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Mr. Spellar: Will the hon. Gentleman give way?
Mr. Duncan: The right hon. Gentleman is welcome to intervene, but he is getting into ever deeper water because he is one of the guilty band.
Mr. Spellar: Is it the hon. Gentleman's argument that Railtrack was solvent and had good prospects and that its managers would have been able to make a statement to their half-yearly meeting that it was able to continue trading solvently?
Mr. Duncan: For reasons that I shall explain in due course, the water is becoming ever deeper for the right hon. Gentleman.
Mr. Spellar: Surely it would be easier for the House if the hon. Gentleman answers now.
Mr. Duncan: Unlike the right hon. Gentleman, I am happy to advance a logical argument according to a logical structure.
The right hon. Member for North Tyneside continued:
"We have work in hand to ensure we are ready to use the railway administration procedure if necessary. We could be forced down this route by events or"—
"we could choose to go down it as an interim step to an eventual solution. It is clear that we ought not to contemplate taking Railtrack into administration, which we could achieve by withdrawing Government support, without being equally clear about how we would like it to come out of administration".
Is that the language of reacting to Railtrack's alleged insolvency, or of wanting to create it?
On 23 August 2001, Mr. Dan Corry, special adviser to the Secretary of State, e-mailed a civil servant in the Department for Transport, Local Government and the Regions, saying:
"I have spoken to SOS about where we are getting to . . . He is very attracted to the option of pushing them"—
Then, we have the infamous minute provided to the Secretary of State by Mr. Rowlands, now the permanent secretary at the Department for Transport and then the No. 2 in the Department, on 31 August 2001. He deals with how to take out Railtrack using the mechanism of railway administration. He writes:
"Under the legislation, however, Railtrack's funding and obligations are matters for the Regulator. We cannot see a way of proceeding without sidelining him."
The next part looks like options, including a "very short Bill" to give the Secretary of State "power to issue directions" to the regulator, which
On 13 September 2001, there was a meeting with the Secretary of State and his civil servants. The private secretary's note records the discussion. Mr. Linnard says
Clearly, the Government wanted the company to collapse and were disappointed that it might not. He goes on to explain, "risk RT"—that is Railtrack, and then there is a reference to the rail regulator—
rail regulator—"under law." That is a damning minute.
Mr. Darling: Will the hon. Gentleman give way?
Mr. Duncan: I leave it to the Secretary of State to intervene if he wishes to do so.
Mr. Darling: I wish to intervene because, contrary to all the evidence, the hon. Gentleman is trying to make a case that Railtrack was solvent, was a going concern, that there was nothing really wrong with it and that there was a conspiracy to bring down a healthy company. As I shall demonstrate shortly, that is not quite the case. I am wondering how the hon. Gentleman can square what he says with a letter that was sent to the Department in March 2001 from Railtrack, which states that on its own analysis, on the day when its shares were trading at 800p a share, the company thought that they were worth 60p a share. Does that not suggest that there was something wrong with the company?
Mr. Duncan: Again, that is irrelevant to the case that we are making. The fact that it was a fairly lousy company in the eyes of the Secretary of State does not excuse him from the conduct that I am demonstrating.
Mr. Darling: I have my answer.
Mr. Duncan: The right hon. Gentleman says that he has his answer. I shall let him intervene in a moment. I want to present my case. The right hon. Gentleman has forgotten one crucial ingredient and that is the rail regulator. A clear picture emerges of the Government—
Mr. Darling: That was not my assessment; that came from Railtrack. It said that at a time when people were being allowed and encouraged to buy shares at 800p a share, the company thought that the value of the company meant that they were really worth about 60p a share. That is not my judgment but the judgment of Railtrack.
Mr. Duncan:
Again, the Secretary of State is missing out a crucial ingredient in the propriety of Government conduct, which is the relationship between the regulator and what they said to the court. As I have already begun to build up in the case—there is more to come, which will make the right hon. Gentleman even less comfortable—a clear picture has emerged of the
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Government's intention to engineer insolvency, combined with an understanding of the regulator's power to stop it.
Mr. Spellar: Will the hon. Gentleman give way?
Mr. Duncan: Not now; I will not give way for the moment.
We can see also that there was another aspect. The Renewco deal, which was to bring £1.5 billion in Government grants to Railtrack in 2001 instead of 2006, presented problems for the Government because they were committed to using their best endeavours to set it up. Mr. Linnard says in the meeting:
That is the Strategic Rail Authority. Sir Richard Mottram replies: "Slow it down." Then the right hon. Member for North Tyneside says that
"in relation to the chance that Railtrack will appeal to the rail regulator for additional funding"—
this is a crucial point that the Secretary of State is trying to deny—
On 14 September 2001, Mr. Linnard—No. 3 in the Department—writes a further note to the Secretary of State discussing taking Railtrack out and replacing it with what he refers to as a "non-equity solution", a euphemism if ever there were one. He writes that
So we see railway administration being used as a means to an end—the end being seizing Railtrack's assets and taking out a FTSE 100 company by the back door. That was political assassination writ large.
Mr. Spellar: The hon. Gentleman is obviously not taking account of paragraph 64 of the judgment, where it says:
"A Railtrack note, prepared for John Robinson (the new chairman) in June 2001 stated that the situation was worse than expected. Neither the Regulator nor Railtrack could estimate the costs of running and maintaining the infrastructure with any certainty, the assumptions on which the [prior financial] settlement with the Regulator were completely unworkable, major cost over-runs . . . were still not under control, Railtrack's bloating operating costs were not being addressed. If the subsidy and pricing regime was left unchanged, the company was heading for liquidation."
Is the hon. Gentleman not building his case on very unsure foundations? He is trying to demonstrate that this creation of a Tory Government—Railtrack—was solvent when its own people were telling it that it was not.
Mr. Duncan: The right hon. Gentleman's argument goes crashing to the ground when we realise that the independent rail regulator estimates that the Government's administration programme for Railtrack has cost the taxpayer £14 billion, which is eight times the Government's worst estimate of Railtrack's deficit.
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