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Hugh Bayley (City of York): As a representative of a great railway city that has hundreds of skilled engineers working for the train-operating companies and a wide range of infrastructure companies, may I say that what the railways need is a clear future for infrastructure, which this statement gives, and it will be widely welcomed in my constituency? [Interruption.] Conservative Members have forgotten that the failure to grant a long franchise extension for the east coast main line was a result of Railtrack's failure to bring forward its costed proposals for the infrastructure renewal. Railtrack was dragging the railways down—

Madam Deputy Speaker (Sylvia Heal): Order. The hon. Gentleman must ask a question.

Hugh Bayley: Will my right hon. Friend emphasise the importance of Network Rail bringing forward costed proposals to use the great increase in investment that the Government are putting into the railways?

Mr. Byers: My hon. Friend is right to point out the devastating consequences of rail privatisation for the

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people and the city of York, where literally thousands of jobs were lost as a result of the programme implemented by the Conservatives when they were in government. My hon. Friend is also right that Railtrack failed as far as large infrastructure projects were concerned. The east coast main line was one example; the west coast main line is probably the other major example of that. That is why we want the successor body to concentrate on renewals and maintenance of the network and not to be involved in those large infrastructure projects, where we feel a different mechanism is needed. We are learning from the mistakes made by Railtrack to ensure that Network Rail concentrates on running the network for the benefit of the travelling public. That is what Network Rail wants to do and what we want to happen.

Mr. Nick Hawkins (Surrey Heath): The Secretary of State will be aware that one of the very interested observers of his antics over the railways has been the rail regulator, in whom the Government used to say they had huge confidence. Can the Secretary of State explain why the rail regulator, speaking to the all-party railways group last week, said that he had severe concerns about a company limited by guarantee? Will the Secretary of State explain how his company limited by guarantee will improve on an equity model that would provide a buffer against poor performance, as the rail regulator has put it? While we are talking about the buffers, has not the Secretary of State hit the buffers in a terminal way?

Mr. Byers: The rail regulator will have his own views about the company limited by guarantee. I have not heard a report of his comments at the all-party group, but he has not raised with me any difficulties with the idea of a company limited by guarantee. As far as the equity model is concerned, it became clear that Railtrack's difficulty was that it had to put the interests of shareholders first; it had no choice, legally. There was a great conflict between the needs of the travelling public and the interests of shareholders. In the end, legally, Railtrack always had to put the interests of the shareholders first The Conservatives may still believe that that is the right model to pursue; we do not agree. We believe that a company limited by guarantee, which puts the interests of the travelling public first, is far better.

Mrs. Louise Ellman (Liverpool, Riverside): What would the speedy setting up of Network Rail mean for west coast main line modernisation in contrast with the abject failure of Railtrack? How much taxpayers' money did the failed Railtrack cost the people of this country? How much would it cost to keep the administrators in being for every additional month after they are required, as that seems to be what the Opposition want?

Mr. Byers: The costs of administration are not borne by the Government. Ultimately, they are borne by the shareholders, so it is not in their interests for the situation to go on.

I know that my hon. Friend is concerned about the delays and lack of progress on the west coast main line, which will go down as the most tangible illustration of Railtrack's failure to manage major upgrade projects. There are many meetings taking place to resolve the difficulties around the west coast main line. That is being pursued irrespective of the position on administration, so in a sense, the issues are

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separate. Nevertheless, my hon. Friend makes an important point about learning the lessons of the difficulties surrounding the west coast main line and ensuring that the company limited by guarantee or any successor body to Railtrack do not repeat those mistakes.

Mr. Howard Flight (Arundel and South Downs): How can the Secretary of State say that the Government are entirely neutral towards the decision to be taken by the administrator when today's statement to the House is clearly intended to support and prejudice a decision in favour of Network Rail? Is that not yet another case of "Animal Farm" language, which we have seen throughout the Railtrack saga?

Mr. Byers: We have been consistent about saying that the model of a company limited by guarantee is attractive, and that is the point that I have been making today. Network Rail has put forward such a proposal, and I think that we should welcome it. However, the point that I made in my statement is that the administrator has made it clear that if there are other proposals, they will be considered. The administrator will look carefully at the proposals and will then make a recommendation to me if it is a transfer scheme. [Interruption.] For the benefit of the House, the Railways Act 1993 is not the basis on which Network Rail has made its approach to the Railtrack group. [Interruption.] No, the House needs to be aware of this. The proposals made by Network Rail are not under the 1993 Act. Its proposals will be voted on by Railtrack's shareholders; they are not for the administrator or the Secretary of State to determine.

Mr. Kelvin Hopkins (Luton, North): My right hon. Friend rightly received unanimous support on this side of the House when he put Railtrack into administration. We thought that that was the right thing to do as a significant step back towards public ownership. The whole railway industry is now in trouble—the train operating companies require extra money, the maintenance companies are in chaos and we know about Railtrack. Given that the railway industry is a natural monopoly, providing a vital public service, and that the ultimate risk is always taken by Government, is it not about time that we seriously considered bringing the industry back into public ownership?

Mr. Byers: That is a point of view, but it is not shared by the Government. We believe that the company limited by guarantee model, which has been put forward today and has the interests of the travelling public at its heart, is the best way forward. The benefits that we will get from a company limited by guarantee may not completely convince my hon. Friend but I hope that they might go some way towards convincing him that this is real progress and will benefit the railway industry.

Chris Grayling (Epsom and Ewell): Has the Secretary of State approached the European Commission to seek state aid approval for any of the support that he is giving to the company limited by guarantee, and if so, what was the response?

Mr. Byers: It would be premature to do that, but the hon. Gentleman is absolutely right to say that any proposals would need state aid approval.

Mr. Jim Murphy (Eastwood): Like most people in our party and in the country, I welcomed the Secretary of

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State's decision to take Railtrack into receivership. Can he confirm that his announcement represents the end of the line for public financing for the shareholders, notwithstanding the fact that the Tories are still demanding further handouts for them? In his discussions with Network Rail, will he ensure that on the agenda is not only the modernisation of the west coast main line but the integration of the rail network in the north-west of the United Kingdom, and in particular the link between Glasgow airport and the modernised west coast main line?

Mr. Byers: Ultimately, it will be for the Railtrack shareholders to decide whether to accept Network Rail's proposal. If they do, there will be a speedy exit from administration and Network Rail will operate the licence, which will bring real benefits. On integration, there is clearly an issue about the interface between wheel and track, and that is the subject of a Strategic Rail Authority inquiry. On the specifics of developing the rail network in Scotland, there are several major projects that would make a significant difference, one of which is developing the links with Glasgow airport. I know that the SRA is examining that closely, as a result of representations that have been made both by Labour Members and by the Scottish Executive.

Pete Wishart (North Tayside): We have paralysis on the tracks, a rail industry in Scotland that is riven by strikes, a Department that can only be described as bizarre and chaotic, and now we have this astonishing U-turn. Given that the Government were elected on the basis of the song "Things Can Only Get Better", can the Secretary of State think of a time when things were worse for the railways?

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