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Chris Grayling: I thank the hon. Lady for giving way to me a second time, and I look forward to interesting discussions with her and other members of the Transport Committee on our recommendations on regulation. Does she agree that the structure and nature of regulation of the rail industry was reshaped by the Labour Government; and that despite the praise she pours on to the regulation of other industries and the Government's approach to them, when the crunch came in the rail industry, the Secretary of State felt the need to threaten to bypass the regulator to get things done?

Mrs. Ellman: In terms of general regulation, I agree that rail industry regulation is not satisfactory. I intend to press for improvements, because the interests of the travelling public are not well served by the current structure. When looking to the future of Railtrack, Ministers should consider the functions and responsibilities of the Rail Regulator and the Strategic Rail Authority. The system has failed, as well as the management of Railtrack as an individual company.

I shall now speak about some of the issues mentioned by the hon. Member for Westmorland and Lonsdale (Mr. Collins) and to the reference in the motion to the conduct of my right hon. Friend the Secretary of State for Transport, Local Government and the Regions. I refer in particular to the contentious note and minutes of the 25 July meeting between the Secretary of State and his officials and John Robinson, chairman of Railtrack.

It is important to remember that the note and the minutes were made accessible to public view solely because the Transport Committee requested that they be made available. When answering the Committee's queries, the Secretary of State said that it was most unusual, if not unprecedented, for notes and minutes of that sort to be made available, but added that to assist the Committee, and if that was what the Committee wanted, he would make them public. That is another illustration of the Committee's importance and underlines the significance of having Select Committees that are open and determined and that want to act in the public interest.

The note and minutes of that important meeting fall into two parts. It is clear that the uncontested part of the note reinforces the indictment made against Railtrack's management by many sources. According to the note, Mr. Robinson said that

"He was trying to build a better relationship with the Rail Regulator"—

presumably something was wrong. He said that

"He was taking personal control of the West Coast Main Line upgrade"—

presumably because Railtrack had failed. In evidence to the Transport Committee, it was made clear that because Railtrack had failed to modernise the west coast main line, Railtrack and Virgin were already discussing compensation of at least £300 million. Moreover, we now learn that Virgin intended to increase its fares by a further

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33 per cent. as part of the compensation deal because Railtrack failed to deliver. The undisputed part of the note recorded that the chairman of Railtrack said:

"In all of this his aim was to follow on the key things Railtrack needed to do to run a safe, reliable railway".

Presumably, Railtrack was not doing so before. The note also stated that the chairman said:

"Turning things round was not a question of more investment, but rather running the company properly."

That echoes Mr. Winsor's evidence to the Select Committee, in which he spoke about Railtrack's incompetence and its disregard for its customers.

In the now published and undisputed part of the minutes, the indictment of Railtrack's management grows increasingly clear and severe, but what about the important part of the note, now a public document, which is disputed? It concerns what the Secretary of State says John Robinson, the chairman of Railtrack, said and what Mr. Robinson says he did not say. The only responsible conclusion to be drawn from the minutes is that it has not been proved that the Secretary of State is right. He says that the chairman of Railtrack stated that he needed a letter of comfort for his bank before he could obtain bank resources and needed extra funding from the Government; otherwise he would not be able to say that Railtrack was a going concern at the meeting at which he was to give an interim statement on 8 November. Those details were not recorded at the request of the chairman of Railtrack, but, according to the Secretary of State, that is what he said. The fact that the chairman of Railtrack said that he did not say those things cannot be proved or disproved.

The notes do not prove that the Secretary of State was right, nor do they prove that he was wrong. We must look at people's motives either for agreeing or trying to dispute what they said. Ministers and Secretaries of State are accountable to the House of Commons, so we can ask those questions of the Secretary of State for Transport, Local Government and the Regions and it is right that we should do so, but Mr. Robinson is the chairman of a private company, so we cannot ask him directly what he said. He is responsible to his private board and shareholders, who are supposed to call him to account, but have Railtrack's minutes been disclosed? Do we know what its chairman reported to his board or shareholders following his meeting with the Secretary of State or, perhaps even more critically, following further discussions with the Secretary of State and his officials? We do not know that, so we cannot challenge or question it.

Dr. Pugh rose—

Mrs. Theresa May (Maidenhead) rose—

Mrs. Ellman: I shall give way in a moment.

We are dealing with two separate things: a Secretary of State is responsible to the public and the House, but a chairman of a privatised company, responsible for a public service, answers not to elected Members of Parliament but to a private board that does not have to disclose its minutes and is not subject to public questioning in a place such as the House of Commons.

