Orders of the Day — Railways Bill.

– in the House of Commons on 26th May 1921.

Alert me about debates like this

Order for Second Reading read.

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

I beg to move, "That the Bill be now read a Second time."

In inviting the House to give a Second Reading to the Railways Bill, 1921, I shall be as brief as possible in my remarks, and I think that will meet the convenience of the House, especially as a very full explanatory memorandum—which I hope was of assistance to hon. Members—was circulated with the Bill, I would first like to bring to the recollection of the House the position of the railways before the War. The railways in this country are approaching, if they have not yet reached, 100 years of life, and in that time they have changed very materially in their position, financially and otherwise. Before the War the value of the shares of railways was declining, and the difficulty of raising capital was increasing. The position of the railways—their future, their organisation and their finance—was the subject of grave consideration right down to the year before the War. I submit that the present very difficult position of the railways cannot be said to be entirely, or even mainly, the result of, or consequent upon, either the War or the relationship between the Government and the railways, brought about as a consequence of the War. The anxieties from which railways suffer are shared by every other transport undertaking, not only in this country, but practically throughout the world. Trams, canals, and docks in this country are all in this difficulty. The railways alone were guaranteed by the Government during the War, and to that extent perhaps one may be allowed to say they were in a happier position than any other transport undertakings, but now we have to consider their future. They were in a difficult position before the War—a position of increasing difficulty—I do not think that is disputed, and now we must have a healthier railway system in the country. Who is to put it into a healthy position?

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

Is it to be done with the money of the taxpayers, is it to be done by increasing the charges to such an extent that those charges will give new revenue, is it to be done by economy and by enabling economies which hitherto have not been possible? Before the War, in 1913, the railway capital of the country, taking the whole of the railway capital, earned 4⅓ per cent. Even then that was a very low return. To-day, with the altered value of money, it is comparatively a lower return. The proprietors have to face difficulties, and in dealing with the railways as an essential part of the life of the country we must be reasonable. Every section of the community desires to treat them reasonably and to give the proprietors a reasonable living wage for their investment. Let me now turn to the position so far as the users of the railways are concerned. For the first time we are able to compare the cost to the user in this country with the cost to the user in other parts of the world. We never had those figures before, but now we have got them. In this country, on the best and the fairest estimate one can make, with a preponderance of low-grade traffic—because low-grade traffic is cheaper than high-grade traffic—with a preponderance of coal, the cost to the user in this country of moving a ton of freight a mile is 0. 9d., after the elimination of terminal charges. That was in 1913. I must give those figures for two reasons, because the conditions to-day are abnormal and varying, and because we have not got quite the same basis. In the United States the cost was 0.4d.—0.9d. in this country, 0.4d. in the United States, 0.6d. in France and Prussia; and throughout the civilised world you will find—I think there is one exception perhaps, China, but it does not really matter—that for moving freight we are the most costly country to the user of railways. That is very important, and it is a big tax on our industry. The return is low. It was low in 1913 to the investor—4⅓ per cent.—and the cost to the user for freight was practically the highest in the world. Why was that? In the first place, as I see it—and I have studied the subject from every point of view so far as I have been able—it is due to the way in which our railways have been built up in this country, to the legislation under which they were promoted, to the restrictions placed upon them.

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

I do not think it will be very helpful for my right hon. Friend to interrupt. Through a variety of causes the costs of our railways are very high from a capital point of view. The French railways cost £30,000 per mile of line equipped. That includes everything which goes to make a running railway. [An HON. MEMBER: "Single line or double line?"] Not per track mile, but per line mile. In Prussia they cost £26,000, in the United States £16,000, and in our country £56,000. You have got very expensive railways. There may be good reasons for it, but they are expensive, and you have got to give that capital a wage. It is partly due to the way they were built up. I think there were over one thousand different railways promoted in this country, and each of those railways have their own different administration, and they all had their own ideas. Gradually that number has decreased. In the second place, for reasons which again may be attributed to the growth of the system under which our railways were run, the track itself is not worked as hard here as elsewhere. In Prussia they got 746,000 tons over each mile on the average in a year; in the United States they got 1,300,000 tons, and in the United Kingdom they got 500,000 tons, so that although this is an old country in railways, a highly developed industrial country, for some reason or other, as far as one may judge, we do not get the same amount of work out of each mile of track we have got down.

I agree that you may criticise those figures and say our passenger traffic is different, but on the whole there is not so much difference, and it is a fair indication. Why is that? In the first place, it is because of the different standards which limit the free movement of rolling stock and locomotives throughout the country. The lowest standard everywhere on a through journey must rule. If you have one low tunnel you must conform to that low tunnel, even if all your other tunnels are higher; if you have one short siding or one weak bridge or one narrow passing point, that rules for the whole journey. If you take what we get into our wagons—and it is a truism to say that the more minute your load, the more minute your unit of operation, the greater the cost—if you take that, you find that the United States get an average of 23.5 tons into a wagon, Prussia gets 8.8, and Great Britain 5.4. That brings the whole of our train-load down, and as wages have increased the size of a train-load becomes much more important. You get less over your track, so, taking these few illustrations, I think they show that it is because of the way we have built up our railways that they are very expensive and less efficient in operation. Before the War our costs were higher—0.9d., against 0.4d. in America—per ton per mile. They are now about 1.9d. in this country. They are high, and that is a big tax on our industry, and the return on capital is less, so that you cannot develop your railways.

4.0 P.M.

That is the position we have to face. We have got to solve it somehow. I submit that it is idle to speculate now on what would happen if the railways had not been guaranteed—or what is called controlled—by the State during the War. They were controlled, they were guaranteed, and in August it comes to an end. The increase in cost is due to material and labour. The price of material was not materially affected by the Government relations with the railways. As regards labour, it may be that certain companies would not have increased their wages or reduced their hours exactly as has been done under the conditions which have obtained during the past seven years, but when this matter was inquired into by the National Wages Board, which I think was a fair Board, which certainly worked in a very painstaking way, and whose constitution was fair—and I do not think the railways have, considered it a very unsuitable tribunal, because they are adopting it voluntarily for the future, at least the majority are. I will always except my right hon. Friend (Sir F. Banbury).

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

There are plenty of others.

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

That Board examined railway wages and, generally speaking, it raised them to the level at which they now stand. It also took hours into consideration. I merely mention that fact so as to forestall the statement that the railways would never have got into anything like this position if the Government had not been in control or authority. On the whole, I do not think that we can say that Government control has really put the railways into the present position of difficulty. It existed before. The circumstances of the War have made the position more difficult, but the circumstances of the War have made the position more difficult for other industries. In August this year the guarantee comes to an end. It may be disputed, but I would like to state, and I think it is right that the House should know, that in the view of the Government there is no obligation upon the State, that is, the community, to put the railways back into any pre-War position. I have no doubt that may be disputed, but that is the view of the Government. It is in accordance with their advice, and it is on that basis that the Government are acting.

Lieut.-Colonel A. MURRAY:

Is that the opinion of the Law Officers of the Crown?

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

I am stating the attitude of the Government. It is not usual in this House to give the opinion of the Law Officers of the Crown.

Photo of Sir John Marriott Sir John Marriott , Oxford

Has the Act of 1871 been repealed?

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

It is not necessary to go into that question. That is a different matter. As the House knows, the Government, subject to the confirmation of this House, have come to a settlement with the majority of the railways—with the Railway Companies' Association. I know that my right hon. Friend dissents, but perhaps he will kindly take that as agreed in every case. By that settlement, if the House confirms it, we pay the railway companies £60,000,000, of which at least £9,000,000 comes back in the ordinary way in the form of Income Tax. That settlement has been approved by over 75 per cent. of the capital invested in the railways, and, if it be confirmed by the House, it wipes off any obligation of any kind. I think that settlement, on the whole, was wise. I think it was essential. It was made a part of the settlement on the principles of this Bill, subject always to the discretion of the House to accept or reject it. I was asked why it was necessary to make the Bill and the lump sum a part of the settlement. There were many reasons, but the principal one was this: The conditions of the War fell with not quite equal severity upon all com- panies. Before I got to the stage of a money settlement, I thought it was reasonable, in the Bill as first drafted, having regard to the fact that the State, through the powers of the Ministry of Transport, had altered the statutory charging powers of the railways that we should say to the railways: "Now you are going to be put in possession of something to which you are not entitled by statute in the way of charging powers. Therefore, until you can settle down and find your level in the new conditions and in the new state of affairs, you will pool your receipts so as to help the weak company from the purse of the rich company which has got more than its share out of these abnormally high rates." That was the proposal that I made. I proposed that as the rates were abnormally high the company which scored very heavily, say on its coal rates, should help the company which did not score because its passenger rates had not been raised to the same extent. The companies objected to that proposal. They said: "We cannot settle on that basis. It was a difficult basis. It was the national pool basis. [HON. MEMBERS: "Hear, hear!"] It was only temporary. It was found better not to go on with it, and we came to a settlement washing out all the old claims. That was the £60,000,000 settlement, and they are entitled to deal with that money as they like. We therefore dropped the question of that temporary pooling of abnormally high rates.

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

It was quite a different thing from the coal pool. That is one very good reason why it was necessary to make that part of the whole settlement. That is the reason I gave my reply to my hon. Friend the Member for Bristol (Mr. Inskip) the other day. Having brought, very briefly, the railway position before the House, I will now explain what is intended by the Bill and why we have adopted the methods which we proposed to the House for meeting the present situation. There were, as I stated, over 1,000 railway companies promoted in the country, and they have come down through a process of amalgamation to perhaps 200 altogether. If you go back the last 50 or 60 years and look at the proceedings, findings, recommendations, and proposals of the in- numerable Committees and Royal Commissions which have sat upon this matter, you will find that systematically they have advised increased co-operation, increased amalgamation, greater unification, larger units to operate for economy's sake, and to a decreasing extent they have placed importance upon what they now describe as the illusory advantages of competition. There are two or three extracts which, with the permission of the House, I would like to read. The first is from the Report of a Committee presided over by Mr. Russell Rea. The first of their conclusions in regard to railway co-operation is important having regard to the question of competition: The effects of the limited degree of competition still existing between railway companies are not necessarily to the public advantage, and, having regard to the fact that much of the unnecessary burden which competition undoubtedly imposes upon the companies themselves, is likely in the long run to be passed on in one form or another to the public, we cannot doubt that the balance of advantage, not only to the railway companies, but also to the country, would be found to attach to a properly regulated extension of co-operation rather than to a revival of competition. That is the conclusion of a very representative Committee in 1911. I will quote further from the summary of their conclusions: Our conclusions may be thus summarised: First, that the natural lines of the development of an improved and more economical railway system lie in the direction of more perfect co-operation between the various railway companies, and that we accept the growth of co-operation and the more complete elimination of competition as a process at once inevitable and likely to be beneficial both to the railway companies themselves, and, if properly safeguarded, to the public also. Secondly, that the protection required by the public cannot be afforded by any system of sanctioning or regulating agreements, but that such protection must in the main be given by general legislation dealing with any injurious consequences of the co-operative action of particular railways or the assimilation of railway practice independently of whether they occur as the results of formal agreements or not. That was Mr. Russell Rea's Committee. I would like to read from a more recent Report of a Committee presided over by my hon. Friend the Member for Tamworth (Mr. Wilson-Fox) in 1913: The main railway system of the United Kingdom has been provided entirely by private enterprise, and it has been organised on a basis of company ownership and management. Its history has been described, as one of amalgamations. It has been one of continuous absorption of smaller units by larger organisations, resembling in many respects what has occurred in the case of private local banks, which have gradually been absorbed by larger joint stock enterprises. In the case of the railways the first stage of the process had been more or less completed by 1880, when the railway grouping, of the country as it exists to-day had come into being. But, just as in the case of the banks, the recent tendency has been for the larger units in their turn to combine, so similar causes have been at work in the case of railways impelling combination in one form or another between the great railway companies. The tendency in both cases has been due to a desire to promote economy of administration by widening the area of operation under a single management and to put an end to uneconomical competition. It will thus be seen that the tendency in favour of combination, presumably up to the point where a single system will have been established, springs from the natural desire of the men who control the railways of the country to carry on the business of railway management in the most efficient and economical manner. This desire is one with which it is impossible not to sympathise. It appears to be inherent in the conditions in which all large-scale modern businesses are conducted, and it is extremely doubtful whether it can or should be resisted. The Committee then quote from Mr. Russell Rea's Report which I have read to the House. I quote those Reports at some length, and I make no apology for doing so, because they have been of infinite value to me in framing these proposals. They were considered in a pre-War state of affairs. They bring back to the recollection of the House the fact that this was an urgent problem then. It is not merely a problem of war creation. It is not merely a war difficulty. It is not merely the outcome of State control. It was an urgent matter then. Those Committees recommended practically that which I am seeking the sanction of the House to introduce. Our proposal is that the railways of the country should not be put into one great system as was advocated by this particular Committee, but into six groups. The grouping is before the House in the explanatory memorandum, and I will not go into it in detail. We believe that by this grouping far-reaching economies can be made. On the one hand, you get the enthusiast who will put the figure very high. On the other hand, you get the railway companies who, quite naturally, wishing to be conservative, will say that the advantages are not so great as the enthusiasts think. Various estimates have been made, and, if I might give a figure—it is right that the House should have some idea what is in mind—I think you might take £25,000,000 a year to be obtained in a few years' time, say, six or seven years' time, as a very conservative estimate of the economies possible. Other estimates put it higher. I have had it put by very competent officials and experts as high as £45,000,000. I think £45,000,000 is rather a bit too high, but a great deal can be done, and I think £25,000,000 a year is a very reasonable estimate. It is true, if there were advantages in competition, that those advantages will have to be foregone, but there was not much real competition before the War. Such competition as there was was the wrong kind of competition. It was the competition that tried to pinch somebody else's traffic. That is not the competition which makes traffic or gives prosperity. That is the competition which costs money, and the public pays in the end. The competition which I hope that we shall get will be the competition in prosperity of one district against another. If you are cultivating your garden you do it much better if you know you are going to get the whole profit and advantage of it than if you knew that your next-door neighbour would come in the middle of the night and take away a portion of the produce. That is exactly what we have been doing in relation to the railway companies. We have asked them to develop the traffic of the country, and then subsequently have allowed an outside company to come in, or to run a line alongside, or have given them running powers, thus practically taking away, or stealing, the traffic of the original company. I would hope that the House will see that a railway company will develop and endeavour to promote the prosperity of the communities through which it runs if it knows that when it succeeds if will have the advantage of it. I believe such a course of procedure would be far more valuable than anything that can be, or has been, done by railway competition which is not satisfactory and has cost a lot of money.

Economies, as the House knows, in railway management come under many heads. You can get economies of administration. You can get economies by standardisation. Another economy will be that with these big unifications those concerned will be able to effect and improve the standardisation, improve the gauges, unify the equipment, and so on, which they could not do before, because there was so many interests involved. If, on the other hand, we have only six or seven big interests, it is much easier to bring about these reforms and spread the difficulties over, and, therefore, you facilitate the elucidation of the various problems.

