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House of Commons

Thursday 11 April 2002

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]


London Development Agency Bill (By Order)

Order for Second Reading read.

To be read a Second time on Thursday 18 April.

Oral Answers to Questions


The Chancellor of the Exchequer was asked—


1. Norman Baker (Lewes): If he will make a statement on the involvement his Department has had in the proposed structure of the successor company to Railtrack. [44497]

The Chief Secretary to the Treasury (Mr. Andrew Smith): Treasury Ministers and officials have been involved in regular discussions with colleagues in the Department for Transport, Local Government and the Regions on the subject.

Norman Baker: I am delighted to hear that. Is it a coincidence that on the very day that the Treasury received advice from the Office for National Statistics that the finances of a successor to Railtrack would not be counted as public borrowing, Railtrack was put into administration? Are we running a railway system based on the needs of passengers, or being driven by Enron-like accounting tricks?

Mr. Smith: This Government are determined that the rail system serves the needs of the travelling public as well as meeting the needs of the taxpayer. The future of the company limited by guarantee depends on the Railtrack Group and the administrator, but we believe that it will offer a more efficient service, better aligned to the needs of this country's travelling public, because it will be able to focus on engineering efficiency and excellence in the network service that it delivers.

Mr. Bill O'Brien (Normanton): Is my right hon. Friend aware of the evidence given by the Secretary of State for Transport, Local Government and the Regions to the Transport Committee yesterday, when he outlined how savings will be made to meet some of the additional costs

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of Railtrack receivership? Will he join me in congratulating our right hon. Friend on the work that he has done and the efficiency that he has applied in bringing rail services back to something like normal?

Mr. Smith: Yes, I am very pleased to congratulate my right hon. Friend. I thank my hon. Friend for his question. He is right that enormous benefits to rail users and savings to the taxpayer are to be gained from an early exit from administration—quicker efficiency savings, reduced performance penalties, faster progress on the 10-year plan projects and earlier introduction of the right incentives for managers to get the network rail system delivering to the travelling public in a way that was not possible under the flawed privatisation for which Conservative Members were responsible.

Chris Grayling (Epsom and Ewell): Before the Government's recent announcement about Network Rail, was the Treasury told by the team preparing the Network Rail bid that without it administration for Railtrack would last until at least the later part of next year?

Mr. Smith: We have the same information as anybody else on the likely length of administration. I am aware of recent speculation that without an early exit as a result of the CLG bid, administration could go into November. There has even been speculation that it could go into next year. Ultimately, of course, that timetable and those matters are for the administrator and not the Government.

Caroline Flint (Don Valley): There has been some concern that payments to shareholders might impact on Government spending in other areas. Will my right hon. Friend assure me that there will not be any impact on areas in which we want to invest as a result of payments to shareholders?

Mr. Smith: The £500 million—the £300 million from the Strategic Rail Authority and £200 million from the CLG—is not compensation to shareholders. As I have been explaining, it is an offer that has been made in appreciation of the value to the travelling public and the taxpayer of an early exit from administration. My hon. Friend can be assured that that is not an additional cost to the taxpayer. Indeed, because of the savings, there will be enormous benefits for the taxpayer and the travelling public.

Mr. Howard Flight (Arundel and South Downs): The House will be aware that under the proposals for Network Rail to purchase Railtrack, it will need to borrow £9 billion, mostly to finance Railtrack's debts, of which I believe £4.4 billion constitutes the Treasury-guaranteed loan. In turn, that will have to be guaranteed by the Strategic Rail Authority, which is itself an arm of government. Will the Minister please confirm whether under Eurostat requirements that will be accounted for as a public sector liability? If it will not, will he candidly explain the Enron off-balance-sheet accounting trick for not so doing?

Mr. Smith: The technical position is that the £9 billion is a debt that Network Rail expects that it needs to raise to finance the purchase of the company and to repay the company's finance creditors. It is a contingent liability,

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which will be called only in the unlikely event of all alternative means of refinancing the bridge borrowing falling through. The money does not score unless it is called. I have to say that we would not be having to do this if the Conservative party had not privatised Railtrack in such a flawed way, doing such enormous disservice to taxpayers and the travelling public.

