Chief executive Carne vows to cut NR operating costs

“We know that we did not do a good enough job in CP4 to deliver the reliability that customers want and expect,” Network Rail Chief Executive Mark Carne admitted to Transport Select Committee MPs on June 9.

In his first appearance before the TSC, Carne cited the “enormous growth in the railway”, and the “need to invest to create more capacity on the railways in Britain so that we can meet that demand”.

He told MPs: “We need to reduce the costs. Ticket prices on the railways today are a major concern for the travelling public. Although we do not set the ticket prices, our costs are a large part of the total costs in the rail system. 

“We need to drive down our costs, and that is what we will do over the coming five years.”

Asked by TSC Chairman Louise Ellman about the impact of NR’s reclassification as a public sector body from September 1, Carne replied: “It should not make any necessary difference because it does not in itself drive particular changes in the way that the company works with the Government.”

NR needed clarity about the “interfaces with Government”, although Carne said he was satisfied with how discussions with HM Treasury and the Department for Transport were going. 

On NR’s funding, Carne said the reclassification of NR would not affect how much NR is allowed to borrow. “The £38 billion settlement that was made in CP5 is, as far as I am aware, completely secure, and that continues to be the case. I do not see why, in the longer term, it should make any fundamental difference.”

Asked by Graham Stringer MP whether NR would be able to make any savings with the Treasury borrowing for it, Carne said he was “not sure that it will necessarily save anything”.

“We were able to borrow money at very good rates because we were achieving Government-supported loans. We have a very small Treasury department so I do not think there are any material savings that would accrue.”

Comparing his former career at Shell, Carne said: “The fundamentals that drive business performance, whether it is the structure of NR or a private enterprise of the sort that I have worked with in the past, are not that different.

“Are you really clear about what your strategic priorities are? Do you have proper performance management systems in place? Is accountability really clear? What is it that drives performance in the business? All of these things are the same in all walks of life.”