Network Rail - A not for profit company - Free Essay Example

Sample details Pages: 17 Words: 4987 Downloads: 7 Date added: 2017/06/26 Category Business Essay Type Analytical essay Level High school Did you like this example? Network Rail A not for profit company. 4,500 words. (i) To what extent and why has Network Rail, a not for dividend private company, been able to resolve the problems of financing and managing the national railway infrastructure, as compared to both public and conventional (for profit) private ownership? Discuss the degree to which the difficulties it has encountered are generic to rail systems elsewhere. There are two essential conclusions to be drawn here. Firstly, that value for money is a outcome mediated through the type and the location of use exercised by individuals, and groups of consumers. Don’t waste time! Our writers will create an original "Network Rail A not for profit company" essay for you Create order Secondly, that the imperfect or intermediate state of railway management (if it is regarded as such) ultimately reflects the nature of a problem which successive governments à ¢Ã¢â€š ¬Ã¢â‚¬Å" or, if you prefer, successive ideologies à ¢Ã¢â€š ¬Ã¢â‚¬Å" have tried to address. If this perspective is accepted, the corollary is that only a rigorously utilitarian re-appraisal of the railway question, conducted with regard to likely outcomes, can offer any kind of solution. ) The problem with this approach however, is that the resulting analysis may well be one which rail users, and society as a whole, are unwilling to accept. The other, and largely unknown factor in this analyses, is the likely impact of medium and long term external factors, such as shifting energy markets and environmental policy. The privatization process as it has been conducted since the 1990à ¢Ã¢â€š ¬Ã¢â€ž ¢s, has four essential components, as Steel and Heald indicate: charging, contracting out, denationalization, and load shedding: à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦Charging involves the (partial) substitution of user charges for tax finance. Contracting-out represents the substitution of private contractors for in-house production. Denationalisation and load-shedding refer to reductions in the scope of public sector activity, taking the forms, respectively, of the sale of enterprises and the (partial) abandonment of public non-market functionsà ¢Ã¢â€š ¬Ã¢â€ž ¢ (Steel and Heald 1984: p.13). In the post-privatisation phase, we are essentially faced with a hybridised management style presiding over an increasingly fragmented business. As Hibbs indicates with regard to overall transport use, à ¢Ã¢â€š ¬Ã‹Å"Measured by volumeà ¢Ã¢â€š ¬Ã‚ ¦the railways account for a proportion of less than 10 per cent of the market. Wartime apart, their contribution has declined steadily for since the 1920à ¢Ã¢â€š ¬Ã¢â€ž ¢s, and yet there are those who seem to see them as in some way essential.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Hibbs 2006: p.59). It is government and the taxpayer who largely make up the difference between utility and viability, so close attention must be paid the extent of government influence in railway management. The Railways Act 2005 dismantled the Strategic Rail Authority and split its tasks between the Department for Transport and Network Rail. As Tyrrall points out, this put the government à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦back in charge of the strategy and the cost of the railways, and of the franchising of TOCs.à ¢Ã¢â€š ¬Ã¢â€ž ¢ Meanwhile the HSE (Health and Safety Executive) transferred its remit to the Office of Rail Regulation. (Tyrrall 2006: p.123) It has obviously been both the salvation and the misfortune of the rail network to be the subject of long-term government interest and intervention. These activities, sometimes necessary, sometimes unnecessary, and frequently representing some form of financial or structural discontinuity, have the added implication of involving rail ways in an ideological debate. As Ferlie et al. have indicated, à ¢Ã¢â€š ¬Ã‹Å"There is a danger that the reforming cycle simply reproduces itself endlessly, as each generation of newly appointed ministers builds short term political reputations on announcing ever newer reforms.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Ferlie, 2003: S2) The implicit absorption of such dialogue into the political sphere means that generic controversies about the relative utility of private and public management are difficult to divorce from the entire issue of railway management. As Glaister and Travers pointed out of John Majorà ¢Ã¢â€š ¬Ã¢â€ž ¢s original privatization impetus, à ¢Ã¢â€š ¬Ã‹Å"Debate about the privatisation of the railways has been obscured by the exaggerated nature of opposing views. The government has projected an attachment to an ideologically pure version of privatisation that probably exceeds its own hopes and expectations. Opponents of the policy have exaggerated the potential threats to the operati on of an integrated railway.