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Mr. Don Foster (Bath): I am not sure whether I should begin by declaring an interest. Indeed, I suspect that all Members should declare the same interest, if the recent report in The Sunday Times is correct. It stated that as a result of the order the MPs pension fund has suffered to the tune of £400,000, so I declare an interest, just in case I should.
I hope that I shall not end up in the doghouse like the hon. Member for Brentwood and Ongar (Mr. Pickles) because of some of his earlier remarks, although having listened to his subsequent remarks, I think that the hon. Gentleman would be put in the doghouse by anybody who was looking forward to the cut and thrust of debate on this issue. None the less, although it may not have been an exciting speech, the hon. Gentleman put several important and significant questions.
I look forward to some detailed answers from the Under-Secretary of State for Transport, Local Government and the Regions. As the debate began so late in the day, I am sure that the hon. Gentleman will have been fully briefed on those points.
Perhaps it would be helpful to begin by reminding ourselves of exactly how we got into this position. On 7 October, the Secretary of State—
Madam Deputy Speaker: Order. It might indeed be helpful, but it would be entirely inappropriate.
Mr. Foster: Madam Deputy Speaker, if you will allow me about 30 seconds, you will see the complete relevance of my comments to the order.
On 7 October, the Secretary of State petitioned a High Court judge to put Railtrack into railway administration, specifically under section 60 of the Railways Act 1993. The order is based on the 1993 Act, section 59(2) of which states:
- "The purpose of a railway administration order"
- "the transfer to another company, or (as respects different parts of its undertaking) to two or more different companies, as a going concern, of so much of the company's undertaking as it is necessary to transfer in order to ensure that the relevant activities may be properly carried on".
It is legitimate to discuss what has happened since the order was introduced and consider whether or not Ernst and Young are delivering the best value and quality service for passengers. Will the Minister explain why, in the six-week period following the administration order, according to the latest figures, there has been a 26 per cent. increase in delays on our railways? It is important for him to explain why, following the order, there has been a significant apparent reduction in investment in a range of improvements to which Members representing many different constituencies had been looking forward. If I were speaking purely as a constituency MP, I would press the case for the improvements to Freshford railway station that we have been waiting for. That is a specific example of the investment that now appears to be held up because of the administration order.
It is important to remember that section 59 of the 1993 Act states that the administrator has the task of acting
- "in a manner which protects the respective interests of the members and creditors".
- "the respective interests of the members and creditors".
Having suggested that I am going to be a little critical of the way that things are going, I shall put firmly on the record my belief that the Secretary of State was right to introduce the order. If there were a Division tonight, I would recommend to those of my hon. Friends who might be around that they should join the Government in the Lobby, but we may not get to that. Nevertheless, the Government were right to introduce the order; Railtrack was in a mess and the travelling public were not being best served by its activities.
Mr. Pickles: Why does the hon. Gentleman think that Railtrack was insolvent?
Madam Deputy Speaker: Perhaps I can save the hon. Member for Bath (Mr. Foster) from getting into the doghouse by asking him not to reply.
Mr. Foster: I will do everything that I possibly can to stay out of your doghouse, Madam Deputy Speaker, and shall merely refer the hon. Gentleman to the speech I gave in the House on 13 November, when I gave an answer to that very question. In that speech, I made a point relevant to the order. Some confusion has arisen as a result of the Secretary of State's initial failure clearly to distinguish between Railtrack plc, which is being put into administration, and Railtrack Group, which is not. I criticised the Secretary of State on 13 November for not being clear enough about that. It is not easy to make even the simple distinction between Railtrack plc and Railtrack Group, as the administrator, Ernst and Young, is finding out.
We understand, although we have not been officially told, that Ernst and Young is earning £500,000 a week for its activities. It was interesting that the firm's first action on being appointed administrator was to ask the Secretary of State for an extension of time to carry out the work. It has been told that it can have six rather than three months to do it, but there are many in the City who suggest that the firm will be at it for much longer than that. The comment of the hon. Member for Brentwood and Ongar about the amount of money being made from the exercise is a point well made.
