Railtrack Group PLC
The government decided to privatize British Rail by reorganizing different areas of British Rail's responsibilities, creating four main component parts: track, rolling stock, maintenance, and train operators. The old railway companies Regional Railways, Network SouthEast, and InterCity were abolished and replaced with 25 train-operating units. The railway infrastructure (the track) was placed under the control of the newly formed, government-owned Railtrack. Railtrack was set up on 1 April 1994 under the Railways Act 1993 to manage the rail infrastructure (track, stations, signalling etc.) in the UK. This was part of government plans to restructure and privatise the rail industry. These required separating the management of the railway infrastructure from the provisions of train services.
Railtrack is one of the largest commercial estate owners in Britain, with 20,000 miles of track, 2,500 stations, and more than 40,000 bridges and tunnels. Tenants included Battersea Dogs' Home and the London International Financial Futures and Options Exchange. Railtrack's customers are the 25 train operating companies and the freight companies. Its job was to provide access to its network, manage the allocation of train paths; plan and co-ordinate train movements, and produce a workable timetable.
Railtrack is split into zones which manage Railtrack’s day-to-day business, originally ten zones, the East Coast and North Eastern zones merged in June 1995 to form the London North Eastern Zone (LNE), while the West Coast Main Line Zone was absorbed by the Midland and North West Zones. The other zones are as follows, the Great Western Zone, South West Zone, Scotland Zone, East Anglia Zone and South Zone. In the LNE Zone Railtrack control is in the main headquarters building in York, the South Zone headquarters is based above Waterloo Station.
Railtrack is responsible for maintenance and renewal of the railway infrastructure. Work is contracted to seven privatised infrastructure maintenance companies and six track renewal companies which supply services on a roughly geographical basis. These broadly relate to the zones into which Railtrack is organised. The directors of each zone report to the chief executive of Railtrack and play a major role in customer relations with train operators and business planning within their geographical areas. The engineering and production division is responsible for all work relating to maintenance, renewal and operation.
In January 1996 the U.K. government confirmed the privatization of Railtrack for £2bn with a total asset value of £4bn. In October of the same year, Railtrack announced a plan to invest £1.5 billion in upgrading the West Coast Mainline railway. During its first year as a private company, Railtrack experienced its first of many deadly train crashes when in August 1996 a commuter train collided with an empty train, killing one person and injuring 66.
Throughout 1997 and 1998, Railtrack entered into agreements with other rail companies, announced large-scale projects aimed at improving the rail network, and won important contracts. Some of these projects and contracts included: in January 1997, the company outlined a £560 million project called the Thameslink 2000; the following month, Railtrack unveiled a £15 billion plan to create the world's most efficient rail network; the company came to an agreement with Virgin Rail (Virgin) to an upgrade package that enabled Virgin to operate high-speed trains on certain intercity routes, and later, joined a partnership with Virgin wherein they promised to invest £600 million in the West Coast Mainline.
The company's expansion streak continued when, in 1988, Railtrack along with the U.K. government and London and Continental Railways (LCR), agreed to a public private partnership (PPP) deal to save the proposed Channel Tunnel project. The PPP involved the management of Eurostar (an LCR service that was intended to supply income while the railroad link was being constructed), based on the restructuring of LCR. This deal led to Railtrack's 1999 participation in the design, construction, finance, and operation of The Channel Tunnel Rail Link (CTRL). The CTRL was designed to carry high-speed services between London and the Channel Tunnel. The details of the CTRL deal enabled Railtrack to manage the construction of the CTRL, as well as assume responsibility for the operational management of the first phase of the project's infrastructure. As a result of their participation, Railtrack was granted the opportunity to purchase the entire new link upon completion of the project, although part of the plan was that the ownership of the link would eventually (in 2086) revert to the U.K. government.
Along with the partnerships and deals that Railtrack entered into during this period, they also experienced disaster in the form of one major train crash in 1997. Seven people were killed when an express passenger train crashed into a good train in a London suburb.
Below the holding company, Railtrack Group PLC, lies the trading company Railtrack Corp, which holds two non-trading arms (Railtrack Projects and Railtrack Stations). Another trading arm, Railtrack (UK), was set up to handle the Channel Tunnel Rail Link project. There is also Railtrack Insurance, a Guernsey-based captive insurer. The latest addition is Railtrack Developments, set up in March 1999.
Only two years after Railtrack's privatization, the company began to receive chastisement from the government for its failure to suitably upkeep the country's rail network. In December 1998, Rail Regulator Chris Bolt outlined a proposal that would cut future Railtrack profits and demand increased investment in the rail network; this proposal was scheduled to come into effect in 2001. The following year, an official report criticized Railtrack heavily for its failure to remedy train delays, run-down stations and out-of-date signaling. Soon after this report was released, the new Rail Regulator Tom Winsor informed Railtrack that if it did not improve passenger train performance by 12.7 percent by March 2000, the company would be fined from its profits. In November 1999, Tom Winsor began enforcement action against Railtrack for its failure to upgrade the West Coast Mainline as it had previously agreed to.
The chastisement did not have a noticeable effect on Railtrack. Indeed, not one month after the rail regulator started the process of enforcement; Railtrack announced that the cost of upgrading the West Coast Mainline would be almost three times the original estimate. This same year, a syndicate of 19 banks provided Railtrack with a £1 billion syndicated loan to rescue them from their monetary woes. Train crashes continued to occur, despite the government's attempt to goad Railtrack into improving rail safety, and in 1999 two trains collided outside London killing 31 people and injuring 400.
In February 2000, Railtrack signed a £98 billion public private partnership (PPP) with Tyne and Wear Passenger Transport Executive (Nexus) to develop the Sunderland Metro system. Railtrack undertook the design, construction, testing, and commissioning of the Northeast England network, including the parts of the network that connected to the Metro. Railtrack also agreed to build additional stations along the lines' extensions. Railtrack invested £40 million, Nexus provided £8 million, the European Regional Development Fund provided £12 million, and the central government invested £35 million.
On October 17, 2000, a broken rail caused a passenger train to derail near Hatfield; four people were killed and 34 were injured. The emergency recovery program that followed the crash cost Railtrack £644 million. Soon after the train wreck, in February 2001, Railtrack's Chief Executive Steve Marshall warned that Railtrack could have a net debt of approximately £8 billion come 2003.
Railtrack Group PLC was put into administration on 7 October 2001 and came out of it on 1 October 2002. Network Rail took over many of its responsibilities on 3 October.