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Glaister and Travers 1993: p.54) Fortunately for this discussion, we are able to focus on a much more tangible problem: the fitness, for its declared purpose, of Network Rail. à ¢Ã¢â€š ¬Ã‹Å"Tangibleà ¢Ã¢â€š ¬Ã¢â€ž ¢, in this respect, does not necessarily imply the easy physical access to objective or even accurate information, or that the issues involved are to be adduced or debated in a straightforward way. There is also a further dimension to this question. The performance of Network Rail may be apprehended with relative objectivity in terms of the judgment, activity , and reliability of its governance, officers and systems. This, however, is merely an appraisal of the specificity of that organization. Whilst this is useful, it does not adequately answer the underlying question, which is, on precisely what basis should the UK rail network be run, and what kind organization an be envisaged to properly carry out that function? Within certain parameters, Network Rail is well situated at present: it also has new management. In October 2008, both Chief Sir Ian McAllister and Chief Financial Officer Rod Henderson announced their departure, amidst speculation that the CEà ¢Ã¢â€š ¬Ã¢â€ž ¢s post would be filled by Rob Holden, current head of London and Continental Railways. (Wright 4.10.08) In the six months leading up to September 30th 2008, it made pre-tax profits of  £706 million out of turnover of  £3.12 billion: the same results over the same period in 2007 were  £780 million and  £2.9 billion respectively. (Wright 20.11.08). (See Appendix ) The challenge it faces is essentially the same one faced by it ill-fated predecessor: inescapable political pressure for the overall reduction of its public subsidy. The inevitable nature of this is mediated through one key variable: the timescale. As Glaister and Travers argued at the time of privatisation, à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦In the short term, there is no prospect of reducing subsidy because: Productivity savings will take some time to go through; The backlog of investment will be caught up; Future investment requirements must be financed; and Reductions in profitability in some services because of regulation and, in the longer term, because of competition through open access, will imply replacement by direct subsidy.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Glaister and Travers 1993 p.57) Network Rail is currently awaiting the outcome of its credit rating to be established by January 2009 which will effectively determine the viability of its plan to raise  £4.4 billion in debt over the next four years. (Wright 20.11.08) As in many other respects, it lacks the self-determination to adequately influence these events. The regulator has recently allowed Network Rail government subsidies, operators fees and freight revenue of  £26.7 billion, a sum  £2.4 billion less than it asked for. Whilst it theoretically has recourse to the Competition Commission for an appeal over such rulings, as Wright indicates, the latter à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦could take years to reach a decision and Network Rail in the interim would have to abide by the October 30 guidelines on its spending.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Wright 20.11.08) This in effect means that, despite making concessions of  £800 million on its original request, Network Rail has to make significant savings on its infrastructural budget. As a spokesman explained, à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦Reducing costs in line with ORRà ¢Ã¢â€š ¬Ã¢â€ž ¢s draft determinations would require annual savings of over 7 per cent in other areas, which is double the overall rate assumed by ORR. It has given no evidence to suggest that this is realistic. It is also out of line with assumptions made by other regulators.