---

Madam Deputy Speaker (Sylvia Heal): Order. I remind the hon. Gentleman of the narrowness of the debate. We are discussing the process of administration, not what took place before it.

Mr. Pickles: You are right to tick me off, Madam Deputy Speaker. I cannot understand how I allowed myself to be drawn away from this most important order.

Mr. Hawkins: Will my hon. Friend give way?

Mr. Pickles: I do not know; I am in the doghouse. I can give way only if my hon. Friend does not tempt me from the subject of the debate.

Mr. Hawkins: I assure my hon. Friend that I will not tempt him to incur the wrath of Madam Deputy Speaker. Although this is a precise order on the process of administration, does he think it remarkable, given the history of the problems that we have set out, that the Secretary of State does not have the courage to come to the House and deal with this important matter?

Mr. Pickles: To be honest, I did not expect the Secretary of State to be present. He is probably going through texts of meetings and crossing things out. I will not stray further, Madam Deputy Speaker, although I hope that you will indulge me on a couple of points, such as the need to assess the background to the order.

Mr. Nicholas Winterton (Macclesfield): I will stick religiously to the document, Madam Deputy Speaker. Paragraph 3.2 of part 3 is on verification, which, to me, means the truth. Is not my hon. Friend trying to get to the base of the problem and the truth of the issue? I am in no way questioning your ruling or observation, but are we not entitled find out the truth behind this administration order?

Mr. Pickles: My hon. Friend has enormous experience of procedures in this place and he sums up the situation. However, I am not going to take Madam Deputy Speaker on, certainly not on a Thursday evening. I respectfully explain that the order relates to affidavits and so on and I will touch briefly on such matters, including the Chancellor's approach to them, but before I do that I shall address matters of substance.

We need to understand what impact the order will have on Railtrack. Ministers have been kind enough to talk to us in the confines of the Lobby because they are unhappy with the Department for Transport, Local Government and the Regions. We understand that the order has cost

22 Nov 2001 : Column 549

£100 million to put together, which is to pay lawyers, accountants and financial advisers. We also understand that the Government have promised, in relation to the order and the way in which it comes into operation, £800 million to deal with the day-to-day operation of Railtrack, and that a further figure of £650 million is also to be used.

It is little wonder that officials who helped to draft the order told the Daily Mail that they feel like deckchair attendants on the Titanic. They believe that Railtrack is under the control of an independent administration that cannot raise the cash in the City and that hundreds of rail improvement schemes are frozen. We need to discover how those matters will be dealt with in the administration process.

Mr. Hawkins: Does my hon. Friend agree that the problems that he identifies and the views of the officials would become much clearer if the Government were not ignoring their code of practice and their protestations on open government by blocking all the requests that we have tabled for the civil service minutes on the Secretary of State's private meetings on this saga to be placed in the Library and made open to the public gaze?

Mr. Pickles: I agree with my hon. Friend, and he is not the only one complaining; I remind him of the views of the Joint Committee on Statutory Instruments. The Government have paid no attention whatever to rules on openness, yet this most important of statutory instruments breaks new ground in laying down rules on insolvency in the railway industry. We will now have three forms of insolvency: one for the water industry, one for railways and a general set of rules.

I hope that the Minister will explain whether the company will be subject to European competition rules when it comes out of administration. He will no doubt recall that I asked a parliamentary question of his colleague the Minister for Transport and was told in a written answer:

"The Secretary of State will ensure that any proposals for restructuring the railway industry are compatible with European law."—[Official Report, 30 October 2001; Vol. 373, c. 570W.]

Yet we know that that is not the case because the administrators, Ernst and Young, have made two contradictory statements, or rather they have issued a statement and a retraction. It was suggested that because a trust facility was being created, European rules would require commissioners to give permission, by 7 April, for distributions made under the order.

Mr. Don Foster (Bath): Is the hon. Gentleman not aware that the same request had to be made to the European Union for sums that have already been given to Railtrack? There is no change in the procedures.

Mr. Pickles: The hon. Gentleman anticipates my next remark. I am just trying to lay the groundwork.

The substantive point is that we are unclear, from the order and from statements by the Secretary of State, who will ultimately make the decision about a buyer for the company. Will it be made by the administrators or by the Secretary of State? We have had conflicting advice. The

22 Nov 2001 : Column 550

hon. Gentleman may have read The Times on Monday, which quoted Mike Rollings, a senior Railtrack administrator, saying that the Secretary of State will make the decision, but in the same paper this morning, the administrators disclose that they might try to overrule any decision made by the Secretary of State. These are matters of considerable importance.

