Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Welsh Water model for new company

News :

GOVERNMENT PLANS to set up a company limited by guarantee to take over Railtrack mirror the model recently adopted for Welsh Water, now owned by Glas Cymru.

Glas Cymru was set up to take over Welsh Water after the water company's owner's Western Power Distribution (WPD) decided to sell.

WPD sold up in the face of increasingly tough restrictions on prices and investment from the water regulator. New owner Glas Cymru has no shareholders and ploughs profits back into its infrastructure rather than paying a dividend.

Railtrack's problems stem from the fact that it had to satisfy the Rail Regulator's demands for investment while providing a return for shareholders.

A recent report by Institute for Public Policy Research senior researcher Tony Grayling suggests that the Glas Cymru model could be used as a template for the new Railtrack owner.

Grayling's report says that if Railtrack is taken over by a company limited by guarantee it will be under less pressure to produce sustained profit growth.

This week the Department of Transport Local Government & the Regions said Railtrack's new owner was - like Glas Cymru - to have a board of 'stakeholders'.

For Railtrack this would include the Strategic Rail Authority, the passenger and freight operators, train operators and bankers.

Grayling's report suggests that this management structure would 'foster a culture of cooperation' adding that the previous ownership structure was 'adversarial and fostered a culture of blame.'

His report adds that a 'stakeholder' board would also reduce the need for the type of tough regulation which was put in place to control Railtrack in its position as a monopoly supplier to rail infrastructure.

'As an economic regulator, the main job of the Office of the Rail Regulator was to stop Railtrack abusing its market power and making excessive profits. With no shareholders and no profits, that danger would be removed, ' says the report.

INFOPLUS www. ippr. org

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Please note comments made online may also be published in the print edition of New Civil Engineer. Links may be included in your comments but HTML is not permitted.