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Mr. Byers: We were never going to improve significantly the quality of rail in the United Kingdom with Railtrack as the operator of the licence. I hope that the hon. Gentleman will agree with that. We had to make big decisions about Railtrack and its successor body. Those big decisions are not easy and are bound to be criticised, but they are the only way in which we can secure real improvements. In the end, we will be judged on whether the punctuality and reliability of our rail network have improved. I believe that the changes in hand will produce real improvements in punctuality and reliability in Scotland, as elsewhere in the United Kingdom.

Mr. Ivan Henderson (Harwich): Is it not a fact that the previous Government were warned several times that the privatisation of our railway infrastructure would be a disaster, and did not the Conservatives privatise it as an afterthought, because our country's finances were in such a mess that they were scratching around for extra cash? Is there any other country that privatised its railway infrastructure in the same way?

Mr. Byers: It is true to say that it was a pretty unique form of privatisation. On the £300 million that the hon. Member for Maidenhead (Mrs. May) is so excited about, hon. Members should read the excellent report published by the Public Accounts Committee when the current chairman of the Conservative party was its Chairman. The report shows very clearly that Railtrack was floated and

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sold for less than £2 billion, and that within 18 months the value of the shares was up to about £8 billion—a £6 billion shortfall for the taxpayers of this country. Conservative privatisation brought a shortfall of £6 billion, as well as worse service on the railways. Our proposals will make a real difference and improve the quality of rail travel.

Miss Anne McIntosh (Vale of York): I remind the House of my interests in Railtrack, Eurotunnel and First Group.

I know that the Secretary of State does not drive, but he has performed a U-turn, and so has the Prime Minister. Why? Is it because he feels that he should not after all have put Railtrack into administration and that he should have taken the advice of the independent rail regulator and granted an interim review, or is it because he is frit of a legal action that would force him to give evidence on oath? This offer is time barred. What happens if Railtrack does not come out of administration, the offer fails and the shareholders get nothing? May I remind him that 90 per cent. of Railtrack employees hold shares? Why has he changed his mind?

Mr. Byers: Railtrack could have applied for the interim review; it had the power to do so, but it failed to do so. Its representatives sat in court and did not oppose the petition for administration. The £300 million is available only if there is an early exit from administration. If that does not happen, it will not be available to the shareholders. That is why it is not compensation; it is money that is being made available for the benefits that we, as a Government, will get from an early exit from administration. If the shareholders do not support the proposal, they will lose the benefits and we will not get the benefits, so the £300 million simply will not be available. We will then go through the competitive process, which the administrator will put in place. That will take time, so we will not get the savings of an early exit, which is why the £300 will not then be available.

Mr. Gary Streeter (South-West Devon): In relation to transport, will the Secretary of State please tell the House what part of his job he thinks he has done well since he was appointed last year?

Mr. Byers: The taking of Railtrack into administration was absolutely right for the simple reason that Railtrack was at the heart of all that was wrong with our railway network and many of the problems. Conservative Members will disagree with the action that I took in relation to Railtrack—we can all understand why—but I firmly believe that that action was necessary. Railtrack was put into administration because it could not pay its debts or was unlikely to pay them. Most importantly, we are now putting in place a new structure for the railway industry that will provide us with the opportunity to bring the industry together, to get away from the fragmentation and to put the interests of the travelling public first. That is what a company limited by guarantee will do, and I hope that the hon. Gentleman, who is concerned about transport to the south-west, will recognise that those real improvements will be delivered for the south-west as well as the rest of the country.

Bob Russell (Colchester): May I congratulate the Secretary of State on his impeccable timing? He chose to

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make his statement on the very day when the problems on the Colchester to Liverpool Street line were so bad that my constituents took up to five hours to complete a one-hour journey. I was lucky; my journey took only three hours. Does he agree that, despite the fact that the previous Government caused the problem in the first place, after five years of Labour Government, the situation is worse now than it was in 1997? Who does he blame—himself or the former Transport Secretary, the Deputy Prime Minister? Has he stopped digging, or is he going to fill himself in?

Mr. Byers: I have been very clear with the House in saying that we have to take responsibility, and I will take responsibility for the performance not being as good as it should be, which is unacceptable and we must move forward. However, we will never see the sort of improvements that the hon. Gentleman and I want by tinkering around at the edges and playing around at the margins. We have to take the big decisions that will make a difference to our railway industry, which we are now doing. Some people find that uncomfortable, but it has to be done if we are to achieve an improvement in the service from Colchester to Liverpool Street—a line that I know very well—as well as elsewhere in the country. I honestly believe that we can do that, and I think that the measures that are being taken and today's developments will lead us to a far better future for our railway industry.

Mr. Michael Jack (Fylde): Will the Secretary of State tell us precisely from which part of his Department's vote will the £300 million come? Will he be more specific about the savings that he mentions? He says that the costs of administration will be borne by the shareholders, so there appears to be doubt about where the Government will get their savings from. Finally, will he agree to the National Audit Office making an early inquiry into his proposals to ensure that the taxpayer gets good value for money?

Mr. Byers: Of course we always co-operate with any National Audit Office inquiry. The savings will not come from the costs of administration to the Government. As with every other administration, those costs are borne by the shareholders, so it is not a call on the Government. The savings to the Government will come about because Network Rail's proposals are designed to be produce greater efficiency than Railtrack. It will have lower financial costs and no dividends to pay, so it will be easier and cheaper for it to raise money. There will be a quicker realisation of efficiency savings and a reduction in performance penalties, which will come about as a result of a company limited by guarantee and the fact that Railtrack is no longer responsible. Those are all benefits and savings that the Government will get, from which we will be able to fund the £300 million without that being a claim on another part of the railway budget.

Mr. Julian Brazier (Canterbury): Can the Secretary of State answer the questions repeatedly asked by a number of my hon. Friends? What has changed since his original statement that has led him to make a U-turn on compensation for shareholders?

Mr. Byers: I repeat that the £300 million is available only if there is an early exit. If that does not happen, it is not available, so it is not compensation for shareholders.

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It is linked to an early exit from administration and the savings that the Government will obtain as a result. There is no change. It is absolutely consistent with the statements that I have made since 15 October last year.

Richard Ottaway (Croydon, South): In response to a question on how the grant is self-financing, the Secretary of State replied that Network Rail will be able to get money more cheaply. Is not that the real reason why he introduced the package today, because if he had not, the City would have charged him higher penalising interest rates for future infrastructure projects?

Mr. Byers: No. If hon. Members look at the refinancing deal of some £4.1 billion announced by the administrator this afternoon, it is clear that no premium is being charged by the City. The City makes a clear distinction between the position of Railtrack, a company quoted on the stock market, with all the risks that arise from that, and the public-private partnership approach in which the Government enter into contractual obligations. That is the difference, and it is understood by the City. As a result, no premium has been charged.

Mr. Andrew Robathan (Blaby): Before conjuring up the £300 million that every newspaper describes as compensation for shareholders, what legal advice did the Secretary of State receive on the impending shareholders' action? Was he led to believe that he might easily lose a legal action? Was he told that he might be found to have acted illegally by taking Railtrack into administration without providing compensation and, indeed, to have acted in a manner akin to theft?

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