There is huge confusion even now about Railtrack plc and Railtrack Group. It is difficult for Ernst and Young, as administrator, to sort that out. Railtrack Group has a large number of component parts. Perhaps the Minister can clarify one example. Railtrack (Spacia) Ltd. is the United Kingdom's largest small business landlord, with 22 million sq ft of property, which it leases. It is part of
Railtrack Group, but its assets—the properties that it leases out—belong to Railtrack plc. I am not sure whether the properties belonging to Railtrack (Spacia) Ltd. are covered by the administration order, as Railtrack (Spacia) Ltd. is in Railtrack Group, which is not in administration, yet it can succeed only if the properties, which belong to Railtrack plc, are available to lease.
Mr. Andrew Turner (Isle of Wight): Would the hon. Gentleman be surprised to know that the Government appear to have learned from the difficulties of introducing the order, if the Evening Standard today is anything to go by? It states:
- "The private sector taking over large sections of the Tube . . . will be safeguarded against major financial risk if things go badly wrong".
Mr. Foster: I take note of the hon. Gentleman's comments. I shall deal later with the financial arrangements proposed as a result of the order.
I have a further example to illustrate the potential confusion facing the administrator. Can the Minister tell us anything about the demise of Totaljourney Ltd.? Totaljourney Ltd. is part of Railtrack Travel Ltd., which is within Railtrack Group, but on 15 November it ceased to operate. Was that the result of the work of the administrator, or was a decision made to close the company down because it was not working well?
I seek an assurance from the Minister in respect of the operation of the order and of the administrator. I understand from the media that the administrator is planning to hive off the IT activities within Railtrack plc. We use the name "Ernst and Young" as shorthand for the administrator, but in fact the firm is Cap Gemini Ernst and Young. Cap Gemini is a major IT firm. I hope that the Minister can give us an assurance that there will be no conflict of interest between the administrator hiving off to a potential bidder the IT activities of Railtrack plc, and the administrator itself, which has a particular interest in that area.
Mr. Pickles: I agree entirely with the hon. Gentleman. The order shows that those issues are exclusively in the hands of the administrator. The Minister is impotent in the matter. He can do nothing about it.
Mr. Foster: I am rather hoping that the Minister will demonstrate that, before the administrator was selected and the appointment made, assurances about those very matters were sought from the firm that was chosen. I hope that we will get a positive answer on that point.
I want now to focus specifically on the question asked by the hon. Member for Brentwood and Ongar about who will make the decision on the future organisation of Railtrack. I asked the Secretary of State that question on 13 November, but I did not get a very clear answer. Of course, he could have given me such an answer, because it was there for all of us to see in black and white, in schedule 7 to the Railways Act 1993, on which the order is based. Paragraph 2(2) of that schedule states that the scheme
- "shall not take effect unless it is approved by the Secretary of State".
Let me turn to the crucial issue. The Secretary of State has asked the administrator to consider a range of different options for the future. He has made it absolutely clear that that is the case, but the problem for the administrator is that, while he has asked it to make a range of proposals, he has at the same time employed an organisation to prepare an option that he wants to put forward: the company limited by guarantee. How it can be that one body, the administrator, is charged with considering the range of options and making a proposal to the Secretary of State, while he is employing yet more people to develop a particular model that is based on what he says that he wants: the company limited by guarantee? We all know that it is the Secretary of State who is going to make the decision. Presumably, he will decide on the model that he wants anyway. So, I simply fail to understand, on the basis of the order, what is going on and why Ernst and Young is spending all its time in discussions with the train operating companies, WestLB, Barclays, Citigroup, Alchemy, Nomura and many others. The matter becomes almost inexplicable in relation to what Partnerships UK is going to do, other than effectively make the decision itself in its recommendation to the Secretary of State.
Finally, as I said, the Secretary of State has asked Partnerships UK to develop a solution that is based on his requirement for a company limited by guarantee. However, Partnerships UK is a body in which there are a number of different partners, and 49 per cent. of it is owned by the Treasury. Thus, the Treasury holds 49 per cent. of the shares in the body that will provide the new solution. Furthermore, we know that, while the work has been developing, it has had its hands in the whole issue. I know that the Minister is not responsible for Treasury matters, but given the significant involvement of the Treasury in this matter, will he explain why it has refused to give evidence to the Transport Sub-Committee of the Select Committee on Transport, Local Government and the Regions? I agree with the press report published by that Committee, which states that that refusal is disgraceful.
Although I am delighted that the order was made to get us out of the mess that Railtrack had created for the travelling public, I believe that a large number of questions need to be answered. We look forward with great interest to hearing the Minister's attempts to provide those answers.
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