Mrs. May: I am sure that the hon. Lady is aware that the chairman of Railtrack has made his notes of the

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25 July meeting available to the Financial Services Authority in connection with its investigation into the matter, whereas the Department for Transport, Local Government and the Regions has so far not passed on the papers requested by the FSA. Does she agree that, if the Government are as interested in public information as she claims, those papers should be sent to the FSA forthwith?

Mrs. Ellman: My point concerns disclosure and responsibility on the part of the chairman of a private company that is running a public service. I am not aware of the chairman of Railtrack making publicly available the minutes of his board meeting on 25 July or, even more significantly, about what happened following 25 July.

It is not clear whether the chairman of Railtrack met his fiduciary duties in relation to his shareholders and his board, in terms of his understanding of the possible critical financial situation of Railtrack as a going concern? We do not have that information. I am not certain that the public are entitled to have such information. We are dealing with a private company, and we see the conflict when a private company is running a major public service, yet is not responsible to the public.

I give way to the hon. Member for Southport (Dr. Pugh).

Dr. Pugh: The point that I intended to make was made by the hon. Member for Maidenhead (Mrs. May).

Mrs. Ellman: Railtrack has featured large in the debate, because it represents the failure of privatisation and the problems of public accountability for a public service when it is run by a privatised company. The Government have done much to restore confidence in the public services.

All of us should take note of two things, the first of which is the importance of public services being run by publicly accountable bodies. Until we have that, it will not be possible for the House or the public at large to know that services are being run properly or to have the answers that they require and, indeed, deserve. Secondly, the House must register the importance of Select Committees. The work of the Transport Committee in particular is proving increasingly important in the matter of Railtrack. If it were not for the questions asked by the Committee, the notes would not have been requested and would not have been made available.

It is incumbent on all elected Members to recognise the importance of Select Committees in accessing and making available public information in the public interest. I hope that no Government, including the present Government, will be tempted to curtail the activities of Select Committees. Their powers should be extended, as it is the Select Committees above all that represent the people of this country and allow democratic accountability to be far more stringently applied than is possible on the Floor of the House.

5.22 pm

Mr. John Redwood (Wokingham): I have declared my interest in the register.

The Government treat public information as though it were private property, and are grasping in the way that they hold it to them and will not release it. They are rather like Scrooge with public information, before he

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underwent his remarkable conversion and discovered that Christmas could be fun and one should be generous. My worry is that the Government, having launched their new code, and having penned an amazing amendment to the motion about how much they believe in openness, are not about to convert as Scrooge did, just before Christmas. However, I shall be delighted to give way to the Minister if he wishes to answer the many questions that I tabled concerning the conduct of his Department, and in particular the conduct of its railway policy.

Trying to get to the bottom of what has happened, what is going on and the Government's estimate of what will happen next, I have discovered a series of roadblocks and railblocks placed in my way, which I shall share with the House as we are debating how impossible it is to get information out of this miserable Government, while they pretend to be very much in favour of openness and full disclosure. In their amendment to the motion, they have the brazen cheek to refer to

"the publication of the new Ministerial code including the requirements on greater transparency never seen before".

That takes the breath away. When will we see and benefit from the greater transparency in which they proudly say they believe?

Let us start with an easy question for the Department for Transport, Local Government and the Regions. I asked the Secretary of State recently

"what proportion of freight went by (a) road and (b) rail in May (i) 1993"—

there has been quite enough time to collect those figures—

"(ii) 1997"—

a good long time to collect those—

"and (iii) 2001"—

a little closer to the present, but several months ago. The question was a very simple and factual one. Why did I ask it? I have a hunch that the proportion of freight travelling by rail rose after privatisation. Indeed, in support of that view, I have the testimony, in general terms, of the Deputy Prime Minister, who expressed that view when he was Secretary of State for the Environment, Transport and the Regions, as well as the testimonies of Ministers in the Department. Thus, we know from statements made by the Deputy Prime Minister and one of the junior Transport Ministers that they have studied the issue and must have the figures. Yet, I was told in reply:

"The figures are not available in the form requested."—[Official Report, 4 July 2001; Vol. 371, c. 156W.]—

greater openness, "never seen before". I rest my case on that point. The Minister does not jump up to help the House or to explain whether the Deputy Prime Minister knew what he was talking about when he said that the proportion of rail freight had risen sharply under privatisation.

I then started to ask a few more difficult questions about what the Government were doing and why they were digging a huge hole for the railways by forcing them into administration. I asked the Secretary of State for Transport, Local Government and the Regions when bids would close for the assets and liabilities of Railtrack plc in administration. I have read in the newspapers that the Government have an estimate—presumably, this information comes from good sources that are close to them—of when Railtrack will come out of administration.

