Miss Anne McIntosh declared a pecuniary interest as the holder of shares in FirstGroup plc and Railtrack plc.

The Sub-committee deliberated.

Miss Anne McIntosh declared a pecuniary interest as the holder of shares in FirstGroup plc and Railtrack plc.

Draft Report [Rail Investment: Renewal, Maintenance and Development of the National Rail Network] proposed by the Chairman, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.—(The Chairman.)

Paragraphs 1 to 53 read and agreed to.

Paragraph 54 read, as follows:

54. The disruption following Hatfield has, as we have said, cost Railtrack a great deal of money. The current structure of funding of the railway is such that the Government is likely to be obliged to provide additional money, either directly or via the Strategic Rail Authority and the train operating companies, to Railtrack in order that investment in the railway will be maintained at the expected, and indeed required, level. It has been widely reported that Railtrack has already sought additional funding so that it can meet the costs of the national rail recovery plan and still deliver the investment expected in the next control period: indeed it has been suggested that Railtrack "cannot survive as it is without the injection of further Government money". Recent reports suggest that the Government has decided to bring forward payment of £1 billion due to be made to Railtrack in a few years time. The short-term and long-term costs which have arisen as a result of the Hatfield accident and the national rail recovery plan have arisen principally because Railtrack has failed in the past properly to manage maintenance and renewal of the national rail network. Such costs are likely to end up being borne, in one way or another, by the Government: the only alternative would be to permit Railtrack to cut back vital investment in the railway. It is unacceptable that the taxpayer should be compelled to bail out a private monopoly company which has acted so incompetently, without taking any stake in the company in return.

Question put, That the paragraph stand part of the Report.

The Sub-committee divided.

Paragraph agreed to.

Paragraphs 55 to 120 read and agreed to.

Paragraph 121 read, as follows:

121. Our view is straightforward. We believe that the Government's role in relation to the nation's railways demands that it should have some influence over the management of Railtrack. We also believe that the very considerable sums of money to be granted to Railtrack from taxpayers over the next few years deserve to make some sort of return. We note the Minister's reservations about taking an equity stake in the company. We also note the views of those who argue that Railtrack's status as a private company should not be affected, and therefore oppose any change to its structure: those views are, we contend, spurious, given the uniqueness of Railtrack's position as a highly-regulated company which receives the vast majority of its income from the Government. We therefore strongly recommend that the Government should consider a number of options: (1) that it should take a majority equity stake in Railtrack, and use that stake to exercise influence over the management and policies of the company; (2) that it should take Railtrack wholly back into public ownership; and (3) that it should consider the role and responsibility of the Strategic Rail Authority in relation to maintenance, renewal and development of the rail network.

Question put, That the paragraph stand part of the Report.

The Sub-committee divided.

Paragraph agreed to.

Paragraph 122 read and agreed to.

Motion made, and Question put, That the Report be the Second Report of the Sub-committee to the Committee.-(The Chairman.)

The Sub-committee divided.

Ordered, That the Chairman do make the Report to the Committee.

[Adjourned till Wednesday 21 March at a quarter to Four o'clock.