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Vermeulen 2008). Basically then, Network Rail has at best reinterpreted, and at worst, perpetuated, the problems of railway finance. Although these issues are not unique to the UK, they are exacerbated by its historical, fiscal and geographical caprices. ii) Based upon the information you have been given, to what extent is it possible to compare Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance in 2008 with regard to usage, investment, punctuality, complaints and overcrowding with Railtrackà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance? Evaluate the degree to which performance in these areas has improved under Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s stewardship. Discuss the degree to which such performance measurement is useful and to whom. Support your arguments with evidence. The enormous amount of data available via the ORR needs careful consideration against that of Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s predecessor, Railtrack, before any meaningful conclusions can be drawn about the relative performance of the two organizations . The overall passenger kilometers have risen from 9.8 billion to 12.6 billion since 2002. (National Rail Trends 2008) Punctuality, we are informed, has also improved. In 1999, the ORR imposed a penalty of  £400,000 for each one-tenth of a percentage point by which Railtrack failed to meet the 12.7 per cent target for the reduction of self-caused minutes delay per passenger train. (ORR 1999: p.1) This is exactly the kind of margin by which Network Rail has been shown à ¢Ã¢â€š ¬Ã¢â‚¬Å" through the ORRà ¢Ã¢â€š ¬Ã¢â€ž ¢s own statistic s à ¢Ã¢â€š ¬Ã¢â‚¬Å" to have made redress. The percentage of trains arriving punctually has reportedly risen at least 10 per cent across all categories of operators, ( National Rail Trends 2008). Network Rail has not been slow to highlight this: à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦the dramatic improvements in punctuality seen over the last five years have continued. By the end of the year, punctuality of trains reached 89.9 per cent.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Network Rail 2008). The passenger approval ratings as published by the ORR also show a shallow upward trend across all regions and types of service. (National Rail Trends 2008). Obviously, such statistics are subject to all the vagaries implicit in mean averages, a clause which must be applied equally to both sets of figures. More specifically, they marginalize the thorny issue of engineering work delays and closures, which have caused significant disagreement between government, regulators and Network Rail. The parliamentary Select Committ ee on transport has drawn specific attention to what it terms the à ¢Ã¢â€š ¬Ã‹Å"seven day per weekà ¢Ã¢â€š ¬Ã¢â€ž ¢ service commitment: à ¢Ã¢â€š ¬Ã‹Å"We welcome the commitment of both Network Rail and the Government to the seven-day per week railway, where engineering works are done overnight, avoiding major engineering possessions at weekends and Bank Holidays. Network Rail will need to implement many changes to the network, such as rerouting and double tracking before the seven day per week railway can become anything more than a distant dream.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (House of Commons 2008). The overall point needs to be made then, that there is a big difference between measuring the performance of a company running on a poorly maintained network, and one which running on a network which is not fully functional. As a means of assessing Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance therefore, a direct comparative approach has significant limitations. Passenger volumes are obviously influenced by performance, and it may be argued that there is a correlation between the two trends. However, the altered business, economic, and infrastructural environment should also be taken into account, as should the differentiated pressures which apply to the respective bodies in different periods. As Wright points out of contemporary projections, à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦passenger volumes look set at least to keep pace with such capacity improvementsà ¢Ã¢â€š ¬Ã‚ ¦SouthWest Trains predicts the present economic slowdown will provide only temporary respite from the rapid demand growth that has created serious peaktime overcrowding on many of the regionà ¢Ã¢â€š ¬Ã¢â€ž ¢s rail routes. Southeastern Trains now plans to maintain capacity on its existing routes even after introduction of the new, high-speed services because it expects continuing, growing demand.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Wright 25.11.08) Furthermore, some of the most revealing indicators of Network Railà ¢Ã¢â€š ¬Ã¢â€ ž ¢s real performance lay in the minutiae of official reporting on individual infrastructural projects, such as the West Coast Main Line. In 2006 the National Audit Office concluded that, à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦value for money for the programme in its entirety has not been maximized: there were substantial early abortive costsà ¢Ã¢â€š ¬Ã‚ ¦and the need for additional franchise support for Virgin Rail Groupà ¢Ã¢â€š ¬Ã‚ ¦to keep train services running.