John Armitt: You may laugh, but the golden bunny is getting Britain's trains to run on time

John Armitt, the chief executive of Network Rail, believes he may have found the solution to Britain's unreliable trains. It's not an extra £10bn of public money, a new fleet of trains or even the renationalisation of the network.

No. The railway industry's holy grail can be found in most garden centres and costs little more than £15. In the sometimes surreal world of the quasi-privatised railways, a plastic rabbit, spray-painted gold, has become the unlikely source of motivation to thousands of engineers with responsibility for keeping the trains running on time.

Each month the top-performing Network Rail region is awarded the golden rabbit (it is currently held by Sussex). And, according to Armitt, competition between the regions for the rabbit is fierce.

"You can poke fun at it but this provides a focus for the guys. It helps to remind people that the number one thing we are trying to do is improve performance and punctuality for passengers on the railway," he says.

Today, Network Rail is two years old. Golden rabbits aside, Armitt argues it is now "a much more self-confident organisation". A company limited by guarantee, with no shareholders, Network Rail replaced Railtrack after the Government controversially put the latter into administration.

Headed by the considered and softly-spoken Armitt, Network Rail has steadily amassed power in the territorial and fragmented rail industry. He announced plans last year to take full control of track maintenance, which involves the transfer of 15,000 engineers from the private sector. Network Rail also secured a five-year government funding package, totalling £24.4bn, after a lengthy battle with the regulator. And the company is about to inherit yet more powers, taking on some of the Strategic Rail Authority's functions, as a result of the summer review of the railways by Alistair Darling, the Secretary of State for Transport.

"If you are a passenger then, yes, there are the lousy days when something goes pear shaped," concedes Armitt, "but those are reducing. Statistically, our performance is getting better month-on-month."

Not everyone sees it this way. Delegates to the Labour Party conference last week voted to renationalise the railways, although the move was quickly rejected by Labour's high command, which blamed the result on union block voting.

"The vote was disappointing. But I don't think that the travelling public mind who the railways belong to so long as trains turn up on time, are safe and comfortable," says Armitt.

One of the main criticisms of rail privatisation was the separation of track and train ownership. As a result, if a train operator is delayed by the track owner then it claims compensation, and vice versa. Mr Darling has expressed amazement at the number of lawyers working in the rail industry, and his latest reorganisation was billed as a way of aligning the interests of the various industry parties.

"The rail review has created an environment where Network Rail and the train operators have said to the Government: we'll sort this out; we will work together; we will deliver," says Armitt.

But he admits that compensation payments will continue. "I know the operating companies would be very reluctant to see [the payments] disappear. The way to minimise the payments is quite simply to improve the infrastructure - the fewer times it fails, the less likelihood of us having to pay out. Hopefully the compensation culture will wither on the vine."

The publication of this summer's rail White Paper coincided with the departure of Tom Winsor, the combative rail regulator who at times was a fierce critic of Network Rail. However, early signs are that the new regulator, former Transco director Chris Bolt, is not planning to give Network Rail an easy ride. In a document published last month which sets out how the Office of Rail Regulation plans to implement the Mr Darling's White Paper, Mr Bolt raises questions over the very structure of Network Rail.

It may have no shareholders, but Network Rail is still accountable to 100 "members". These are made up of representatives of the travelling public and rail industry executives. But Mr Bolt argues that "members do not have a personal financial incentive to require [Network Rail] to increase its profitability through greater efficiency" and he questions whether they are the best people to hold Network Rail to account.

Armitt hits back: "If there was one section of Chris's document I thought, Bloody hell! when I read it, then it was the bit on corporate governance. Network Rail is monitored in a way no plc is. We are held to account by the rail regulator. He has teams of people inside this organisation to report on what they see going on. We meet with our members more than most plcs would meet with their shareholders. And anyone who attended the AGM in Cardiff would have seen questioning comparable to any listed company.

"Frankly, there are far better things to do to make the railways better than be worrying about the corporate governance of Network Rail."

One improvement Armitt is eager to see is in staff safety. A failure to reduce the number of accidents on the tracks is his biggest disappointment - underlined on Tuesday, when two rail workers in Staffordshire were hit by a maintenance truck and killed.

"The issue is not about writing more rules," he explains. "We face a considerable challenge to change the culture and behaviour of people. There is still a feeling [among engineers] that, 'Oh, the company will give me a pat on the back by cutting a corner and saving a few bob.'"

Mr Armitt has experienced at first hand workers' lax attitude to safety. He recalls a track engineer who, clipboard in hand, read out a list of safety rules to his colleagues, and reminded them: "It's wet, so sleepers may be slippery." The engineer then got the men to sign a piece of paper to confirm they had understood the rules. "Then, suddenly," Armitt relates, "he decides to break into a sprint - and slips on a sleeper. He isn't hurt, so he shouts: 'I'm fucking stupid, Jimmy', and off he goes again. This issue is so much about leadership."

Mr Armitt has achieved much in his two years at Network Rail. Performance is on the up, costs have been contained and decision-making centralised. But changing the culture of the tens of thousands of engineers and labourers on the ground is arguably his toughest challenge. Meeting that challenge may take more than a plastic rabbit.

BIOGRAPHY

Born: February 1946.

Education: studied civil engineering at Portsmouth College of Technology.

Career (1966): graduate civil engineer, John Laing Construction.

1970s and 1980s: various engineering and management positions with John Laing, including two years spent in Poland (1976-78).

1987: executive chairman of Laing's civil engineering and international divisions.

1993: chief executive of Union Railways (responsible for the Channel Tunnel rail link).

1997: chief executive, Costain Group.

2001: chief executive, Network Rail.