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

That is provided for in the Bill. If you eliminate competition now—I think it was sufficiently eliminated before—you can make the proper and required safeguards. You have, of course, to safeguard the public against the oppression of a monopoly. That is provided for, and there is a proposal in the Report from which I have read. On the one hand we hear it said, and we read it in the papers, that this will be a great bureaucratically controlled matter. If that were so, if this is to be great bureaucratic control interfering in a whimsical way for political purposes, or any other purpose, with the proper management of these undertakings, then let us eliminate it. That is the last thing the Government want. On the other hand, you get the railways saying, quite naturally, "We want to be free; we do not want interference by any authority; we will run the lines in a businesslike way and on the right lines." It must not, however, be forgotten that the railways are the creation of this House. They have been granted privileges, rights, powers by this House, and the House is entitled to see that these rights, privileges, and powers are not used perversely. If it is found that there are powers included in the Bill unnecessary for the protection of the public, the public will be represented in Committee by the Members of this House, and the Bill can be altered accordingly.

Lieut.-Colonel J. WARD:

What about vice versâ? If the House comes to the conclusion that there are not sufficient safeguards for the public, what then?

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

We are in the hands of the House. I do not want to impose unnecessary control. I want to put the thing fairly. I want to give the railways a reasonable amount of freedom in their management, and the community a proper amount of control. The railways are strongly represented in this House, and they, as well as the public, will be represented in Committee. Let us discuss it there. It is not a party matter. When we come to discuss the whole matter in Committee, I think those who say that this will favour bureaucratic control will be well advised to consider what other countries, America and others, have done in this regard. There is one other important provision in the Bill again for the protection of the public. There is a certain undeserved opprobium attaching to statistics at the present time, but this is only because the figures we have of the operations of great undertakings like railways have not always been adequate. Without adequate statistics nobody can say how these undertakings have been managed, and if statistics are secret no one outside can offer proper criticism; and if there are not comparable statistics, you cannot compare the weak and strong spots of companies, either in this country or abroad.

There is someone else, that is the proprietors, who are entitled to know how the operations of these great undertakings are being carried on. They are going to be much greater undertakings in the future than in the past, and all the more need, therefore, that the traders who carry the burden of the rates should know, and should be entitled to know, whether these undertakings are successfully and economically managed. We can only discover that with proper cost statistics. Only by these can you tell whether you are working as well or less well than another group of companies or another country—only, I say, if you have comparable statistics. I came from one of the great companies of this country, a company which was the first to introduce big statistical records. These were not published. Why? Because we did not want them to be published. No other company did it. We were not going to lay bare our operations when we could get no good from it, and when the criticism might simply be adverse, with no helpful feature in it. No one desires criticism. I do not when I am not going to get anything out of it, and I do not want to give away anything in this matter unless I am going to get some benefit, or if you cannot compare company with company or country with country in different parts of the world.

Traders have to face this fact: that the low maxima of rates which obtain are no use. On the other hand, the present rates have to come down and undoubtedly they will come down, but they can only be adequately discussed and settled in the light of proper statistics, and I enlarge upon this point because I consider it one of the main pillars of the Bill. If Members of the House laugh at these statistics—and there are those who say they are useless—then I could not recommend the House to pass the Bill without some provision of the kind. The matter of railway rates is another of the great changes. As the House knows railways have been entitled to charge, subject to certain conditions, up to a certain fixed standard maxima, but these maxima, in view of the change in money values, and other things, are absolutely useless to-day, for, roughly speaking, the charges are about 112 per cent. above what they were before the War. We have had to arrive at some basis upon which we could provide a living for these big undertakings. They are essential to our lives. They have to be allowed to live, and have to be helped. So we recommend to the House to take the dividend which they earned in 1913, which was the highest year of net receipts the companies ever had. We recommend the House to fix that as the minimum standard on which the rate-level should be based in order to give the railways a return on economical and efficient management. After the statistics to which I have referred have been considered we ought to be able, or the tribunal ought to be able, to say whether the railways have been managed with reasonable efficiency or not.

The rates will have to be periodically reviewed, and for some time the review is, I think, absolutely bound to be in a downward direction. Obviously, if the return is small on the capital—and it was small before the War—and we are recommending the pre-War net receipts as a minimum standard, and you take back any reduction of rates, you are giving the companies no incentive at all to do their best. It must not be forgotten that before the War the companies could not develop. They were becoming inefficient because they were not getting the proper sustenance. It is essential that they should have an improvement in this matter. This Bill in the present state of affairs gives them their opportunity, and for the first time we are getting a real incentive for community of economy, for both the trader and the railway manager. All reduction of rates is going, as to 80 per cent. to the trader—because his interest is against increased rates—and as to 20 per cent. to the management. This gives a fair percentage to the railways, and a fair chance to improve their position. They are having a community of interest with the trader who will no longer treat the matter with indifference as to whether wagons are detained or the loading of wagons performed too slowly. If he gets 80 per cent. on what is saved and everything he saves that will be one of the greatest benefits which will be created under this Bill, and at an opportune moment too, and it is good that we should have this chance of removing that antagonism between the trader and the railways which undoubtedly existed before the War, and which, I think, will never exist again where there is a community of interest to cut down the costs.

In the White Paper there was a proposal put forward at the request of the representatives of labour, and with the approval of the Government, that workman directors should be included in the directorate, and on the boards of these great undertakings. I would remind the House that there are statutory company obligations, and that prices are fixed, not by competition, but by legislation, agreed to between the companies and their customers, and not as in ordinary industrial concerns. It was felt by the Government that it would be a benefit to meet this aspiration on the part of labour and to promote peace and prosperity in the industry, having regard to the way the charges for each commodity was fixed, namely, by legislation, or under legislative authority. I thought so myself. It was at my invitation, at my suggestion, and with my full concurrence and assistance, that this step was taken. The railway companies and the representatives of railway labour got into conference over the provisions of the Bill, as to their future wages and relationship and labour direction. Labour, however, has deliberately surrendered the offer of the Government included in this Bill for the inclusion of workingmen directors on the boards. The Government think that they have made a mistake—that both the workmen and the companies have made a mistake—but they have settled this matter between themselves. The railway companies dislike the National Wages Board. I need not go into the reason. They dislike the inclusion of workmen directors on the boards. The agreement come to between the unions and Sir Herbert Walker, representing the railway companies, was published so that the House might see the actual terms of it. The Government very much regret this decision. Those are the main provisions of the Bill, and if the House will permit me, I should be glad to elaborate any further point which may be raised in Debate at a later stage.

The Measure, as brought before the House for a Second Reading, is not opposed by the vast majority of the railway companies. It is not opposed, and perhaps it is supported, by a large trading interest. It is blessed in a lukewarm way, but good enough for Second Reading purposes, by the Shareholders' Association. It is also blessed by those interested in railway shares on the Stock Exchange. The only dissentients are my right hon. Friend the Member for the City of London (Sir F. Banbury) and the Scottish companies. I think it would probably be for the convenience of the House if the Government dealt with the case of the Scottish companies in the course of the Debate. The proposal originally put forward by the Government was that the Scottish companies should be formed into one group, but the companies desire to be grouped with the English companies. The English companies were prepared not to contest that, but there was the fundamental difficulty that the Scottish companies have spread the belief that they are in a very precarious position financially, but I do not think they are.

Lieut.-Colonel J. WARD:

They are out for the bawbees.

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

Quite right. They said: "We want amalgamation and complete fusion with the English companies, and although we are in this precarious condition now, we want to be taken over by the English companies in our pre-War pristine beauty." You cannot ask English shareholders to do that, because it is absolutely impossible. That is the great crux. They say: "Who is to put us on our feet?" I do not think they are off their feet. Undoubtedly there are great economies to be made by grouping, not only in England, but also in Scotland. I cannot find out exactly what the Scottish companies want. I know the whole of the Scottish Members have been trying to find out, but I do not know that more than two or three of them have succeeded. At any rate, if they have they have not told me. I am sure they will agree that I have done everything I can to put the facts and figures before Scottish Members, but I do not know exactly what they want. Some of them want two groups and some only one. I have now put them into two groups. Probably second thoughts were best, and one group would not suit the peculiarities of the Scottish temperament.

I have endeavoured to put the case of a very voluminous Measure very shortly before the House. I believe if this Bill is adopted that, within a very measurable time, we can look forward to immense prosperity in the railway industry and to a reduction of charges to users. I believe it will bridge over the transition period between wartime guarantees and control and high prices to a post-War period of equilibrium without those disastrous effects which are shaking the country to its foundations to-day, and without those disastrous labour disputes which are ruining the country. I believe this Bill will get us over that difficulty. We have a sliding scale which is bringing down the wages upon a reasonable basis. I think that with the money settlement which these agreements with the railway companies enable us to make we shall be put in a position to bridge over the difficult times. It will enable the companies to pull themselves together, to re-organise and begin to realise the economies which can come from grouping, slowly, but they can begin very soon. For these reasons I ask the House to give the Bill a Second Reading. I believe it puts the railways on a sounder basis than they have ever been on before, and I believe it will avoid a railway catastrophe such as that which is now disturbing the coalfields.

Photo of Mr John Clynes Mr John Clynes , Manchester Platting

I beg to move, to leave out from the word "That" to the end of the Question, and to add instead thereof the words this House cannot assent to the Second Reading of a Bill which not only fails to provide for the public ownership and control of the railways, but would prejudice the future acquisition of the railways by the State on a fair and economic basis, which provides for the payment to the railway companies of a sum far in excess of the amount due to them in consequence of temporary State control, and which, repealing the statutory limitation imposed upon railway rates, vests in a non-elected body the arbitrary power of fixing those rates. The House is not always favoured with a speech of such brevity in relation to a comprehensive and complex Bill such as the one we are now considering. The speech to which we have just listened has not suffered by its brevity. Indeed, it has been very much improved by the frankness of the Minister of Transport. We heard in the first part of the speech something of the history of the growth and development of the railway system of this country, and I suggest that that narrative of growth and development is as strong a censure as could possibly be expressed by anyone upon the past relations of Parliament to so essential a matter as our railway service. In a country with a great population and a complicated trade the railway system is of primary importance, and yet the right hon. Gentleman in his historical account has shown us that very little attention was paid by Parliaments in past years to anything like a scientific development and conduct of this essential service. Until we reached the period of 1913, as the right hon. Gentleman has pointed out, a condition of chaos, as well as a condition of financial insecurity, governed the railway system of this country. The verdict of the right hon. Gentleman does not stand alone, for it is supported by a large body of opinion re presenting the interests of traders, of commerce, business interests, and the public at large, and I think I may say it represents the opinion of several other Ministers in this Government as well as that of the right hon. Gentleman.

I am not yet clear as to what is the policy of the present Government in relation to our system of railways. It is my duty, for reasons stated in the Motion standing in my name, to move that this House cannot assent to the Second Reading of this Bill. I do not think that during the whole of the speech of the right hon. Gentleman he mentioned the word "nationalisation." I want, therefore, to draw his attention to what was the pre-election policy of the Government for which he speaks this afternoon. This Bill clearly is not the result of a well-designed policy, or, if it is, at any rate it cannot be described as being consistent. On 20th March, 1918, the Prime Minister informed a deputation of the Trades Union Congress that he was in general sympathy with their proposals for railway nationalisation, and that the last thing he did at the Board of Trade was to call a meeting of railway managers and railway societies to consider a great nationalisation scheme which could be carried through with the consent of the companies and the men. It is within the recollection of the hon. Members that during the General Election campaign of 1918 the Colonial Secretary declared publicly that it was intended to nationalise the railways, and later on he announced that he had spoken with some authority in making that declaration. I think that on a large matter of this kind, involving such a great principle, we are entitled to some frank statement as to why the Government has changed its policy, and we ought to be told why a Minister was permitted to make a public announcement during an election campaign as to what was the intention of the Government in relation to our railway system. If the Government has deserted the cause which at that time they publicly supported, some of us have not, and we still have unshaken faith in the wisdom of the national necessity of making a great national need national property, placing it under national control, and running the railway system not for any sectional or financial advantage, but for the advantage of the whole nation. This policy appears now to have been deserted by the Government and thrown over evidently under the pressure of interests.

This policy was further manifested in February, 1919, when the Ministry of Ways and Means Bill, as it was then called, included a provision for the nationalisation of our railways. At times in Debates in this House we speak of keeping faith with principles and with public contracts, and I suggest that the desertion of these publicly announced principles does go far to shake the faith of the people in the honesty of Ministers. Such a statement ought not to be announced as part of a settled policy of the Government, or if it is, then it should be translated into action and not deserted in this manner. I refer now to the last speech of the right hon. Gentleman on this subject delivered here on 3rd May. I find him announcing the Government's policy in these terms: The view of the Government is this: You have 114 controlled railway companies. They do not work as one concern. Each of them works on its own. They have certain machinery which co-ordinates their claims, and is available for the Government to address when they wish to deal with general principles; but each railway is a law to itself. There is no central authority over these 114 different companies. We cannot compel them to do anything. I have read the Bill which the right hon. Gentleman has introduced, and listened carefully to his speech, and I fail to see how this Bill in practice would materially change the defects inherent in the separate companies as described by him on 3rd May in this House, and, in view of the relations of the railway system to the interests of the nation, to its trade and its convenience, this question should be approached on the lines of making an attempt to bring the railway system into real relation with national life and national problems. This Bill is a piece of makeshift. It is a compromise between rival interests. It is a compound of consultations which have taken place over a long period between people ready to assent on the one hand, and prepared to resist on the other. That is not the line which the Government, supported by so great a majority in this House as it is supported, ought to pursue in regard to so great an interest as our railway system. An objection which many of us on this side of the House have to this Bill is, that it places in a position of greater prejudice any future prospect of nationalisation. It is a rash and an unpromising experiment. It will only increase the clash between public interest and private greed. Surely, if the Government can ever look forward to the nationalisation of a national enterprise of this kind, they ought not to take a line to-day which clearly is going to intensify the conflict of interests that are imbedded in our railway system, and make it much more difficult for any Government in the time to come to take a step which public opinion hereafter, I am sure, will approve—the step of trying to make such property as the railways national property.

The leading feature of this Bill is an effort to group together various companies now very much in competition and in conflict from the standpoint of interest with each other. This transaction of grouping is essentially one of a compulsory purchase to be imposed by Parliament upon the companies, but Parliament is not to settle the principle or basis upon which the terms of purchase are to be fixed. Parliament is to hand over to an Amalgamation Tribunal the fixing of the price, but in Clause 6 of the Bill it is expressly stated that the price is to be "on the basis of an estimate as nearly as can be of the future net income prospects." I think that is a statement which might have received a little more attention in the speech of the right hon. Gentleman than was given to it. No railway company and no shareholder when this Bill is passed will be able to make even the roughest calculation of what the value of their property will be, and if not during the later speech, which I trust the House will invite the right hon. Gentleman to make during the Second Reading of this Bill, then I hope in Committee we will have the clearest exposition of all that may lie behind the language which I have quoted in this particular Clause

The next point of greatest importance is, of course, that of charges for services rendered by the system. Indeed, I suppose that is the point in which, mainly, the public will be interested, and the country will be well content to leave to the companies and to this House any arrangement with regard to grouping and the method of doing the work, if the work of the railway system is done economically, and with due regard to fair treatment to the public and to trade generally in the matter of charges. This, then, from the public standpoint, is the cardinal financial feature of the Bill directly affecting the public through the decisions of what are termed the Rates Tribunal, and the interests of the railway stockholders through the settlement by the Amalgamation Tribunal under these proposed amalgamation schemes. The first consideration is that a standard revenue shall be provided for each amalgamated company by the Rates Tribunal fixing the rates in such manner that the standard revenue shall be built up in accordance with a certain formula. The amalgamated company shall have an annual net revenue equal to the aggregate annual net revenues in 1913 (which was the most prosperous year in railway history), but that is to be supplemented by an amount equal to 5 per cent. capital expenditure of those companies on which interest was allowed at the end of the period of control, that is, capital which was not fully remunerative in 1913, plus interest of such amount as the Rates Tribunal may consider reasonable on such other capital expenditure, not being less than £100,000 in the case of any one work. I think those provisions contain at least two features. One is an assured return to the capitalist, to the investor, to the ordinary shareholder, whatever might be the fate of others, and the other feature is an inevitable tendency to exploitation in order to secure the rates that the Act will provide. I do not think the House will resent a reference to the opinion of Sir William Acworth on any aspect of finance in relation to railways. Writing within the past few days upon this theme, this is what Sir William Acworth said: Nearly 40 years ago Professor Hadley, one of the keenest intellects ever devoted to the subject of railway economics, wrote that 'All careful students are agreed that fixed maxima are next to no use in preventing extortion.' All experience since that time has confirmed the truth of his saying. But an influential body of traders thought they knew more about the subject than careful students, and pressed for the retention of maxima. Seeing that the Tribunal might, as the Clause stands, prescribe a limit five times higher than the standard rates, the protection does not seem of much practical value. That opinion, coming from such a quarter, I think is entitled to comment from the right hon. Gentleman when again dealing in detail with this question of finance. I was very much interested to hear what the Minister of Transport had to say on Part 4 of this Bill, which deals in some four or five Clauses with wages and labour matters. What we heard from the right hon. Gentleman meant that the representatives of the workmen were anxious to secure some representation which would give them a share in the management of the railways, but that, finally, they were not able to secure it, because, generally speaking, railway companies did not desire that they should have such a share. It is a matter of the greatest regret that the workmen's representatives, obviously, were obliged to forfeit their rights.

