MPs attack Network Rail on its transparency

Public Accounts Committee says is it "fiction" that Network Rail operates as private sector company.

Parliament's spending watchdog, the Public Accounts Committee (PAC), has released a scathing report on Network Rail's financial operations and transparency. The Department for Transport is also held culpable for allowing the rail company to function as a seemingly part-private, part-public company.

Network Rail receives over £3bn annually in funding from the Department of Transport, which also underwrites its debts of over £25bn.

Despite these costs to the taxpayer -- as if it Network Rail were a public company -- it is not held accountable to Parliament and thus avoids the scrutiny it would be due. The report claims that the limited by guarantee company, which owns and operates most of the rail infrastructure in the UK, "maintains the fiction that [it] is a private-sector company." The Department of Transport spends two-thirds of its budget through Network Rail and Transport for London.

The chairwoman of PAC, Margaret Hodge, said:

It is unacceptable that Network Rail is still not fully transparent to Parliament or the taxpayer. The National Audit Office (NAO) must be allowed full audit access as quickly as possible to this organisation which is essentially kept afloat through public funds.

The Department of Transport could not offer any convincing evidence as to what characteristics Network Rail shares with a private company [and] international accounting conventions show that it should be considered as part of the public sector.

The report comes at a time when the Department for Transport is facing cuts of the degree in line with the rest of the public sector: its £12.8bn budget will be reduced by 15 per cent in real terms by 2014-15. Meanwhile, regulated rail fares will continue to be risen above inflation in 2013. The Campaign for Better Transport recently revealed the gross disparity between British rail costs and the travel of similar distances in other European countries: a comparable train season ticket, for example, can cost up to ten times more in the UK than on the continent.