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7 Nov 2006 : Column 206WH—continued

I would like to give an assurance. BDO Stoy Hayward made a statement a few days ago, following a meeting with me, that cheques sent to Farepak and received by the joint administrators after the company went into administration on 13 October were never banked, and that some customers will already have received their returned cheques. That process will continue for some time. Because of the volume of
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correspondence to be processed, there is no set limit on the time that it will take for those cheques to arrive, but the administrator is trying to get it done by the end of November. That money will be returned by the administrator, and not seized and retained.

The company was placed in administration on 13 October on application to the High Court. The administrator has confirmed that the company will not be able to fulfil orders that it has received for either vouchers or hampers, and—I must be straight; there is no point in dressing it up—it is pennies, not pounds, that it will return, at the end of the investigation, to those who lost their money.

I cannot comment on the possible reasons for Farepak’s failure. That is, of course, subject to investigations by the administrator and my Department’s companies investigation branch. I cannot prejudge the outcome of those investigations but I undertake to pass on to the investigators all the points raised by hon. Members this morning, including some points that I have heard for the first time.

This is an appalling state of affairs. The impact on so many family Christmases, in so many parts of Britain, can only be imagined. I fully share the concern that so many hon. Members have expressed about the effect on hard-working people, many of them among the least well-off, who aimed to put by something for Christmas, so that when that happy time of year came round again, they could be sure of participating without getting into debt. Let us be clear that the people affected are not ordinary, but extraordinary, and that they come from extraordinary communities, where they try to do the best they can by their families, friends and workmates. What has happened is not their fault. They have been let down by the so-called top people.

My first priority is to mobilise whatever resources or assistance may be available to help to alleviate the impact of the collapse on the customers and their families, in the limited time available before Christmas. That is why I made it clear in the House, when my hon. Friend the Member for South Swindon (Anne Snelgrove) raised the matter in questions on 19 October—I cannot praise her too highly for what she has done, not only in securing the debate, but behind the scenes, with my hon. Friend the Member for Workington (Tony Cunningham) and other colleagues, in their communities—that I had discussed the way forward with the administrators and contacted the British Retail Consortium. That led to a meeting on 21 October to discuss the potential for a good-will gesture to help the most needy people, who have lost out completely. It readily agreed to the meeting, which was held at the Department of Trade and Industry to assess the level of the problem caused by the company going into administration. We agreed that the aim should be to find a package that would be simple, fraud-free and not derisory, and which would be easy to administer at store level as well as providing as much choice as possible for the customers to shop where they wanted.

The retail sector has no legal obligations in the matter, and the package would not have been a compensation package, but the British Retail Consortium accepted in principle the idea of a good-will gesture, given the exceptional circumstances surrounding Christmas, and agreed a statement setting out the arrangement, to be placed in the public domain. I am sorry that the consortium has come to
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the view that the practical difficulties are too severe, and has abandoned its efforts to devise a good-will package. I am very grateful to the BRC for its help so far and its continued willingness to support our efforts to find a solution. I know from the individual retailers who have contacted me that they remain willing to consider supporting any alternative proposal that is sufficiently simple and timely.

I have also had initial discussions with the chairman of HBOS, Lord Stevenson, about the possibility of the banking community, including his own bank, making a contribution, and we have agreed to further discussions following today’s debate. I am sure that Lord Stevenson would like me to report further to the House on the discussions that we have had. I want to make it clear to hon. Members that I am not in discussions with him about the role of HBOS, or allegations about that role. That is a matter for the investigations. I am discussing his ability, and the sector’s ability, to make a contribution. He has made it clear that some of the allegations in the press are fallacious, and I am sure that a defence will be set out on that basis. However, he has also said that HBOS will, as a company, work with the investigators and support any work that they want to do to get to the bottom of the issues. The discussions that I am having are fire-walled. The other matter is for the investigators, and hon. Members with allegations to make should make those to the investigators, not to me. I shall report back on my discussions with HBOS.

I make it clear to hon. Members that I am not giving up on this issue. I am as committed to it as they are, and we need to make a difference to hard-working people. I was mindful of what the BRC said and accepted what it said, in good faith. I have no reason to believe otherwise. As a consequence, my office and staff have been working around the clock—we were in the office at half-past 1 this morning—trying to bring together what I shall propose. We have been working closely with the Family Fund, a registered charity based in the city of York, whose chief executive is Marion Rowe. She is well-respected in the government, business and charity sectors. She and her team have, in the past few days, been working tirelessly with the administrators. The fund’s main focus is on providing assistance to families with disabled children, and it was originally prompted by the thalidomide disaster, so we are talking to skilled people.

The fund has 30 years of experience of grant-making and providing assistance to families, including the large-scale distribution of vouchers. In 2006, it distributed £27 million on behalf of the Government to more that 46,000 low-income families with disabled children. I am genuinely pleased to announce to the House today that the Family Fund is setting up a dedicated voucher fund for Farepak customers, called the Farepak response fund. The Government are strongly behind that. The fund will be independent of all agencies and will accept donations from all sectors. In recognition of the need for a good-will gesture this Christmas, may I suggest to hon. Members that we should take the moral high ground today? We received a pay rise this week. I ask hon. Members to donate a day’s pay to the fund, because I shall be going out there and asking a lot of people, who have no legal obligation to make a contribution and about whom many remarks have been made today. I want to do that from the moral high ground.