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In order to come out of administration, however, the administrator must first invite bids. Of course, the Government must know when the bidding process will take place. They will have to supply an enormous amount of information for the sale memorandum. We have read in the papers and have heard in a statement made in the House that they are interested in proposing a particular model company that they want to bid. Presumably, therefore, they take an interest in when bidding might open and close. However, this was the answer that I received:

"This is a matter for the administrator."—[Official Report, 22 November 2001; Vol. 375, c. 389W.]

Again, we are reminded of greater openness never seen before.

I then asked the Secretary of State for his estimate of

"the gross assets to be transferred to the new Railtrack company and . . . the debt to be set against those assets."

Again, the Department presumably investigated the issue with great thoroughness and with the aid of all the accountancy and legal advice that it received at our expense before deciding to petition the court for an administration order. The Minister for Transport, who is now sitting on the Front Bench, gave this answer:

"I refer the right hon. Member to the answer given to him by my right hon. Friend the Secretary of State on 31 October 2001, Official Report, column 671W."—[Official Report, 6 November 2001; Vol. 374, c. 134W.]

I referred to that previous answer, which contained some interesting things but nothing about the Government's estimate of the gross assets to be transferred or the debt to be set against them.

If the Government are serious about getting on with the task of getting Railtrack out of administration and back to work properly, they need to tell potential bidders when the bidding will take place and what they are bidding for. Why cannot the Government come clean with the travelling public and the taxpayer and tell us what is on offer, when the bids will open and when they will close? I and my constituents are impatient to see the railway back on the road to recovery. We know that that means getting it out of administration as quickly as possible and getting it back into private hands, which is the Government's policy.

How disappointed Labour Back Benchers will be when they realise the full horror of what the Government have done in collapsing the railway into administration and learn that they are spending a fortune and will be force feeding a large number of advisers large fees for the hard work that they will definitely have to do with the muddle that has been created, after which they will re-privatise the railway. The Minister shakes his head, but he will not spring up and say that that is not his policy, as he knows full well that he has no authority from the Prime Minister or the Chancellor—of course, they have different views on most subjects these days, but they agree on this one—to say that the Government will renationalise the railways.

The Government have no wish to stand behind the safety and track problems and the huge cash drain that the railway would be if it were returned to nationalised control. They should be more honest and open with their Back Benchers, who will be bitterly disappointed when they discover that what is happening is a recipe not for nationalisation but for a very expensive re-privatisation,

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with the Government holding out the hope of an extraordinary type of company that will need massive sums if it is to have any chance of getting off the ground.

I went on to ask the Secretary of State

"what advice the Government had sought about the timing of an announcement to the stock exchange of the changed plans for Railtrack plc."

The answer stated:

"In reaching his decision on 5 October . . . the Secretary of State had regard to the responsibilities and duties that Railtrack Group plc has as a stock exchange quoted company."—[Official Report, 23 November 2001; Vol. 375, c. 494W.]

I asked what advice the Government had sought, not whether the Secretary of State had considered it properly. I did not ask about his decision. I expected the answer to identify the advisers and, even better, the cost of the process. Instead, I received an answer to a completely different question. Another example of greater openness never seen before.

I asked the Secretary of State what action he had taken on the plan to cuts costs at Railtrack plc that the board drew up before the company was put into administration. I had heard a rumour, perhaps in the press, that the Government had been keen to abort the decision of Railtrack's board before it went into receivership to cut costs by reducing staff. I could understand the Labour party wanting to make such a decision. However, the answer stated:

"The running of the company during administration is a matter for the Administrator."—[Official Report, 22 November 2001; Vol. 375, c. 389W.]

Again, that is not a specific answer to the question.

I should still like to know what happened to the outgoing board's plans to reduce costs. Why did the Government decide that there was no need to reduce cost? The rail industry is experiencing a horrendous loss of cash in the hands of the administrator, and is propped up by a reluctant Government, if we are to believe what we read about the Treasury's attitudes.

I asked the Secretary of State

"what his estimate is of the fees of the administrator for Railtrack plc".

One would think that one of the first questions that the Secretary of State and the Treasury would ask during the many months of deliberation about whether to place Railtrack in administration would be about the costs, specifically those of accountants, lawyers and administrators, of undergoing the gruelling and difficult process. If we believe, as we must, the Government's answer, we have to believe:

"It is not possible at this stage to make an accurate estimate."

We are therefore invited to believe that the Government have bought a pig in a poke. They have bought something undesirable and they have no idea of its cost.