Photo of Mr John Clynes Mr John Clynes , Manchester Platting

They were obliged to forfeit their right to a share in the management, in order to safeguard their wage conditions. I shall be interested to hear any disproof of that statement. It is clear that the men had to give up a demand which they made to take a part in the direction, control and management of the railway system, in order that they might have a National Wages Board, and in order that they might have the other conditions expressed in Part 4 to safeguard their wages.

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

I would like to have an understanding on this. It is very important, and if my right hon. Friend regrets the omission of men from the Board, he is only joining me in my regret. There was no pressure on the leaders of the men at all. The men placed far less importance on it eventually than I thought they did and had reason to think they did, and, without coming back to me and saying, "Now, does the Government really mean to try to get the House of Commons to pass this?" the first thing of which I heard was the signed document I have published. They came to me and told me they were in negotiation. I think I was the means of bringing the two parties together. I was not present at the meeting, but the men deliberately surrendered what I told them the Cabinet had decided to invite this House to pass. They deliberately surrendered it.

5.0 P.M.

Photo of Mr John Clynes Mr John Clynes , Manchester Platting

I am very glad to have that amplification of the statement, but my information is that it was under the pressure of the action of the representatives of the railway companies that at length the men, in their view, had to safeguard their wages by obtaining from the railway companies the concessions as to the National Board and the facilities for dealing with wage questions. In exchange for those concessions, they surrendered the claim they originally put forward for a share in the management. In view of what the right hon. Gentleman has now said, it may be that some discussion in the Committee stage of this Bill will enable those who can speak authoritatively for the two sides—the railway companies and the railway workers—to raise the question again as to whether workmen should not be full participants in a question which immediately concerns them as wage-earners. I myself attach the greatest importance to partnership in management. There may be great differences of opinion upon questions of apportioning the gains of any industry, but there ought to be no difference on the question of bringing into the closest co-operation the workmen and the employers, or, as it may be, the workmen and the State, where the State is the employer, in relation to any question of management touching the position of men as ordinary wage-earners. There are two words in one of the Clauses to which, even at this stage, I would like to draw the attention of my right hon. Friend. It is Clause 56. Towards the close of that Clause, in the last sentences of it, there is a provision that the various questions of wages and other matters relating to working conditions and rates of pay must be referred to and settled by the Central Wages Board or on appeal by the National Wages Board constituted by this Act. My information is that those words "and settled by" are words which go far in excess of anything which the men ever intended to agree to, either as between themselves and the companies or as between themselves and the Government. I want to draw the attention of my right hon. Friend to the full meaning and significance of these words. They raise one of the greatest issues which has ever been discussed in the realm of industry in this country—the issue of compulsory arbitration. They mean that questions of wages and conditions of service over the whole of the railway system must, if this Bill becomes law with these words in it, be referred to and settled by either one of these two tribunals. I can hardly imagine that these words have found their way into the Bill by mistake. Therefore they are part of some deliberate purpose. I cannot imagine that they have been agreed to, for my information is that they are words—

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

If my right hon. Friend will look at the Memorandum he will find that it embodies the agreement between the parties, and if this Clause does not give effect to that agreement we are open to amend it in any way that may be necessary to secure that end.

Photo of Mr John Clynes Mr John Clynes , Manchester Platting

I am glad to have that assurance from the right hon. Gentleman. I am expressing views on behalf of those immediately interested. I must not, however, be taken as entirely discarding the advantages of arbitration. I have had some experience of disputes—not merely those which have loomed large in the public eye, like the coal dispute, the railway dispute, or textile disputes, but I have had experience of scores, I might even say of hundreds, of disputes which have seldom found their way into the public Press, but in which groups of workers probably running into thousands, have been concerned. I am not at all belittling the advantages of arbitration. My desire would be to create a temper, atmosphere, and spirit for arbitration; indeed, I think there are conditions which, if they are first fulfilled, would go far to produce in this country readiness on the part of the wage-earners always to submit their claims to the decision of a Court of Arbitration. The House has made the mistake of concluding that the people who refuse to settle by arbitration are the workers. Often that is not so. At this moment there are many instances of employers and Employers' Associations refusing to settle wage disputes by means of arbitration. I have personal knowledge of cases, such as in the great engineering industry where at present the trade, unions and the workmen are appealing to the employers to have their differences settled by a Court of Arbitration, and the employers are refusing.

I would name some essential conditions—and I do not think it is out of place in relation to a Measure of this kind to do that, for it is clear that if this Bill become law, and if these conditions are imposed on the separate companies and on this new form of control on our railway system, it will not stop there, and probably it will be imitated by and applied later on to other industries. I should be glad if in all these arrangements, whether voluntary or statutory, provision could be made whereby the expectation will be expressed that both parties will require to submit their different questions as to pay and conditions of labour to some Court of Arbitration. I think the first essential step is the fixing the case of any body of workmen of minimum rates of wages—rates commensurate with their needs, with the value of their services, and with that standard of living to which all citizens in these days are expected to aspire. Secondly, it is essential there should be a maximum or standard of profit for capital and there ought to be no further yield to capital except from the result of additional gain which would come from the joint exertions of both capital and labour in any industry.

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

Would there be a minimum for capital?

Photo of Mr John Clynes Mr John Clynes , Manchester Platting

Its minimum, surely, would be covered in its maximum.

Mr. J. JONES:

We would give them all they work for.

Photo of Mr John Clynes Mr John Clynes , Manchester Platting

The third condition I would like to see as a preliminary to the establishment of conditions of arbitration is such a state of incentive to service on the part of both capital and labour as would produce a margin above both the maximum and the minimum to which I have referred. The fourth essential condition, without which no system of arbitration would work, would be the constitution of Courts to decide the differences in such a manner as would command the absolute confidence of the two parties, for without Courts so constituted there would very soon be a complete breakdown of any tendency to continue arbitration. We should therefore require to have these absolutely fair tribunals so as to apportion the margin of gain, to which I have referred. The last and indispensable feature of arbitration is that the worker should share the control and conduct of the industry in which he is employed, and I repeat that that condition is so indispensable in the face of the new opinions which are obtaining in the minds of everyone in close touch with industry to-day, compared with former conditions, that I much regret that at present the workers in this railway industry have been obliged to abandon the demand which they justly made for some share in the control of the system.

There are two or three minor points, but still points which I do not want to leave until we reach the Committee stage, to which I will allude for a few minutes. I have troubled the House to listen to points in relation to the question of arbitration, because workmen, as well as employers, indeed much more than employers, lose so much through continuous strikes and stoppages, that any method of settlement which would operate to develop either our industries or trades in the future would pay the workmen better than resorting, as so often they have to resort, to the weapon of strike to ensure just and reasonable treatment. Under the existing railway companies, if not in all, certainly in very many, there are provisions for superannuation payments. That subject is not referred to in any one part of this Bill. The Measure does not contain any provisions for the continuance of existing funds or for the protection of the interests of workmen who may later on have a just claim for superannuation. I want to ask what guarantee there is that the companies will meet their liabilities and continue to make due provision under this new system of grouping for management—what guarantee there is that the needful financial provision will be framed to make the superannuation payments secure.

There is a very large body of workment at present employed jointly in the common interests of all the companies in connection with the great clearing house system. I conclude that given the development of this new form of management there will be little or no need for the continuance of the clearing house system. The right hon. Gentleman made no reference to it in his speech, but certainly it must be changed very greatly in degree, if not in character; and naturally, as about 3,000 persons are employed in connection with the clearing house work which is now being carried on, they are anxious to know what provision will be made, I will not say to safeguard their interests, but to secure them continuity of employment. Something I am sure can be done, probably immediately, to absorb these workers in useful spheres of railway service, as they may no longer be required in connection with the clearing house system of working. I ask what provision has been made to meet that contingency.

I thought the right hon. Gentleman was going to make a reference to the subject of the continued use of private wagons. This is not a small point. I believe there are some 700,000 privately owned wagons. Are these persons to continue to enjoy the same sort of freedom which they have exercised so long in regard not only to the use, but very frequently to the non-use of these wagons in very large numbers? I would like to know what is the intention under this new system of management of the railways with regard to the use of these privately owned wagons. This is not the place or moment to deal in greater detail with what are Committee points. I confine myself, therefore, to the expression of the view that this Bill is a departure from the previously declared official policy of the Ministry with regard to the future conduct and management of our railways, and we ought to have a statement as to why the public declaration upon which public confidence was secured, and upon which Votes were obtained, has been departed from for this makeshift Measure now before the House.

Photo of Mr John Hills Mr John Hills , City of Durham

Whatever may be the opinion on the merits of this Bill—and the last speech showed that there would be some acute opposition to it—there can be no difference of opinion as to the merits of the speech that introduced it, for I have rarely heard a big Bill brought in a speech of greater clarity and greater brevity. The Bill represents the Government's policy with regard to railways, and I want to say a word about that, because the last speaker seemed to be of the opinion that the Bill was a railway companies' Bill. I assure him that it is nothing of the kind. The Bill represents the policy of the Government, and when the Government declared their policy it was, I apprehend, the duty of the railway companies, so far as they could, to assist the Minister in carrying out that policy. The Bill, however, was and remains the policy of the Government, which they ask the House of Commons to pass and which they impose upon the railway companies.

The Minister started with a somewhat pessimistic review of the past history of railways in this country. I would beg the House to mark that, with that sort of genial dogmatism which becomes him so well, he threw about all those figures, which no one knows better than he are acutely controversial, as though they were accepted facts. There was, for example, the comparison of Great Britain with the United States; but with our small haulage, our settled country, our very expensive land, our excessive regard for the rights of landowners, and, above all, the fact that we were first in the field and the pioneers in railway building—surely you cannot compare a country where those conditions prevail with the United States, with its vast area, its very long hauls, its land of very slight value, and, perhaps, a slighter legal support for the rights of landowners. These comments do vitiate to this extent the figures which the Minister has given, for although, no doubt, the figures themselves are accurate, they require examination. I would ask the House to bear in mind that we are not so backward as a nation as the Minister gave us to understand, but that we have shown the way to the world in railway building and railway management, that every country that has come into the field afterwards has copied us, and that in 1913 our railways were far more efficient and much better managed than the right hon. Gentleman's speech might lead the House to suppose. I do not propose to say any more about that—

Mr. J. JONES:

Hear, hear!

Photo of Mr John Hills Mr John Hills , City of Durham

I am quite prepared to argue it with the hon. Member or anyone else. I shall be very pleased to argue the case with the hon. Member at any time.

Mr. JONES:

The challenge is accepted.

Photo of Mr John Hills Mr John Hills , City of Durham

Certainly. There are three parties who are interested in the efficiency of our railways. Firstly, there is the State, which is the general guardian of the public. Secondly, there are the men who work on the railways; and, thirdly, there are the shareholders who found the money for the railways. The main factor is the public interest, for, unless the railways serve the public interest, they are not fulfilling their function. Therefore, in all that I am going to say, I shall endeavour to view the provisions of this Bill from the standpoint of the public interest. The first of its pro- visions is that relating to grouping. The Minister very truly said that grouping has been an accepted policy in the railway world for many years. All big lines are now grouped. They have absorbed numberless small lines. When the companies are criticised, I would ask the House to note that the railway managers always wanted more grouping than they have, and it has always been Parliament that has stepped in and prevented grouping. The Midland Railway has tried to amalgamate on one occasion with the London and North Western Railway, and on one occasion with the Glasgow and South Western, and on each occasion it has been Parliament that has turned it down.

Therefore, when you complain that railways are not economic units, it is not the fault of those who run the railways. I believe that a grouping system is a good thing. Whether it will produce the £25,000,000 which the Minister mentioned is a much more debatable point. I do not express an opinion upon it, because I cannot put my opinion against that of the Minister, but I have consulted those who do know, and I find that they put it at a very much lower figure indeed. I do not think that people outside realise how much has been done to prevent duplicate services, to economise in administration, and to prevent competition. Assuming, however, that there will be some economy in grouping, then the question arises whether the grouping ought to be compulsory, as the Bill makes it, or voluntary. I say at once that I should have preferred a voluntary system. I should prefer to see the railway companies group themselves into areas which would carry out the intention of this Bill. But I am bound to admit that the Government are obliged to keep compulsion in the background, for the Government's whole policy is grouping, and unless you have an element of compulsion you might find that some railways would not consent to be grouped, and would stand out altogether, and then you would not get a unified grouping system. I appeal, however, to the Minister, as far as he can, and as far as it will serve the public interests, to leave the door open still for voluntary grouping. It is open a bit; it is ajar. Let him put it wide open. We have in the Bill two great protections. Firstly, the Minister has to approve of the grouping, and, secondly, this House has to approve of it. Surely those are two very big safeguards, and I shall venture in Committee to suggest ways in which the door might be opened more widely. I will only mention one now. The time within which schemes have to be submitted, namely, by the 30th June next year, is all too short in the case of the great interests that are concerned in this matter.

Next I want to say something about the much disputed point of Government control. Everyone admits that in a monopoly and public utility service there must be some Government control. You cannot just form a railway company, a gas company, or a water company, and turn them loose on the community. It has not been our policy, and I do not think it ever will be. The question is, how far, in the public interest and in the interest of cheap freights and cheap fares, it is a good thing for the State to interfere? I venture to say that the State should not interfere in the actual management or working of an efficient company. If a company is not efficient, then, of course, the State may be called upon to interfere, and may be entitled to lay down limits within which the company shall exercise its powers. But when you have a well-managed company, which is carrying the public and carrying its goods well, I do not think there should be any State interference. The State should only interfere in order to secure efficiency, to control rates, and to secure proper conditions for those who work on the line. If more than that is done, I think you will fall between two stools, and I agree with the right hon. Gentleman (Mr. Clynes) that we have to be very careful in regard to that. I do not think there is any half-way house between the management of a company by the company itself and the nationalisation of the industry. I can see a great many advantages in nationalisation, but I myself am opposed to it, and I do not propose to argue it now. I do say, however, that we must be very careful that the State control which we leave does not produce a condition similar to that which we have seen in the coal industry. That was neither individual management nor nationalisation, and it brought us into the difficulties in which we are now.

