Sir Ian McAllister is to step down as chairman of Network Rail, following criticism of the state-backed company’s performance.

Sir Ian, 65, was criticised for the engineering overruns that caused delays for thousands of passengers at the turn of the year. He will step down in July 2009, confirming an open secret in the rail industry that he was preparing to leave.

Network Rail, which owns and operates Britain’s rail track and signalling, as well as most big stations, also announced that Ron Henderson, its 62-year old finance director, is to retire.

No replacements were named but headhunters have been working with Network Rail since the summer and will advertise for a new chairman this weekend. One person who has been linked to the job is Rob Holden, the chief executive of London & Continental Railways, who was responsible for bringing the high speed Channel Tunnel rail link to St Pancras, on time and on budget.

Sir Ian was attacked by the House of Commons transport select committee in July for failing to inject a sense of urgency to the operation.

The committee, referring to Sir Ian’s explanation that he did not go into the office so as to avoid getting in the way, said in a report: "We fear that the lack of a sense of urgency manifested by the chairman over the new year period, as well as when he appeared before us, is symptomatic of widespread complacency within Network Rail.''

The MPs also attacked Network Rail executives for taking “extraordinary bonuses” despite what they described as a catalogue of failings.

Sir Ian, who was instrumental in setting up Network Rail from the wreckage of Railtrack, which was put into railway administration by the Government in 2001, said: “Network Rail has delivered substantial improvements in the safety, reliability and efficiency of the railway over the past six years.

“Safety is at record levels, train punctuality is now above 90 per cent, and we are on track to reduce cost by around 30 per cent by the next annual general meeting. I have led the board for over six years now and a great deal has been achieved in that time.

“As the company enters a new phase in its development, it is entirely appropriate that a new chairman helps take the company forward.

“The next challenge is for Network Rail to help deliver an expanded and enhanced railway to meet the growing demand from passenger and freight customers. My role now will be to help find a replacement and see through a smooth transition.”

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