STEPHEN BYERS, the former Transport Secretary, had been prepared to offer Railtrack shareholders £1 billion compensation “to go quietly”, it was alleged yesterday.
But the payment was not necessary because Railtrack management “threw in the towel and the Government got its way” anyway, according to written testimony submitted by Tom Winsor, the former Rail Regulator.
Mr Winsor’s evidence, which will not be challenged by the Government’s defence team, was made available on the second day of the High Court action brought by 50,000 private shareholders who are trying to get compensation over the collapse of Railtrack in 2001. They have accused Mr Byers, who was Transport Secretary at the time, of lying and abusing his power to avoid paying them a proper share price.
Mr Winsor’s 25-page statement and supporting documents describe a dinner with Mr Byers four months after the company was put into administration when the minister bragged that the controversial move had all been his idea.
Mr Byers’s reported admission to Mr Winsor is significant because the court heard that ministers were empowered by law only to react to the insolvency of a railway company — not to take action against one “with which the Government has lost patience”.
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Mr Winsor said in his statement that he was not shown the documentary evidence that led to Railtrack’s collapse until days after the company was put into administration.
If he had seen the papers before, he “would certainly have intervened”, Mr Winsor said.
Mr Winsor said that the judge who made the administration order had not been told that Railtrack had an alternative source of funding through the Office of the Rail Regulator, which could have helped it to avoid insolvency. The former Rail Regulator believed that the judge had not been given the full picture about potential sources of finance. Mr Winsor said he believed that the Government’s case was “very thin indeed”.
According to the unchallenged documents, three days after the rail infrastructure group was forced into administration, Mr Winsor told Sir Richard Mottram, the Department of Transport’s Permanent Secretary, that the Government had acted “in a grubby and disreputable” manner that would open up “unimagined adverse consequences”.
Sir Richard’s response was to demand why Mr Winsor had not resigned over the Railtrack affair and “his tone was one of fairly considerable annoyance”.
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When Mr Winsor pointed out that some of Sir Richard’s suggestions could be considered illegal, the senior civil servant replied to the effect that “we’re the Government, we can do anything — we will change the law if we have to”.
Referring to his Commons dinner in February 2002, Mr Winsor said that Mr Byers was clearly attempting some form of “burying hatchets” after their earlier clashes, including “threats” and “attempts” to extinguish the Office of Rail Regulation’s independence and transfer its jurisdiction to the Strategic Rail Authority. “I think he had been surprised and discomfited by the fact that I had not given in to the pressures from him, the Treasury and No 10,” Mr Winsor said. He added: “Mr Byers indicated that the Government had had enough of Railtrack and that the time had come to put an end to all the trouble it had caused.”
It emerged in court yesterday that Steve Marshall, Railtrack’s chief executive, wrote to Mr Winsor in June 2001, four months before the company was placed in administration, asking him to refrain from “battering” Railtrack publicly, as Mr Winsor’s attacks were damaging morale.
Responding to a comment by Mr Winsor about Railtrack being “on the cliff edge”, Mr Marshall had replied: “The cliff’s edge is closer than you realise.”
The case continues.