State ownership has been rejected. The Government have definitely decided against it, and yet in this Bill they leave considerable powers in the hands of Government Departments and Committees. Before the War there were two bodies which controlled the railways, namely, the Board of Trade and the Railway and Canal Commission. In the place of those two you now have four. The Ministry of Transport has taken the place of the Board of Trade with very much extended powers; the Railway and Canal Commission has remained; and then you have the Amalgamation Tribunal and the very powerful Rates Tribunal. I should like, in passing, to comment on the fact that the Rates Tribunal, which will last for ever, and the Amalgamation Tribunal, which will last for many years—neither of which was asked for by the railway companies—are both to be paid for at the expense of the railway shareholders. Therefore, this Bill represents a very great in crease of State control over the railways. I should like to mention a few examples of the way in which this control will work out in practice. Clause 34 of the Bill provides for what are known as exceptional rates. The Bates Tribunal will fix a standard rate, and that is to be the standard rate for the group. No company is to be allowed to lower its rates more than 40 per cent. below the standard rate under any conditions whatever. Thus, supposing the rate for a given service to be 20s., under no conditions will the company be allowed to charge less than 12s. for that service, and they can only do that after notice to the Transport Minister, who may refer them to the Rates Tribunal or may refuse altogether. I fail to see why you want to restrict a company from selling its marketable services at such reasonable and cheap rates as it can. After all, there is no disadvantage. Cheap transport is an advantage to the public, and why the mystic sum of 40 per cent. should be fixed and you should never be allowed to quote a rate below 40 per cent., and then only with the consent of the Minister and of the Rates Tribunal, I fail to see. The same applies to passenger fare a under Clause 24, for the Rates Tribunal has got complete control of any quota- tions of passenger fares which are below the standard rate. Again, under the same Section it is they who apportion the division of the charge for through transport. In all these things I hope the Minister will see his way to relax the excessive control of the State It is excessive again in capital expenditure. The Commissioners can impose capital expenditure on the companies provided that the sum is not more than £100,000 at one time, and so far as I can see they can impose an income expenditure with no limit at all. I am convinced that you only have the two alternatives. Either the State must buy up the railways and run them as a State concern, or you must leave freedom of management. I do not ask, of course, for complete freedom, but the railways must be allowed, as long as they are efficiently managed, to carry on their work in their own way, and I am certain that in the end will be the best for the country; you will get the cheapest service and you will get the country's goods and passengers carried at the cheapest rate.

I come to the question of the standard revenue. The right hon. Gentleman (Mr. Clynes) objected altogether to the standard revenue. He said the companies have no right to a standard revenue. I quite agree you can put the argument both ways, but still do not forget the great change the War has made and the great change that control has made, the very difficult position in which the companies are placed and also the really heavy obligations which this Bill will cast on the companies. Anyhow, the standard revenue is assessed on this basis. It is the 1913 net receipts plus 5 per cent. on capital expenses, 1913; and the Bates Tribunal is to fix the rates of each district so that those rates will produce that standard revenue. In case there is an excess and the rates produce more, the excess is divided and only 20 per cent. is retained by the companies and 80 per cent. is wiped off by revising the rates so as to reduce the costs. I want to argue this not from the point of view of the shareholders. I want to argue it entirely from the point of view of the public interest, and I would ask the House to note that 20 per cent. and 80 per cent. is exactly the same division as was made in the case of the Excess Profits Duty. When a firm made excess profits you left them 20 per cent. and the State took 80 per cent. Surely the universal experience is that that did not tend to economy. You did not give companies a sufficient incentive to earn money. If they only got £1 in £5 of the extra money they earned, it was a matter of considerable indifference to them whether they earned the money or not, and far more dangerous than that, if they knew that when they went in for extravagant expenditure only £1 in £5 fell on them; the tendency was to go in for extravagant expenditure. The small amount left to the company of its excess profits was the great mischief of the duty. Would it not pay the State and the public better to allow a larger incentive to economy? I am certain it would. I believe 20 per cent. to be much too small. I believe it would not have the effect we all want—cheap fares and cheap freights. I believe if the right hon. Gentleman were to raise that 20 per cent. to 50 per cent., or at least 33 per cent., he would do a very good stroke of business. It is a matter on which, of course, opinions will differ, but I come back to our War experience, and surely that was completely convincing that 20 per cent. was too low an incentive.

Another point is the dates the Bill lays down. The groups have to be formed and they have to produce a schedule of rates by 31st December of this year. That cannot be done. I quite agree that the work is being done now, but it cannot be finished in seven months. I will give the House an example of that. In 1888 the railway rates were reviewed. The companies then were much less busy than they will be now, because now they have amalgamation schemes to put through, and yet it took them four years to complete their schedule of new rates. Note also that the work in those four years was so indifferently done that only two years later Parliament stepped in again and passed the Act of 1894, completely revising the system. I hope the Minister will consider that and will give longer time. Then, all amalgamation schemes have to be carried through by 30th June, 1922. No one knows better than the right hon. Gentleman the enormous difficulties—the practical difficulty, the personal difficulty, and the financial difficulty—and you cannot carry them through in 13 months. May I give the House an example of that? In 1913 Parliament consented to the amalgamation of the Midland line and the Tilbury line, and it was not until 1920 that the amalgamation was completed. No doubt the War intervened, but not to anything like the extent of extending it by seven years. It will take a good many more months than the Minister thinks to carry through his amalgamation.

Lastly, it is impossible to carry through the two inquiries together. You cannot expect your general managers and staffs at the same time to settle the rates schedules and the amalgamation. Let us first get the amalgamation through and then settle the rate. The Bill provides for the present rates being temporarily extended for, I think, 18 months. All the Minister has to do is to extend that for 2½ or 3 years, and then when the amalgamation is through, settle his new schedule of rates, otherwise you will have hopeless congestion, and you will not get the best scheme of amalgamation or the best scheme of rating. I hope the right hon. Gentleman (Mr. Clynes) will excuse me if I do not go into all the questions he raised. On the question of the Central Wages Board, I was not present, of course, at the negotiations, but I have heard about them, and the Minister is entirely right. It was a perfectly open body on both sides, and the men preferred the Central Wages Board to representation on the Board of Directors, and I think they were entirely right. I have tried to look at this matter from the point of view of the public. I do not think from the widest standpoint that really differs from the point of view of those interested in the railways, those on whom the public duty is cast of carrying the public and the public's goods, and I do not believe there is any very serious conflict between the interests of the public and the interests of the shareholders. I have endeavoured to say where I did not approve of the Bill, and to say where I did. On the whole there is a very great deal in the Bill which I think will be of great benefit to the transport industry. I believe the system of grouping will produce economies, though not so high as our optimistic Minister thinks. I believe the abolition of our old, obsolete, tiresome rating system will be a very great advantage to the public. I do not take his gloomy view of the past history of railways, but I share to the fullest his high optimism for their future.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

The hon. and gallant Gentleman (Major Hills) addressed himself to these questions not only with the special and expert knowledge he has, but with an amount of balance and fairness which left me in some dubiety whether the Minister of Transport may reckon him as a follower or the right hon. Baronet the Member for the City of London (Sir F. Banbury) may regard him as a convert.

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

Yes, he is with me, I am sure.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

However that may be, it is certainly the kind of speech which this Bill needs, and that is fair criticism. Whatever may be said for or against the Bill it is true that every clause of it bristles with points, and points which I hope, and I am quite sure that the Minister of Transport hopes, will be fully, fairly, and adequately discussed in Committee. The House is faced with a revolution in the very basis on which Parliament has up to the present viewed the railways. It is peculiarly and specially the duty of both Houses of Parliament, and of this House in particular, to view with the greatest care any change in the policy which it has hitherto pursued towards the railway companies, because the railways are the pure creatures of Parliament, the absolute creation of Parliament, differing in that respect from anything in the shape of the great businesses which we know.

Photo of Sir John Marriott Sir John Marriott , Oxford

Parliament does not provide the capital.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

It has given them the powers without which not a single penny could be invested in them.

Photo of Sir John Marriott Sir John Marriott , Oxford

I agree, but it has not given them the capital.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

Therefore, I hope the House in approaching this Bill now and in Committee will bear that fact in mind. I do not quite agree with what my right hon. Friend said in a depreciatory review of the achievements of the railways of this country. On the whole, up to 1914, I think the carrying of passengers and goods in this country compared favourably with that in any other country in the world. My right hon. Friend said that there might be some surprise that he had brought in a settlement with the railway companies along with the Bill. Nothing could be more fitting, and I congratulate him, because I have some knowledge of the great difficulties with which he and the Government were faced, that they have arrived at the present stage of preliminary agreement on this vexed and most difficult question. In regard to the amount of compensation, I do not profess to express any opinion which will be worth very much, but I have read every word of the Colwyn Report and have had some discussion with men who have special know ledge of it, and it seems to me that on the whole the amount that is fixed in the Bill is generous, and I think that the railway companies, and those who in the discharge of their public duty speak specially for them in this House, ought to be very careful as to the line they take and what action they commit themselves so as not to imperil the passage of some such Bill as this into law. I cannot conceive without the greatest apprehension that we should arrive at the time of decontrol without a settlement of this question of the railways' claim to compensation. Nobody could look without horror at the prospect of our being launched into the maelstrom of litigation. There would be no likelihood of settlement for years to come if we allowed the matter to go into the Law Courts, and I hope that this opportunity which is given in the Bill will be seized by the House in order to bring this matter to a decisive end before this Session closes.

I am glad to say the Bill is a very much better one than the one which was foreshadowed in the first White Paper. There are many improvements in it on almost every one of its main lines. Hitherto the discussion has ranged between two great interests, the vested interests of both the worker and the proprietor.

Mr. J. JONES:

There is no vested interest in the worker. He is chucked on the street when there is no work.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

I did not mean to use the word in a controversial sense.

Mr. JONES:

Use a proper word.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

I repeat the word. The working man has a vested interest in his labour to the same extent as the man who has a vested interest in the money which he owns, and he is just as entitled to get a proper return for his capital, that is, his labour. It was a very proper word to use. I am very much concerned as to what is going to happen to the general public under this Bill, to the man who puts his traffic on the line, to the freighter, as he is called, to every person who uses the railways in this country who is not a proprietor or a worker on the railways. My hon. and gallant Friend (Major Hills) said he wished to approach the question from that point of view. He did his best, but he will forgive my saying that, naturally, he took those points with which he was most familiar. I am not familiar with the technical working of railway companies, but I claim to have a very considerable knowledge and some experience of the freighter who puts his traffic on the line. How does the Bill stand in that respect? We have several Clauses or parts of Clauses which attempt to deal with the protection of the public, as apart from the two great interests to which I have alluded, namely, the worker and the railway proprietor. The interests of the public in the working of this measure is an overwhelming one. Unless we can get reasonably cheap rates for passengers and goods, the outlook for the recovery of trade in this country is very black. See what a difference there is between the old point of view and the new point of view. In the memorandum which has been issued, on page 5, there is a reference to the Act of 1894. What that did, those of us who had anything to do with it will remember. This is what it accomplished. Maximum rates had been fixed and charges were made, but the maxima were not charged. What that Act ensured was, that wherever the existing charges were increased, although they were within the maxima, the onus lay upon the railway company to prove to the satisfaction of the Court that those increases were reasonable. We find in Clause 34 a complete reversal—you have to justify your lowering of your rate. I suggest to the House that that is a most serious consideration, and one which requires most careful inquiry in Committee.

As a Scottish Member I may be expected to make some reference to a very thorny problem, but I shall make a very brief reference to it, because there are certain hon. Members who have made a special study of it who will give the House the benefit of their special and expert knowledge. I will only say that the new proposals are great improvements on the old proposals, and there is some movement on the part of my right hon. Friend towards the longitudinal rather than the horizontal. The attempt that is being made to separate the Scottish railways from the English railways is arbitrary and unnatural. The traffic runs naturally as experience has developed. Though my right hon. Friend has only been three years a Member of this House I am certain that he has already experienced what the pertinacity of the Scottish Member means.

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

And the English Member too.

6.0 P.M.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

I can assure him that the nation to which he belongs is, so far as it is represented in Parliament, thoroughly on the warpath in this matter, and I advise him to make his peace with the enemy while he is yet in the way. I want to say a few words with reference to the grouping question, and to the Clauses which refer to the worker. With regard to the Clauses affecting the worker, I regret that a decision has been come to that no railway workers are to be on the boards of railway companies. I regret it on general public grounds. I am convinced, so far as my observation entitles me to speak, that the real way out of our labour troubles is not the imposition of a hard and fast system of what is called nationalisation, but that it lies in co-operation. If the Railway Directors and the railway workers themselves had accepted the offer and the pressure of the Government a real beginning would have been made in that direction. I understand the point of view of a very powerful section of the workers, who think that by committing themselves to any share in the management, as things stand, they weaken their position. I see the force of that, though I do not agree with it. We are here to attempt, sometimes with success, sometimes with ill-success, to legislate for the general public interests, and I hope that this matter will be fully discussed in Committee. I do not see why the opinion of hon. Members should not be tested in Committee, and on Report stage, by an Amendment, in order to see what the arguments are for and against such a proposal as that. I say that with this general observation. I do not make any special application to my right hon. Friend, but I do think that the growing habit of Ministries of making what they call deals outside the House is very largely abrogating the function of the House to legislate on the information which the House has before it. I would be very sorry to take any action which would upset the very delicately balanced arrangement that has been come to, but it is proper, I think, on a great public question fraught with consequences of the deepest import, not in the distant future, but here and now, to see if we cannot take here some first step in the direction of a better system of relations between workers on the railways and the owners.

My other general observation with which I wish to wind up is as to the groups and their effect on the general trade of the country in the immediate future. I may be excused for taking as an example a district with which I have some special acquaintance—the district of South Wales. We all agree that the reinstatement of the export coal trade lies at the root of the development of outgeneral industry. The whole basis of the British mercantile marine is not the splendid liners that we see, but what is called the tramp ship. The revival of our export coal trade is of the utmost importance. Taking the port of Cardiff, including Barry, no less than from 80 to 90 per cent. of the whole mercantile marine passes through Cardiff and Barry in the year and is concerned with this trade. That is going on in other ports in England and in Scottish ports. The question of railway facilities and rates in relation to the carriage of coal from collieries to ports is vital. What has developed the district to which I refer to the state of pre-eminence which it enjoyed up to 1914? Competition. A lot has been said about the illusory advantages of competition. I am old-fashioned enough to believe that competition is a vital factor in the development of commerce and industry.

The opening of the Barry railway brought about an enormous development. Under the Bill the Great Western Railway is not only the amalgamated company, but also the constituent company, and there is not one of the local railways which serve that great district that is in any other position, but simply to be mopped up by this railway company. It is a great railway company. It is one of the most progressive of the great companies in this country, and if you were to make a selection of companies, from my personal knowledge, I would say that the Great Western is the greatest trunk railway of the country. But it is not advisable to hand over these vital points in connection with this vital part of our export trade to a simple monopoly. What will happen in these places where the subsidiary railway companies are working in this way? Instead of dealing with questions swiftly and advantageously at the moment there will be inevitably the reference to the head office in London of all these railway companies. Those are the sorts of points with which the Committee should concern itself with a great sense of responsibility. Some such Bill as this is necessary to prevent a catastrophe in August. I do beg hon. Members to bear that in mind. But, above all, let this House see that it is concerned as its primary duty with the interests of the general public.

