The hon. Gentleman says that the regulator is crucial. Again, he is trying to make a case
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that there was nothing basically wrong with the company. When he looked through the documents lodged in court, he would have seen a letter from the then chief executive of Railtrack, Steven Marshall, dated 29 June 2001, to the then rail regulator, Tom Winsor. He said: "You"the rail regulator:
Mr. Duncan: There was a lot wrong with the company, but there was even more wrong with the conduct of Ministers and officials in the way in which they tried to address the problem. That is the case that we are laying out.
"Our advisers say they have unearthed no killer facts which I could use to force the company into railway administration. And Counsel has warned that a contested petition for administration would be seriously risky and therefore to be avoided."
On 25 September 2001, the Government's investment bank advisers began to get cold feet about the plan to cut the company's financial lifeline by extinguishing the independence of the rail regulator. Mr. Challen of Schroders wrote to Mr. Rowlands and Shriti Vadera:
"Furthermore we remain (as laymen) surprised that the Government can, with impunity (albeit through a Parliamentary process), remove the effect of a key component of the regulatory regime on the basis of which shares were sold, shares have been traded and contracts have been entered into."
"short paving legislation . . . making the Regulator subject to Ministerial direction, so that he could not use the discretion available to him under current statute . . . to frustrate Government's new approach to Railtrack."
The next day, the Secretary of State met his officials, together with Mr. Adonisnow Lord AdonisBrian Hackland of the No. 10 policy unit, Shriti Vadera of the Treasury and others. The minutes of the meeting say:
The handwritten notes of the meeting add colour to that. Mr. Rowlands is recorded as having said: "talking about closing" Railtrack's "escape route" shows that the Government are no longer behind the company, which he calls a "hammer blow". It was a meeting at which the right hon. Member for Warley (Mr. Spellar),
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with all his brilliance, sat. As the then Minister of State, he added that
Mr. Spellar: I am pleased that the hon. Gentleman asks me to comment. In the face of insolvency, the Government had to take action. That is the case. Unfortunately, he seems to believe that endless public money should have been pored into that utterly unworthy enterprise. That is the basis of his case, and he criticises us for protecting public funds and the transport system.
Mr. Duncan : That was not about reacting to the company's insolvency; it was about cutting its financial lifeline, and the right hon. Gentleman has just condemned himself with his own words. Indeed, the company was not insolvent, because that lifeline was available. As it would have taken highly controversial primary legislation and a period of months in which to pass such legislation, including the use of the Parliament Act, to sever that lifeline, the Government had a major problem. How could they present the judge with a convincing case that Railtrack was already insolvent when that lifeline was still intact? They were seriously worried.
The Government knew that they were planning to use the railway administration regime for a collateral, and therefore illegal, purpose. They knew that to secure a railway administration order they had to convince a High Court judge that the company was insolvent. They knew that it was not insolvent as long as the rail regulator's jurisdiction was intact. They knew that they could not sever that lifeline without legislation, and that they could not pass such legislation in a short enough period of time, so they decided to present to the Court a case that contained serious and culpable omissions.
Methinks it is Gordon's representative on Earth who is up the creek now. Is that the language of a Government reacting to an insolvency, or is it the language of a Government who know that their case for insolvency is shaky or even non-existent?
On the morning of 7 October, the day on which the Government went to court, the Secretary of State had a final meeting with his officials, his outside advisers, Dan Corry and the notorious Jo Moore. The minute of the meeting shows the shakiness of the evidence of insolvency, as it records that
There was definitely a plan to engineer the artificial insolvency of Railtrack without reference to Parliament as a means of re-acquiring the company at no cost to the Government but at the expense of the shareholders. There are no two ways about it. Perhaps the most pitiful example of new Labour's attitude towards private ownership emerged during the course of the trial. It demonstrates beyond all doubt the utter contempt that Ministers and special advisers had for shareholders. I remind the House that 90 per cent of Railtrack's employees held shares in the company, and many of the shareholders were small investors, so we are not talking about big business or fat cats. Gordon's representative on Earth has described shareholders as "grannies" on many occasions. If the "grannies lose their blouses", Ms Vadera cynically observed, it would not matter, as they were only
What a motley bunchthe Chancellor, his contemptuous special adviser, and the weedy lackey of a Secretary of State for Transport saying, "Yes, Gordon, no, Gordon, can I be nice to you in Cabinet, Gordon?"