§ Mr. LidingtonTo ask the Secretary of State for Transport if he will make a statement on the conduct of the sale of BR's rolling stock heavy maintenance depots, including the Eastleigh depot. [15618]
§ Sir George YoungThe British Railways Board sold its six British Rail maintenance depots—BRML—in June 1995. They were the largest sales at that date in the rail privatisation programme and BR prudently decided to commission a study to ensure their soundness. Price Waterhouse was therefore engaged by BR to review the sale of one of the depots, the Eastleigh works.
Price Waterhouse concluded that the sale process for Eastleigh was generally robust and that the net proceeds would not have been higher if it had been undertaken differently.
However, on reviewing the Price Waterhouse report, the Department of Transport concluded that, while its findings gave reassurance on proceeds, they were incomplete. The Department therefore commissioned Ernst and Young to carry out a further, detailed, investigation of all six BRML sales. Following consultation with the Department, the Ernst and Young 575W team has been accompanied in its investigation by an official from the National Audit Office, which carrying out its own independent and separate examination of the sale.
Ernst and Young has concluded that the sale process depended crucially on the fairness and transparency of the competition. The composition of the Eastleigh depot's assets would have been a subsidiary consideration to the strategic value of the business to the eventual purchaser. Having spoken to other bidders for the Eastleigh depot, Ernst and Young is confident that there was a strong and fair competition, and that all the necessary information, including details of the company's cash balances and its future trading prospects, was available to all bidders. Ernst and Young concluded that, whilst there were some procedural weaknesses, they did not affect the sale. Ernst and Young's inquiries also point to the fairness and transparency of all the subsequent BRML sales.
The National Audit Office has been kept fully informed throughout by the Department. The BRML sales, like all other sales in the railway privatisation programme, are subject to scrutiny by the NAO on behalf of the Comptroller and Auditor-General.