à ¢Ã¢â€š ¬Ã¢â€ž ¢ From this kind of evidence the NAO projected that Network Rail was likely to overspend its budget to 2008-9 by approximately ten per cent. Furthermore, the job still appeared incomplete: as the NAO indicated, there remained à ¢Ã¢â€š ¬Ã‹Å"uncertaintyà ¢Ã¢â€š ¬Ã¢â€ž ¢ about the lifespan of à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦some of the equipment on the upgraded line.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (National Audit Office 2006: p.8). There is therefore a complex ethical trade off implicit in the current spending and subsidy negot iations between Network Rail and the government. Iain Coucher, head of Network Rail, has recently said his company was minded to accept the Office of Rail Regulations ruling on its funding, which as Wright reminds us, was à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦  £2.4bn less than Network Rail said it needed to achieve improvements in train punctuality and investment projects.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Wright 21.11.2008) . It will be interesting to see if, despite this significant shortfall, the Rail Trends reports show continued improvement next year, and even more interesting to consider their provenance if they do so. iii) The UK government has indicated its support for procuring public services from the private sector. Evaluate the arguments used in the research and official literature to support the view that the private sector provides a better alternative than the public sector, citing evidence derived from the course readings to support your views. The Economist furnishes us with a useful introduction to this part of the discussion, which is worth quoting in some length. à ¢Ã¢â€š ¬Ã‹Å"The advantage, from the governments point of view, is that it is neither one thing nor the otherà ¢Ã¢â€š ¬Ã¢â‚¬ neither in the private sector, which is widely regarded as having ruined the railways, nor in the public sector, which would place the outfit on the governments books and thus discomfit the Treasury by increasing public debt. The disadvantage is that it is answerable neither to shareholders nor, directly, to the Treasury. And with nobody controlling costs, they have mushroomed.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Unattributed, The Economist 2003). Discussion of the privatization of the rail network inevitably involves the consideration of privatization per se, and its comparison à ¢Ã¢â€š ¬Ã¢â‚¬Å" favourable or otherwise with public sector management. The public-private debate was one a literary and academic cause celebre, throwing up a whole genre which had its roots in the divi siveness of the 1980à ¢Ã¢â€š ¬Ã¢â€ž ¢s and post-Thatcher years. Now that discourse has apparently been displaced by assumptions about the hegemony of a à ¢Ã¢â€š ¬Ã‹Å"Third-Wayà ¢Ã¢â€š ¬Ã¢â€ž ¢ neo-liberal economics, rendering discussion of corporatism and the mixed economy vernacular, passÃÆ' © and irrelevant à ¢Ã¢â€š ¬Ã¢â‚¬Å" or so it might seem. However, controversy about the stewardship and management of bodies such as Network Rail contains much that is residual, calling up an older discourse about the relative competencies of either camp in British management. There are two strands to this controversy: the supposed abrogation of public resources by private interests, and the relative managerial à ¢Ã¢â€š ¬Ã¢â‚¬Å" and ethical à ¢Ã¢â€š ¬Ã¢â‚¬Å" qualities of public and private management. This template of public-private competence should not, however, distract us from the specificity of the situation: for example, in the hand over from Railtrack to Network Rail, both set s of senior management were substantively drawn from the private sector, as the Economist noted: à ¢Ã¢â€š ¬Ã‹Å"Network Rails pleas are likely to raise a wry smile from the former chairman of Railtrack, John Robinson. Railtrack was forced into bankruptcy when Mr. Robinson told ministers that it could not continue without additional government funding. At that point, it was getting barely half the  £3 billion a year from the taxpayer which Network Rail now says it needsà ¢Ã¢â€š ¬Ã¢â€ž ¢. (Unattributed, The Economist 2003). Neither should this fact distract us from the fact that governments of both political persuasions have stopped short of fully re-creating the railway network in their own ideological image. Conservatives have failed to allow authentic laissez-faire economics to take their course, perhaps because of the political impact of line closures and increased costs at the ballot box: Labour meanwhile has avoided full-blooded re-nationalisation, perhaps because their spending plans and the Public Sector Borrowing Requirement could not absorb the burden of the rail balance sheet as in bygone days. Therefore, it may be argued, a partisan analysis of the Network Rail management impasse does us little good in utilitarian terms. It may, as Roberts has argued, be true thatà ¢Ã¢â€š ¬Ã‚ ¦ à ¢Ã¢â€š ¬Ã‹Å"While private sector boardrooms are under pressure to do more with less, many government departments are giving a masterclass in how to do less with moreà ¢Ã¢â€š ¬Ã‚ ¦ Given that some parts of the country rely almost entirely on the public sector for economic growth, the problem is too large for anyone to ignore.