BRITAIN'S bonus culture in both the public and private sectors suffered another hammer blow yesterday after Network Rail executives gave up their lucrative payouts.

The leaders of the privatised firm waived the six-figure sums, just a week after Stephen Hester, chief executive of the part-taxpayer-owned Royal Bank of Scotland, declined his £1 million bonus after criticism by Labour and the Government.

Network Rail chief executive Sir David Higgins decided against taking his £360,000 reward following widespread public anger and Government criticism.

The move places further scrutiny on other bosses, including Barclays chief executive Bob Diamond, who is expected to get a reported £11m payout later this week.

A number of other banks are due to announce their award pots as the bonus season gets under way in earnest over the coming weeks.

MPs are due to debate curbs on extra payments today amid a growing clamour for action.

Last night David Cameron's official spokesman indicated the Prime Minister sympathised with public feeling on the issue.

The Conservative leader was keen to see restraint exercised by boards and companies "whether they are in the public or private sector", he said.

Network Rail executives said they had decided to forgo the extra cash this year and instead give the money to improve rail safety.

There was outrage last week when it emerged Sir David was in line for the pay-out.

The company is to be prosecuted over the Grayrigg crash in Cumbria, involving a London to Glasgow Virgin West Coast train in February 2007 which claimed the life of Margaret Masson, 84, from Glasgow.

It also admitted criminal behaviour over the deaths of two schoolgirls at Elsenham in Essex, six years ago. It emerged the company refused to comply with requests by an internal safety report to build a new bridge, which would have cost £2m.

However, Network Rail executives could still pick up bonuses worth up to £2.6m, despite yesterday's announcement, as part of longer-term schemes.

The company has also postponed a meeting scheduled for later this week at which Transport Secretary Justine Greening was due to vote against the bonus.

The UK Government insisted the organisation's executives had made the decision themselves and were responding to the strength of public opinion, and Ms Greening described the announcement as "sensible and welcome".

The move came as Downing Street announced ministers would investigate the structure of the organistion. It follows criticism after Ms Greening claimed that while she could register her protest against any bonus she had no power to veto the payment.

The Institute of Directors, which represents business leaders, led calls for more action on the bonus issue.

Simon Walker, the director-general, said shareholder activism had "never been more necessary than it is today".

He said: "The Government is in the same position as the pension funds and investment institutions which own public companies. They should all take a vigorous role on remuneration matters."

He also called on ministers to investigate whether Network Rail itself was "fit for purpose".

Manuel Cortes, leader of the TSSA rail union, welcomed the decision, saying the Elsenham deaths "only happened because it refused to spend £2m on a new bridge at the level crossing despite an internal safety report demanding such action."

He added that he welcomed the announcement "as the first step in the direction of the directors starting to put safety and passengers ahead of their own handsome rewards".

Mick Whelan, general secretary of the train drivers' union Aslef, accused the executives of making a "tactical" decision in the face of public criticism.

Anthony Smith, chief executive of rail customer watchdog Passenger Focus, said the "bonus" passengers wanted was more of their trains to arrive on time.

Maria Eagle, Labour's Shadow Transport Secretary, said Network Rail's management had "done the right thing".

"At a time when so many families and rail commuters are being squeezed financially, when fares are rising by up to 13% and the rail network is performing inadequately, it was completely wrong for bonuses of this scale to have been even considered, let alone agreed," she said.

However, she accused the Coalition of being "out of touch" on the issue.

Last night Labour also rounded on the Conservatives after it emerged former City financier Michael Farmer had become their co-treasurer.

Mr Farmer, once dubbed "Mr Copper", founded RK Capital Management, whose Red Kite fund is one of the biggest metals hedge funds in the world. He has donated around £2.6m to the Tory Party.

Labour accused the Tories of being biased in the row over fat cat pay because many of their donors had vested interests.

Michael Dugher, Labour's Shadow Cabinet Office Minister, said: "You can judge the Tories by the friends they keep. David Cameron's newly appointed co-treasurer even describes himself as 'a fat cat'. The Tories are incapable of tackling irresponsibility in the boardroom, top pay and the big bonus culture.

"Why? Because they are too close to vested interests – and too out of touch to stand up for the public interest".

l More than 100 London investment bankers have launched a bid at the High Court in London to get €50 (£42m) in unpaid bonuses. The individual claims, ranging from €15,000 to €2m, have been brought by former employees of Dresdner Kleinwort Limited (DKL) against DKL and its new owner, Commerzbank.