 there were 20 . . . These are not the statistics of a company failing to manage its business properly, said Horton.
But anti-privatisation campaign group Save Our Railways begs to differ, and describes Hortons letter as an exercise in complacency. It claims that since Railtrack published its last NMS it has done little to reduce the massive 277M backlog of essential track work set out in its Asset Maintenance Plan.
Railtrack has still an enormous backlog and it is only coming down very slowly, says SOR spokesman Jonathan Bray. Having set its own targets it is failing to meet them not by a small amount but by a long way.
The campaign group claims that although Railtrack quotes large numbers an annual spend of more than 1bn in its last NMS the question should really be whether or not the numbers are big enough to maintain the railway in a steady state.
We want to see more of the money that Railtrack receives from subsidised access charges spent on renewing and improving the network. We want to see Railtrack doing its job rather than stacking up the profits, adds Bray.
He claims that Railtrack has been doing just enough work to keep Rail Regulator John Swift happy, and that it is not developing the network aggressively enough. In the last NMS there was a commitment to open 13 new stations and two new lines - all of these were funded by local authorities, says Bray.
So what hard facts are available about Railtracks actual spending record?
To start with, Railtrack made pre-tax profits last year of 346M. And with interim results last September up 10% on the previous year it looks well on target to make another record profit this year. Its share price has blossomed from about 6.60 this time last year to around 9.60 now, having peaked at 11.15. At flotation it sold for about 4 a share.
Yet in last years NMS, Railtrack said it only planned to renew 2,500km of rail over the next 10 years. At that rate it will take the company 128 years to renew all of the track under its stewardship.
It also transpires that Hortons defence of his companys performance depends very much on subtle accountancy phrasing. Railtrack sees its 277M underspend from its AMP and the 385M of essential work needed on railway properties not as a backlog, but as an accrual.
With our asset management plan we have taken a 10 year view and have a charge to our profit and loss accounts of broadly 500M a year. In the first two years we were still under government control and because of certain cash constraints we couldnt spend what we would have liked to, says investor relations manager Peter Durman.
Railtrack can and has agreed that it will make up its maintenance backlog over the next three years. But so far it is not making much headway.
Were spending money as quickly as we can within the constraints of ensuring that the railway continues running and that we get value for money, maintains Durman. We never pretended that we would be able to turn the railway around on day one, but we do run a safe railway.
The Rail Regulator condemned Railtracks 1995-96 AMP underspend of 267M as wholly unacceptable and said he would expect prompt action to remedy this. But since then the figure has risen by 10M.
By September 1997 Railtrack had for the first time spent the same amount as it had charged to its profit and loss accounts but it had still not actually started reducing the backlog. Durman says the company is now committed to tackling the problem: We are now starting to borrow money so that we can reverse the accrual.
But despite Railtracks acceptance that its spending is still way behind, Regulator Swift continues to sit back even though he now has considerably more power to act. In September last year he negotiated a licence change with Railtrack which now means he can impose fines, or ultimately revoke the licence, if the company fails to meet the required standards. So after six months with no improvement why havent those powers been used?
Office of the Rail Regulator spokesman Ian Cook explained: We have to depend on the publication of Railtracks Network Management Strategy for a good picture of whether or not it is living up to its commitments. We leave them to manage their business we cant be looking over their shoulder all the time.
He added that greater impact of the licence change will come in a years time. And if Railtrack is found to be dragging its feet on a particular priority project, the Regulator would then be able to enforce the time scales agreed for the work.
Cook admits that the first two NMS were somewhat short on detail so did not give a true picture of Railtracks spending plans. And although the new statement is expected to be much improved, it would appear that the Regulator is still relying on Railtrack to judge what needs to be spent. Certainly Swift is still only equipped to take sanctions once a year.
So while Railtrack is improving and work is being carried out on the railway, it is clear that it is happening at a slower pace than could be achieved. And while Swifts office continues to represent the publics interest with such a soft touch, can we really be sure that Railtrack will not continue to sacrifice maintenance work for the good of its shareholders?