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Thursday, 3 October, 2002, 13:21 GMT 14:21 UK
Rail users promised 'real improvements'
Train
Network Rail must plough profits back into the network
Network Rail, the not-for-profit body that has taken over the running of the UK's rail network, has promised that passengers will see real improvements within two years.

The company was handed responsibility for the UK's track, signals and stations on Thursday morning in what many have greeted as a fresh start for the railways after the troubled history of Railtrack.


What was at fault was the competence of Railtrack's management

Tom Winsor
Rail regulator
"It is difficult to just turn around and say, 'Yep, in a year's time I can assure you it is all going to be at 90%,'" said John Armitt, Network Rail's chief executive.

"[But] by all working together I am sure we will see some real improvements in the next 12 to 24 months."

And he insisted that the company would not put profit before safety.

No dividends

Mr Armitt and Network Rail are faced with the huge task of restoring public confidence in train travel and upgrading the rail infrastructure.

The company will oversee the running of 23,000 miles of track and 2,500 stations.

Because Network Rail will be a not-for-profit body, any profits it makes will be ploughed back into rail maintenance rather than being used to pay dividends to shareholders.

The rail regulator Tom Winsor told the BBC that the state of track and infrastructure has not been the main cause of the crisis on the railways.

"What was at fault was the competence of Railtrack's management and that is changing completely," he said.


There is no doubt the new board is much stronger than Railtrack has been

Jeremy Long
Chief Executive GB Railways

"I believe the biggest challenge the company faces is the change of culture which it must carry out."

Mr Winsor admitted that change would not happen overnight but said rail users had every reason to be optimistic.

He also reaffirmed his intention to carry out a review of the fees train operators pay to Network Rail.

However, he insisted this was all about getting "more bang for your buck" and should not result in any fare rises for passengers.

Railtrack's progress

Stuart Francis, from the Rail Passengers' Council, said that the handover heralded a fresh start for the rail industry.

"There have been many problems and there's been something rotten at the core of the rail industry, and that's been lanced," he said.

Jeremy Long, chief executive of train operator GB Railways, welcomed the shake-up.

John Armitt
John Armitt moves across from Railtrack

"There is no doubt the new board is much stronger than Railtrack has been.

"But Railtrack has made real progress. It has begun to improve and is a better company today than a year ago."

Mr Long said one key change would be to bring more engineering expertise into Network Rail to allow it to take decisions about infrastructure itself.

Shareholders' payout

The financial aspect of the deal involves Network Rail paying 500m to Railtrack for the rail system - 300m of which has been provided by the government - and inheriting Railtrack's 7.1bn of debt.

Hatfield
Hatfield crash hastened Railtrack's demise

John Armitt, who was Railtrack's chief executive while the company was in administration, is filling the same role at Network Rail.

Ian McAllister, the former head of Ford in Britain, will be chairman.

Railtrack shareholders are expected to get 260 pence per share in compensation - nearly 90% of the value of their holdings when trading in the stock was suspended last year.

Rising repair bill

Railtrack was privatised in 1996 and was at first a big favourite with City investors, with its shares reaching a peak of 17.68 in November 1998.

But confidence in the state of the railways was affected by rail crashes including Hatfield, two years ago, which led to speed restrictions across the network and soaring maintenance costs.

Last year the then transport secretary Stephen Byers put Railtrack into administration rather than keep contributing to the company's rising track repair bill.

Earlier this week the High Court backed a government request to take Railtrack out of administration so that the changeover could take place.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Simon Montague
"Network Rail is now responsible for the tracks and stations"
Network Rail Chairman Ian McAllister
"This is a new start for the railways"
Rail Passengers Council's Phil Davis
"I think passengers should welcome this"

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