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Roberts, 2008, n.p.). The potential of either form of expertise is unlikely to be fully tested while the current parameters of rail management remain unchanged. The substitution of a full-blooded private sector ethic in railway infrastructure management is not only extremely unlikely, but of questionable utility unless the f ull implications are genuinely accepted on all sides. In 1986, Starkie à ¢Ã¢â€š ¬Ã¢â‚¬Å" with some prescience à ¢Ã¢â€š ¬Ã¢â‚¬Å" reflected that, à ¢Ã¢â€š ¬Ã‹Å"It is arguable whether such transfers would promote the objective most strongly canvassed by the privatisers à ¢Ã¢â€š ¬Ã¢â‚¬Å" increased efficiency in the supply of services and therefore more benefits to consumers. Efficiency is associated with competition, but it is not necessarily true (even if it seems likely) that a simple transfer of assets to the private sector has the effect of sharpening competitive forces.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Starkie 1986: p.178) At present, the nearest thing Network Rail has to this kind of relationship lays in its contractual arrangements with train operators, although even this features an elasticity not normally present in commercial deals. As one operator spokesman put it, à ¢Ã¢â€š ¬Ã‹Å"We will bend over backwards to help Network Rail to perform,à ¢Ã¢â€š ¬Ã‚  says Graham Eccles, head of rail at Stagecoach. à ¢Ã¢â€š ¬Ã…“But at the end of the day if they dont deliver on their contract with us, we will have to take action.à ¢Ã¢â€š ¬Ã‚ .à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Unattributed 2003) As the demise of Railtrack demonstrated however, it is really only the government who can apply the ultimate sanction. (iv) To what extent and how does Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s governance structure as a not for dividend private company provide accountability to the public for taxpayersà ¢Ã¢â€š ¬Ã¢â€ž ¢ money? Is this corporate structure likely to be a problem for not for profit companies that deliver public services in other countries? As Tyrrall points out, à ¢Ã¢â€š ¬Ã‹Å"Almost all indicators suggest however, that costs have increased substantially. The cost of BR had been approximately  £4 billion per annum, consisting of around  £3 billion of passenger and freight revenue and  £1 billion of government subsidy. It was accepted that after privatisation gove rnment subsidy payable to the industry via the TOCs would increase to approximately  £1.8 billion initiallyà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã¢â€ž ¢ (Tyrrall 2006: p.113). In absolute terms then, railway management governance has merely presided over a net increase in expenditure, with the only measure of return residing in the official statistics. Long before premier John Major somewhat precipitously launched the rail privatisation programme which had been eschewed by his no less zealous but perhaps more circumspect predecessor, Mrs. Thatcher, a Department of Transport report adduced that à ¢Ã¢â€š ¬Ã‹Å"One can distinguish two approaches to managing the railway. One is a business-oriented approach in which the purposes of investment are to adjust as fast as possible to changing demand for transport, to permit changed operating practices which will save money, and to take advantage of the greater productivity of newer assets . The other approach is a custodial approach in which th e purpose is to retain and renew as much as possible of the railwayà ¢Ã¢â€š ¬Ã¢â€ž ¢s infrastructure and servicesà ¢Ã¢â€š ¬Ã¢â€ž ¢ (Department of Transport 1983: p.49) Privatisation overall à ¢Ã¢â€š ¬Ã¢â‚¬Å" if not Network Rail per se has boosted passenger numbers, although, as Tyrrall points out, à ¢Ã¢â€š ¬Ã‹Å"this increase has largely been attributed to the growth in the economyà ¢Ã¢â€š ¬Ã‚ ¦and increasing road congestion. These would have increased demand regardless of privatisation, but there is no doubt that more imaginative approaches to pricing and promotion since privatisation also played a part. (Tyrrall 2006: p.111). If we wanted to define Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s probity in inversionary or oppositional terms, we could do so in Altmanà ¢Ã¢â€š ¬Ã¢â€ž ¢s definition of corporate ethics: as he puts it, à ¢Ã¢â€š ¬Ã‹Å"From a Kantian perspective, a corporation can have no responsibility at all. Insofar as it is a tool, and a good tool performs its designated function well, a good corporation maximizes profits for its shareholders.