SENIOR managers in charge of Scotland’s rail network will have their earnings slashed by regulators for the first time if passengers continue to suffer severe disruption.

Network Rail, the nationalised body that manages the rail infrastructure, such as the tracks and signals, is being investigated by the transport regulator requiring improvements after the punctuality and reliability of rail services slumped last summer.

The regulator is requiring urgent improvements of performance across the UK or senior managers will be personally fined from their annual earnings.

Network Rail Scotland was responsible for two in three of the delays which saw train operator ScotRail forced to settle 65,000 successful claims from passengers in nine months last year.

The ORR said in November that problems in implementing the new timetable in May, as well as extreme weather, had contributed to the worst performance since 2014 and possibly breached Network Rail’s licence conditions.

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Now the Herald understands that the regulator, the Office of Rail and Road (ORR) is to go ahead with a new way to penalise Network Rail for licence failures - by hitting executives and even staff directly in the pocket through their bonus schemes.

It is set to announce that from next month it will in future issue fines at a scale that should be paid from Network Rail’s staff bonus pot.

At the moment Network Rail can be fined by the regulator, but there are concerns the money comes from funds that could otherwise be used to improve the nation’s railways instead of staff directly.

The move could also have the effect of reducing bonus payments for Network Rail staff of a particular route where there was a problem. The move has been discussed with both Network Rail and the Department for Transport.

READ MORE: Scotland's railways set for £600m spending boost over five years

While the ORR cannot intervene in setting management bonuses the ORR would direct that any penalty would be capable from being funded from bonuses, and expect Network Rail to comply.

Andrew Haines, chief executive of Network Rail, said: “It’s right that we are held to account for how we deliver on our promises to passengers and freight users, and we welcome our regulator’s approach to this. We look forward to working with the ORR over the months and years ahead to ensure that passengers are at the forefront of our thinking and activity, so that we can deliver a better, more punctual and reliable railway.”

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The move comes as Network Rail staff has seen earnings boosted by big bonuses, including 61 in 2017/18 who got a bonus of more than £30,000 and two who received six-figure bonuses.

An ORR source said: "We have not used financial sanctions or penalties yet as this is a new enforcement tool. These would only be considered where we found evidence that Network Rail was in breach of its licence obligations. If that happened then our Board would need to decide what action was appropriate.

"The board could decide to issue a financial penalty and scale that to be capable of being paid from Network Rail bonus pot or it could decide to use the mechanism which would have the effect of reducing bonus payments for all Network Rail staff of a particular route."

"Careful consideration will be given by the board and they will be mindful of the impact of their actions, particularly on staff incentives and impact on future behaviour, and any financial penalties or sanctions will be deployed on a last resort basis "Hopefully by being more of an interventionist in the ORR can ensure issues are resolved early and avoid the need for enforcement but when things do go wrong it is important that the board has tools available to it to ensure Network Rail regains compliance."

Some 963 Network Rail employees received more than £100,000 in 2017-18, up from 882 in 2016-17 - as passengers endure the worst train services for nearly 20 years. Of those, 131 earned more than £150,000 last year.

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In total, 224 signallers receive between £80,000 and £100,000 and ten are paid more than £100,000 due to overtime and weekend pay.

The organisation revealed in June, last year, that the out-going boss Mark Carne would give up his £74,000 bonus.

Bonuses are set by Network Rail’s remuneration committee, which is chaired by an independent non-executive director and acts according to a management incentive plan that is meant to take into account whether a licence has been breached or is likely to be in future.

The Transport Secretary was yesterday quizzed by MSPs about the £18 million remedial plan which ScotRail has put in place after being in breach of key targets on performance and cancellations.

It has emerged that more than half of ScotRail's worst end of year punctuality performance for a decade were actually issues that were the responsibility of publicly owned Network Rail.

Office of Road and Rail figures revealed that the proportion of ScotRail trains that arrived at their destination within five minutes of schedule slumped to 82.4% for the period from October 1 to December 31, which includes 22 days of the post-new timetable chaos.

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Passengers posted their complaints about their issues online during the winter timetable trains disruption

But while ScotRail bore the brunt of criticism and apologised for their performance in the wake of the timetable cancellation chaos, new figures produced by the rail regulator, seen by the Herald showed that over the period 52.9% of the issues were blamed on Network Rail.

Nearly 40% of the blame was laid at ScotRail's door while nearly 8% was the responsibility of other train operating companies.

A report by the House of Commons committee of public accounts has revealed concerns about the performance of Network Rail in Scotland.

Network Rail has told the committee that in Scotland, there was a close working between ScotRail and Network Rail’s Scotland route, with both organisations headed by the same person, Alex Hynes (below).

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But the committee found in February that passengers in Scotland "still faced significant disruption from issues with rail infrastructure, partly due to the acute effects of the hot weather in 2018".

Network Rail has commissioned independent experts to review performance in Scotland, who have recommended a performance improvement plan, the progress of which was being tracked with Transport Scotland.

The committee says that Network Rail is reviewing its improvement proposals and aimed to have the plans validated by some of the train operators and present them to ORR by the end of March 2019.