§ 1. Norman Baker (Lewes)If he will make a statement on the involvement his Department has had in the proposed structure of the successor company to Rail track. [44497]
§ The Chief Secretary to the Treasury (Mr. Andrew Smith)Treasury Ministers and officials have been involved in regular discussions with colleagues in the Department for Transport, Local Government and the Regions on the subject.
§ Norman BakerI am delighted to hear that. Is it a coincidence that on the very day that the Treasury received advice from the Office for National Statistics that the finances of a successor to Railtrack would not be counted as public borrowing, Railtrack was put into administration? Are we running a railway system based on the needs of passengers, or being driven by Enron—like accounting tricks?
§ Mr. SmithThis Government are determined that the rail system serves the needs of the travelling public as well as meeting the needs of the taxpayer. The future of the company limited by guarantee depends on the Railtrack Group and the administrator, but we believe that it will offer a more efficient service, better aligned to the needs of this country's travelling public, because it will be able to focus on engineering efficiency and excellence in the network service that it delivers.
§ Mr. Bill O'Brien (Normanton)Is my right hon. Friend aware of the evidence given by the Secretary of State for Transport, Local Government and the Regions to the Transport Committee yesterday, when he outlined how savings will be made to meet some of the additional costs 132 of Railtrack receivership? Will he join me in congratulating our right hon. Friend on the work that he has done and the efficiency that he has applied in bringing rail services back to something like normal?
§ Mr. SmithYes, I am very pleased to congratulate my right hon. Friend. I thank my hon. Friend for his question. He is right that enormous benefits to rail users and savings to the taxpayer are to be gained from an early exit from administration—quicker efficiency savings, reduced performance penalties, faster progress on the 10-year plan projects and earlier introduction of the right incentives for managers to get the network rail system delivering to the travelling public in a way that was not possible under the flawed privatisation for which Conservative Members were responsible.
§ Chris Grayling (Epsom and Ewell)Before the Government's recent announcement about Network Rail, was the Treasury told by the team preparing the Network Rail bid that without it administration for Railtrack would last until at least the later part of next year?
§ Mr. SmithWe have the same information as anybody else on the likely length of administration. I am aware of recent speculation that without an early exit as a result of the CLG bid, administration could go into November. There has even been speculation that it could go into next year. Ultimately, of course, that timetable and those matters are for the administrator and not the Government.
§ Caroline Flint (Don Valley)There has been some concern that payments to shareholders might impact on Government spending in other areas. Will my right hon. Friend assure me that there will not be any impact on areas in which we want to invest as a result of payments to shareholders?
§ Mr. SmithThe £500 million—the £300 million from the Strategic Rail Authority and £200 million from the CLG—is not compensation to shareholders. As I have been explaining, it is an offer that has been made in appreciation of the value to the travelling public and the taxpayer of an early exit from administration. My hon. Friend can be assured that that is not an additional cost to the taxpayer. Indeed, because of the savings, there will be enormous benefits for the taxpayer and the travelling public.
§ Mr. Howard Flight (Arundel and South Downs)The House will be aware that under the proposals for Network Rail to purchase Railtrack, it will need to borrow £9 billion, mostly to finance Railtrack's debts, of which I believe £4.4 billion constitutes the Treasury-guaranteed loan. In turn, that will have to be guaranteed by the Strategic Rail Authority, which is itself an arm of government. Will the Minister please confirm whether under Eurostat requirements that will be accounted for as a public sector liability? If it will not, will he candidly explain the Enron off-balance-sheet accounting trick for not so doing?
§ Mr. SmithThe technical position is that the £9 billion is a debt that Network Rail expects that it needs to raise to finance the purchase of the company and to repay the company's finance creditors. It is a contingent liability, 133 which will be called only in the unlikely event of all alternative means of refinancing the bridge borrowing falling through. The money does not score unless it is called. I have to say that we would not be having to do this if the Conservative party had not privatised Railtrack in such a flawed way, doing such enormous disservice to taxpayers and the travelling public.