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Altman, 2007: p.261). Whatever the ethical integrity of this perspective, it illustrates precisely the kind of unequivocal purpose which Network Rail lacks. As Ferlie et al. argue, à ¢Ã¢â€š ¬Ã‹Å"There hasà ¢Ã¢â€š ¬Ã‚ ¦ been continual restructuring in the UK public sector for over 20 years, initially based on securing greater productivity and value for money, but more recently (though somewhat ambiguously), with a new partnership on partnerships and networks.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Ferlie et al. 2003 S1) Network Rail has attracted many labels and unsolicited testimonials, from being characterised as merely à ¢Ã¢â€š ¬Ã‹Å"unusualà ¢Ã¢â€š ¬Ã¢â€ž ¢ to being a à ¢Ã¢â€š ¬Ã‹Å"pantomime horse with 230 legsà ¢Ã¢â€š ¬Ã¢â€ž ¢, a description which the Economist evolved with reference to Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s 115-member public interest board. The same commentary judged that the institutionà ¢ â‚ ¬Ã¢â€ž ¢s origins à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦were not auspicious. Stephen Byers, the transport secretary who forced Railtrack into administration, was casting around for ideas on what to do with the railways and plucked the model from a policy paper by the Institute for Public Policy and Research.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Unattributed, The Economist 2003) Whilst this may be apocryphal, the structure to which the Economist alludes it not: a management body answerable to the aforementioned 115 worthies, two-thirds of whom are selected from 1,200 applicants, the rest drawn from interested stakeholder bodies such as the National Farmers Union and the Royal Association for Disability and Rehabilitation. Many features of the organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s structure, such as its public interest board, were designed to reflect its not for profit public service ethic. However, it also retains many aspects of corporate governance which its architects in New Labour may regard as less de sirable, such as a remuneration structure whose profligate tendencies preponderate in the boardroom. The short circuiting of the supposed break with the past in the form of the defunct and now apparently friendless Railtrack à ¢Ã¢â€š ¬Ã¢â‚¬Å" was apparent in the awarding of 60 per cent bonuses to all five of its executive directors. Within their terms of service, this largesse would be triggered even if the statistics reflected a performance worse than that of the now sidelined Railtrack. The retention of private sector executive pay structures has not, however, been mirrored in the achievement of other standards. As Monks and Minow put it, the à ¢Ã¢â€š ¬Ã‹Å"external legitimacy of the executive.must be sustainedby the personal ethic of the individuals involved as well as the broader corporate and societal ethics.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Monks and Minow, 2004, p.41). Yet many of Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s worst failings have been in the related areas of ethics and value for money. In March 2007, Network Rail was fined  £4 million for its part in an infrastructural disaster directly attributed to its operations management: as Tait reports, à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦Network Rail, which took on Railtracks liabilitiesà ¢Ã¢â€š ¬Ã‚ ¦pleaded guilty to a single count of breaching health and safety laws in the run-up to the fatal crash. Prosecutors told the court this week that there had been a catalogue of failures à ¢Ã¢â€š ¬Ã¢â‚¬Å" and that the problems had started with the culture at the top of the body responsible for the track and affected staff at all levels of the organisation.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Tait 2007) As Tyrrall indicates, à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦the accident record since privatisation contrasts unfavourably with the record under BR after Clapham Junction (1988), but not by comparison with a longer history of UK rail accidents.