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

The right hon. Gentleman (Sir D. Maclean) at the beginning of his speech said that my hon. and gallant Friend (Major Hills) had been imbued with the views which I think the House knows well I take on this Bill, and I must admit that while my hon. and gallant Friend was speaking, I thought, "is it necessary for me to make any further speech," because practically the whole of the speech was condemning the proposals of the Bill. I can say the same thing of my right hon. Friend with the exception of one reservation, that in his opinion we have got to accept this Bill before August unless we are to have a catastrophe. That is at the bottom of the whole thing. In order to avoid a temporary catastrophe the companies are being asked to submit to something which will lead not to a temporary catastrophe but to a catastrophe for all time. The right hon. Gentleman responsible for the Bill made some curious statements in his speech. He opened with a resumé of the history of the railway companies not only in this country but in all the various countries in the world, and I could not make out when he was coming to the Bill. He said that you must not impute the serious condition in which the railway companies are at present to the Government, and that before the War they had been going down continuously. I am not sure that that is correct, because if my memory is right in 1896 the price of railway stocks stood higher than it ever stood—of course I am not alluding to the price of 1845. But at the end of his speech the right hon. Gentleman said that the largest net receipts which the companies ever had were in 1913—and his Department has used that argument when discussing whether or not the companies were entitled to have any payment. How is it possible to advance two arguments so diametrically opposite? When it is necessary to show that the companies are prosperous we are told that the net receipts in 1913 were the largest ever recorded, and when it is necessary to prove that the terrible condition in which the railways are now is not due to Government control we are told that before the War they were in a bad condition. The two things do not go together. My own idea is that the last remark of the right hon. Gentleman was the correct one.

But I will ask the House to remember the services which the railway companies rendered to the country during the War. Not only did they give every facility in their power to convey troops and munitions, and do everything requisite in order that all troops should be sent abroad, but in addition they took a large share in the making of war material, and they did that at cost price. I commend that to hon. Gentlemen opposite who talk about the increased cost of living, and the necessity of advancing everybody's income except that of the unfortunate shareholders of the railway company, because no increase was given to the shareholder either to meet the increase in the cost of living or to recompense them for the extra cost which they had incurred. Up to December, 1918, the Government made no loss on the railways. During the first years of control the Government were making a profit, and if you take an average over all the years up to the end of 1918 there was an even balance. I am, of course, well aware that the Minister of Transport is not responsible for what occurred before August, 1919, but he is responsible for what has occurred since then, and for the Bill which is now before the House. Has the right hon. Gentleman been successful in his management of the railways, and is there any reason to suppose from what we know has taken place in the past that he is likely to bring forward proposals which would be successful in the future?

In order to be able to form an opinion as to whether he is likely to be successful in legislation regarding the railways we must look to his action since the railways have been under control. By their fruits ye shall know them, and I am going to tell the House some of the statements which were made by the right hon. Gentleman since he assumed control of the railways. Speaking in this House on 17th March, 1919, the right hon. Gentleman said: We are going to make such demands upon the transportation system of the country as I venture to think never have been made before, and it is right that we should at this stage consider the conditions both financial and physical of the machine upon which we are going to make these demands."—[OFFICIAL REPORT, 17th March, 1919; col. 1761, Vol. 113.] I do not know what the Treasury White Paper, which we were reading yesterday, would say to the statement that "We are going to make such demands upon the transportation system of the country as I venture to think have never been made before." Then the right hon. Gentleman said: There are 700,000 privately owned wagons in this country. If this Bill passes one of the first actions which the Government will take will be to acquire on fair terms the private wagons of the country. They have not done it; they have not acquired one. Therefore, what reliance can we place upon the statement that in future there is to be a saving of £25,000,000 by amalgamation? I shall deal with that later. I have many more quotations here, but I will not trouble the House with them unless they are necessary. That statement was made in March, 1919. The Bill became law in August, 1919, and the right hon. Gentleman had an opportunity, he being then Minister of Transport, of showing what he was going to do. There was a circular issued in September, 1919, and the right hon. Gentleman contributed to it. It is a very interesting circular, and I have kept it for a very long time. What he said is à propos of what is to happen now, because he has given us a vision of the future, when the railway companies are to be prosperous and large savings are to be made. This is what the right hon. Gentleman said: I visualise the casual dock labourer of the future living in a garden city, with a branch Labour Exchange in connection with the dock area, and putting in his free time in his garden, from which he will be called by telephone to his work at the docks. This would do away with all the present hanging around street corners and public-houses"— It is a pity that the Noble Lady who represents Plymouth (Viscountess Astor) is not present— in the congested and cramped area of our seaports. To do this, however, we must have an adequate and quick means of conveyance between the dock worker's home and the docks, either by road or rail service. That has to be worked outI visualise the new factory of the future being built in the country, with its houses around it, and with the next factory some three or four miles away, similarly in the country. The operatives will live in healthy surroundings with their own gardens, and the depopulated countryside will draw its labour from those communities to which the factory and the field will offer alternatives of employment. The industrial organiser of the future will know how to meet the changed conditions and to benefit by them.The rural industrial settlement has certain disadvantages. It is not so close to the market or the port; it necessitates a town office as well as a factory office; but the operatives will be more healthy, they will do better work, and they will be more contented; the rates will be lower; and there are compensating advantages which on the whole will outweight the disadvantages. That has been found to be the case in other countries, and to a limited extent in our own country.I think that this is, in the main, one great means of the solution of our agricultural problem. Dot the factories through the country and the isolation goes; the health of the population improves; the agriculturist is not cut off by the wet, dark and mud of our winters from his fellow men. The metropolitan transport problem is now one of the greatest difficulty, and it can be solved only at tremendous expense. At far less cost we can provide adequate transportation for a more diffusely settled population, and the C3 man will become an A1 man. If the Ministry of Transport in the years to come fails to provide that link between rural England and the markets of the world it will have failed; but there is no reason on earth why it should fail. That is a very valuable document, and I will not lose it. There are in it some statements by other Ministers, which I might want to use in future. So much for the possibilities of the future as outlined by the right hon. Gentleman. He has been wrong once. [HON. MEMBERS: "Only once?"] I do not go as far as that. He was wrong in bringing in his Ministry of Transport Bill, and if I were a betting man, I should say that the odds are that he is wrong again in bringing in this particular Bill.

I would draw attention to Clause 3 of the Bill, because it is very important from the point of view of the House. This House', I have always thought and hoped, would ultimately insist upon maintaining its control over the country and over the laws which the House has made. Clause 3 empowers the tribunal to be set up to modify the provisions of the Companies Clauses (Consolidation) Act of 1845, and the Acts amending that Act and Part 5 of the Railway Clauses Act of 1863. What may happen is this. I do not know whether hon. Members ever read the "London Gazette." In these days it is a very interesting publication. The "London Gazette" of 20th May had this interesting announcement:

"Ministry of Transport,

6, Whitehall Gardens,

London, S.W.1.

The Minister of Transport hereby gives notice that he has revoked the Herne Bay Gas and Electricity Act of 1913 as to the whole of the area for the supply of electricity thereunder, as from the 12th day of May, 1921, and that the said revocation is to take effect as from that date."

Then follows another— The Minister of Transport hereby gives notice that he has revoked the Mid-Sussex Electric Lighting Order of 1913 as confirmed by the Electric Lighting Orders Confirmation (No. 2) Act, 1913, as to the whole of the area of supply, as from the 12th day of May, 1921, and that the said revocation is to take effect from that date. So what we sacrificed thousands of lives for in the War was to get a Minister who, by his own ipse dixit and by his statement in the "London Gazette," can revoke an Act which this House has passed. If we are foolish enough to pass this Bill the same thing will happen again. We have had enough of bureaucratic control. Englishmen do not like it, never have liked it, and never will like it, even if it is successful from a pecuniary point of view; but as it has resulted in enormous loss, and if it is continued will bring the country to bankruptcy, I do not think there is anything to be said for it, and the right hon. Gentleman will find that no one outside the House will have very much to say for an Act which continues the control of the Government. The Bill is divided into six parts and 75 Clauses, with seven Schedules. At present the management and control of the railways are vested in the Minister of Transport, the Government guaranteeing to the railway companies as compensation the amount of their pre-War earnings. The removal of the management and control of the railways from the hands of the directors to the Government has resulted in a large deficit, and, in my opinion, the only hope of putting the companies on a dividend-earning basis lies in the restoration of the control and management of the railways to their owners, free from any Government or Departmental interference, beyond, of course, the Government interference that existed before the War. I have no objection to the Board of Trade resuming its old powers. I hope the House will take this opportunity, in view of what happened yesterday and the issuing of the White Paper, of giving a chance to the Government of economising by abolishing the Ministry of Transport. Under the Bill the management and control of the railways are for the most part either continued in the Ministry or vested in various tribunals or bodies set up by the Bill. The guarantee of the Government ceases, so that though the management of the railways will not, in the main, be in the hands of the owners, they will have to bear the costs which bureaucratic control will entail. In fact, this is a sort of bastard Nationalisation Bill. It is not nationalisation. I would prefer the Bill of the right hon. Member for Derby (Mr. J. H. Thomas), which I have on one or two occasions stopped after 11 o'clock.

The chief matters in which the companies will be controlled are the following: The Railway and Canal Commission may, on the application of any body of persons adequately representing any interest of the public or of trade or of any particular locality, order such railway services, facilities, and conveniences as appear to them to be reasonable The railway companies are assumed to be protected by a proviso that if a company satisfies the Railway and Canal Commission that the capital required for the purpose cannot be provided or expended without prejudicially affecting the interests of existing stock-holders, the Order shall not be made. This proviso is to a great extent illusory, because it deals only with cases where capital is required to be raised, whereas the protection should also be extended to revenue and should be afforded wherever compliance with the Order would prove unremunerative. Prior to the War the Railway and Canal Commission had power to require the companies to afford reasonable services and facilities, but the Courts of Law had held that if these facilities were unremunerative to the companies, they could not be imposed. It is more than probable that, as the Bill provides a limit where capital is required but does not apply a limit where revenue is concerned, the Courts might hold that, as there is no limitation on the loss which might fall on revenue, facilities which would prove unremunerative might be forced upon the companies.

There is another so-called protection in the Clause which limits the expenditure in any one instance to £100,000, but this is not the limit of expenditure which the Railway and Canal Commission can compel any one company to undertake. It is the limit of the amount which can be ordered to be expended on any single application, so that an individual company might have ten, twelve or twenty applications and might be compelled to spend £1,000,000 or £2,000,000. The right hon. Gentleman seemed to think that standardisation was going to be a valuable asset from the point of view of economy. I believe if it is carried out in the way laid down in this Bill it will impose enormous expense on the companies and result in no good to anybody. When the companies were first started if they had all made their lines, their engines and their brakes on the same system probably it would have been better, but, as in many cases they have proceeded on different systems in all these important matters, to go back now and insist on a certain fixed standard, instead of being an economy would be an extravagance. The Minister under the Bill may order the standardisation of ways, plant and equipment, and the co-operative working of rolling stock, workshops, manufactories, plant and other facilities. In this case again some protection to capital is given by saying that the order is not to be enforced if the capital expenditure cannot be provided without prejudicially affect- ing the interests of the existing stockholders. But revenue is left unprotected. Under standardisation, companies might be asked to build their locomotives on the model of the large Great Northern locomotives. These locomotives can only run on the Great Northern and North Eastern systems and part of the main line of the Great Western, as the bridges on the other railways do not carry them. I only use this as an illustration, but if the other companies were compelled to adopt that type the result would be an enormous cost in the strengthening of their bridges.

On the other hand, if the Great Northern was ordered to build locomotives corresponding to those used by the other companies all the money would be wasted which has been spent on strengthening roads and providing engines to haul large trains. The right hon. Gentleman thinks that is a proper thing to do, and the Great Northern has now an engine which hauls 1,300 tons. There is a plain simple illustration of what would occur under standardisation. Then take the case of the Westinghouse brake. I think the North Eastern Company use it, as well as one or two other companies, but the majority of companies use the vacuum brake. If you lay it down that every company is to use the Westinghouse brake the expense will be enormous, and if, on the other hand, you compel all companies to use the vacuum brake it will entail heavy cost on those now using the Westinghouse. These are matters which in my opinion, and I hope that opinion will be shared by the House, should not be decided upon by a Government Department, but should be left to the companies themselves.

Under the Bill the amalgamation of railways is made compulsory, and there is to be an Amalgamation Tribunal whose sanction is required to any agreed scheme. I do not know what the Government meant when they issued that White Paper yesterday in which they said they were going to cut down expenditure, because everything in this Bill seems to tend to produce new posts. It is quite true that in two cases the expense which is first to be borne by Parliament is afterwards to be borne by the railway companies, but, as under the Bill the railway companies will have no money, the result will be that the whole expense will ultimately fall upon the nation. Every amalgamation scheme, whether agreed or not, is to make such provision as appears to the tribunal, necessary or expedient, with regard to the capital of the amalgamated company and to provide generally, as to the terms and conditions of amalgamation, and for the winding up of the constituent companies. I have spent a good many years of my life in the City, and I have had something to do with the amalgamation of foreign railways. I really do not know how this tribunal is going to make all these provisions with regard to the capital of the amalgamated companies. In a case of three or four different railway companies, what is going to happen? Are their debenture stocks to be cut down? How are their preference shares to be dealt with? Is their capital to be reduced? Let us look, for example, at the case of the Great Central which pays no dividend on its ordinary, and has only recently paid a dividend on its preference—

Colonel NEWMAN:

It does not pay a dividend on its preference.

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

Oh, yes, it does. What will happen if it is to be amalgamated with the Great Eastern, which has always paid dividends, not only on its preference, but on its ordinary stock? What will Great Eastern preference shareholders find their stock placed at? Are their dividends to be reduced from four to two, or whatever the figure is? This is what the Amalgamation Tribunal will have to settle and here again we find a catch in the Clause dealing with the matter. I had the honour of being one of the committee of nine representing the railway companies which had to meet the right hon. Gentleman, and since then I have been one of the committee of 12, and we all thought we were getting a great concession because we were to have voluntary amalgamation after the 30th of June of next year. Here I find we will have nothing of the sort. We may say we will amalgamate, and we may make terms, but they cannot be carried out, because they have to be submitted to the right hon. Gentleman for his approval, and he has to submit them to the tribunal. The tribunal cannot confirm a voluntary amalgamation unless it conforms with the provisions of the Bill, and therefore it is all eye-wash about the voluntary arrangement. The saving which it is suggested will be made by amalgamation has been very much exaggerated by the right hon. Gentleman, and in this I am supported by the unanimous belief of the Railway Companies Association—not a majority of them, but the whole of them. This is what they said last December to the right hon. Gentleman: The Association believe that while economy may ultimately result from a suitable scheme of grouping, it will not be to the extent seemingly contemplated by the Minister. It must not be forgotten that during the last six or seven years competition has practically been eliminated from the country and there is very little room left for saving by amalgamation. I will give the House an illustration. I said to the general manager of the North Eastern, "Supposing you were amalgamated with the Great Northern, can you take all the carriage building works and locomotive works which the Great Northern have at Doncaster and move them to your works at Darlington," and he said, "No." What will happen? There is a locomotive superintendent and engineer at Darlington and there is one at Doncaster. If the two companies are amalgamated it is more than possible, it is probable, that the North Eastern will say that their engineer is the best man and that he is to be head over the two works. He will then say that owing to the increased responsibilities of his position he must have an increased salary. When he gets the increased salary he will point out that Doncaster is far away from Darlington and that he must have a competent locum tenens to take his place at Doncaster. The result will be that we shall have one locomotive engineer at an increased salary and a second one at the same salary as previously, and instead of effecting a saving there will be increased cost.