If this matter is subject to European competition rules, we cannot have the Secretary of State making decisions like a renaissance prince; we need clear procedures setting out who should make them. If they are to be made by the administrators, that all but puts a stop to the Government's preferred plan of setting up a non-profit company.

Mr. Julian Brazier (Canterbury): I am most grateful to my hon. Friend for giving way generously, as usual. I just thought that he might like to remark that there are now only four Labour Members present—just rising to five as the Deputy Chief Whip sits down—for a debate on a matter of such importance to the country's commuters, rail passengers and pensioners.

Mr. Pickles: My hon. Friend's grasp of arithmetic is as good as ever.

If Railtrack is to come out of administration, could we talk a little about the potential bidders? Might the private bidders include the preferred bidders for the tube public-private partnerships? Will private railway companies in, say, Japan, the United States or France be given an opportunity? Such companies would regard a distress sale as a highly attractive opportunity. We also need to know whether Railtrack itself will be able to make an offer—to buy itself out. Under the order, what sort of long-term financial support do the Government intend to give to Railtrack and its successor? That is of considerable importance.

We have a series of questions. Under the licensing agreement between Railtrack and the Rail Regulator, even on the most optimistic estimate that the Government have produced so far, a compliance statement will be needed toward the end of March. We and most people in the industry believe that Railtrack's network management statement is now all but finished. We need to know whether, before the company comes out of administration, a railway network management statement will be put out by the company. That would normally be produced in conjunction with the Government. What provisions have they made in that respect?

Let us consider last year's compliance statement and the failure to fulfil condition 7. The Rail Regulator was not satisfied with last year's compliance statement. Will Ministers say whether the regulator still has the power—my reading of the statutory instrument is that he does—to withdraw the licence if he is unhappy with the statement? To put it in simple terms, it appeared to me when I watched the Rail Regulator's appearance before the Select Committee that he was feeling a little bruised and somewhat resentful: withdrawal of the licence may well be Mr. Winsor's revenge on the Government. How do they intend to deal with such an eventuality?

We have a series of technical questions about the order, and I apologise to the House for having to go through them. Had the explanatory notes been clearer, I might not have needed to ask them.

The first question is, can the Minister give the House an assurance that the rules that were laid before Mr. Justice Lightman on 7 October contained the signatures of the

22 Nov 2001 : Column 551

Lord Chancellor and the Secretary of State by way of concurrence? One might consider the answer self-evident, but the Government have made an amendment to the regulations—hon. Members should turn to page 36—and the only reasonable explanation is that there was some sort of defect in terms of the signatories. Why was the correction on page 36 of the rules relating to dates of signing and the names of the signatories of both the Lord Chancellor and the Secretary of State made?

On what date was that correction printed and published by The Stationery Office? The correction itself simply states "October 2001". What was the exact date? Why did the Lord Chancellor and the Secretary of State decide to make the order on 8 October, to bring it into force on 7 October—the same date as the petition to the court and the administration order itself—and to lay the rules before Parliament on 8 October, after the court had ordered the administration of Railtrack plc? On what date was the hearing before the court set down?

Does the hon. Gentleman accept the criticism made by the Joint Committee on Statutory Instruments on Tuesday 20 November when the Committee reported the rules to both Houses? Does he accept the Committee's view that the Lord Chancellor's explanatory note is "self-evidently insufficiently informative"? Can the Minister explain which companies are affected by the rules and give a broader indication of the provisions that have still not been included in the Lord Chancellor's memorandum to the Joint Committee of 19 November?

Does the Minister agree that the policy reasons given by the Lord Chancellor's Department in its memorandum to the Joint Committee of 8 October—which infringes the requirements of statutory instrument practice—do not adequately explain in the public interest the failure to comply with proper procedure?

Will the Minister give the House his justification for presenting rules that alter the Insolvency Act 1986 in its application to Railtrack plc? Will he explain to what extent the contents of the affidavit presented to the court, the form of the petition, the filing of the petition and the choice of those who were able to appear before the hearing are consistent with the normal rules in administration procedure?

I am embarrassed at having to put those questions, but if the Secretary of State had obeyed the rules, we would not have to undergo the tedium of asking so many questions. We are about to dispose of Railtrack plc with only three or four lines by way of explanation, so we have to take up valuable time to debate them on the Floor. However, I am still encouraged, so I shall continue.

Will the Minister inform the House why creditors and others adversely affected by the rules were treated in a manner different from that normally applied under the insolvency procedures? Did any official consult the Strategic Rail Authority or the Rail Regulator about those rules?

We have been presented with an inadequate set of papers. The documents are technically and financially flawed. Their content is dubious and they are clueless as to the future: in other words, situation normal in the Department for Transport, Local Government and the Regions.

22 Nov 2001 : Column 552

6.27 pm

---