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5.37 pm

Mrs. Louise Ellman (Liverpool, Riverside): It is wholly appropriate that the Conservatives have brought the issue of Railtrack to the Chamber today. A better use of their time and ours, however, would have been to debate the possibility of a public apology by the Conservatives for their botched privatisation of our rail system, and to debate constructive proposals on how we might restore a rail service that meets the needs of the travelling public whom the right hon. and learned Member for Rushcliffe (Mr. Clarke) mentioned. We certainly do not have such a service at the moment.

Railtrack was, from the beginning, part of a botched privatisation. Some of my hon. Friends have already referred to the conclusions of the National Audit Office's report, and to the £6 billion shortfall in valuation between what was obtained and what was due to the public. Railtrack was part of a flawed system of privatisation that separated wheels from rail and fragmented the public transport rail system. Worse, Railtrack soaked up public subsidy as the beneficiary of at least £9 billion of taxpayers' money. It paid out £10 million to directors and £700 million to shareholders.

Mr. Pickles: Will the hon. Lady give way?

Mrs. Ellman: I am sorry, but there are time constraints in this debate. I might give way later.

In the uncontested petition made to the High Court by the Secretary of State, it was shown that the company had a projected deficit of £700 million by December, rising to an anticipated £1.7 billion by the end of March next year. Are the Conservatives seriously saying that the Government should have been prepared to give more to a company in such a financial state? It was eating up taxpayers' money and failing to deliver. It wanted unidentified amounts of money—open-ended cash supplies—and had predicted deficits that were not challenged in the petition to the High Court. To have done so would have been a dereliction of public duty.

We should consider what Railtrack has failed to achieve. I will make particular reference to the west coast main line, because as hon. Members have said, that is an important issue, especially to the north-west region. The Transport Sub-Committee discussions made a number of things clear. They showed that, before Railtrack was placed in administration, discussions took place between Railtrack and Virgin, and that compensation to Virgin was considered because of Railtrack's failure to modernise the west coast main line as promised.

During the Sub-Committee discussions, £300 million in compensation which Virgin thought was due to it from Railtrack was mentioned. Indeed, I have heard reference to larger sums. In addition, reference was made there and

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elsewhere to the fact that Virgin sought rail ticket price increases as part of the compensation package. Virgin considered that it had lost money because of the failure to modernise the west coast main line.

It is surely absurd and unjust that travellers on the west coast main line are losing out because Railtrack, before going into administration, failed to deliver modernisation as promised. Individuals are losing out; the economy is losing out. The economy of the north-west, and that of other regions, has suffered a great deal because of that failure; but according to statements made by the chief executives of Railtrack and Virgin in the Sub-Committee, we have confirmation that the public purse was asked to compensate the privatised company for failure to deliver what the public were promised. That adds insult to injury.

Mr. Pickles: Will the hon. Lady give way?

Mrs. Ellman: I may give way later.

The travelling public have already lost out because modernisation did not take place as promised, and now they are being asked provide compensation. That is particularly galling for travellers from Liverpool.

Owing to the privatised system and price rises inflicted by Virgin, some Liverpool-to-London services have increased in price by more than 100 per cent., and it is now impossible for anyone on such a service to get to London for less than £153 standard or £240 first class if they want to arrive before the afternoon. Liverpool is regenerating itself, but how can that be achieved if passengers face price increases of that order? They now hear that Virgin may increase saver ticket and other fares by 33 per cent. as part of the compensation package, because Railtrack failed to deliver.

Mr. Clifton-Brown: Will the hon. Lady explain how she can have confidence in her own Secretary of State levering in £34 billion of private finance, which will be needed if her constituents are to experience improvements in the London-to-Liverpool service and modernisation of the west coast main line?

Mrs. Ellman: My comments show how Railtrack, despite receiving large public subsidies, woefully failed to modernise the west coast main line. Instead of trying to cover up their bad record on rail privatisation, will the Conservatives suggest some positive ways forward? If they did so, I suggest that support from the private sector for investment would be forthcoming. However, Conservative Members are more concerned to cover up their misdeeds, mismanagement and incompetence than to look after the needs of the travelling public.

