Interview
passenger operations and whether it’s kept separate from the infrastructure.’ Network Rail’s main weaknesses, says Walker, revolve
around the fact that it is a virtual monopoly with little pressure from the private sector. ‘They were going to move to unsupported debt just as our financial pressures became acute, so the steps that were planned for them to have some sort of pressure from the debt and issue markets haven’t happened.’ She also says that the members need to be armed with
enough information to hold Network Rail to account, but stops short of saying that members should be replaced by a tighter board structure. Network Rail’s new chair, Rick Haythornthwaite, looked into ditching members and introducing a board a year ago, but failed to get agreement on it. ‘We have discussions with members to get them up that learning curve. We had a session back in June or July and about half the members came in.’ The ORR has been known to wade into the thorny issue of the high bonuses that Network Rail’s senior managers receive – chief executive Iain Coucher’s was £640,000 this year. Bill Emery wrote to Network Rail’s Remuneration Committee last year to recommend that bonuses be limited to reflect the fact that the company had not been successful in some areas of its work – and to take account of the economic climate. His advice was not taken. ‘The really important point I’d like to make is that the
setting of bonuses is not and should not be an issue for the regulator,’ says Walker. ‘There is a requirement in Network Rail’s licence to have a management incentive plan and the reason for that is that, because the range of incentives on Network Rail is not that strong, it’s another way to ensure that the top team, and the company, are focused on the key tasks. What they have now done, and this got almost no press coverage, is suspend the management incentive plan. So Network Rail is looking at two things: what you include in the management incentive plan, and what it is you want to incentivise. Is it a contractual entitlement? Is it, what most of us would think, for having delivered the day job? Or is it for truly exceptional performance outwith the normal and only for the few?’ Discussions between Network Rail and the ORR
will begin later this year about the funding settlement for Control Period 5 (2014-19). CP5 may seem a long way off, but there will be much argument and analysis on both sides before the ORR and Network Rail finally reach agreement. The government decides how much funding is available and broadly what it wants for that money, but it’s the ORR that works on the details. Following a review of the way in which the discussions
on CP4 funding were carried out, the ORR is going to implement a wide-ranging review before the start of the negotiations, so that a wider range of views can be taken into account. Last time, discussions about the detail of CP4 delivery were still going on with Network Rail after the control period had already started, but Walker says this shouldn’t happen the next time around. ‘When a spending period begins, you not only want to agree the spending, but also the delivery and it was
discussions of the delivery that were still going on.’ We’ve not mentioned the safety element yet, but
Walker has also had experience of this in her work for the Healthcare Commission. ‘There’s no doubt that our record has improved over the
last decade and if you compare our record to our European counterparts, as the recent RSSB annual report did, we are one of the safest. That’s really good news, but because of the awful history that we have of very prominent rail crashes, people tend to think rail equals unsafe. The key issue is not how good the regulator is, it’s all the rail companies recognising that safety is one of their key business offerings. I’m not sure we’re there with that.’ In the Healthcare Commission, she adds, the phrase
‘from board to ward’ was coined when it transpired, during various investigations, that what the board thought was happening was not always carried through on the ground. And this has resonance in the rail industry too. ‘The Potter’s Bar incident flags that up; it’s not good
enough to have things decided at the top. Why were those points not dealt with?’ The ORR is looking at the issue of ticketing at the
moment to see whether there is an easier way for passengers to be sure they are getting the best fare for their journey. On the issue of choice, Walker is also keen to see more open access operators enter the market. ‘Where it makes sense,’ she qualifies. ‘There is no point in awarding a franchise, then six months later granting an open access route that makes that franchise fundamentally unviable. Some open access routes might even involve new infrastructure and some of that, in the long term, is really exciting.’ All of this seems like a lot to pack into two or three days
a week, which is what her time commitment is officially meant to be. ‘Well, it’s two to three days a week or whatever it takes
to do the job,’ she clarifies, implying that most weeks it takes up more time than that. ‘They are clear that they want a non-executive chair and I think that’s right, but what they obviously wanted was somebody who had the time available when it was needed.’
Curriculum vitae
1951 Born in Oxford 1972 BA in history, Lady Margaret Hall, Oxford, 1972 British Council 1973 Confederation of British Industry 1975 Various roles in the Department for Trade and Industry, Cabinet Office and Efficiency Unit, including assistant private secretary to the secretary of state for industry
1993 Various roles at Oftel, including deputy director general
2003 Director general of land use and rural affairs for Defra 2004 Chief executive of the Healthcare Commission 2007 Non-executive director of Consumer Focus (ongoing) 2008 Head of independent review of household water and sewerage charging
2009 Chair of the Office of Rail Regulation SEPTEMBER 2010 PAGE 21
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