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Mr. Douglas Hogg (Sleaford and North Hykeham): Will the right hon. Gentleman tell the House what he has so far refused to tell me in reply to my written question: when, after 1 August, did his Department receive advice from the Treasury that it was unlikely that public funding for Railtrack would be approved?
Mr. Byers: The issue that the right hon. and learned Gentleman raises concerns the relationship between different Departments. The position is clear. I took the
decision on 5 October based on the advice that I had received, including advice from my colleagues in the Treasury.
Mr. John Redwood (Wokingham): On 3 July, the right hon. Gentleman told the House that it would cost £6 billion to set up a not-for-profit company, £2 billion to pay the shareholders and £4 billion to pay the debt holders. We know that he has decided to mug the shareholders and rob them of the whole £2 billion, but is it also his intention to rob the bond holders? Should they not be told, or does his scheme cost £4 billion plus the cost of sorting out the mess?
Mr. Byers: The right hon. Gentleman knows, because I have made the statement in the House before, that on 25 July circumstances changed dramatically. That was the day on which the chairman of Railtrack, John Robinson, came to see me and outlined the position as he saw it. I will say something specifically about 25 July in a couple of minutes because the hon. Member for Maidenhead raised some serious points about that discussion.
The Conservative party's difficulty with the issue is that Railtrack was the last throw of the privatisation dice when, in the dying days of the Major Government, it was floated on the stock market. Helpfully, the flotation was subject to a report by the Public Accounts Committee during the previous Parliament, when it was chaired by the right hon. Member for Haltemprice and Howden (David Davis), who is now chairman of the Conservative party. That report, the twenty-fourth report of the Public Accounts Committee, makes valuable reading and I commend it to Opposition Members.
Michael Fabricant (Lichfield): Will the right hon. Gentleman give way?
Mr. Byers: No, because I want to address this particular issue, but I will be more than happy to give way to the hon. Gentleman later.
The key finding in relation to the flotation of Railtrack that emerged from the Public Accounts Committee's report—bear it in mind that it was rushed through ahead of the 1997 general election—was:
- "The timing of the sale was a factor in the poor value achieved, and the Department themselves acknowledge that the large increase in Railtrack share price since flotation was because it had been undervalued and sold in haste."
Mr. Byers: I want to make this point, but I will give way in a minute.
- "The share price of Railtrack quadrupled in two and a half years with the result that the taxpayer received less than £2 billion from the sale of shares compared with the company's current valuation of nearly £8 billion."
Mr. Salter: Will my right hon. Friend explain to the House, in addition to the staggering increase in the share
value of Railtrack after privatisation, exactly how much money has been paid to the shareholders and directors? The information that I have suggests that about £700 million has been paid to shareholders and £10.4 million has been paid in bonuses to Railtrack directors. Are those figures correct?
Mr. Byers: My hon. Friend is absolutely right. During the period of privatisation, some £700 million was paid in dividends to shareholders and some £10.4 million to directors by way of remuneration.
Mr. Byers: Members of the Select Committee will have an opportunity tomorrow afternoon to quiz me at great length, so I shall give way to the hon. Member for Lichfield (Michael Fabricant).
Michael Fabricant: Will the Secretary of State answer the question of my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg), and say precisely on what date he was advised by the Treasury that funding would not be made available to bail out Railtrack?
Mr. Byers: I have answered the question, although hon. Members might not like the answer. The decision was mine, taken on behalf of the Government, on Friday 5 October. That was when the decision was taken by myself as Secretary of State. It was a decision for me to take on behalf of the Government. That is the situation. I have explained it to the House before.
Michael Fabricant: On a point of order, Mr. Speaker. I think that the Secretary of State has misunderstood my question. I asked him not when he made the decision, but when he was advised.
Mr. Speaker: The Secretary of State is entitled to misunderstand questions.
Mr. Byers: I will try not to misunderstand the question, Mr. Speaker.
Michael Fabricant: Will the Secretary of State give way?
Mr. Byers: If I can have a second chance of explaining the matter to the hon. Gentleman, he may find it beneficial. I know that he has not had experience of government and is unlikely to get any, but the reality is that, in government, there are Secretaries of State who are responsible for taking decisions. I was responsible for taking the decision in relation to Railtrack.
Mr. Ronnie Campbell (Blyth Valley): It was the right one.
Mr. Byers: I thank my hon. Friend very much. I took the decision on Friday 5 October.
Mr. Byers: I want to make some progress, as many hon. Members wish to speak.
Mrs. May: Will the right hon. Gentleman give way?
Mr. Byers: Of course, I give way to the hon. Lady.
Mrs. May: Perhaps I can give the Secretary of State some assistance in this matter. Will he inform the House whether he had any discussions with the Treasury, or whether any of his officials had discussions with Treasury officials, in which it was indicated that funding would not be forthcoming, prior to 28 September, the date on which The Stationery Office published the administration order?
Mr. Byers: I have to say that the question of the printer's mark of 28 September—[Interruption.] That is the issue that the hon. Lady raised. I have already explained that the nature of government is such that there is advice that Ministers receive, and decisions were taken on Friday 5 October. That is the situation. [Interruption.]
Mr. Speaker: Order. The House should allow the Secretary of State to answer. It is unfair not to do so.
Mr. Byers: In relation to 28 September, I explained to the House last Monday that that was a printer's mark, and not a fax, as some people suggested. It was a printer's mark of the sort that The Stationery Office often uses. The issue was raised by the hon. Member for Maidenhead. I am seeking to outline the circumstances. I shall answer the allegations in a minute.
Mrs. May: I am grateful to the Secretary of State for giving way a second time. I did not ask him about 28 September and the printing of the document. I asked him whether he or any officials in his Department had had any discussions prior to that date with Ministers or officials in the Treasury at which it was indicated that funding for Railtrack was unlikely to be forthcoming from the Treasury. It is a simple question—is the answer yes or no?
Mr. Byers: The situation is this, as I have explained to the House on two previous occasions: there were two options that were being worked up. One was a situation of a decision being taken to put Railtrack into railway administration. Of course, in all those discussions, various Departments would have been involved. Alongside that were the restructuring proposals being made by Railtrack, which were being actively considered at the same time. We had two programmes of work that went alongside each other, with a decision taken on Friday 5 October. I hope that that makes it perfectly clear for Opposition Members.
Mr. Salter: Will my right hon. Friend give way?
Mr. Byers: No; I want to make some progress.
I am trying to explain the background to Railtrack's formation, because there is a very important message here about how the Conservatives use public money to prop up their own approach to public services. I have already outlined the useful finding from the chairman of the Conservative party that the shares were undervalued by some £6 billion. But the situation is worse than that, because to ensure that the flotation was a success, £1.4 billion of debt owed to the taxpayer was written off by the Conservative Government. In addition, £69 million of profit, earned while Railtrack was in public ownership, was held back from the public, but then given to shareholders by way of a dividend. Taxpayers' money
was recycled as profit for Railtrack, sprinkled like confetti among shareholders—yet not one of them was a shareholder at the time when that profit was made.It is also enlightening—it shows the climate of the times under the Conservatives—to consider how the shares in Railtrack were marketed at the time of flotation. One financial adviser produced a pamphlet that stated:
- "Railtrack is essentially a property company and the land that Railtrack will own could be regarded as one of the most valuable pieces of real estate in the United Kingdom."
- "a captive audience of passengers who are all potential customers . . . This waiting time is valuable selling time for retailers and food providers".
The hon. Member for Maidenhead has made—
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