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Mrs. Anne Campbell (Cambridge): Will the hon. Lady confirm that it is the Conservative party's policy to compensate shareholders to the tune of between £7 billion and £8 billion?
Mrs. May: Shareholders are entitled to compensation based on the value of the company. [Hon. Members: "How much?"] Labour Members all want to know how much, but perhaps they would also like to know that those were not my words but those of the Prime Minister.
Mrs. May: I will not give way.
The Secretary of State and the Labour party were thinking about renationalisation some time ago, but compensating shareholders would cost too much. So the right hon. Gentleman—ever keen to help the new Labour project—devised a cunning plan. He knew a way of renationalising without compensating shareholders. He would drive the company to the wall, put it into administration and renationalise on the cheap. How else
could he explain the way in which he and the Treasury held out on the discussions on the new company, Renewco? How else would he explain holding back the payment of £162 million that was due on 1 October, keeping the Strategic Rail Authority in the dark and not meeting its chairman from June to this day, as far as I am aware, to discuss his plans for Railtrack? How else does the right hon. Gentleman explain that he took such great pains at the beginning of April to state—a statement that he has relied on consistently since the company was put into administration—that the Government stood behind the network, not any company? How does the right hon. Gentleman explain keeping the Rail Regulator in the dark and then stopping him in his tracks when he suggested that he could help the company out?
Mr. David Laws (Yeovil): Is the hon. Lady aware that the head of the Financial Services Authority gave evidence to the Select Committee in which he confirmed that evidence from Railtrack has now been lodged with the FSA? He has therefore written to the Secretary of State and the Department asking for a response. Does it makes sense for the House to make a judgment on those issues and the Secretary of State's future without even bothering to read the report that the FSA is now going to prepare?
Mrs. May: We are not short of accusations against the Secretary of State which we can use to make a judgment on him, notwithstanding the report that will be prepared by the FSA. The plan is clear; it was devised by the Secretary of State and the Treasury was complicit in it. But like all Baldrick's cunning plans, it does not look so clever now. It means delayed or cancelled projects; phase two of the west coast main line has been delayed; likewise Thameslink 2001 and improvements to South Central.
Mrs. May: No, I am not giving way any more.
It is clear that the plan of the Secretary of State means two years of chaos on the railways and delay in improvements. Indeed, the Prime Minister predicted that on 6 June, when he said that it would
- "probably take two years before we sorted everything out and, in those two years, we would have the railways in a state of paralysis and not be able to start the investment programme that is there now ready to go."
Mr. Winterton: I am glad that I carry some small influence. Is my hon. Friend prepared to go into detail about the implications of that sad saga for the west coast main line, which is critical to the economic future of the north-west of England?
Mrs. May: I should tell my hon. Friend that I never could resist a more mature man.
The plan has indeed delayed the second phase of the west coast main line project; I know that that is a cause that my hon. Friend has valiantly championed. As the Rail Regulator made clear in his evidence to the Select Committee, it has caused extreme problems for Virgin in the purchase of tilting trains. Indeed, the Government can kiss goodbye to the subsidy that they were going to receive as a result of those developments.
Mr. Donohoe: Will the hon. Lady give way?
Mrs. May: No. The hon. Gentleman should take that as a compliment; I obviously do not think that he is more mature.
The plan of the Secretary of State means increased cost to the taxpayer as the private sector walks away from investment or demands more government guarantees or a higher price for that investment.
Mrs. May: No, I am not going to give way any more—[Interruption.]
Mr. Speaker: Order. Do not drown the hon. Lady out.
Mrs. May: Thank you, Mr. Speaker.
Claire Spottiswoode, the former gas regulator, said this morning when talking about Government intervention in Railtrack that
- "that would increase the cost of raising capital in the markets. And, of course, if the cost of raising finance for Governments goes up, then that affects all of us through increased taxes."
- "Now all I have left is my pension. We aren't the fat cats Mr. Byers and MPs think we are."
The Secretary of State stands accused of failing to inform the House; of holding promised funding back from the company; of stringing the company along by talking about the future, while he knew that he was going to pull the plug on it; of letting Railtrack staff take dividends as extra shares, when he knew that the shares would soon be worthless; of increasing the cost to the taxpayer of future investment in the railways; and of causing delay to the improvements in the rail infrastructure. The Secretary of State stands accused. There is only one verdict for the House to return: guilty as charged.
4.1 pm
The Secretary of State for Transport, Local Government and the Regions (Mr. Stephen Byers): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
- 'recognises that many of the problems of the railways stem from the years of underfunding of the industry by the previous Conservative Government and the shambles of their rushed and ideologically driven privatisation of Railtrack; welcomes the decisive action that Ministers have taken in regard to Railtrack which will be welcomed by the travelling public; congratulates the Government for developing contingency plans for the industry as soon as it was told of the company's plight; rejects the policies of the Opposition, who would have offered the company a blank cheque and even now wish to pay over £1bn to compensate shareholders; and welcomes the work of Ministers in developing positive policies to take the industry forward in terms of a successor to Railtrack and to put the interests of passengers first.'.
We are witnessing a Tory smokescreen—an attempt to hide the fact that the Labour Government, and I as the responsible Secretary of State, have taken action against the failed privatisation that was Railtrack. The travelling public know that Railtrack was a failure. The City knows that Railtrack was a failure. The railway industry knows that Railtrack was a failure. The only people who regard it as a success are the architects of Railtrack: the Conservative party.
The hon. Lady made a number of allegations and posed some questions this afternoon. It is interesting to note that they are the same allegations and the same questions raised by people who have a vested interest. There are those who seek compensation from the Government. Those shareholders are now clearly aided and abetted by the Conservative party. The Government's position is clear. We believe, as the Prime Minister said last week, that shareholders should get what they are entitled to, but that there should be no new taxpayers' money to compensate them.
We now know that Railtrack has said that it wants £3.60 a share, guaranteed by the Government, regardless of the company's assets or liabilities. That would mean more than £1 billion of taxpayers' money being used to compensate shareholders for a bad investment. No doubt pressure will continue to try to force the Government to pay for the company's incompetence, but we are clear: investments can go down, as well as up. As we said on 2 April, we stand
- "behind the rail system but not behind individual rail companies and their shareholders".
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