Condemnation of Railtrack's management is easy to find. The evidence was clear in discussions that took place in the Select Committee over the past two weeks. Before that, the Select Committee's all-party report of March 2001 criticised Railtrack's performance in maintaining, renewing and developing the network, and described it as seriously inadequate. That criticism was supported by Conservatives on the Committee.

Only last week, Tom Winsor, the Rail Regulator, told the Select Committee:

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I cannot think of a more damning indictment. Comments of that nature were also made, by implication, to the Select Committee by the Strategic Rail Authority, the Department and by others giving evidence, including by the chief executive of GNER. Again and again, we heard about a company that apparently had no interest in its customers. Indeed, according to the regulator, it was hostile to them.

Our interest, however, must be in deeds rather than words. For the west coast main line, Railtrack simply failed to deliver. One privatised company is now seeking compensation from the Government, and fares have been put up for already hard-pressed travellers because the privatised Railtrack failed to deliver. I cannot think of a more damning indictment of a privatised industry.

Mr. Pickles: Will the hon. Lady give way?

Mrs. Ellman: I am sorry, but I have only two minutes left.

We must now look to the future and consider what to do. I applaud the decision taken by the Secretary of State. It is appropriate that questions be asked about procedures and legalities, and questioning on those issues will continue at tomorrow's meeting of the Select Committee. However, it would be more appropriate if Conservative Members faced up to their failings of the past and, instead of continuing their dogged adherence to failed privatisation, accepted that rail privatisation was wrong. It was not in the interests of the taxpayer or of the travelling public, and I ask them to join Labour Members in seeking a constructive way forward, in which we have once again a rail service run in the interests of the travelling public.

5.48 pm

Sir Brian Mawhinney (North-West Cambridgeshire): The essence of this debate on the handling of the Secretary of State's decisions relating to Railtrack is best summed up by the fact that he could not even stay to listen to what was said about his behaviour, and has already fled the Chamber. I wanted to start by finding some common ground with him, although I admit that I shall go on to be critical thereafter.

I share the Secretary of State's unhappiness about the quality of Railtrack management over the past few years. Had the Conservatives been in government, we would have taken a similarly jaundiced view of some of the decisions and behaviour of the Railtrack board. Mr. Corbett has a lot to answer for.

The giveaway in the Secretary of State's speech was how frequently he had to resort to the partisan and ideological instincts of his Back Benchers. We have seen that in the House for generations; it is not a new instinct, but it is always a reflection of a Minister who is in trouble. That is what we heard today.

The Secretary of State was all injured innocence. He could not understand what the fuss was about, but the truth is that he has form. Some time ago, he told the nation about a conversation that he had with the chairman of BMW, and the chairman of BMW said, "It ain't so." He tells the nation about a conversation with the chairman of Railtrack and the chairman of Railtrack says, "It ain't so." He tells the nation of a conversation with the Rail Regulator and the Rail Regulator says, "It ain't so."

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It reminds me of that old saying, "Everybody's out of step except our Johnny"—everyone knows the meaning of that.

I dealt with the Rail Regulator. We had a series of meetings during my 11 months as Secretary of State for Transport. We recognised our individual responsibilities. We showed respect for each other's responsibilities. Neither I nor any of my Secretary of State colleagues ever threatened to take away the independence of the regulator if he did not do what we wanted him to do, or thought should be done.

We have now got to the point where, following the Rail Regulator's evidence—I am not getting into semantics, either—the chief executive of Railtrack has, I am told, talked on the record about the possibility of legal action against the Secretary of State for "malfeasance in public policy". The House should not underestimate the seriousness of that charge. Whether he is proven in a court to be guilty or not, the damage is done to Railtrack and indeed to the Secretary of State by the very raising of that charge. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was right, as he so frequently is. The Government do not understand that the Rail Regulator is one of the guarantors of the confidence of the City and the private sector in putting money into organisations such as that. The damage will be enormous.

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