A Rates Tribunal is set up at the cost of the railway companies to settle fares and rates and charges for the carriage of traffic. The fares and rates are to be fixed so as to secure to the companies as far as practicable the net receipts of 1913, plus 5 per cent. on capital expended on works brought into operation after 1914. The words, "as far as practicable" give a very great loophole to the Rates Tribunal. They may decide it is not practicable to give rates which will ensure the companies the 1913 receipts. It is possible that the result may be that railway shareholders, who, during the War have not received a single increase, are going now, that the War is over, to be placed in a worse position than before. Is there any justification for that? Provision is made for periodical review of the rates and charges, and the Rates Tribunal have power—and this is a very extraordinary thing—if they think that with efficient and economic management, net revenue might have been obtained in excess of the net revenue of 1913, to modify the rates and charges so as to effect a reduction of 80 per cent. of such excess. That means that if I were on the Rates Tribunal I might say to the Chairman of the Midland Railway, "In my opinion you are managing your railway very badly, and because you have only made a certain amount I am going to reduce your rates." Did anybody outside of Bedlam ever hear of such an absurd suggestion? I may point out further, that under the scheme of the Bill the railway rates are to be revised before the 31st December, 1921. In 1888 they were revised by a tribunal presided over by Lord Balfour of Burleigh. Those acquainted with him know he is an extremely competent man, but working very hard it took him four years to revise those rates, and the right hon. Gentleman supposes we are going to revise them now in three or four months. We have got to look the facts in the face, and there is no use in deluding ourselves with visions.

Does the House know that last March, according to the Government returns, there was a deficiency of £514,023 in the working of the railways; in other words, that there was not enough coming in to pay the goings out by £514,023? This sort of thing cannot go on. You cannot increase rates any more. In fact, I am inclined to think you have got them too high already, and if we are going to get the traffic and give the merchants and manufacturers of this country a chance, we shall have to reduce the rates. What is going to happen? There is only one alternative, and that is a reduction of wages. It is no use disguising it. What is going to happen under the Bill? Rates of wages, hours of duty, and conditions of service are to be settled by the Central and National Wages Boards as at present constituted. The Central Wages Board is to consist of six railway officials and six members of the railway unions. I believe there are to be some representatives of the Railway Clerks' Association added to them, but not to increase the number.

The House will see that a very large number of the railway companies will not be represented on this Board at all, but should the Central Wages Board not be able to come to a decision, all matters are to be referred to the National Wages Board. It is evident that the trade unions, if their demands are not agreed to, will say, "We must refer this to the National Wages Board." How is that Board constituted? It is to be constituted of four men representing the trade unions, four men representing the railway companies, two men representing the traders, and two men representing the users of the railways, with an independent Chairman, or 13 in all. You may take it that it is more than likely that the four men representing the trade unions and the four men representing the railway companies will not agree. The decision is therefore left with the other four men, two representing the traders and two representing the users of the railways, having no interest whatever in the future of railways, not having put a single farthing into the railways, who would not be injured if the railway companies defaulted even on their debenture stocks, but who would be injured if there was a strike, and any difficulty in getting their goods forwarded, or the trains by which they go to the City in the morning interrupted. What hope is there for the shareholder?

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

The arrangement my right hon. Friend has described is an agreement between the railways and the unions, and it is not an arrangement that has been created or imposed upon them by the Government.

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

The arrangement is one that has not been come to between the railway companies and the unions. What has taken place is this. On the Thursday before the 2nd May I was told that an arrangement of this sort had been made. That was the first I had heard of it, though I am Vice-Chairman of the Association and a member of the Committee of Twelve. I was told in the Lobby of this House on a Thursday that this arrangement had been come to. I said, "I will have nothing to do with it." On the following Monday we had a meeting of the Association. We discussed certain matters, and at the close of the business it was suddenly said that this arrangement had been proposed. The vast majority of people at that meeting had never heard of it before. There was a vote on it. Ten companies opposed it, 12 companies did not vote, and 21 companies voted for it. You cannot call that an agreed arrangement. It is agreed by the 21 companies, and I am sorry for those who were foolish enough to agree to it, but there were 22 companies, 10 of whom opposed it and 12 of whom did not vote. Therefore it is a mistake that that is an arrangement which has been agreed to by the railway companies.

Accounts under the Railway Companies (Accounts and Returns) Act, 1911, which only came into operation the year before the War, are now to be compiled in the manner determined by the Clearing House, with the approval of the Minister, or, failing his approval, as determined by him after reference to a committee, which is to be selected by the Minister from a panel. The railway companies have to continue this for 5 years from the end of 1921, and after that they have got to do anything which the committee referred to may consider desirable. I have one word to say with regard to the £60,000,000 which is supposed to be going to be paid. In the first place, it is only £51,000,000, because £9,000,000 are to be taken off for Income Tax, and this £60,000,000, or £51,000,000, when it comes to be divided up amongst the different companies, is by no means a large sum. The vast majority of the companies would have to use this money in putting their roads, carriages, and engines into the condition in which they were before 1914, and if they are going to use any of it as dividends, though they may perhaps tide over a year or two, they will find at the end of that time that they are in a very parlous condition. What has this £60,000,000 got to do with this Bill? It is the just right of the railway companies under the Act of 1871 and the Agreement which was entered into in 1914. A hostile Committee, the Colwyn Committee, said they thought the claims of the railway companies might amount to £150,000,000. Then this great concession is that claims which, according to a hostile Committee, might amount to £150,000,000 are going to be settled for £51,000,000; but that is not all, because on the 3rd May the right hon. Gentleman said, "Oh, yes. The railway companies have got to settle; they are not to go to courts of law and advance their claims, but to settle for what we choose to give them, but we are going to be at liberty to make counter-claims against the railway companies." If hon. Members will look in the OFFICIAL REPORT they will see that the right hon. Gentleman said that they might amount at that date to £30,000,000, that is to say, £20,000,000, £8,000,000 and £2,000,000. What a settlement! It is "Heads I win, tails you lose." Did you ever hear of two people with claims against each other who agreed that one should accept £50 for his claim and that the other should say, "I will give it to you, but please understand I will have you in a court of law for all you owe me." That is what the right hon. Gentleman has done and what some people have been foolish enough to accept.

I ought perhaps to say, before sitting down, what I think would be the proper course for the Government to pursue, and what I hope the House will insist upon their pursuing. There are two things open to the Government. One is to withdraw the Bill, and the other is so to amend it in Committee, and to give an undertaking that they will so amend it in Committee, that all it should do would be to restore the railway companies to their own; to give the Government the power of control that existed by the Board of Trade in 1914, and no more; to fix the rates which are in existence for a given number of years, say 20, 30, or 40 years, or for all time, but to give power to the railway companies to reduce them if they like; and to abolish the Act of 1894. Then, as far as I personally am concerned—and I can only speak for my own company—I should be quite willing to come to a satisfactory arrangement with the right hon. Gentleman. I do not want to try and get the last farthing, but on the understanding that the arrangement should be a just one between the two, and that if I am to give up my rights for a certain sum, he must give up his rights also, and include them in that sum of money. If my advice was taken, the first good thing that would result would be that we should all get away in August and need not come back for an Autumn Session, and the second thing would be that there would be some chance of the railway companies finding themselves in a position which would enable them to give a good and proper service to the public and the traders and a reasonable return to their shareholders.

Photo of Mr Marshall Stevens Mr Marshall Stevens , Eccles

It is very well known to hon. Members that the right hon. Baronet who has just addressed the House is Chairman of one of our great railway companies. It is very well known also to the railway companies, but not so well known to hon. Members of this House, that the Great Northern Railway Company is looked upon as the most retrogressive of all the railway companies in the country. On the revision of rates, to which both he and the hon. Member who spoke before him (Major Hills) referred, the then general manager of the Great Northern Railway, Sir Henry Oakley, than whom there was no better railway manager, frankly told the Commission, of which Lord Balfour of Burleigh was the Chairman, that the Great Northern Railway Company fixed its rates by rule of thumb, and the amount of the rate was what they thought the traffic would bear. That is the condition of things to which, if the right hon. Baronet could have his way, we are to return under the Bill as he would like to see it moulded by this House. Before leaving that question of the revision of rates, I would like to say that I happened to be leading witness for the traders, and I gave evidence over eight days, I think, at that time, so that I know something about it. It did last for three or four years, but three-fourths of the work that was done by that Commission has been done already by the Rates Advisory Committee and the other negotiations which have already taken place, and there is nothing left for the railway companies to do between now and the end of the year but to arrange their classifications—and they are doing it—and fix a scale of rates.

7.0 P.M.

I would like to congratulate the Minister and the House on the introduction of a Bill which at least provides a foundation and some portion of the structure of reconstructed railways. It is true that a good deal remains to be done, but to meet trade requirements it gives us a foundation. I wish to say here, from my experience, that the Minister has never missed an opportunity of consulting traders in every reasonable way in order to bring about the arrangements he has made in the Bill. He is master of his subject, and deals in a very practical manner with any suggestions put forward. The right hon. Gentleman, in his opening, made a comparison with what was happening in regard to another decontrol, and referred to the unfortunate position in the coal industry. If the Board of Trade had had a trader at its head, who was able to negotiate—and the coal question is a much smaller and more insignificant question compared with the complicated matter of the railways—if it had had a trader at its head, as I am pleased to say it has now, I do not believe that we should have had the trouble with regard to decontrol from which we are now suffering.

The Minister's policy on amalgamations is only partially provided for. The right hon. Gentleman has dealt very frankly and lucidly with this question—it was examined by a Departmental Committee under Mr. Russell Rea, and I think I gave evidence before that during a whole day—of coming to terms of amalgamation so that we could do away with competition. What competition? Not competition in rates; there has been no such a thing in the last 50 years as competition in rates on railways. Competition in accommodation has been exercised to such an extent that the cost is so great that it exceeds many times over any advantage which is obtained from it. This cost in the end has to be borne out of rates by the trader, and, as a consequence, our rates are and have been the highest in the world. I say that the Minister has only partially concluded his work. I will give an illustration which will show, on the one hand, how he proposed to economise and make great savings, and how he has failed to do it in this Bill. There is no mention in the Bill of the Cheshire Lines Committee. The Cheshire Lines Committee is in a district the whole of which is, under this Bill, to be left to the working of the London and North-Western Railway, the Lancashire and Yorkshire Railway, and the Midland Railway Company. Within that district entirely is the Cheshire Lines Committee, belonging to three large companies—the Great Northern, the Midland, and the Manchester, Sheffield and Lincolnshire—I mention the old title of the last railway to show that in neither of these cases have these companies any original right to traffic in that district if competition is done away with.

What is the history of the Cheshire Lines Committee? Sir Edward Watkin, Chairman of the Manchester, Sheffield, and Lincolnshire Railway, with the Great Northern and the Midland Company, feeling that they were not strong enough individually, came to Parliament for the formation of thi3 railway in order to invade the territory of the London and North Western and the Lancashire and Yorkshire Companies at Liverpool. They got the support of the Liverpool traders, who were told—they would not have been told directly by the railway companies, but they were given to understand—that this new competition would mean a saving to them in reduced rates, reduced charges, and so on. That railway was made into Liverpool. The nearest station was inconvenient to the merchants to the extent of 3d. a ton in cartage—that is to say, it cost them 3d. a ton more to cart to this new station than it did to the other existing railway stations belonging to the London and North Western and the Lancashire and Yorkshire Railway Companies. The result was they could not get the traffic; 3d. turned it, and they could not compete in rates. They could not reduce their rates by 3d. because that would have meant that the London and North Western would have reduced theirs by 6d., and so on, and they would have come to starvation terms. What they were allowed to do was to provide facilities, and each of these companies—the Great Northern, the Midland, and the Great Central—embarked on huge expenditures in Liverpool, providing not only their own railway stations connected with this new Cheshire line, but central depots in the centre of Liverpool, without any railway connection in any shape or form, where this traffic was received for the benefit of the trader to the extent of 3d. a ton. In many instances 10s. or 15s. a ton was the cost to the railway company in order to get traffic by enabling the trader to save that 3d. The London and North Western Railway, whose territory had been invaded, and the Lancashire and Yorkshire Railway, had to follow on. They also had to have depots, until Sir George Findlay—Mr. George Findlay as he then was—the general manager of the London and North Western Railway Company, stated that the cost in goods railway stations to his company alone at Liverpool was more than twice as much as the completed original cost of the Liverpool and Lancashire Railway. The result was that these huge expenditures on terminals far outweighed any cost of conveyance on the railways.

So much for amalgamation. The Cheshire Lines Committee is left entirely out of the Bill because, as I believe, the Minister who is not usually timid has, in this case, been too timid to hand over the North-Western territory to the group companies that should have it. The right hon. Gentleman speaks of £25,000,000 a year savings from economies over the whole of the railways. Let me show how immediately huge amounts would be returned to the companies owning the Cheshire Lines Committee. As I have pointed out, and, as would happen, if you take away the competition between these companies the terminal facilities will be improved in another direction. The facilities will be increased, but the costly stations will be disposed of, and fortunately for the railway companies upon such terms that they can get more than their money back. I should like to know from the Minister, when he replies, whether he has committed himself so much in regard to this matter of the Cheshire Lines Committee that it cannot be put right upstairs in Committee. I would also ask whether the Amalgamation Tribunal, which is to be formed, will have power to deal with questions of this sort which are not dealt with in the Bill? In regard to that tribunal, speaking on behalf of an exceedingly large body of traders, I say that it requires strengthening. The gentlemen whose names are given in the Bill are most admirable. Three better names could not have been chosen, always bearing in mind that Sir William Plender is the recognised representative of the railway companies as an accountant. He is always called by the railway companies to give evidence, as he did on the Colwyn Committee. Principally, however, it is a question on which the railway companies should have their accountants, and I do not see any objection to that at all. The traders, however, have been forgotten. Take the illustration I have just given with regard to the Cheshire Lines Committee. We want someone representing the traders on that tribunal, not necessarily the same representative throughout all the inquiry. The right hon. Gentleman has a panel already. He could select from that panel one accountant and one man with commercial experience when the Amalgamation Tribunal is dealing with a particular amalgamation, so that the traders might feel that their interests were not being lost sight of.

The Bill has another defect, and that is evidently one with which the right hon. Baronet (Sir F. Banbury) will agree. There are some references in the Bill to the Railway and Canal Commission, not many. The railway companies evidently were not satisfied with the Railway and Canal Commission, otherwise there would have been no Amalgamation Tribunal. It is no wonder that the railway companies are not satisfied with such a Commission, for the traders certainly are not. It is provided that that Commission is to be a lay Commission, with a representative well versed in railway matters as one of the Commissioners, a commercial man, with large experience, as the other Commissioner, and over them a judge. To-day, however, that Commission has three lawyers—the judge, Mr. Tindal Atkinson, a good lawyer and a K.C., and Mr. Lewis Coward. We see by the Bill that the railway companies have no confidence in them. Amalgamation questions are not referred to them. Minor questions are, here and there in the Bill—only in three or four cases, I think, excepting the question of undue preference—referred to the Railway Commission. The traders, for whom I speak, very strongly resent that, and are quite willing and wishful that the Railway Commission's name should come out of the Bill altogether, and that either the Minister—and I remember that in one case it was the railway commissioner, or the Minister, who, if he likes, may do so-and-so—or someone chosen by him should be the man. We are quite ready to have a Minister in the other cases, for a case of undue preference, say, is not a legal question at all; it is a question of fact. Questions of undue preference are left to that Railway Commission. We are quite prepared that they should be left to the Minister, or to any committee out of his panel that he may select. May I here say that it was this House, the private Members, which put into the Transport Bill these committees which are working so exceedingly satisfactorily in carrying out the provisions of the Act. The Rates Advisory Committee were put in by Members in Committee upstairs against the wishes of the Minister, but he has seen the advantage of these committees, and is using them all the time. There can be no better court to which to refer questions of this sort—questions of fact, questions which have reference to rates and charges, and so on.

