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Mr. Pickles: The hon. Gentleman is reading from a prepared speech.
Mr. Hall: Of course I am. It is a long time since I have spoken in the House, and I am being careful about my remarks. Earlier today, I noticed that the hon. Gentleman was reading out his speech from the Dispatch Box in Westminster Hall.
Mr. Pickles: There is no Dispatch Box in Westminster Hall.
Mr. Hall: But the hon. Gentleman read out his speech.
This is an interesting debate. Railtrack came to my right hon. Friend the Secretary of State and asked for a blank cheque to oversee the running of the company not just for this year, but for many years to come. It is interesting that a public company should come to the Government and say, "Please will you give us a blank cheque to cover our operations." It is not the Government's role to underwrite companies on the stock exchange, nor is it their role to
give further subsidy to a company that has had so much Government money in the past five years that it should not have had to go to the High Court.
Chris Grayling: Will the hon. Gentleman give way?
Mr. Hall: Not at the minute. If the hon. Gentleman will allow me, I will develop my argument. If I do not cover the point that he wishes to make, I am prepared to give way to him later.
When the previous Government floated Railtrack on the stock exchange in 1996, it should have had a secure future. It had a valuable property portfolio and an annual guaranteed income stream of Government subsidy worth £1.8 billion. Why did it need to come to the Government after five years, during which it must have received £8 billion, to ask them to prevent it from being put in a position in which it might be trading insolvently and in which it was certainly unable to cover its costs.
Chris Grayling: Will the hon. Gentleman give way?
Mr. Hall: Not just yet; the hon. Gentleman must be patient. If he catches your eye, Mr. Deputy Speaker, he may get the chance to speak. There is a time limit on this debate, and I am conscious that many Members want to participate in it.
Railtrack ultimately failed because privatisation by John Major's Administration was a rushed, botched and incompetent exercise that failed to deliver value for money for taxpayers. Specifically, it gave shareholders confidence in an unsound company and left the travelling public saddled with an inefficient and unsafe railway network.
Mr. Clifton-Brown: The Government have had four years to sort it out.
Mr. Hall: Things take time. If the privatisation had not been botched in the first place, we would not have needed to use so much public money to sustain that public limited company. Today, we have not had any apologies from the Opposition for the way in which they privatised Railtrack.
Matthew Green (Ludlow): Will the hon. Gentleman give way?
We should receive at least some apology from the Opposition for the way in which they dealt with privatisation and for putting the travelling public in a difficult position. Right from the start, the Tories' motivation for privatising Railtrack was not difficult to discern. It was not to maximise receipts for the Treasury or make sure that the travelling public had a safer or more efficient railway—as my right hon. Friend the Secretary of State said, they were motivated by pure party political dogma.
I do not expect the House to take my word for that. I urge Members to read the twenty-fourth report of the Public Accounts Committee, from the 1998–99 session. The House will recall that Railtrack was floated on 20 May 1996, as I said, and shares were issued at £3.90. The offer was oversubscribed by 10 per cent. and the Government raised £1.9 billion from the sale. Like many preceding
privatisations, the sale of Railtrack was characterised by the fact that the company was undervalued, shares were underpriced and taxpayers were ripped off. It is no wonder that the PAC said that Railtrack
- "had been undervalued and sold in haste".
On 15 February 1999, in evidence to the Public Accounts Committee, Sir Richard Mottram, the permanent secretary at the Department of the Environment, Transport and the Regions, told the Committee that
- "in the political circumstances of that period, a 100 per cent. sale was required".
I have no doubt that I am right. Sir Richard Mottram is a highly regarded, top-ranking civil servant. His evidence to the PAC was given impartially and provides irrefutable proof that Railtrack was privatised for political purposes. The report also confirms that the aim of privatising Railtrack was to give shareholders the best possible deal. The House will realise that the Tories failed to achieve that.
At the time that Railtrack was privatised, it was described as having a secure and profitable income stream; a large asset base, including a substantial property portfolio; scope to reduce costs; and considerable investment potential. The Tory Government went even further and guaranteed the company an annual income of £1.8 billion, wiped off £1.4 billion of debts and offered the shareholders, in their first year, a return of 19 per cent. on their investment. Over the past five years, Railtrack has enjoyed about £8 billion of hard-earned taxpayers' cash, but in the same period the travelling public have suffered enduring delays in services, increased travel costs and misery at the hands of a privatised company.
Anyone who has had the misfortune to travel on the west coast main line will confirm that the two major problems facing the line are that the track is totally inadequate and the signalling is in urgent need of modification and major investment. The west coast main line connects the north-west and Scotland to London. It is in a deplorable state. I cannot tell the House how much the economy of the north-west has lost as a result of the state of the line, but one thing is certain: because of the way in which Railtrack has handled its affairs, the prospect of the west coast main line being improved and upgraded under its stewardship has been no more than a pipe dream. The cost of that project has risen to more than £6 billion.
Chris Grayling: Will the hon. Gentleman give way?
Mr. Hall: I give way to the hon. Gentleman, whom I have come across before.
Chris Grayling: The hon. Gentleman is presenting a black picture of Railtrack and its capabilities. If that is the
case, why did his Government choose to make Railtrack the principal investment vehicle for their 10-year plan for rail?
Mr. Hall: That is an important question. Railtrack was the company that owned the track at the time that the 10-year rail plan was introduced. It was not until the early part of this year that Railtrack told the Government that it was facing severe financial difficulties. That is the straightforward answer. It would have been stupid not to include in the 10-year plan the company that owned the track.
I beat the Conservative candidate in Warrington, South by only 191 votes in 1992. The hon. Gentleman fought the seat in 1997 and lost to my hon. Friend the Member for Warrington, South (Helen Southworth)—[Interruption.] I had not gone on the chicken run by then.
How could a company like Railtrack find itself in such financial difficulty? With all that public money, why could it not invest in the rail and provide a brighter future for people who travel on the railways? There are two possible answers: at the time of privatisation, either the then Government did not know the state of disrepair of the track, or they knew the state of disrepair but did not tell anybody. The investment problems that Railtrack has experienced since the Hatfield disaster have brought it to its present state. If the then Government sold Railtrack without knowing the state of the track, that is one thing, but if they knew about the state of the track and did not tell anybody, that is criminally deceptive. That question needs answering.
The next question that needs answering is why, once Railtrack was a publicly owned company, it did not carry out an investigation into the state of the track to find out what liabilities it had taken on? It might then have been able to plan a way forward to prevent the position in which it now finds itself. It might have been able to put a plan into action to build, over time, a railway that was efficient and effective for people to travel on.
I am not sure what the answer is, but one thing I know for sure is that Railtrack did not tell its shareholders about the state of the company when it went to see the Secretary of State to ask for more money. I am certain that it knew that it would find itself unable to meet its debts, and therefore went to the Secretary of State. He has made the right decision, which is why the Tory party is on the wrong side of the argument this afternoon. We must take forward Railtrack in administration, find a secure future for it and ensure that the travelling public are better looked after.
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