Mr. Don Foster (Bath): I thank the Secretary of State for advance notification of his statement, and I welcome him to his new and very challenging post. I also congratulate him on beginning on a high with this welcome announcement of the start of the process of Railtrack plc's being taken out of administration. As he sought to dwell on historical matters, I hope that he will acknowledge a strange irony. It is almost a year to the day since his predecessor said that my proposal to turn Railtrack into a not-for-profit company would
However, there is one U-turn that we do not welcome. The Secretary of State's predecessor told the House categorically that no additional money would come from the Government to compensate shareholders. Since May 1996, shareholders have received some £700 million in dividends and they bought Railtrack in the first place at a knock-down price because it was undervalued by some £6 billion. I therefore see no justification for further compensation to shareholders, especially in the light of the right hon. Gentleman's predecessor's assurance that it would not be forthcoming.
Will the Secretary of State acknowledge that Network Rail does not really know what it is getting with the deal? On several occasions before administration, Railtrack failed to produce a full asset register. The asset register that the administrators were expected to produce by April has not been forthcoming, and today's statement by Network Rail specifically states that it will take the company a further 18 months to produce a full asset register and
Mr. Darling: I am grateful to the hon. Gentleman for his opening remarks and I look forward to working with him. He raises two substantive questions. First, he asked about the compensation for shareholders. My view on that is straightforward. The sooner that Railtrack is out of administration and the business handed over to Network Rail, the better for everyone concerned. The Government will receive a cost advantage for that, and that is why the payment to shareholders is justified. For the avoidance of doubt, I confirm that the payment is available now provided that the shareholders of Railtrack accept it quickly at the extraordinary general meeting. It will not be available indefinitely and no one should be under any illusions about that.
Secondly, the hon. Gentleman asked about Railtrack's assets. He is right to highlight one of the problems that faced Railtrack in that it did not seem to have a grasp of its asset base or its cost base. One of the problems confronting Railtrack was the upgrade of the west coast main line and one reason why costs overran substantially was that contracts were let before the scale of the work required became apparent. That is not efficient in business terms, but it is beginning to change.
My predecessor, my right hon. Friend the Member for Tyneside, North (Mr. Byers), deserves credit for the fact that in the past few months the industry has worked together more closely than in the past. Railtrack, under John Armitt, its new chief executive, who is an engineer, has undergone a sea change in its attitude to what needs to be done, and that is very encouraging.
I should have dealt with a point raised by the hon. Member for Maidenhead (Mrs. May), and the hon. Gentleman also asked me about transparency. Network Rail's accounts will be accounted for under the Strategic Rail Authority. The big difference with what happened with Railtrack is that we will be able to see exactly what money went in, where it was spent and what is owned. In other words, under the new system we will have complete transparency, which was not always the case with Railtrack. That is becoming increasingly obvious as more and more information comes to light.
Mrs. Gwyneth Dunwoody (Crewe and Nantwich): Is my right hon. Friend aware that this is a most welcome and long overdue statement? Railtrack has not served the community well. Ever since it was pushed into the private sector at the time of the fragmentation of the railway industry it has faced enormous problems. With its poor management and poor targets to hit, it was not capable of providing the level of care that the railway system desperately needed. Will the Secretary of State undertake to look closely at the amount of money that the new company will need? It is clear that considerable shortfalls exist.
I am sure that all hon. Members strongly support the tribute that my right hon. Friend has paid to John Armitt, but will he also undertake to discuss with the new company the need to look closely at how it works with contractors? The travelling public are sick of constant excuses. The infrastructure is very old and needs considerable maintenance, but it is not being enhanced
Mr. Darling: My hon. Friend raises two good points. First, in connection with the amount of money that the railway system needs, the Strategic Rail Authority has been speaking to Railtrack and its chief executive, John Armitt. It has been looking at a number of measures to determine what money is required and what investment is necessary, with a view to bringing benefits for rail passengers as quickly as possible.
In the past, too much attention may have been placed on what might be in 10 or 20 years' time, and not enough on what the position will be in the next five years or so. I am determined to ensure that we achieve year-by-year improvements in the service, and that the public see those changes as quickly as possible. One of the most urgent examples of where improvements are needed is the west coast main line, about which my hon. Friend the Member for Crewe and Nantwich knows a great deal.
My hon. Friend also raised the substantial matter of the use of contractors. That is of concern because one of the problems with Railtrack was that, when it was set up, it almost set out to be a virtual company. It did not do very much itself but used third parties to discharge its obligations and deliver its objectiveshence the growth in the use of the contractors.
I believe that, under any systempublic or privatethere will be third-party contractors. I have discussed the matter with John Armitt, and it is clear that, in the past, not enough attention was paid to ensuring that contractors did what they were supposed to do. There were many checks on the processthe tick-box approachbut not enough attention was paid to whether, and how satisfactorily, the work was done.
I have made it clear to John Armitt that, in future, the public will expect money to be invested properly, and that we will get what we pay for. I know that Richard Bowker, the head of the SRA, is also concerned about that. As far as safety is concerned, everyone must ensure that there is end-to-end accountability, regardless of who people work for and who they are answerable to. That is crucial, and we must see that the necessary mechanisms are properly in place.
I wish to speak about the independent Rail Regulator. I do not want to go over the whole sorry saga, but many questions were raised about the advice that the Rail Regulator gave the Secretary of State's predecessor, the right hon. Member for Tyneside, North (Mr. Byers), which that right hon. Gentleman indicated he would overrule. Does the present Secretary of State agree that if the new company announced today is to succeed, there should still be a prominent role for an independent rail regulator?
Mr. Darling: No, I do not. The Government have made it clear several times now that, as and when legislative opportunities arise, we will establish regulatory boards to back up regulators. That is becoming common practice, and the help that it gives to regulators has been welcomed by them. The week before last, I made an announcement emphasising the importance that we attach to independent economic regulators. Before I made that announcement, I discussed the matter with the regulator. He is happy with the proposals, and in fact has an informal board already. There is therefore no difficulty in that respect.
The regulator has welcomed today's announcement. Strikingly, however, bodies such the Association of Train Operating Companies and Network Rail have welcomed the work of the economic regulator. Tom Winsor has done a very good job over the past few years and I am quite sure that he will continue to do so. However, I think that most people will welcome a regulatory board to help and give greater depth to his deliberations. That approach is not unique to the rail industrythe Government are doing it in relation to all other regulators as well. Therefore, I do not think that the hon. Lady's points have any substance and believe that most people outside this place would accept that.