Jarvis has been heavily criticised after derailments

The 16% fall in the company's share price on Thursday followed news that Network Rail is investigating the company over allegations that records of substandard rail upgrades were falsified.

It comes as Network Rail revealed it is to stop using private contractors to maintain Britain's railways.

The work is to be taken in-house, a decision which will affect seven contracting firms and more than 18,000 workers.

'Serious allegations'

Network Rail has said there are major question marks over the quality of work done by Jarvis over the summer to upgrade the west coast main line.

A 40-mile segment of track between Stoke-on-Trent and Macclesfield had areas where the track had been laid incorrectly - not stretched to the right degree.

And Network Rail has had to introduce 20 temporary speed restrictions which have slowed trains and caused delays.

In a statement, Jarvis said it took the allegations extremely seriously and was investigating them.

It also said: "To the best of its knowledge, these allegations are without foundation."

Anomalies

Network Rail is angry that work has not been done properly, but a statement issued by chief executive John Armitt went further, saying the company has received allegations that records were falsified.

He said: "These are serious allegations which Network Rail is treating accordingly.

"There is a full investigation underway being led by the director of projects and engineering and the chief engineer and when they have established the full facts then the executive directors of company will decide what action needs to be taken."

Jarvis denies there has been any falsification of any paperwork and insists the final paperwork has not been received by Network Rail.

It said preliminary papers had gone forward, conceding these might have contained anomalies but maintaining they would have been picked up by the company's quality control.

Jarvis said no final certificate for the work had been issued and that it was correcting the faults in the upgrade work.

Relations damaged

It said any employee who falsified paperwork would be subject to instant dismissal and possible prosecution.

The latest allegations are a further blow to relations between Network Rail - set up to replace rail infrastructure firm Railtrack - and Jarvis, one of the biggest rail contractors.

Jarvis has already abandoned rail maintenance work because of fears of damage to profits and its reputation, undermined by a number of high profile incidents.

The firm is being investigated for its role in the Potters Bar crash last year and a derailment at Kings Cross station in London last month.

The heads of all the major railway engineering companies are being given the news that Network Rail is to take maintenance work in-house on Thursday evening.

It is expected the announcement will be made to the Stock Exchange on Friday.

More than 18,000 track workers will be transferred from their current jobs, to new positions at Network Rail.