HC Deb 03 February 2004 vol 417 c614
9. Mr. Richard Bacon(Con) (South Norfolk)

If he will make a statement about the financing of Network Rail. [152279]

The Secretary of State for Transport (Mr. Alistair Darling)

Network Rail is a private sector company, and raises its finance from commercial markets. The company's borrowing is supported by up to £21 billion of standby credit facilities provided by the Strategic Rail Authority, but that support will be reduced as Network Rail launches its long-term debt issuances, which we expect later this year.

Mr. Bacon

Does the Secretary of State think it right that under the terms of the new Greater Anglia rail franchise £500 million will be siphoned away from East Anglia so that Network Rail can pay for improvements elsewhere, while people in East Anglia must make do with second-hand rolling stock, and while many infrastructural improvements are still needed locally? If he does not think it right, what will he do about it?

Mr. Darling:

The hon. Gentleman has asked about Network Rail, but the franchise is awarded by the SRA. As the hon. Gentleman will know, a tender was entered into, and the SRA has a duty to protect public funds. As well as making improvements, the new operator—which brings together the three franchises operating from Liverpool Street—offered a lower price.

I am sure the hon. Gentleman will accept that the SRA, and the Government for that matter, have a duty to make the best possible use of public funds. Moreover, as a result of the new franchises there will be improvements, not just services but in rolling stock.

Kevin Brennan(Lab) (Cardiff, West)

Is not the main point about the financing of Network Rail that, as a public interest company, it will be able to raise money more cheaply than it would by issuing shares, as the old Railtrack had to? Moreover, it does not face the perverse incentives that were faced by Railtrack, as a privatised shareholder-owned company, in terms of safety.

Mr. Darling

I think the most important thing about Network Rail is that, first and foremost, it is there to operate in the interests of the railways. I have mentioned its decision to bring maintenance back in house. One of Railtrack's many mistakes was to farm out not just maintenance but decision making on maintenance. Network Rail estimates that this move will save some £300 million a year. Its priority is to ensure that any money it makes goes back into the railways, and over the last year or so many improvements have been made that would probably not have been possible under Railtrack because, in my view, its priorities were completely wrong. I am sorry to return to this theme, but that was a direct consequence of the way in which the industry was privatised 10 years ago.

Forward to