Stephen Byers (North Tyneside, Labour)
When I was Secretary of State, I obviously had to have regard to the interests of shareholders, which is right and proper. But, as Secretary of State for Transport, I also had an overriding consideration: the travelling public. People chose to invest in Railtrack shares, and they received the value that was in the company. That is the nature of shareholding. There was value in the company—what was it? £2.50 or £2.60 per shareholder—and it was right for the shareholders to receive that amount. That was what the company was worth.
It is for investors to think carefully about where they are putting their money. Shares can go down as well as up, and Railtrack was a bad investment for many people. There are questions that the former shareholders should be asking the directors of Railtrack.
The privatisation of Railtrack was really a last throw of the die by the John Major Government. It was introduced because he was desperate to bring his party together. It is fascinating to look back at the terms on which Railtrack was promoted to the financial sector. At the weekend, I came across the comments of one financial adviser. He said
"Railtrack is essentially a property company".
He went on
"Railway stations provide a captive audience of passengers who are all potential customers".
Because of the way in which Railtrack ran the system, the passengers were in the stations for even longer waiting for the delayed trains. That financial adviser was absolutely right: these were the captive customers for those who were trying to promote the sale.
Railtrack was sold for £1.9 billion. It was clear that it had been undervalued. When David Davis chaired the Public Accounts Committee, the Committee issued a stinging criticism of the privatisation. Commenting on why it was rushed through before the 1997 general election, the right hon. Gentleman said
"The timing of the sale was a factor in the poor value achieved".
The Department acknowledged that Railtrack
"had been undervalued and sold in haste."
That was the background to the botched privatisation of Railtrack. What sort of company was it in the private sector from 1996 onwards? In his report on the Paddington crash at Ladbroke Grove, Lord Cullen said that the company suffered from "institutional paralysis". In a recent court case dealing with the Hatfield derailment, it was revealed in the evidence before the court that Railtrack, the company that the Conservatives would have kept in business, had failed to act for over a year after being told that rails near Hatfield were badly cracked and in need of replacement. That is the company so cherished by the Conservatives; but that was the finding of the judge in the recent Hatfield court case.
The judge, Mr. Justice Mackay, went on to say that the Hatfield derailment and the neglect that was there constituted
"one of the worst examples of sustained industrial negligence in a high-risk industry I have ever seen".
That is Railtrack. That is the performance of Railtrack. The Conservatives have alleged that somehow I personally engineered the collapse of Railtrack, but the evidence makes clear that I did not need to, because of the nature of Railtrack.