The Rates Advisory Committee is one of these. It is the creation—if the Minister will allow me to say so—not of the Minister, but of this House. It has done wonderful work. The Committee has sat I do not know how many days—I forget for the moment—but I happened to be the first witness before them on behalf of the traders. They have satisfied the railway companies and the traders as well. Take the speeches of the chairmen of the great railway companies at the last half-yearly meetings, and you will find that in almost every case they are satisfied, in a general way—for there are always grievances to be considered—that the work which has been done by the Rates Advisory Committee is good. There was agreement on the part of the railways, on the part of the traders, and on behalf of Labour by the Labour representative who was upon the Committee, that in all matters consideration should be given to the shareholder whose interests should be conserved. I myself would not be a party to do anything which would rob the shareholder in a railway company of his just due. A good deal has been said this afternoon, and repeated three or four times, simply because certain hon. Members are not accustomed to these things, and do not see the point of the provision in the Bill that railway companies should not reduce rates without going to the tribunal. It is, however, as much to the interest of the traders of this country that the railway companies should be prevented from reducing a rate as that they should be prevented from raising it. For years and years in France no rate could be reduced or raised without reference, and it would be very much better if it could have been so in this country. One hears of the difficulty there is, and we will hear it again in this Debate, of the coastwise trade getting on with its work.

Directly a coastwise service has attained a traffic the railway companies come along, cut down the rates, and make it impossible for that service to go on. That is one side of the question. Look at the provision in the Bill, to which I shall strongly object if I have an opportunity upstairs—where exceptional rates may be reduced by the railway companies under exceptional circumstances. Let me give an illustration of what might happen in the case of the Cheshire lines to which I referred a little while ago. Certain traders make an agreement for seven years by which the whole of their traffic is carried between Manchester and Bombay at given charges. It is a great traffic. Millions of pounds are involved. The traders make a contract with a firm of shipowners or carriers. Here in the Bill the Cheshire lines are left out of the grouping of the companies and under this Bill, and unless we can get them included upstairs, it would be possible, as the Bill now stands, for them to take that seven years' contract between Manchester and Liverpool and Bombay with the Bombay traders—thousands of tons every week of Manchester goods being involved—to cut the prices to the disadvantage of the groups in the district, the railway companies, and everybody else. Take the opposite coast. Take the Port of Immingham, of the Great Central Railway. They might want to make an arrangement with the wool growers in Australia diverting some tens of thousands of tons of wool from London by quoting an unfair rate which need not be an undue preference. These are points in connection with Clauses which I am sure will be dealt with fully upstairs.

The standard rates proposed in the Bill cover a good deal more than the class rates do to-day. I am speaking to hon. Members who know in a general way what our railway traffic is. We are covered by maximum rates. I am talking always of general merchandise which is now in eight classes. Then there are exceptional rates. Eighty per cent. of the general merchandise of this country is carried at exceptional rates, but these exceptional rates need not be considered as exceptional rates. In the new revision, as we are dealing with it now, what we want is the lowest rates at which each description of traffic can reasonably be carried by railway companies. Take, for instance, train-loads of coal, in owners' wagons for shipment, where the railway company has nothing to do but to haul the traffic from point to point. Take train-loads of world, but in sowing his political wild-oats, china clay similarly. At the other end of the scale you have millinery in bandboxes which can be charged at the highest rate that you can reasonably put upon any traffic. These are the two ends. Under our existing classification we have eight classes covering all traffic. In the Rates Advisory Committee we have practically come to an agreement—the railway company suggesting it—that there should be at least 21 classes. Thirty classes or more have been suggested. A scale has to be settled between now and December, and according to my view it should cover both the standard and the exceptional rates. The lowest step should be No. 1 and the highest, it may be, 30, but each step should be an equal step all the way along covering every grade. You have your classification and you are going to put your traffic, not only into a particular class, but into classes according to the conditions under which it is carried—taking coal again by way of illustration, in truck-loads or train-loads, and so on. There would be all the different classes, subject to the different scales of rates covering the whole of your traffic, both standard and exceptional. You cover the whole ground. There is no more difficulty in doing this than in dealing with standard rates separately, and entirely apart from exceptional. I hope I am not wearying the House, but it is most important that these things should be considered.

The railway rates tribunal should be a body which, having fixed a standard scale of rates, should have that standard scale cover what the railway companies have always sought to frighten the public as to the difficulties by the millions of rates which are in operation. Here I must give some explanation. To-day, if a rate is, say, 3d. per ton per mile on a particular traffic, it means that that rate is put into every rate-book throughout the country, and you will find the railway managers seriously coming forward and saying that they issue hundreds and thousands of rates for that particular traffic. No rates must be advanced or reduced except by that railway rates tribunal which must always be available. Something has been said and it is very desirable that more should be said, so that we may get a better under- standing upon the great cost of our English railways. We are all proud as Britons to acknowledge that the Prime Minister is the foremost statesman in the world, but in sowing his political wild-oats, and not so very long ago, he used what to-day we would call Bolshevist propaganda. Amongst other things he touched upon this very question we are now discussing. Shortly after his Lime-house speech he went to Newcastle. Let me give a short reference to what he said: When I was at the Board of Trade I saw a good deal of this matter. I recollect a number of cases that were brought before me of complaints from the trading community as to the oppressive character of the railway rates. From every part of the country and from every kind of business and undertaking there were complaints that the heavy cost of carriage and the railway rates interfered with the success and prosperity of that particular business. I had to go into it. I went into it very carefully, into hundreds of these cases, and at the end I found that it was not the railway companies that were to blame. They had to pay over and over for the land they desired more than fifty times its real value. That is not the fact.

Photo of Mr Marshall Stevens Mr Marshall Stevens , Eccles

I will show it is not. In this country our original railways were built upon land which cost less, or not more, than the land cost in Continental countries. In many cases in this country the land was given by the landlords in order that railways might come into the district. Where the excess has come is in the competition which this Bill is intended to do away with. I have given Liverpool as an illustration, and I will not give others, although there are plenty of instances all over the country where a district has been made profitable and where works, houses, and everything else have grown up as a result of the original railway coming in on cheap land. Other railway companies have attempted to capture that traffic instead of working for new traffic, and it is then that expensive land has had to be bought and buildings taken down. In the case of Manchester, the Great Northern Railway Company, without a railway at Manchester, has built a goods railway station, which has not created one single ton of traffic, at the cost of more than £1,000,000, largely incurred in buying up property, not from large landowners, but from the owners of property. If under this Bill we enable railway companies to sell such property as that when no further competition is needed a great lot of capital will come back to the shareholders.

The total amount of the capital of the railway companies is, roughly, £1,200,000,000 and of that about 12 per cent. is not really in railway undertakings at all, but in canals, docks, harbours, hotels, and steamships, and has no right to be included in this Bill, because subsidiary companies ought to be dealt with separately. If in addition you take this unnecessary expenditure in railway terminals away you will find that of the £1,200,000,000 not one-half is capital invested in the railways for the conveyance of traffic from point to point. The Minister of Transport gave some figures illustrating the cost of working in other countries. I have put a series of questions in the House asking if the right hon. Gentleman could give the cost of railway traffic apart from the terminals, and he says that the railway companies are very slow, and will not help him with the particulars. Here is a question which I put to the right hon. Gentleman on the 14th March this year:

Photo of Mr Marshall Stevens Mr Marshall Stevens , Eccles

asked the Minister of Transport what statistics the Great Northern Railway Company can produce of the past and present cost and receipts for the separate service of the conveyance of merchandise and passengers, respectively, conveyance being the only statutory monopoly service possessed by the company, which would enable Parliament to determine what, if any, increase of conveyance charge should be permitted to the Great Northern Railway Company to enable it to operate as a sound commercial undertaking when no longer controlled; if he will state whether he is yet in a position to give the ton mileage cost and receipt, respectively, together with the net receipt for the single service of conveyance of merchandise upon the Great Northern Railway; and whether he has information available which enables him to compare present ton mileage figures of cost and net receipts for conveyance only with any pre-War period?

Photo of Sir Eric Geddes Sir Eric Geddes , Cambridge

As my hon. Friend is, I think, aware, the railway companies generally oppose the publication and profess not to compile cost figures which will enable Parliament to judge fully of the justification for increased charging powers. The trading community is, in my judgment, insufficiently alive to the imperative need in their own interest of adequate statistical and cost information of the working of railways.—[OFFICIAL REPORT, 14th March, 1921; cols. 1014–15, Vol. 139.]

I hope the right hon. Gentleman will press for those statistics which will enable us to ascertain our position with regard to cost. I think it will be found that it costs us no more to convey traffic from point to point apart from the terminals than it does in any other up-to-date country. What we are helping to do away with in this Bill is the domination of the railways over transport, and that domination must cease. The traders must be free to use the railways, canals, roads and coastwise services without the domination of any one of them over the other. Up to the present time, and for a generation almost, we have been absolutely dominated by the railway companies, and this Bill will tend to free us. A great deal more has to be done than the foundation which is laid by this Bill. I am sorry to hear that the present Minister of Transport is going to leave us; do let us have in his place some thoroughly practical Minister who as fully understands transport and its requirements. I do not know of any professional politician who is fitted for the post, but if there is no one in the House, then get someone from outside. Now that transport is taking its proper place in the affairs of the country, do let us get into the position of being up to date in the world.

Photo of Mr George Roberts Mr George Roberts , Norwich

Having had some experience in the making of agreements between the Government and railway companies, and having noticed their varying character, I desire to congratulate my right hon. Friend on the fact that he has been able to introduce his Bill, and that he has been able to tell the House that he does so having secured a very large measure of support from each of the parties concerned. I do not know whether this may be described as a Bill of the railway companies or not. My recollection is that the companies have advised the Government that decontrol could not take place for a substantial number of years, and therefore if it be that decontrol should not take place until 1924, I do not think they are very well pleased with this particular Bill. The first point to which I want to draw attention is that relating to Part IV of the Bill. I think that this is a very wise departure. At the same time I join with my right hon. Friend and other speakers in regretting that developments have occurred which have obviated the possibility of what would have been an extremely interesting experiment, namely the inclusion of representatives of the workmen upon the Board of Directors.

My right hon. Friend the Member for Gorbals (Mr. Barnes) and myself are able to bear out the claim of the Minister of Transport, that it was the desire of the Government that this experiment should be made. In fact we are able to say that before we left the Government we understood that the principle had been accepted, and that when legislation dealing with the future of our railway service was introduced, it would include provision whereby representatives of the workmen would occupy a great position of that sort. When later on I heard that this had been abandoned, I made further inquiries. Being an ordinary professional politician, I entertained the usual suspicions against the Government, although at one time I had the honour of being a Member of the Government myself. I was often suspect myself merely because I was a Member of the Government. I very soon ascertained from the parties interested that the representatives of the workers' organisation, not under pressure from the Government or the railway companies, had agreed to abandon this principle. As far as I am able to gather the reason why we are not allowed to watch this experiment is due to divisions of opinion within the workers' organisations.

It is held by some, and I am not questioning the honesty of their belief, that the railways will continue to be what are called capitalistic organisations, and, therefore, if a trade union representative were sitting on the board of directors he would, in effect, be bolstering up a system in which they no longer professed belief, and one which they desired to abolish. I think that that is a wrong view, and I still believe the Labour party were wrong in withdrawing their representatives from the Government, because if representative workmen are to be entrusted in future with larger responsibilities, they must be trained to fill those positions before they are called upon to undertake those duties. If the action of the workers' organisations is as I have stated, I think it is very short-sighted, because it deprives us of the opportunity of watching the very interesting experiment. This Bill does indicate the new spirit in industry. My right hon. Friend the Member for Platting (Mr. Clynes) should have his attention drawn to Schedule 3. I was a member of the Departmental Committee on Railway Agreements and Amalgamations set up by the present Colonial Secretary, when he was President of the Board of Trade in the middle of 1909, and which reported in 1911. To that Report my right hon. Friend made allusion in the course of his speech. I was then representing the Labour party, and, at least, I think, a reference to that Report will prove that I endeavoured and succeeded, with the good will of my colleagues, in carrying out my duties in that respect fairly efficiently.

I got in those recommendations the recognition which is now incorporated in this Bill, of this principle constituting veritably a vested interest on the part of the workman in the railway service. It was to the effect that when amalgamations took place, discharges should not be permitted, and that a man, even if he had to pass from one post to another, should suffer no loss of salary, my argument then being that if there was a redundancy, the railway workman was placed in a more difficult position than the generality of workmen. He generally enters the railway service early in life, one of the main attractions being the security of employment there offered. He becomes a specialised workman, and if, late in life, he is dispossessed of employment, he encounters more than the average difficulty in fitting himself into another occupation. That view was accepted by my colleagues of the committee, and was also very rapidly accepted by representatives of the railway companies, because when the Bill proposing to amalgamate the Great Eastern, the Great Northern, and the Great Central Railways was before this House, the parties then agreed to the insertion in the Bill of recommendations comparable with those ultimately submitted to this House by the committee presided over by Mr. Russell Rea. Again, if my memory serves me rightly, when the Taff Vale Railway Company were promoting their Bill for the purpose of amalgamating or absorbing the Rhymney Railway, they also accepted something even more drastic than that which was agreed to by the three companies whom I have just named. Therefore, I feel that we have made marked progress here, because, at any rate, at last we have admitted the fact that the railway worker, because of the special character of his work, because of the handicap that he would suffer in competing for employment in later life, has constituted a claim on the resources of that railway company, and that the company will have to continue him in employment, or mutually arrange to grant him compensation, in the event of his deciding to take up other employment. Therefore, I think my right hon. Friend is to be congratulated on the fact that he has won over the Labour organisations concerned.

I was a little surprised that my right hon. Friend the Member for Miles Platting, who is usually so well-informed on these matters, had lost sight of the Agreement, which is not, of course, part of the Bill, but which was incorporated in Command Paper 1,292, as a matter of information to Members of the House. There the Agreement states that Clauses 1 to 4 have been arrived at on the distinct understanding that the Railways Bill, as presented to the House of Commons, shall contain, in the form of a Clause or Clauses, the provisions which are enumerated. This is very interesting, and bears out again the point made by the Minister in his intervention. It states that their rates of pay, hours of duty and conditions of service shall, in default of agreement between the individual railway companies and the men's unions, be referred to, and settled by, the Central and National Wages Boards. I have always been opposed to the statutory enactment of compulsory arbitration, and, so far as I am concerned, although it may be that we get a little more moderate as we grow older, and if we do so, we claim that we are correspondingly the wiser, I see no reason for modifying my objection to compulsory arbitration. But where the parties have agreed, as in this case, I think it is a very wise procedure, and one that might very well be commended to a similar organisation, that is, the Joint Industrial Councils which are being established throughout industry. I am certain that, if the relationship of the coal owners and miners had been as friendly, or, at any rate, as clear—I think the personal relationships are usually of the most friendly character—but if the facts of the industry had been made as clear as has been the case in connection with railway matters, I am sure we would not be suffering the appalling trouble with which we are afflicted at the present time. Therefore, I certainly want to say that I thank my right hon. Friend for having carried through these negotiations, particularly with the Labour bodies, so successfully, and having incorporated in the Third Schedule the recommendations made by Mr. Russell Rea's Committee, of which I am, of course, pleased of the fact that I was a member.