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Mr. McGovern: Will the Minister give way?

Mr. McCartney: I shall give way to my hon. Friend in a minute.

I know that Members of all parties donate to charities all the time, privately and selflessly, but I think it important to assist the process by doing as I suggest.

My right hon. Friend the Member for Oxford, East (Mr. Smith) asked about the London stock exchange. By coincidence I have made contact with the chief executive of the London stock exchange, Clara Furse, and I hope to talk to her later today about the possibility of organising a trader’s day, in which some of the proceeds of the day’s trading would be turned through the fund into gifts for children, the elderly and people with disabilities, and other vulnerable people who have suffered from the collapse of Farepak.

Many companies and bodies have contacted me to say that they want to help, and they can now do so with confidence because there is a dedicated fund for them to support. There is no reason not to do that. I believe, and so do members of the BRC, that the fund overcomes practical difficulties that the BRC had previously referred to. For example, Tesco contacted me again this morning and committed itself to putting £250,000 in the fund immediately. Others have in principle agreed to support the fund and I hope that in the next few days they will do so. The fund offers the opportunity, whether to a multinational company or a national or local company, to make a contribution—a gesture—large or small. Uniquely, we now have a fund where individuals with resources can also make contributions to help children or others who have been deeply affected by the Christmas failure.

The fund is about the spirit of Christmas. As some of my hon. Friends have shown, there is good will about. I
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shall place in the Library for all Members in the next 24 hours a full, detailed statement about issues concerning regulatory affairs, administration and the questions that have been asked today. Obviously I shall write personally to the Opposition spokesman. I shall answer all the questions honestly. There will be a reason given when I cannot answer. Let us pull together. This is a national emergency involving more than 100,000 people. We have a few days to do something. Let us go forward with the fund and resolve the issues affecting it. Let us get the resources to the people who need them, and make sure that the regulatory inquiries take place in an appropriate way. That will enable us to deal with the issue effectively.

Mr. McGovern: If that is the only way forward at this point, so be it, but my constituents are not looking for charity. They are looking for their money. Will the Minister join me in calling for HBOS to donate perhaps £34 million to the fund?

Mr. McCartney: I am not asking for charity, but I am not going to go for a quick headline with a comment like that. We are trying to have detailed discussions with companies. My job is to get those companies to make the payment, and I am trying my best to do that.

Anne Snelgrove: I congratulate my right hon. Friend on the work that he and his Department have done, and give heartfelt thanks on behalf of my constituents, and other hon. Members’ constituents.

Mr. McCartney: I thank my colleagues for the debate and the support, and I ask hon. Members to go back to their constituencies and to make contact with the companies to make sure that they contribute to the fund.

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Rail Network

11.00 am

Dr. John Pugh (Southport) (LD): One of the most famous old boys at the school I went to, Maidstone Grammar School, was Richard Beeching who was subsequently Lord Beeching. I rush to add that we were not there at the same time and I have no recollection of the gentleman. He is the sworn enemy of railway anoraks and his spirit, to some extent, haunts the Department for Transport to this day.

I want briefly to explain the legacy Lord Beeching left. Classically, he closed a quarter of the rail system, fuelled road expansion and earned himself a hallowed place in the demonology of railway lovers. I will obviously not praise him in that context, but I will say something about the Beeching plan and what he did for our take on railways.

The Beeching plan was based on doubtful statistics that were closed to any kind of public or independent audit. It was spurred on by the vested interests of commerce and the unions—capital and labour combined—and was speculative about the future. In some cases it was also wrong and unbalanced about the present because rail patronage was not actually falling when the plan was conceived. The plan was unimaginative in the solutions it offered—for example, it suggested closure in every case—and it was Stalinist in its implementation, because sometimes with closure came the immediate demand that housing be built over railway land. Yet Beeching was not a fool. There is an anecdote that tells of when he went into a railway station lavatory and came across a slogan that said, “Beeching is a prat.” Apparently, he responded to that—I am not sure if this is parliamentary language, but I am only quoting—by writing in very neat handwriting, “No, I am not.” He was not a fool, but he did throw down a gauntlet to the rail system by challenging it to state an economic case for its existence. That theme was recently taken up by the former Transport Minister, now the Secretary of State for Trade and Industry, when he said that the railways were not there to carry fresh air around the country.

In a sense Beeching set a framework for subsequent debate, although in truth, since the inception of the railways, those involved have always had to make some sort of economic case. The first entrepreneurs who built the railways definitely knew that there was an economic case before they started work. Since Beeching, the argument has raged over whether an economic case should be a necessary condition for a rail service or whether it should simply be a sufficient condition. After all, there are other arguments that can be made for a railway system which are not strictly economic—for example, the tourist benefits it can offer and the environmental benefits such as cleaner air. There is also a public service argument that the railway should be in place because people need railways whether or not the railway companies actually make money.