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Tyrrall 2006: p.110). However, when one considers the enormous technological and regulator y differentials inherent in the latter comparison, any collateral which might be claimed for Network Rail over its nationalised antecedents appears specious. Network Railà ¢Ã¢â€š ¬Ã¢â€ž ¢s à ¢Ã¢â€š ¬Ã¢â‚¬Å" and the governmentà ¢Ã¢â€š ¬Ã¢â€ž ¢s à ¢Ã¢â€š ¬Ã¢â‚¬Å" discomfiture is not without precedent elsewhere, although the value of direct comparison obviously diminishes in the light of confounding variables. For example, Indiaà ¢Ã¢â€š ¬Ã¢â€ž ¢s railway system hovers similarly between pressures for privatisation and the maintenance of an essential public service. As the Economist reveals, its à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã…“operating ratioà ¢Ã¢â€š ¬Ã‚ Ãƒ ¢Ã¢â€š ¬Ã¢â‚¬ operating costs as a proportion of revenuesà ¢Ã¢â€š ¬Ã¢â‚¬ which had climbed close to 100% by the beginning of this century, has fallen to 92.5%. à ¢Ã¢â€š ¬Ã‚ ¦not enough to cover depreciation, maintenance and expansion. Nor can the railways rely onà ¢Ã¢â€š ¬Ã‚ ¦ government bail-outs at a tim e when Indias overall fiscal deficit (at more than 10% of GDP) risks becoming unsustainable. Yet the railway system has been losing customers to an improving road network, making it hard to see how its finances will ever improve.à ¢Ã¢â€š ¬Ã¢â€ž ¢ The important point for comparison here is that, despite this, vested railway interests have little difficulty in garnering support from a range of opinion across Indian society, somehow circumventing the inescapable logic of the balance sheets. As the Economist reports, much of the disagreement is between economists looking at the railways as a business, and dedicated civil servants looking at what they still see as a public utility and social service. As one senior railway officialà ¢Ã¢â€š ¬Ã‚ ¦puts it, à ¢Ã¢â€š ¬Ã…“if you moved to a business model, Indian Railways would collapse.à ¢Ã¢â€š ¬Ã‚ .à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Unattributed, The Economist, 2003) Appendix Bibliography Altman, M.C., (2007) à ¢Ã¢â€š ¬Ã‹Å"The Decomposit ion of the Corporate Bodyà ¢Ã¢â€š ¬Ã¢â€ž ¢, Journal of Business Ethics, Vol.74, No.3, pp.253-266, Springer, USA. Carbon Trust, (2005), Brand Value at Risk from Climate Change, Carbon Trust, London. Department of Transport, ((1983), Railway Finances, Report of a Committee chaired by Sir david Serpell KCB CMG OBE, Supplementary Volume, HMSO, London. Ferlie, E., Hartley, J., and Martin, S., (2003), à ¢Ã¢â€š ¬Ã‹Å"Changing Public Service Organizations: Current Perspectives and Future Prospectsà ¢Ã¢â€š ¬Ã¢â€ž ¢, British Journal of Management, Vol.14, S1-S14. Freeman, R., and Shaw, J., (eds), (2000), British Railway Privatisation, MGraw Hill and Price Waterhouse Coopers. Giddens, A., (2000), The Third Way and its Critics, Polity Press, Cambridge. Giddens, A., (2001), The Global Third Way Debate, Polity Press, Cambridge. Glaister, S., and Travers, T., (1993), New Directions for British Railways? The Political Economoy of Privatisation and Regulation, Institute of Eco nomic Affairs, London. Hartley, J., and Allison, M. (2000) , à ¢Ã¢â€š ¬Ã‹Å"The role of leadership in the Modernization and improvement of public servicesà ¢Ã¢â€š ¬Ã¢â€ž ¢, Public Money and Management, April-June, pp. 35-40. Hibbs, J., à ¢Ã¢â€š ¬Ã‹Å"Railways and the Power of Emotion: Seeking a Market Solutionà ¢Ã¢â€š ¬Ã¢â€ž ¢, in Institute of Economic Affairs, (2006), The Railways, the market and the Government, IEA, London, pp.46-67 Hooley, G., Saunders, J., Piercy, N., Marketing Strategy and Competitive Positioning (3rd Edition) Prentice Hall, Essex 2004. House of Commons (2008), Transport à ¢Ã¢â€š ¬Ã¢â‚¬Å" Tenth Report, INTERNET, available at https://www.publications.parliament.uk/pa/cm200708/cmselect/cmtran/219/21902.htm [viewed 30.11.08] Institute of Economic Affairs, (2006), The Railways, the market and the Government, IEA, London. Kay, J., Mayer, C., and Thompson, D., (1986), Privatisation and Regulation, the UK Experience, Clarendon Press, Oxford. M onks, R., and Minow, N., (2004), Corporate Governance, Basil Blackwell, Oxford. National Audit Office, (2006), The Modernisation of the West Coast Main Line, The Stationery Office, London. Network Rail, (2008), Annual Report and Accounts 2008, NR London. Network rail, (2005), Corporate Responsibility Report, NW London. Network Rail (2005), Business Plan: Summary Plan, NR London. Office of Rail Regulation, (2008), National Rail Review, Q2 2008-09, ORR, London. Office of the Rail Regulator, (1999), Railtrackà ¢Ã¢â€š ¬Ã¢â€ž ¢s Performance Targets: Statement by the Regulator, ORR London. Office of Rail Regulation, (2008), Rail Trends à ¢Ã¢â€š ¬Ã¢â‚¬Å" Spreadsheets, INTERNET, available at https://www.rail-reg.gov.uk/server/show/nav.1540 [viewed 30.11.08] Roberts, J., à ¢Ã¢â€š ¬Ã‹Å"COMPANIES UK: Public sector needs more than Private Eye jokes Why Capita deserves a nicer nicknameà ¢Ã¢â€š ¬Ã¢â€ž ¢, Financial Times, ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¨Published: J ul 21, 2006, INTERNET available at https://search.ft.com/ftArticle?queryText=public+sector+managementy=8aje=truex=17id=060721000987ct=0 [viewed 2.12.08] Starkie, D., à ¢Ã¢â€š ¬Ã‹Å"British Railways: Opportunities for a Contestable Market, in Kay, J., Mayer, C., and Thompson, D., (1986), Privatisation and Regulation, the UK Experience, Clarendon Press, Oxford, p.177-188.. Steel, D., and Heeald, D., (eds), (1984), Privatising Public Enterprises, Royal Institute of Public Administration, London. Veljanovski, ., (ed) (1989), Privatisation and Competition, A Market Prospectus, Institute of Economic Affairs, London. Tait, N., à ¢Ã¢â€š ¬Ã‹Å"Network Rail fined  £4m over fatal 1999 crashà ¢Ã¢â€š ¬Ã¢â€ž ¢, Financial Times, 30 March 2007, INTERNET, available at https://www.ft.com/cms/s/0/220fa5f6-dea8-11db-b5c9-000b5df10621.html [viewed 30.11.08] Tyrrall, D.E., The UK Railway: Privatisation, Efficiency and Integrationà ¢Ã¢â€š ¬Ã¢â€ž ¢in Institute of Economic Affairs, ( 2006), The Railways, the market and the Government, IEA, London, pp.105-129. Unattributed, à ¢Ã¢â€š ¬Ã‹Å"Anyone know how to run a railway?à ¢Ã¢â€š ¬Ã¢â€ž ¢ The Economist, 2nd October 2003, INTERNET, available at https://www.economist.com/world/britain/displaystory.cfm?story_id=E1_NTDTVVT [viewed 1.12.08] Unattributed, à ¢Ã¢â€š ¬Ã‹Å"The Pantomime Horseà ¢Ã¢â€š ¬Ã¢â€ž ¢, 26 June 2003, The Economist, INTERNET, available at https://www.economist.com/world/britain/displaystory.cfm?story_id=E1_TRSSGGD [viewed 1.12.08] Unattributed, à ¢Ã¢â€š ¬Ã‹Å"The Rail Billionairesà ¢Ã¢â€š ¬Ã¢â€ž ¢, The Eonomist, 1st July 1999, INTERNET, available at https://www.economist.com/business/displaystory.cfm?story_id=E1_NTRRSG [viewed 1.12.08] Unattributed, à ¢Ã¢â€š ¬Ã‹Å"Thereà ¢Ã¢â€š ¬Ã¢â€ž ¢s no such thing as a free rideà ¢Ã¢â€š ¬Ã¢â€ž ¢, The Economist, 4th December 2003, INTERNET, available at https://www.economist.com/business/displaystory.cfm?story_id=E1_NNGVRPP [viewed 1.12.08] Ve rmeulen, A., à ¢Ã¢â€š ¬Ã‹Å"Shortfall impedes Network Rail budget dealà ¢Ã¢â€š ¬Ã¢â€ž ¢, Financial Times, 8 Sept 2008, INTERNET, available at https://www.ft.com/cms/s/0/63adb6c6-7df6-11dd-bdbd-000077b07658.html [viewed 30.11.08} Wright, R., à ¢Ã¢â€š ¬Ã‹Å"Network Rail to à ¢Ã¢â€š ¬Ã…“acceptà ¢Ã¢â€š ¬Ã‚  cutsà ¢Ã¢â€š ¬Ã¢â€ž ¢, Financial Times, 21 Nov 2008, INTERNET, available at https://www.ft.com/cms/s/0/93db04e8-b76c-11dd-8e01-0000779fd18c.html [viewed 30.11.08] Wright, R., à ¢Ã¢â€š ¬Ã‹Å"Network Rail seeks clarification on funding from regulatorà ¢Ã¢â€š ¬Ã¢â€ž ¢, Financial Times, 20 Nov 2008, INTERNET, available at https://www.ft.com/cms/s/0/297bb5b4-b6dd-11dd-8e01-0000779fd18c.html [viewed 30.11.08] Wright, R., à ¢Ã¢â€š ¬Ã‹Å"Network Rail Seeks New Chiefà ¢Ã¢â€š ¬Ã¢â€ž ¢, Financial Times, 4 Oct 2008, INTERNET, available at https://www.ft.com/cms/s/0/285ada56-91ae-11dd-b5cd-0000779fd18c.html [viewed 30.11.08] Wright, R., à ¢Ã¢â€š ¬Ã‹Å"Red and Green lights on roads and railà ¢Ã¢â€š ¬Ã¢â€ž ¢, Financial Times, 25 Nov 2008, INTERNET, available at https://www.ft.com/cms/s/0/94fbd3de-ba82-11dd-aecd-0000779fd18c.html [viewed 30.11.08] à ¢Ã¢â€š ¬Ã‹Å"The funding package for Network Rail, owner of the UKà ¢Ã¢â€š ¬Ã¢â€ž ¢s rail infrastructure, for 2009-14 includes money for work to allow longer trains to run on many of the regionà ¢Ã¢â€š ¬Ã¢â€ž ¢s routes. Platforms will be lengthened and power supply enhanced along the Tilbury loop on the Fenchurch St line to allow operation of 12-carriage trains. Similar work will be undertaken around Gravesend on the south side of the river. (Wright 25.11.08) à ¢Ã¢â€š ¬Ã‹Å"The Regulators and Franchising Directorà ¢Ã¢â€š ¬Ã¢â€ž ¢s duties imply relationships with the government, with each other, with the owners and operators of the infrastructure, with owners and operators of trains, and with each other. In each relationship, there will be points that are politically contentious; badly-handled activiti es could threaten either the success of privatisation or the future of the railway system (or both). (Glaister and Travers 1993: p.55) à ¢Ã¢â€š ¬Ã‹Å"The influence of the HSE has been to enforce regulations which have too often been inappropriate and expensive, conflicting with the element of self-regulation proper to a fail-dangerous industry like transport.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Hibbs 2006: p.57) à ¢Ã¢â€š ¬Ã‹Å"There are many other aspects of brand or a companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s reputation that can impact a company, including its reputation amongst its business customers, staff, suppliers, shareholders and regulators.à ¢Ã¢â€š ¬Ã¢â€ž ¢ (Carbon Trust 2005: p.22)