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Railwatch 081 - October 1999
Sliding off the points
RDS parliamentary committee chairman David Bigg and campaigns director Alix Stredwick both went to Railtrack's annual general meeting. What were their impressions?
Alix and I both left Railtrack's 1999 AGM feeling that the board of Railtrack had treated its small shareholders with a degree of contempt, writes David Bigg. Profits are up by 8% to £428 million on turnover of £2.573 billion. The dividend is also up slightly to 26.3%, payable in October. All good news. But now the bad.
Investment, it was claimed, was £1.45 billion in 1998/99 but could we figure out where it was? We could not. The tangible assets in the balance sheet didn't appear to show it and despite questions from shareholders we left the meeting none the wiser. Little wonder the company is criticised. Indeed, most of the questions raised were either ignored, or received answers differing from the question, or were referred to another director to deal with later.
What did we learn? Well it appears that while operators such as South West Trains want to run more services on the Salisbury-Exeter line, Railtrack says there is no business case. This was repeated time and time again. We also know the West Coast main line will have four tracks south of Rugby; two for trains travelling at 125 mph and two for slower services. Crosslink is a diluted version of London's Crossrail. Main line trains will use existing Circle line tracks from Liverpool Street to Paddington. But is there actually capacity for both? We were left wondering.
We do know Railtrack wants fixed access charges reduced from 90%. The problem is whether more variable charges will put up costs to the operator and fares to the customer. We think it will. The AGM was certainly unsatisfactory. We voted against the new directors share option scheme and along with 99% of the audience we did not give the outgoing chairman a standing ovation. The new Companies Act needs to give us small shareholders greater power to control the future direction of the company.
Alix Stredwick writes: At the beginning of this well-orchestrated, stage-managed PR event, Railtrack's chairman, Sir Robert Horton described the last year as being one of "great challenge". He quoted £440 million as the figure to be spent this year on enhancement investment, acknowledging that "improvement cannot come soon enough". He then pointed out that "profits always draw criticism, and stressed an environmental rather than economic benefit stemming from Railtrack's activities. Apparently an additional 1.2 million tonnes of CO2 were saved from being pumped into the atmosphere last year. Good news - if a little like a drop in the ocean - but it wasn't made clear exactly how this figure was calculated. Presumably it comes from the difference in fossil fuel consumption resulting from increased journeys being made by train instead of by road.
The chairman then went on to mention Railtrack's shortfall on improving minutes delay to passenger services, talks with the Government over the prospective TPWS safety system, and the anticipated relationship with the SRA.
Future priorities set for Railtrack were to improve safety, improve performance, shift the balance from maintenance to enhancement of the network and address the environmental agenda. All very honourable aims to be spoken about in public, but when it came to shareholders' questions, Railtrack didn't look so good.
Jonathan Bray (of Save Our Railways) put it to Railtrack that they are in breach of agreement because, as found by an independent consultant, the rail network has deteriorated since privatisation. Railtrack's board of directors said that they "totally dispute" the claim, denying the consultancy report's conclusions.
Then on a question of capacity Railtrack made it clear that they would only commit to adding to capacity "as it comes through". This seems to imply that they will not make future predictions of need and provide accordingly, but will instead wait until there is obvious overcrowding before improving the situation (presumably so that no profits will be jeopardised).
Richard Pout's question of whether Railtrack has any kind of policy for socially desirable but financially non-profit-making schemes remained un-answered, and on the issue of Railtrack land development, the board was hardly unequivocal about who was the priority, commuters or shareholders.
On the one hand it was said that Railtrack "is not in the business of developing property" and is "not a property company" but on the other hand we were reminded that money from land sell-offs "can get ploughed back into the railways". Note the word can, not will.
The board was challenged as to Railtrack's precise commitment over spending on disabled access to stations, and replied that its policy is to aim for all stations to be accessible to disabled people..... within the next 15 to 20 years. With a trifling £4 million spent in this area last year, this kind of time-scale is hardly surprising.
In response to David Redgewell's query regarding what action was being taken to protect unused track beds, Railtrack replied that they will "seek to preserve track beds....in some parts of the country....where projects are coming forward....where potential lies". Again, a fairly non-committed response, the only certainty being that Railtrack alone has the final say as to whether there is any potential in a line or not.
The AGM was a frustrating experience. I hope that by this time next year there will be many changes afoot within the company - not least an improvement in the representation of women and people of ethnic minorities on the board of directors (this year: one, and none, respectively).
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