As chairman of Network Rail’s Membership Selection Panel, I would like to thank you for asking for the Information Pack about becoming a Public Member of Network Rail.  Should you decide to apply, I hope that you find this letter and the information provided helpful as you consider how to complete the Application Form.

When Network Rail was created, as a private company tasked to provide a public service, a “company limited by guarantee” structure was considered to be the most appropriate governance structure. Such a company does not have shareholders. Instead it has Members. That said, the role of Members is broadly comparable to that of shareholders. Members do not take executive decisions for the company. They do not duplicate the work of the company’s non-executive directors who sit on the Board of the company. Rather, it is the task of Members to hold the Board as a whole to account for the way in which the Board is running the company.

Network Rail’s Members need to satisfy themselves that the company has in place internal processes which should enable the Board to make sensible decisions on the key issues facing the company. These key issues include the overall strategy for the business; safety, financial management and operational performance. Members need to satisfy themselves that there are clear points of accountability within the company for these issues. Equally, Members need to be satisfied that the Board has effective arrangements to sustain its relationships with its key outside stakeholders, such as its regulator (the Office of Rail Regulation), the Department for Transport, suppliers and customers.

The formal way in which Members carry out their task is by receiving the company’s Annual Report and Accounts and by attending the company’s Annual General Meeting, usually in July. At the AGM Members are presented with resolutions the same as those at any company’s AGM including to accept the Report and Accounts; to approve the Directors’ Remuneration Report; to elect or re-elect Board Directors.

In addition Network Rail provides other opportunities during the year for Members to meet Board Directors. These give Members the chance to question the Board in more informal settings than the AGM.

There are in fact two classes of Members – Industry Members, who are companies in the rail industry who meet certain eligibility criteria, and Public Members. The latter are in the majority. We are now seeking to make new appointments of Public Members.

Given the role of a Public Member, we wish, crucially, to appoint individuals who can demonstrate to the Panel that they have experience of holding an organisation to account and who, in doing that, have shown that they can make a personal impact. Such experience might have been gained in any one of a variety of organisations – a company, a public service, a charity or a school. Importantly, the Panel is not looking only to identify people who have done this just within large companies.

From those who pass this test we wish to assemble a blend of experience across the Members as a group, whether that comes from large or small businesses, public services, charities, the professions or elsewhere. The Panel is particularly interested in candidates who themselves have a breadth of experience – for instance, within a business and also within a charity. We also seek to sustain a wide range of backgrounds in terms of age, gender, geographical location, and so on.

I need to tell you that one of the recommendations recently put to the Board of Network Rail by a group of Members was that the number of Members be reduced from the current number of about 100 to about 30. This proposal is being given careful consideration. No decisions have been taken on whether - or when - changes should be made in the current structure. The MSP, and the Board of Network Rail, decided, therefore, that it would be appropriate to continue to seek new Members in 2009.

As you complete the Application Form, may I invite you to ask yourself three questions:

• Have I demonstrated my experience of holding an organisation to account?
• Have I shown that I have the ability to make a personal impact when I am doing this?
• Have I set out the full range of my experience that should be relevant to being an effective Public Member?

Yours sincerely

Alastair Macdonald

Chairman, Membership Selection Panel