Renewable Energy

2. Mr. Colin Challen (Morley and Rothwell): What fiscal measures are being considered to assist the renewable energy industry reach the Government's target of 10 per cent. of energy being sourced by renewables by 2010. [44498]

10. Lynne Jones (Birmingham, Selly Oak): If he will use the forthcoming Budget to help increase investment in renewable energy. [44508]

The Financial Secretary to the Treasury (Mr. Paul Boateng): The Government are already putting in place significant support for renewables, not least through the renewables obligation in England and Wales. Most forms of renewable energy are already eligible for exemption from the climate change levy. Hon. Members will appreciate that, for obvious reasons, this is not the time to speculate about future measures.

Mr. Challen: Is it not evident that the Government have done more in the past five years for the renewable sector than the nuclear neanderthals on the Conservative Benches did in the previous 18 years? Nevertheless, perhaps because of that inheritance, Britain, which has the greatest wind energy resources in Europe, does not have a single wind turbine manufacturer. I urge my right hon. Friend to follow in the footsteps of the parliamentary renewable and sustainable energy group and the Environmental Audit Committee and speak to the German economics ministry and consider the measures that it has taken which, by 2025, should generate a quarter of all German electricity needs from wind.

Mr. Boateng: That was a breath of fresh air on the debate. My hon. Friend makes an interesting point. We are always happy to learn lessons from Germany. It, too, has a lot to learn from us in terms of reducing the burdens of business taxation, not least on its manufacturing sector, and in terms of the rate of growth of the economy. But it is always important to keep such matters in mind and we certainly shall.

Lynne Jones: I am glad that my hon. Friend is happy. I want him to be sunny. By 2005, Japan will have 370,000 solar roofs and Germany 140,000. Under current policies, Britain will manage only 4,000 to 5,000 and we need 15,000 a year to justify manufacturing capability. Will my right hon. Friend consider fiscal and other measures to ensure that building projects automatically consider the incorporation of photovoltaics? Not only will that help to reduce carbon dioxide emissions but it will give a boost to manufacturing investment in innovative technologies.

Mr. Boateng: My hon. Friend makes an important point that has already formed the subject of a considerable volume of Budget submissions in this area. She will know

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that we have already put in place a programme of support for measures that increase the use of solar panels, but she makes a powerful case for fiscal measures and no doubt my right hon. Friend the Chancellor will bear that in mind in due course.

Mr. Michael Weir (Angus): The Minister will be aware that to obtain the full benefit of wind and wave energy it may well be necessary to extend the national grid, particularly to the north and west of Scotland. Has the Minister given any thought to public investment in so extending the national grid?

Mr. Boateng: I have no doubt that my right hon. Friend the Chief Secretary gives that matter thought from time to time. It is important to recognise the importance of the national grid in that area, and also to recognise, as the performance and innovation unit's report did, the ramifications of the new electricity trading arrangement in terms of renewables. The Government are considering the PIU report and we will make our views known in due course.

Rev. Martin Smyth (Belfast, South): Will the Minister explain why he made particular reference to England and Wales in his earlier response although wind and wave energy are also vital within Scotland and Northern Ireland? Is it a question of co-operation? In that context, will the Department be having discussions with local planning authorities, especially in England, which have been hindering the development of such proposals?

Mr. Boateng: As the hon. Gentleman will recognise, my noble Friend Lord Falconer has brought forward a raft of proposals in relation to planning and they will undoubtedly have ramifications for renewables, and wind farms in particular. My omission of Northern Ireland was an oversight for which I apologise.

Miss Anne Begg (Aberdeen, South): Is my right hon. Friend aware that the Minister for Industry and Energy is to establish a Government agency in Aberdeen called Renewables UK? This is the first opportunity that I have had in the House to welcome that initiative. It will make a huge difference in helping to steer some of the energy companies—I do not want to call them oil and gas companies—currently operating in Aberdeen and in the North sea towards renewable energy. Obviously, any help that the Treasury can give in next week's Budget in ensuring that the fiscal regime is helpful to those companies to diversify into renewable energy will be helpful.

Mr. Boateng: I am grateful to my hon. Friend for that further Budget submission. She will be aware of the not inconsiderable support that we are already giving in terms of renewables, but she makes an important point and no doubt my right hon. Friend the Chancellor will take it into account.

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