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Mrs. Theresa May (Maidenhead): I thank the Secretary of State for his statement, and for giving me an advance copy. As this is my first opportunity to do so in the House, let me also welcome him to his new post.

I refer hon. Members to the declaration that I made on 14 January, which can be found in column 33 of Hansard.

Like the Secretary of State, I hope that today's announcement will bring an end to the damaging last few months of uncertainty on the railway, and that the new body will indeed succeed in bringing much-needed stability to the railway network—much needed because the Government's decision to put Railtrack into administration caused considerable and, in our view, unnecessary upheaval on the railways.

I am sure that the Secretary of State has seen this morning's press release from Railtrack Group. Page 8 says:

The right hon. Gentleman may recall his predecessor's claim that the reason for the decision to put Railtrack into administration was that it was insolvent. Indeed, on 7 November last year the Prime Minister told us

Will the Secretary of State take this opportunity to admit that his predecessor and the Prime Minister were wrong to make such claims?

The Government have belatedly decided to compensate the Railtrack shareholders whom his predecessor so deliberately wronged. Notwithstanding the caricature that the Government tried to create, the people who were really wronged were not fat cats but thousands of employees and vulnerable pensioners whose savings were put at risk.

When the Government put Railtrack into administration, the former Secretary of State said:

At the time, Railtrack was looking at a possible financing requirement of £1.7 billion. Now we see the Government guaranteeing funding of up to £21 billion—£21 billion of taxpayers' money. They said that they would not give a blank cheque, but that is exactly what they are doing.

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The Government also said, through the former Secretary of State:

Yet now they are acting as guarantor to an individual company. Nine months after pulling the plug on the company, after increased misery for passengers and the spending of hundreds of millions of pounds of taxpayers' money, the Government have done what they said they would not do.

It is reported that administration has cost £1 million a day. Has this not been a very expensive way for the Government to do away with a company for reasons of ideology?

It is reported that the Government's guarantee for Network Rail's financing will be on the books of the Strategic Rail Authority, but not those of the Treasury—it sounds rather like WorldCom accounting to me. Can the Secretary of State confirm that the Office for National Statistics has determined that that guarantee and any further such sum can remain off balance sheet for the Government? We all know that the only reason why the guarantee is necessary is that the City has lost confidence in the Government because of the way in which they handled Railtrack.

In his statement, the Secretary of State outlined the structure of Network Rail but did not say who would own the company. The travelling public and the taxpayer have a right to know that, so that they can properly hold it to account. Will the Secretary of State answer the question of who will own the company, and will he confirm that the company's members will be Government appointees—Government sitting on the board and Government guaranteeing the funding? What comfort can he give that he will not need to give a further blank cheque to the company?

The Prime Minister promised that the railways would be "basically fixed". The only thing that seems fixed about this deal is the Government accounting. As I said earlier, Conservative Members hope that Network Rail can be made a success. We have concerns about matters such as the financing, the structure of the company and the cost to the taxpayer, but what people are worried about is whether their train will be on time tomorrow morning. The fact is that this Government have not treated transport as a serious priority. Five years and three Secretaries of State later, the Government have been forced to sit up and take notice.

We wish the new company well. The Secretary of State has promised

but it will take more than a Government promise to sort out the mess that his predecessor created.

Mr. Darling: First, it would be churlish not to thank the hon. Lady for her good wishes on my appointment. I fear we part company on just about everything else she said.

I had not intended to spend too much time going over what has happened in the past but as the hon. Lady raised it, it is important to remind the House of the situation that the Government faced last autumn. It is not as if Railtrack was a healthy, flourishing, thriving company. Let us be

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clear about this. Railtrack came to the Government about a year ago. Essentially, it asked for three things in order to carry on. One was that the Government should meet uncapped additional financial support. It also wanted us to underwrite the value of its shares, and a suspension of the regulatory regime for up to four years. No Government, of whatever political colour, could meet that sort of uncapped liability—[Hon. Members: "They would."] I must correct my hon. Friends. No Government would. It is no wonder that the Opposition lack credibility. Let us once and for all be clear about the facts: we were faced with a situation where a company which we had given the benefit of the doubt for some time—perhaps too long—was completely unable to carry on trading.

The sole test that the judge had to face under the Railways Act 1993 was whether Railtrack could pay its debts. The Government's position was that it could no longer do so. That is why they asked the High Court to award the order. It is also worth reminding ourselves that sitting in that court was counsel representing Railtrack. Had he taken issue with anything said, counsel would have got to his feet and said so. Instead, he said absolutely nothing.

I turn to the other matters that the hon. Lady raised. She asked about the membership of Network Rail, a company limited by guarantee. Its membership will consist of about 100 or 120 members. On the assumption that the agreements will go through, a small nominating committee, completely independent of the Government, will invite applications to be members of Network Rail. It will include the train operating companies and people with an interest in the industry. Critically, the majority of its members will come from outside the industry—from passenger groups, and from the Welsh and Scottish devolved Assembly and Parliament—to ensure that a wide range of people are included, and it will be independent of the Government. That is a far better way to ensure that the money invested in the railways is spent on the railway system itself. I repeat that it is not the Government who will run the company; it will be independent.

Incidentally, I am glad that the hon. Lady now welcomes the fact that Railtrack is out of administration. When asked in February this year whether she still thought it right to invent Railtrack, she said that she did. She has changed her mind, which is very encouraging indeed.

The hon. Lady also asked an important question about support arrangements and the finance available to Network Rail. As I have said, no matter who took over from Railtrack, it would be necessary to find substantial funds to take over the debt and meet existing commitments, and to meet the substantial cost overruns that Railtrack face, and which the successor body will have to pick up.

There is another matter about which the hon. Lady has been spectacularly wrong in the past few months, which is probably why she did not mention it much today. She has always maintained that Network Rail would be unable to raise private funds, but it has already raised £9 billion, and at extremely competitive rates. It is of course absolutely right that, initially, the Government should stand behind the Strategic Rail Authority, which is providing credit facilities for Network Rail. Such initial support will fall away as the bridging loans are

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securitised, and ultimately, through the SRA, the Government will simply stand behind the £4 billion long-stop contingency funding that will be made available. However, on any view—be it a totally private or a totally public company—the Government, through the SRA, would need to help get the company out of administration.

I welcome the hon. Lady's concession that this Government are ending a period of uncertainty. I should point out, however, that above all we are ending a period of extremely damaging uncertainty, division and argument, which so characterised a botched privatisation that should never have taken place. More importantly, I also welcome the comments of those outside this House who are involved in the industry, who said today that this is a good chance to begin rebuilding the railway system, and to establish a properly operating system that is valued by public and private customers alike. I believe that this is a major step forward, which should therefore be welcomed by everyone in this House.

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