Change since privatisation
A Railtrack case study

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Page 2: Costs and revenues

Railtrack 4 Image 1Railtrack’s main costs lie in maintaining and renewing its infrastructure, including the track and stations, as well as other operating costs such as the provision of signalling for the network. Its income comes principally from access charges for using its network and facilities such as stations, depots and other properties - from the 25 new train operating companies as well as the freight operators who have leases for the occupation and use of freight terminals, siding and yards.

Privatisation

Privatisation brought about the largest transformation the railway industry has witnessed for 50 years. The lifting of public finance constraints and other nationalised industry controls has enabled Railtrack to take a more ambitious approach to raising its operating performance. However, it has also meant undertaking new responsibilities to shareholders and other stakeholder groups.

Everyone, including the motoring organisations and the road haulage industry, now accepts that the UK must make better use of its existing transport infrastructure. The congestion and pollution in our cities and opposition to new road construction makes rail the logical, convenient and environmentally friendly answer to Britain’s transportation needs. It is Railtrack’s intention to co-operate with train operating companies to promote significant growth in passenger numbers and in the large scale transfer of freight from the roads.

Railtrack’s ambition is simply to create the world’s best railway - creating a competitive edge over road and air travel. In order to do this, Railtrack has undergone a fundamental culture change and established a private sector business ethos, dedicated to the provision of outstanding service to customers and shareholders. Substantial progress has been made towards achieving a range of key business objectives which include:

  • Primary objective - providing a sound foundation for the creation of a safe, reliable and efficient railway system fit for the 21st century.
  • Dividend policy – improving Railtrack’s operational performance with the pursuit of a progressive dividend policy.
  • Safety - the maintenance of high standards of rail safety with a rigorous safety management scheme for the stewardship of the network.
  • Changing the culture - this is fundamental to the transformation of the railway industry so that Railtrack develops a culture which is more focused and more responsive to customer needs through fresh thinking and innovation.
  • Improving efficiency and performance - building upon improvements to lead the way in partnership with customers and contractors in providing the most efficient and reliable railway possible for the travelling public.
  • Controlling costs - reducing costs and achieving value for money through a comprehensive investment programme.
  • Exploiting property assets – realising the potential of the property portfolio to maximise rental income.
  • Employees - developing the concept of partnership with employees through schemes such as share ownership.
  • Corporate governance – complying with the Code of Best Practice recommended by the Cadbury Committee.

As Railtrack works towards these objectives, it is steadily creating the conditions for a railway renaissance - working with customers, contractors and staff to improve performance, renewing the railway network and regenerating stations so that rail becomes the nation’s preferred method of transport.

Railtrack | Change since privatisation
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