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6.10 pm

Mr. John Redwood (Wokingham): I have declared my interests in the Register.

I had hoped that we would have a proper debate on the so-called 10-year plan, which was issued on Monday with such a fanfare and received a pretty disappointing press thereafter. Perhaps we have not done so, other than some interesting detailed observations from Members with constituency interests, because there is so little in the plan before us. Perhaps it has dawned on Labour Members that they have been rather let down.

If we look to the plan for a promise that 140 mph trains will be bought and will operate on the west coast main line, we look in vain. If we look to the plan for a guarantee that the full west coast main line upgrade will go ahead, we see instead that it is subject to review and very likely to be downgraded. If people in my part of the world, the Thames valley, seek the promise of a solution to the problems of conflict and lack of capacity on the lines through Reading into Paddington and Waterloo, they will be answered only with a deafening silence.

There will be no solution to the obvious problem that after a very successful period immediately after privatisation, in which there was a big surge in the usage of the railways, the Government have, during the past five years, failed to make the commitment to invest in the new capacity that is so obviously needed to respond to that successful growth.

We see the schizophrenia on this issue not only in the statements of various Ministers and, as my hon. Friend the Member for Maidenhead (Mrs. May) admirably pointed out, in the contradictory statements made by the Secretary of State, but in the words of the newly appointed chairman of the Strategic Rail Authority. In his foreword to the plan, he points out that privatisation has been a great success, and he draws great comfort from the fact that there has been a 34 per cent. increase in passenger usage of the railways, a 40 per cent. increase in freight and a 20 per cent. increase in train usage of the network.

Mr. Hopkins: Is it not the case that the main factor behind that increase is the recent growth of the economy under a Labour Government, and in fact it has nothing to do with privatisation?

Mr. Redwood: I do not accept that, because we had periods of substantial economic growth when the industry

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was nationalised, and it never succeeded in increasing passengers and freight as it did in the beginning of the railways' remarkable renaissance after privatisation. I know from experience in my own area that we had a strong economy in the late 1980s, and we did not see anything like that growth in passenger usage of the railways in those days. When we introduced privatisation, there was successful growth in the industry—services improved and companies accommodated more passengers. That growth was, rightly, proudly trumpeted by Ministers until recently, and in the plan it is proudly trumpeted by the chairman of the SRA.

The chairman goes on to explain, however, that all is woe on the railways because of the obvious failure, which has been most pronounced in the past five years, to make any response to that success or to make a commitment to the new rail capacity and the investment required to cash in on that success and further expand the railways. The chairman's prose is not particularly elegant, but its meaning is devastating. He says:

This is after five years. It is after the Government introduced their chosen vehicle, the SRA, appointed a boss, gave him his head and then, for some unknown reason, decided to sack him and replace him with someone else.

How long will it take for the Government to get the SRA up and running in the way that they would like? Why is it that, five years in, we hear from their recently appointed nominee this devastating indictment that practically all the measures that the Government said are necessary to perfect privatisation have not been taken because they chose the wrong person and did not get the SRA straight?

Mr. Kevan Jones (North Durham): Does not the right hon. Gentleman admit that the privatisation introduced by his Government is the reason for the current fragmentation and disjointedness in the rail service to which he is referring? It is not down to people's failure to work in teams; privatisation was flawed and has led to the breaking up of the railways. Under this Government, the SRA is trying to put strategy and vision back into our rail service.

Mr. Redwood: I wish that that were true, but I take the view that the original structure as set out by my right hon. Friend the Member for North-West Hampshire (Sir G. Young), the Transport Secretary at the time, was beginning to work extremely well. There was a great increase in rail usage, but the intervention of the SRA and the Deputy Prime Minister, in his role as Secretary of State for the Environment, Transport and the Regions, completely undermined the working relationships in the industry and put on ice quite a lot of the investment. The Government deliberately stopped investment by refusing to renew or extend franchises for companies that would otherwise have made big investment commitments. They worked away gradually to undermine Railtrack, leading to its administration, as we saw.

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The hon. Member for North Durham (Mr. Jones) smiles and he is sure that he is right, but he ought to read the plan because it is a great admission of failure. It is all about the failure of the Government's body, the SRA, which was going to solve the problems that they thought existed but which has clearly made them all worse. The chairman goes on to say in his foreword:

Here we are, five years on, and two or three years after the SRA got up and running, and we are told that the body was completely wrong. That is the view of the Government's chosen agent, and the SRA must now be fundamentally restructured. Will the Minister tell us how long that complete restructuring of the SRA will take? How long will it be before the SRA stops looking at itself and engages with the chief executives and chairmen of the private companies running the industry, gets them on side, gets us back to work and gets the industry investing again?

