NETWORK RAIL’s directors face substantial cuts in their bonuses after persistently failing to give train companies enough notice of engineering works, The Times has learnt.

Chris Bolt, the Rail Regulator, has written to Network Rail’s remuneration committee pointing out that the public interest company is “seriously in breach” of its operating licence.

The letter, a copy of which has been obtained by The Times, reminds the committee that it must take into account any licence breaches when it meets next month to decide the level of bonus. Mr Bolt encourages the committee to use its powers to “reduce incentive payments”.

He adds: “The ORR (Office of Rail Regulation) Board wishes to emphasise to you the importance which we attach to this breach and the effects on operators, passengers, freight customers and the rail industry as a whole.”

Network Rail’s four executive directors, who had been expecting a bonus of at least 30 per cent of their salaries, have been infuriated by the regulator’s intervention. They claim to be ahead of target on each of the three criteria — train punctuality, asset condition and financial efficiency — used to determine their bonus.

Last year John Armitt, the chief executive, received a bonus of £112,000 despite the company falling well short of its punctuality target. This year Mr Armitt had been expecting a bonus well in excess of £150,000 on top of his salary of £468,000.

Iain Coucher, the deputy chief executive, who received a bonus of £99,000 last year, this week issued an apology to passengers for the late notice of engineering works.

The delay in fixing the timetable has meant train companies have been unable to sell tickets for some services until two days before they are due to run.

Thousands of passengers have been unable to obtain cheap advance-purchase tickets and have been forced to buy much more expensive tickets on the day of travel. The price difference for a standard class return trip from London to Manchester can be as much as £163.

Passengers are supposed to be able to book tickets 12 weeks in advance. But yesterday some companies, including Virgin and First Great Western, were still unable to sell tickets for many trains over Easter in two weeks’ time.

Mr Armitt said he and the other directors deserved to be rewarded for cutting train delays by 16 per cent in this financial year compared with 2003-04.

“If people meet their targets then quite rightly they should get their bonuses,” he said Network Rail was surprised by Mr Bolt’s letter because the company believed it had persuaded him that it was on course to deliver the full 12 weeks’ notice by July.

Mr Bolt this week rejected a request from the train companies to issue an enforcement order against Network Rail over the licence breach. The order would have enabled the companies to sue Network Rail for losses they say they have suffered.

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