The shareholders contend that the Government maliciously schemed to bankrupt the company, so it could be taken under public control at no cost to the taxpayer. Stephen Byers, the then secretary of state for transport, will later tell the court that, at a meeting in July 2001, Mr Robinson had even warned him that the company may not be able to be certified as a "going concern" by autumn Mr Robinson denied using those words "I certainly wouldn't have made that statement," he said. There is no written record of Mr Robinson's alleged comments because civil servants taking minutes of the meeting were told to put down their pens. Mr Robinson said the meeting with Mr Byers and later meetings with officials were "positive", and he was led to believe that a deal would be struck with government.
Under cross-examination by the Government's QC, Jonathan Sumption, Mr Robinson admitted that he had not read a report on Railtrack's liquidity situation, by its auditors, which had painted a grim picture of the company's finances. But he had read a document prepared by a colleague which stated that Railtrack's regulatory regime was "completely unworkable" and that "if unchanged, the company is heading for liquidation". Asked by Mr Sumption whether this had concerned him, Mr Robinson said: " If the huge [funding] gap was left unplugged, we were heading for liquidation But that is true for any business. As a businessman, that sort of thing does not necessarily scare you." Earlier in the day, Mr Sumption said Railtrack had been seeking to force more money out of the authorities "Railtrack said, 'we are bust', £2.2bn extra is needed. Unless we are given this, we will die in front of your gates and our corpse will send up the most embarrassing stink," he said. Mr Sumption said that, presented with evidence of Railtrack's financial position, it was reasonable for Mr Byers to have concluded that the company was no longer sustainable.
"It is impossible to see how Mr Byers was being malicious for refusing to pay [Railtrack], when he was being told by his advisers that the company was worthless ... More "robust" measures are being introduced for this year's management bonus scheme.Network Rail said its performance had improved markedly since the committee's hearings in May last year. Train delays had been reduced by 17 per cent, punctuality was running at above 84 per cent and £70m a year was being saved by bringing maintenance in-house.. "In particular, that means reducing the long-term cost of running the network - measured in terms of carrying more passengers at a lower network cost."One-third of the bonuses Network Rail's executives receive are linked to a financial efficiency index but the report notes that this only takes into account actual spending against budgeted spending, without taking unit costs into account.In evidence, both the Department and Network Rail said there were possible benefits in moving to a system where costs of track maintenance and renewal were adjusted for the number of passenger miles. The latest GDP data showed that household spending grew in the first quarter at its slowest pace since the final three months of 2000.The Bank has published a study suggesting that MEW had played only a limited role in financing consumption, although many analysts believe that is too optimistic.Howard Archer, the UK economist at the consultants Global Insight, said: "This is undoubtedly weighing down markedly on consumer spending. It is clear the slowdown in the housing market and higher interest rates have markedly reduced individual's scope and desire for mortgage equity withdrawal.". New car registrations fell at an annual rate of 4.8 per cent in June although the three-monthly rate improved from minus 4.5 to minus 4.1 per cent.Martin Weale, the NIESR's director said: "These data, taken in the context of the revised estimates of the growth profile in recent quarters and giving a year of below-trend growth, suggest to us that interest rates should now be reduced."But there was further ammunition for those forecasting that the Bank will hold fire tomorrow from a better-than-expected performance by the manufacturing sector in May.The MEW figures will add to the debate over the impact that the slowdown in the housing market has had on consumer spending.