This is not so much a plan as a plan to have a plan. Again, the chairman lets the cat out of the bag in his remarkably forthright foreword. He says that we need one plan, and that is the key target that he has set himself for 2002. This is not the plan; it is a plan to have a plan. The plan is even more delayed than the trains that it is talking about. The Government say that they believe in planning; they set up a body to make a plan; they have two launches of a plan that is not a plan, and they then decide that the latest plan is a plan to have a plan at some unspecified date this year.

Bob Russell (Colchester): It has nice pictures though.

Mr. Redwood: Some of the pictures are quite jolly, but the Government seem to be interested in photographing buses and empty railways because they are rather embarrassed by the shortage of good train shots caused by the cancellation of so many trains due to strikes, absent plans and the failure of investment because franchises have not been renewed in time.

We are told that the Government have embarked on creating a new type of vehicle. They should be rather more honest with their supporters about what is going on. The Secretary of State has been absolutely masterful in leading many of his Back Benchers, who never really liked privatisation, to believe that in some mysterious way he is renationalising the main part of the railways, Railtrack. Some of them are happy because they think that that is what is happening. However, if they read the plan carefully they will be deeply disappointed.

We have a private company that was put into administration by a Secretary of State who wanted to waste taxpayers' money and give far more money to the receiver than he would have had to give the company to keep it flourishing in the private sector. We now have a private company, run by private sector accountants in a private sector administration, which the Government are looking to sell on to another private company in due course. The Government say that they may come up with a new type of private sector bid—a company limited by guarantee that is not for profit—but it will be difficult to attract capital into a venture that makes no money for its shareholders.

From what I have read in the newspapers this week it will be even more difficult to raise bond finance for such a company. I hope that Labour Members understand how

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serious the matter is. Apparently, a group of convertible bond holders voted against the scheme of arrangement for the bond finance in Railtrack which the Government hoped would go through. The Government are now in an invidious position, and some people believe that they, through the administrator, may not meet all the payments on the debt. If we get into an Argentinian situation with Railtrack bonds, the Government will find it difficult to raise money from the City for a future vehicle, if they manage to construct one that is a front for the Secretary of State.

The Minister has leave, if he wishes, to intervene and assure me that the Government will make every payment on those bonds and guarantee that the bondholders will have all their interest and money repaid. I am happy to give way if he wishes to give that assurance. The fact that he cannot do so and is trying to smile and pretend that it does not matter means that I have touched a sensitive nerve; the Government are trying to launch a company on bond finance but, at the same time, they cannot give a guarantee that they will be any better than the Government of Argentina on a bad day in meeting obligations incurred by a company that has almost become a creature of the state.

The Secretary of State has enormous influence and a lot of responsibility for the railways. He made a big error in putting a private company into private bankruptcy, but now hopes that he can get it back into the private sector. He has underwritten the position, presumably because the Treasury insisted that he do so, by stating, through the chairman in the 10-year plan, that practically all the projects of the new Railtrack will be privately financed; that will be done through public-private partnerships, not private capital. For a long time, I have tried to get the Government to tell the markets and the travelling public their plans for granting money to the new Railtrack, whether it is taken on by a company limited by guarantee, as they wish, or some other private bidder.

That question is not unreasonable; the Government will have to reveal the answer before they can have a competition to get Railtrack moved back into the private sector, up and running and perhaps investing again. Answer came there none until we had the strategic plan, which includes a little clue. It says that out of the £33.5 billion of public money, some £26 billion will subsidise the existing railway, quite a lot of which will be routed through the train operating companies. Only £7.5 billion therefore could conceivably be for Railtrack-type investment over the whole 10-year period, which demonstrates that unless something dramatic happens, there will be a fall in investment in mainline railway activities compared with the poor totals managed in the years prior to privatisation. That is an extremely disappointing outcome, which Ministers should take more seriously.

The chairman of the SRA has a delightful sense of humour. In his foreword, he gives one of his aims:

To assist the chairman, the Government put all of Railtrack into the tender loving care of a set of accountants in administration, then went off and hired a whole load more consultants, lawyers and accountants to advise the Secretary of State. Railtrack plc, which is in administration, has to have that sort of advice, as does

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Railtrack Group. It is therefore turning into a field day for a lot of hard-working and intelligent lawyers, accountants and consultants.

I have previously estimated that the total cost of Railtrack administration in lawyers' fees, administrators' fees, accountants and consultants will be more than £100 million. No Minister has ever been prepared to gainsay that figure, and I am now beginning to feel that my expectation is far too modest; the legal complexities, with failed bondholder issues and possible lawsuits from Railtrack group, will be such that millions more pounds could be spent on those fees.

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