Before a policy was agreed in government in my day, we held bilateral meetings with the Treasury, which always argued about our estimates of the cost. A compromise was struck or, in some cases, the policy was vetoed if the Treasury decided that it was too dear. Yet it seems that it is not possible to tell us how much money the taxpayer will spend on administration—greater openness never seen before.

3 Dec 2001 : Column 56

I asked the Secretary of State

"what the . . . daily rate of (a) loss"—

profit before tax—

"and (b) cash outflow at Railtrack plc in administration has been since 5 October."

Again, one would think that the Treasury and the Department would monitor that question day by day as it is such a large item in the public budget.

In the pre-Budget statement, the Chancellor claimed enormous credit from Labour Back Benchers for announcing £1,000 million extra for the national health service. That is not a large sum, given the size of its budget. He did not mention the more than £2,000 million extra that, according to the Government's figures, will be needed for Railtrack in administration until March 2001, let alone the sum that may be needed in 2001–02. Money will be required to continue paying for losses, start paying for investment, which cannot be delayed for ever, and to get the company out of administration. It will also be needed to pay all the fees, and, if the Government have their way, the huge sum needed to capitalise the not-for-profit company that they believe the private sector will finance in the future. That is breathtaking.

Again, I received an extraordinary answer to my question. It stated:

"This is a matter for the Administrator. The premature release of unaudited financial information may prejudice the Administrator's . . . release of commercially sensitive information".

I could understand that answer if Railtrack was a public limited company that had to report to its shareholders in the normal way. I should not have dreamed of asking the question in that case because such companies are answerable to the markets, their shareholders and their customers and they have to report according to a defined cycle.

However, the House of Commons made its reputation and built its strength on making the Executive answerable for the amount of money that they spend and how such spending is financed. How, then, can a company as huge as Railtrack be in administration, losing hundreds of millions of pounds as the months go by—on the Government's forecast, possibly losing or absorbing £3.5 billion in the year to March 2001—when we believe that the Government budgeted only £900 million for Railtrack if it had stayed a fully fledged, private sector, public limited company? That represents a massive change in the Government's figures. Greater openness, never seen before.

I then asked the Secretary of State what money was available for the successor company to Railtrack in 2001-02, 2002-03 and 2003-04 from Government sources and from Strategic Rail Authority sources. I knew that I had to specify both sources, otherwise the Government would play tricks with the answer. The Minister replied:

"I refer the right hon. Member to the reply given by . . . the Secretary of State to the hon. Member for Preston (Mr. Hendrick) on 23 October 2001, Official Report, column 195W."—[Official Report, 21 November 2001; Vol. 375, c. 277-78W.]

I re-read the reply given to the hon. Member for Preston (Mr. Hendrick)—indeed, I had the pleasure of making a speech on the subject of that reply on the day it was hurried out to the media to try to deal with some media management problem that the Government were having. It is a very full answer, untypically for the Government, but, once again, it has nothing to do with the question that

3 Dec 2001 : Column 57

I tabled. There are no figures in the reply to the hon. Member for Preston on how much money is available for the successor company in the years specified.

My question to the Secretary of State was not a scholarship question. It was more a GCSE question, by public expenditure standards. I was simply asking how much money was available for a very big chunk of our rail industry in the next three years. We know that the Government budget in three-year dollops, and we know that the Chancellor has just produced a pre-Budget statement, so presumably he has put all these figures to bed. Why, therefore, is this a state secret? Why cannot we prise these figures from the Government? Why cannot we know how much money is going to be spent?

Labour Members might welcome such information and say that it is great that so much money is to be poured into the railways. Or they might be critical and say that it is not quite enough for the west coast main line, or whatever is their preferred tipple in railway investment terms. My Conservative colleagues might share my view that the figure might be rather too big, and that there might be better ways of running the company and spending the money. To receive absolutely no reply on the matter is a disgrace.

This is also a matter of great public interest. I am not making a party political point here; I am interested in this because if we are going to get the company out of administration quickly, any bona fide bidder is going to want this information. It must have been agreed with the Treasury in the run-up to the pre-Budget statement. Should not it be published now so that people can consider, on the basis of the money available for the next three years, whether they think that they have a chance of putting in a sensible bid for the railway, or whether they think that the money is too little and that there is no point in bidding?

Would not it also help Labour Members—who still favour that extraordinary animal, the company limited by guarantee that neither makes profits nor pays dividends—if they knew how much this company was going to get in the form of public subsidy, when they were deciding whether to go on the board, and going to the City to raise the billions that the company will need? That information could be crucial to getting the company going.

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