The thorny question that is often raised is how the economic case will be assessed and whether the economic case is solely made by looking at the bottom line of the operator, by considering a subsidy or whether, more holistically, an evaluation should consider the contribution of a rail system to the economy of a particular area.

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Daniel Kawczynski (Shrewsbury and Atcham) (Con): Does the hon. Gentleman agree that at the very least every county town in England should have a direct rail service to our capital city?

Dr. Pugh: I warm to that sentiment, but do not know whether it is strategically possible—it is a certainly an entirely worthy ideal.

The question that provokes me most is that if there is an economic case for railway development, particularly relatively modest development, how is it to be progressed in current circumstances? We are not talking about Crossrail—I can see more than a couple of my fellow prisoners from the Crossrail Committee here.

Jeremy Corbyn (Islington, North) (Lab): Go on, talk about Crossrail.

Dr. Pugh: I have spent enough of my life talking about Crossrail so I will forgo the opportunity. We are not talking about high-speed rail links to Glasgow or the £3.5 billion spent on Thameslink, but about reversing some, although not all, of the Beeching cuts. Some clearly cannot be reversed for practical or economic reasons, but I am referring to instances where an economic case can be made.

We must accept that the railways are very different from how they were in Beeching’s day: the power of the unions is significantly reduced, patronage is rising sharply, competition exists and environmental issues are centre stage as they certainly were not before.

Tim Farron (Westmorland and Lonsdale) (LD): In that spirit, does my hon. Friend accept that the Government are making potentially disastrous use of the existing network? The plans for a cross-country rail franchise will result in people who travel from towns north of Crewe to the south and south-west—particularly to stations such as mine in Oxenholme—having to change at Birmingham New Street. Passenger Focus has said that that would cost 2.8 million passenger journeys a year. Does he accept that that would be very damaging for the rail network and also for our environment?

Dr. Pugh: My hon. Friend makes a good point on which I am certainly not qualified or knowledgeable enough to comment in detail. The Minister will surely respond by saying that rail utilisation strategies are what the Department for Transport is focusing on at the moment to obtain better use of the existing network. It appears that that is certainly not happening in my hon. Friend’s neck of the woods.

In my experience, the Treasury is always involved in the railways and actually killed off the investment in rail that was part of the Beeching package. There was supposed to be investment following on from the cuts, but while there were cuts, there was no investment, a move that set back electrification. The Treasury has suffered and groaned, quite understandably, under Railtrack and the events associated with it, and has calculated that it subsidises every rail passenger by about £4 per trip. However, the pressures for expansion exist and have to be admitted. In recent statements, the Government have said that they are aiming for more
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use and capacity on the railways, which is part and parcel of the new franchising process. Network Rail certainly aims to do that, and it set aside considerable sums of money for that purpose. The rail regulator, to whom I recently spoke, said that in his dealings with the rail companies and Network Rail, he wished to encourage, as far as possible, increased capacity and rail growth—whatever we mean by that.

Groups such as Transport 2000 are mounting a vigorous and effective campaign, arguing for developing the railways. There have been a number of conferences on that, which have been supported by players such as the CBI.

Mrs. Linda Riordan (Halifax) (Lab/Co-op): One of the best ways to expand the rail network is to have more direct routes to the capital. Does the hon. Gentleman agree that the recent decision to turn down Grand Central’s bid to operate a rail service from Halifax to London was a mistake and should be rectified as soon as possible?

Dr. Pugh: I do not have the detail on that particular proposition, but knowing the hon. Lady and the extent of her experience of the railways, I am sure she is making a valid and adequate comment.

We cannot obtain increased capacity and a real modal shift, which is what everybody wants, simply through tidying up and investing in stations, smarter ticketing—though that is desirable—or clever rail utilisation strategies.

Mr. Christopher Fraser (South-West Norfolk) (Con): In terms of the investment needed to get people off the roads and on to rail, will the hon. Gentleman accept that Network Rail must invest in car parking facilities, which are often overlooked because the requirements for them are underestimated? Many landowners around railway stations are willing to give up their land, but Network Rail is incapable of accepting those offers.

Dr. Pugh: We certainly require a degree of joined-up thinking on that. Network Rail owns a considerable amount of land, some of which could be freed up for car parking. Clearly, the easier it is to get out of one’s car and on to a train, the more the train will be used. Better franchising will help. I am sure that the Minister will say something about that. All that is entirely desirable—I do not demur from that one jot—but we need increased productivity, functionality and utility to travellers. In some cases, that will mean infrastructure that has been removed being put back in place. That need not be a nightmare for the Treasury, or mean establishing connectivity without customers. It can be a win all round.

Kelvin Hopkins (Luton, North) (Lab): I congratulate the hon. Gentleman on securing the debate. Does he agree that the first priority is to ask the Government to insist that every old railway corridor is protected and not built on?

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