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Mr. Dennis Skinner (Bolsover): Is the Secretary of State aware that when someone invests in that gambling den, the stock market, shares are likely to go up and then to fall again? When we consider Railtrack, it is almost incredible that the company made a hash of it. Now the Tories and their friends are worried about the money in their pockets. Will my right hon. Friend tell the House that when he discussed the three options the first was the present course; the second was to carry on handing over tons of money; and the third, which he has skimmed over very quickly, was renationalisation—I assume, without compensation? My right hon. Friend should not dismiss that option so lightly. When we consider the whole mess of British Rail and its 20-odd different pieces, at some time or other we shall have to come back to the question of a fully, publicly owned rail system in Britain.
Mr. Byers: My hon. Friend makes a case that some of us have heard before about the need to nationalise the railway industry. That was one of the three Rs put to us by the advisers to Railtrack: receivership, renationalisation or restructuring. I hate to disappoint my hon. Friend, but it was not an option that we pursued with a lot of vigour. However, the options before us as a result of going for railway administration will give us the chance to provide a railway network fit for our country.
My hon. Friend is right to say that shares can go up or down. What is interesting about Railtrack—uniquely for a private sector company—is that fully two thirds of all its income came directly by Government grant. That was the real problem for Railtrack. Of course, the company always depended on the Government to bail it out and sign the cheque but in the end it came once too often and the Government had to say no.
Sir Brian Mawhinney (North-West Cambridgeshire): The right hon. Gentleman talks about market-sensitive information. How can anyone have confidence in the integrity of his proposals when he stood back and allowed employees and the public to invest in Railtrack shares while he was working behind the scenes to devalue those
shares? Does he not understand that he may retain the title for the time being, but that he is in grave danger of losing the moral authority that underpins it?
Mr. Byers: I can understand the anger that the right hon. Gentleman expresses because, of course, he was a member of the Government who put Railtrack in place. It is as simple as that, and the position is very clear.
Sir Brian Mawhinney: Shareholders.
Mr. Byers: Shares in Railtrack were devalued because of the actions of Railtrack directors, and the right hon. Gentleman needs to consider the fact that the price of Railtrack shares dropped dramatically over the years because of the way in which the company was run. As a former Secretary of State for Transport, he will know that there is no obligation on a Secretary of State who receives information in confidence from a company to give the details to shareholders. He knows very well where that responsibility lies: in law, it lies with the directors of Railtrack. They knew the financial situation that they faced and that the chairman had come to me on 25 July and said, "If you don't give me more money, I cannot make a statement on the 8th of November that we are a going concern." What did he tell his shareholders?
The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Mr. David Jamieson): Nothing.
Mr. Byers: That is right—nothing. He said not a word to his shareholders. I discharged my responsibilities, but did the directors and the chairman of Railtrack discharge theirs?
Mr. Bill O'Brien (Normanton): My right hon. Friend must be aware that a substantial number of rail passengers support his action because of the problems and difficulties that they have witnessed during the years of privatisation. He will also be aware that there are still a number of issues to be addressed on the east coast main line. Will the new authority undertake to complete the outstanding phases to bring the east coast main line up to standard? Even today, we experienced a 90-minute delay in services between Leeds and King's Cross, and passengers are complaining about that kind of service. Will my right hon. Friend ensure that the new authority will continue to maintain and improve the east coast main line?
Mr. Byers: One of the benefits of the new proposals is that the operator of the licence will no longer be responsible for major upgrades to the network. One of the great difficulties that Railtrack faced with the west coast main line was the fact that the cost was originally estimated at a little more than £2 billion, whereas the estimates are now £6 billion or £7 billion, perhaps even more. That crippled Railtrack's finances. Under the new structure that we want to put in place, the network operator will be responsible for renewals, operations and maintenance of the network, but not for major infrastructure work.
We propose a special-purpose vehicle, whereby the Government, the Strategic Rail Authority and the private sector will work together to ensure that major projects can be completed. I am confident that the east coast main line
could provide us with one of the first opportunities to use a special-purpose vehicle to carry out the work that I, as a user of that line, know will be so important in future.
Mr. Andrew MacKay (Bracknell): What advice on the timing of the Railtrack announcement did the Secretary of State receive from his special adviser, Jo Moore?
Mr. Gerald Kaufman (Manchester, Gorton): Does my right hon. Friend accept that he would have been irresponsible if he had not put in train the detailed contingency work required to deal with the incompetence of the gang of feckless mendicants that was put together by the Conservative party? The fact that Conservative Members are unaware of the need for such contingency plans shows how far away they now are from the responsibility of government. If they continue with such absurd and pointless antics, it will be far longer before they can even form a credible Opposition.
Mr. Byers: It is noticeable that, since Railtrack was put into administration, no great difficulties have arisen. I want to take this opportunity to thank and congratulate all the workers in Railtrack. While the company has been in administration, they have turned up daily and worked in a dedicated and highly motivated fashion: they are railway people, putting the interests of the railways first.
In taking the decision to go for railway administration, we had to prepare for a range of issues, of which the railway administration orders are an example. The House would rightly have been critical if we had not been able to act on our decision to go for railway administration because we had not put the contingency arrangements in place. We had to make such arrangements—it was one of the options available to me. Therefore, when I took the decision on Friday 5 October, I had to make a judgment between railway administration or additional Government funding for the proposals from Railtrack. I took the decision that no further Government money would be made available, and we had the appropriate contingency planning in place for that decision.
Mr. Peter Lilley (Hitchin and Harpenden): The Secretary of State ended his rather partisan statement by saying that privatisation had prevented money from being invested in services for passengers, and that instead it had been paid out in dividends. Will he confirm the answer that a junior Minister gave me: that the total invested by private investors in Railtrack exceeds by a factor of nearly three the amount paid out in dividends? Will the Secretary of State explain how people are to be persuaded to invest in other public-private finance initiatives when they know that the Government, having pocketed their money, may suddenly cease to pay dividends or to return any of it to them?
Mr. Byers: As the right hon. Gentleman knows, the Government made crystal clear our response in relation to Railtrack on 2 April, but I shall repeat that important statement for the benefit of the House. When we agreed on 2 April to make available £1.5 billion to Railtrack—£337 million of which was paid on 1 October—we wanted
our approach to Railtrack and to other companies in the railway sector to be made clear to shareholders. That is why we said:
- "The Government stands behind the rail system but not individual rail companies and their shareholders".
The right hon. Gentleman will also be aware that the City knows that Railtrack is a unique being. The City is still interested in public-private partnerships because it knows that they are quite different from the privatisation of the railways that he so enthusiastically supported.
Dr. Howard Stoate (Dartford): I thank my right hon. Friend for the helpful statement that he will put the travelling public first. That is more than we hear from Conservative Members, who seem to be interested only in shareholders.
My right hon. Friend will be only too well aware that the channel tunnel rail link phase 2 will not just benefit the travelling public but will be enormously important to the economy of this country. It will bring huge regeneration opportunities to north Kent, east London and all points north. Will he therefore assure the House that major projects such as the rail link will go ahead on target? That would reassure my constituents in Dartford that it is business as usual and that we will have the economic development that we badly need.
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