| Previous Section | Index | Home Page |
Mr. Duncan: That does sound grander, Mr. Speaker. The Chancellor's representative on Earth let the cat out of the bag when she wrote in one of her memos:
It is unprecedented, according to everyone I have spoken to in the House, for someone mentioned so specifically in a motion not to turn up to hear what is said. How on earth could the Chancellor, if he were here, stand up and talk about a Britain of opportunity for all, not just a few, when his representative on Earth has shown such contempt for shareholders and was worried only about American investors?
This whole sorry saga has undermined investor confidence in Government projects. It was the process of Government, the bypassing of Parliament, and secret back-room meetings that precipitated this loss of trust. All this happened at a crucial time for the Government. Private finance initiatives are the cornerstone of many
24 Oct 2005 : Column 32
Government projects, and I am sure that the Secretary of State will agree that investor confidence is critical to the success of these projects.
Let us take a look at a letter written by 22 senior City fund managers to the Chancellor in March 2002, in response to this Railtrack scandal. They said:
"There is a straightforward issue of trust. A range of Government initiatives rely on the development of partnerships between the private and public sectors . . . We believe that many of our colleagues in the private sector will now be wary of entering into such relationships and that damage has been caused to the trust that previously existed between Government and the City."
If an investment partner is so unreliable, how can anyone expect people to risk their capital when the Government have behaved so despicably in this case?
As the House knows, independence of economic regulation is of fundamental importance to the financial regime for the railway industry, especially as regards the financing of Railtrack. It was the company's financial lifeline, and it was, and remains, of immense importance. During the period up to and immediately after the administration order was made, the Government displayed two characteristics that were extremely damaging and alarming to confidence, in their actions and their iron-control mindset. They showed that they did not understand the importance of independent economic regulation and regarded it as a disposable commodity; and they showed such contempt for the constitutional significance of an independent institution that they had to devise a discreditable plan to extinguish that independence, to prevent it from interfering with their plan to seize the assets of a FTSE 100 company for nothing. What does that say about the stability of the independence of other institutions?
Since he took over as Secretary of State, the right hon. Member for Edinburgh, South-West (Mr. Darling) has been at pains to stress how important he and the Government regard independent economic regulation. On 12 June 2002, he stated:
"As the Government announced in October 2001, they have been considering whether the railways regulatory framework continues to be fit for purpose given the changing circumstances faced by the UK rail industry. The Government's considerations have been guided by . . . key overarching principles:
Providing sufficient comfort and protection to operators and lenders through independent economic regulation and in order to regulate monopoly/monopsony elements and to secure private investment in the railways at an efficient cost".—[Official Report, 12 June 2002; Vol. 386, c. 1262W.]
He went on to say that the Government regarded that principle as an "essential continuing requirement".
"In a statement to Parliament in June 2002, I set out the key overarching principles for the regulatory framework for railways. Independent economic regulation was one such overarching principle for which there was an 'essential continuing requirement'. This remains the Government's position."—[Official Report, 15 December 2003; Vol. 415, c. 122WS.]
Having so assuredly asserted the essential importance of independent economic regulation, is the Secretary of State now going to go back on all those statements, which were intended to steady markets and reassure investors, and defend the secret Bill of October 2001 and the extraordinarily detailed plans that were put in place in the summer of 2001 to extinguish the independence of the rail regulator? Let us see how he both defends a
24 Oct 2005 : Column 33
violent attack on independent economic regulation in 2001 and at the same time asserts that independent economic regulation is an essential continuing requirement of private investment in the railways.
There was also a rescue plan, which, as the Government were well aware, threatened their plot to take over Railtrack. RenewCo, as it was called, was a new company, and planned jointly between Railtrack and the Strategic Rail Authority. Through that mechanism, Railtrack would be able to bring forward billions in Government grants and also borrow extra money against that financial security. Does it sound like a good plan?
Mr. Darling: Who will pay for that?
Mr. Duncan: The Secretary of State mutters from a sedentary position, "Who will pay for that?" I remind him again that he has since paid far more than that in the arrangements that have followed the improper takeover of Railtrack. This was a massive threat to the Government's plot to present Railtrack as insolvent.
Again, the process of government was totally ignored by Ministers and unelected special advisers; leaked emails and memos show the true extent of the deceit and plots that were hidden from the House. We now know that in July 2001, the Chancellor's representative on Earth was writing to colleagues and asking:
"Should we be approving Renewco at this point in time when it could enable Railtrack to avoid insolvency for a while and rob us of a cleaner insolvency trigger?"
That is clear and damning evidence that the Chancellor's special adviser was seeking to block the deal. The right hon. Member for North Tyneside wrote in that crucial memo in September 2001 to the Prime Minister and the Chancellor that with regard to the RenewCo rescue plan:
"I therefore conclude that we should not proceed with it. This will hasten the onset of Railtrack's financial problems".
So there we have it—the Secretary of State for Transport was seeking to
Again, he is damned by his own words.
It gets worse, however. A central element of the Government's attempts to wreck the plan was to ensure that any RenewCo debt was classified as public sector debt. In that way, the Chancellor could refuse to agree the plan, claiming that it was unacceptable for its debts to appear on the public accounts. But what about the Office for National Statistics? It decides the classification of where the debt lies, and was therefore another obstacle for the Government. Another battering ram was needed to smash through and plough on with the plan to
The Chancellor's representative on Earth described the ONS in one of her e-mails as
The national statistician has confirmed, in a written reply to my right hon. Friend the Member for Maidenhead, that
but after receiving "new information" from the Treasury, it concluded by 5 October 2001 that the company
We have now seen the evidence, as it has been released to the High Court, showing precisely what was going on behind the scenes at the Treasury. We now know that officials from the Treasury e-mailed the head of public sector accounts at the ONS encouraging him to re-examine his original classification of RenewCo. The Treasury official wrote:
"A holding reply today would help. It is very urgent. Something along the lines that you want to reconsider the case in the light of this new information",
to which he might have added, "Sir Humphrey".
In the face of such damning evidence, how can the Chancellor possibly claim that his Department was not attempting to influence the classification? There is now no doubt: his order to "reconsider the case" was a deliberate strategy to wreck the rescue plan.
As the evidence makes perfectly clear, it was not the ONS advising the Treasury but the Treasury ordering the ONS around. It is time that we saw all the communications on the issue between the Chancellor's Department and the ONS.
| Next Section | Index | Home Page |