8.0 P.M

I desire to direct the attention of my right hon. Friend to one point, in which, I think, an injustice is being done, and, after all, one was interested in his historical survey of railway development in this country. Most of us have been critical at one time or other of our railway system and its services, but, still, we have constantly to keep in view this fact. Great Britain was the pioneer of railways in the world. If we were starting afresh, and able to extract experience and knowledge from other countries which had carried out experimentation, then undoubtedly we would refuse to give sanction to a system which allowed the creation of small companies all over the land. But we have also to pay this tribute to the enterprise and initiative of those who established these small companies. They, at any rate, had a vision of the possibilities of railway development, and they are entitled to credit for their work and achievement. Railways have grown up here, as so many other systems have done, in an all too haphazard fashion, and, of course, now that we are able to look back over 100 years of experience, it is quite easy to say that if we had only had the vision necessary to imagine what would be the position at the end of that 100 years, then we would have done something different. I am very much afraid we are not approaching the newer problems in a much broader spirit. I do not know whether yet there is sufficient imagination in this or other countries in relation to the possibilities of electricity. I do not know, but it seems to me that the development is already too haphazard. What was the attitude of mind 100 years ago, when people had far less experience upon which to draw, I am unable to state, but, at any rate, we may assume that people who did display enterprise and initiative, a belief in the schemes which warranted them in investing their money, did great service, not only to the particular locality in which they operated, but to the general question of railway development.

Under this Bill we are proposing to get rid of what is, undoubtedly, a handicap to railway efficiency, that is, the all too numerous Companies, many of them small in character. I know that there is a good deal of objection—in fact, the objection is expressed in the Amendment which has been moved—that the Government have not embarked on a scheme of nationalisation. I understand the disappointment of many friends of mine in the Labour movement, and I have asked them whether they desire that the Bill should be tested from that point of view. They have assured me they recognise that the tide of public opinion has recently flowed, and, as far as they can judge, is still flowing, so strongly against nationalisation that the Government dare not embark on such a project. I say that is the view which was expressed to me—and no one will charge me with expressing intentionally an untruth—only last night by representative railwaymen—I will not say official, but prominent in the railway world. But that is not necessarily related to my argument here. I say there is disappointment that the scheme submitted is not one of complete unification. I have had some doubt in my mind as to whether there is not a point in transport, as in general industry, where you exceed, by the size of your undertaking, the possibility of efficiency. I submit that is a point well worthy of consideration. While at the Board of Trade, subsequently in other Departments, and later as a free lance, I have applied myself to the consideration of industrial organisation, and I have reached the conclusion that there are businesses in this country, inspired very largely by the cartels of Germany, or the trusts of America, which have become so swollen as to be practically unmanageable by the men at the head of affairs. I do not know whether that is right or not, but I do say there is a doubt as to whether you may not make an industry so large that it is absolutely impossible to give to it the requisite supervision, so as to ensure the efficiency and economy which are the essential aim in all cases. Whether this applies to the transport problem equally with others, I am not here prepared to say, but I welcome this because it is an experiment in the direction of unification. Instead of having hundreds of different organisations, we shall have six or seven, as the case may be, and I believe it constitutes a very reasonable half-way house towards what my Friends on the other side desire to achieve. At any rate, I am satisfied to be witness of a very interesting experiment. But, in carrying out our purpose, I am sure neither my right hon. Friend nor any Member of the House would willingly inflict an injustice upon any interest. It is quite true that this multiplication of companies has now proved to be uneconomic. Yet they have been encouraged by Parliament. No company could be started or operate without, first of all, securing the sanction of Parliament, and, having given that sanction, I am sure that Parliament is not entitled to, nor will, act in such a manner as will prejudice the legitimate interests of any of the parties concerned. In my constituency my attention has been directed to Clause 6. It is claimed by people who are shareholders in small railway companies that that Clause, as it now stands, may operate prejudicially towards them. Small companies fall naturally into two categories—working companies, that is, companies owning and working a small system, and worked companies in which the working company is invariably one of the larger concerns and works it for the owning company in the way I have described. It is thought that the terms of purchase, set forth in Clause 6 may be unfair to those smaller companies. From what I know of my right hon. Friend I am sure it is not his intention that it should do so, and if it be that the terms are appropriate I am satisfied that he has regarded it as in the public interest so to set them forth. These people for whom I have been speaking have understood that the principle of valuation was to be on the basis of the 1913 receipts. My attention is directed to a passage in the Command Paper in which appears this statement: The Bill therefore provides (in Clause 6) that they are to be valued on the basis that their charging powers would have been regulated on the principles contained in Clauses 52 and 53. Generally speaking, their charging power would be such as to produce the 1913 net revenue. I believe that is really the intention of the Minister, but I am advised it is not clear that this is properly carried out in the Bill as it now appears before the House. At any rate, I think we ought to have sympathy with these smaller companies, because we are conferring upon a certain number of larger companies the power to absorb the smaller companies, and, after all, it is not that the State will be getting the advantage. I am not claiming that the State should devote any more money to be made available for the protection of the smaller companies, but we want to safeguard the bargaining powers of those smaller companies so that they can secure a fair value for their companies when they are to be absorbed by the larger, or what are called the constituent companies. The first proviso of Clause 6 specially affects the small working companies. My objection to this first proviso, as I understand it, is that the Amalgamation Tribunal is directed to value the line on the basis of an estimate as nearly as can be secured of the future net income prospects of each company. This means that the tribunal will be required to value the undertakings on the basis of their traffic and working expenses as they are to-day, or as they will be in the immediate future. It is well known that no railway can be worked to-day to produce pre-War net receipts. It is a matter of very acute speculation as to how soon we shall be able to return to that happy state of affairs. Moreover, the smaller companies invariably operate in sparsely populated districts, and their general charges must therefore be proportionately higher than those in the larger concerns which operate in more densely populated districts. Of course, there are many other considerations which will immediately occur to the minds of other hon. Members who are interested in the subject. In effect, what I ask is, that the tribunals should be directed to value with the 1913 basis as the minimum. Let me repeat that this does not involve any further contribution on the part of the State; it only safeguards the interests of the smaller companies which must necessarily be at a disadvantage in bargaining with very wealthy corporations backed up by the powers of this Bill, and it only means that in the ultimate result the larger constituent companies will get a lesser proportion of the £50,000,000, and the smaller companies would get a little more. My right hon. Friend may not be able to give a reply as satisfactory as I would desire straight off, and I would therefore ask him to promise that he will give the matter his sympathetic consideration. I think I may assume he will do that.

The second proviso I do not think I need trouble the right hon. Gentleman with to any extent. This is my last point. It gives a direction to the Amalgamation Tribunal that where there exists a working agreement no agreements are to be made that would abnormally unsettle affairs. This must necessarily be to the advantage of the larger companies. The general procedure with regard to these worked companies is that they receive a fixed percentage of the gross receipts, and as the gross receipts are now high their receipts are increased in proportion. But a bargain is a bargain, and I feel as this bargain was made with Parliamentary authority it ought not to be lightly modified. We are not here protecting any great State or public interest. We are simply here dealing with the conditions of bargaining as between the constituent companies and the smaller or subsidiary companies. The observations I have made have been directed to the protection of the smaller companies which, I say, in the very nature of things, must be placed disadvantageously in the negotiations which will inevitably ensue. Whatever we think of the methods of modern industry at any rate we must admit that shareholders ought to be fairly treated. I am clear about this, that unless we can bring a return to railway capital more nearly approximating that which is earned in other industries, then no capital is coming into railway development, and the railways must suffer. They are the arteries of our whole industrial and social fabric, and if capital does not flow into them not only must the railways suffer, but other interests in the country will also suffer. First of all, I would like to congratulate my right hon. Friend on the lucidity and conciseness of his speech and on what I think to be the very satisfactory arrangement he succeeded in making with Labour bodies concerned, and then I simply want to represent to him what I believe to be a substantial grievance felt by the smaller companies, a grievance arising under the construction of Clause 6, and if my right hon. Friend will, in the course of his reply, give me an assurance that he will sympathetically consider that point I shall be very well satisfied and I shall be at liberty to express the view of those for whom I speak, that we will do our best to expedite the passing of the Bill through the House.

Photo of Sir Halford Mackinder Sir Halford Mackinder , Glasgow Camlachie

I rise to take part in this Debate, not to put forward my own particular views, or for the purpose of expressing merely the views of my constituents. I have been asked by my colleagues from Scotland to express what we believe to be the generally held view in Scotland in regard to the Bill. Hon. Members will know that the relationship of Scotland and Scottish railways to this Bill has been a matter of acute controversy. What I am going to say will relate, not merely to particular portions of a certain Schedule, but it will affect the whole Bill in regard to its incidence in Scotland. In this matter we believe we are dealing with something which is of great importance to England as well as to Scotland. The Minister for Transport knows that the Scottish Members have taken a great deal of trouble for a good many weeks in order to study and understand this somewhat intricate Measure. We have held a series of meetings to which have been summoned Members from Scotland of all parties. The meetings have been attended largely by men of all parties, and the spirit in which we have gone to work has been a spirit of honest inquiry. We have sunk all party differences. We had the advantage of deputations which included, not only all the Chairmen and General Managers of Scottish railways, but also important representatives of the great trading communities in Scotland, and of the principal local authorities. We have reason to know what is the opinion in Scotland upon the general proposals, and I may now add in some degree also on the Bill itself as printed, because, as the Under-Secretary will remember, the Bill was printed just before the Recess, and Scottish Members have been in communication with their constituents in the interval. We met again this week in order to exchange our experiences, and I am commissioned to state here to-night to the House and to the Government what we believe to be the Scottish view of the Bill. Roughly and simply put, Scotland does not like the Bill, and if it depended on Scottish votes alone I think the right hon. Gentleman would have considerable difficulty in securing its Second Reading.

The Bill is disliked in Scotland because it is felt to be doubly unjust. It is unjust where it puts Scotland apart and separates her interests from those of the remainder of the country, and it is unjust because, in regard to many matters, while thus separating Scotland, it maintains the central control. Before the War the Scottish railways were separate in every respect. They were separate in finance, in management, in rates, in wages, in hours, and in conditions both of labour and of freight. During the War, for great national and Imperial reasons, the Scottish railways were controlled by the Government, and were placed under the same control as the English railways; and during that time the Government standardised the conditions of the railways to a considerable extent. That meant that the Scottish railways were compelled to standardise up to the standard of the richer neighbour, England. After the War, a Bill is introduced which, in the opinion of Scotland, gives us the worst of both worlds—the pre-War world and the War world. So far as finance is concerned, you separate the Scottish railways; but when it comes to fixing rates, when it comes to negotiation in regard to wages, you have central control and you establish a single rates tribunal, a single Wages Board. There really is rather a humorous aspect of this matter. We Scottish Members usually have to plead in this House for the recognition of the rights of Scotland, for some separate treatment when legislation is in view—as often as not for a separate Bill. As often as not we are resenting the fact that legislation has been conceived from an English point of view and then, in the last or the last but one of the Clauses of the Bill, you have an interpretation provision which merely translates some alien English words into good Scots, and by that is supposed to have adapted the measure to Scottish conditions. That is our normal position; but what is our position now? This evening we find ourselves more English than the English. We are claiming that we belong to a United Kingdom, and we find that the Government is pushing Scotland out into the outer—darkness, I was going to say, but certainly into the outer scarcity; and all the time, by truly Imperial methods, they are retaining control at the centre over the rates that Scotland may charge, and are leaving the Scottish companies face to face with a Wages Board dominated by unions drawn from the whole country. That board and those unions will inevitably do bargains with the great and rich English companies, and the small Scottish companies will find themselves compelled to accept the decisions so arrived at—I am not complaining, but am merely indicating a fact which is within human nature—although all the time they will not be free to adapt their rates or other conditions to the rather more difficult conditions of Scotland. In this connection I want to take hold of an argument which the right hon. Gentleman used in his speech this afternoon, and which he has also used in a narrower form in the White Paper that was issued explanatory of the Bill. In the White Paper, after saying that certain rates in Scotland are lower than the equivalent rates in England, he goes on to use these words: There would appear to be no justification for throwing the burden of a Scottish deficiency on to the shoulders of English traders. Are we living in a United Kingdom or not? When the union was brought about between these two kingdoms, certain subjects were reserved. Scotland has her own ecclesiastical system and her own educational system. Scotland has maintained her own law for certain purposes—as, for instance, the law of real property. But in regard to two matters—the external relations of this country and the internal communications and commerce—there was to be absolute unity, and that was the object of the Act of union. Why, then, this distinction between the Scottish railways and the English railways? If I am told that Scotland is in fact separate, that the railway systems of Scotland are five in number and are contained in Scotland, I reply that also in the North of England, still to a very large extent and only recently to a greater extent, you have a separate railway province. You have the North Eastern Railway, the Hull and Barnsley Railway, the Lancashire and Yorkshire Railway, and only the other day you had the Manchester, Sheffield and Lincolnshire Railway. You have a district province there. It does not happen to have been demarcated, but to all intents and purposes, until penetrated by the railways from England in their effort at longitudinal communication with Scotland, you had a separate province in the North of England.

The right hon. Gentleman broadened his argument this afternoon. He said that he wished to see the right kind of competition between railways. There was to be a competition between districts—a competition in which the traders and the railways were to share and have the same interests. It was to be to their interest, in this region and in that region, to have a railway system superior to anyone else's, giving a better service at a cheaper rate, and thus facilitating the prosperity of commerce in that region in competition with other regions. He held that up as a desirable condition of things, but I venture to think that it is a very dangerous argument. If you are to maintain the solidarity of this country, the State must give a fair opportunity to every citizen wherever he may be placed. If the rivalry depended simply upon relative efficiency, there might be something to be said for it, but there are physical advantages to be taken into account. The State has decided that in the far Western Isles—my hon. Friend the Member for the Western Isles is not here at the moment or I am sure I should receive his applause—the State has decided that the Post Office shall deliver letters out in remote regions at a great loss, because it is felt that citizens who live even in those regions should enjoy, as far as practicable, the same privileges, so far as the State is concerned, as those who happen to live in the great Metropolis.

The argument really cuts very deep. Let us take two such railway systems as the North Eastern and North Western in England—two such systems as are contemplated in these amalgamated companies. There you have something comparable in the two systems. Both start from London; both traverse rich agricultural plains; both attain to the coalfields and the industrial regions; both have terminals in the large ports. They may not be quite equal, but there is something comparable in the two cases, and I can understand the right hon. Gentleman arguing that there will be a very healthy rivalry between those two great railway provinces, in which the traders and the railways will have common interests. But when you consider the case of Scotland, you are considering a nation which is not usually thought to be unenergetic or lacking in efficiency, but you are considering a country which physically suffers under very great disabilities. I may remind hon. Members that one-half of Scotland contains a population of 300,000 people only, and that the half of Scotland is larger in area than the whole of the six Northern counties of England, which contain 11,000,000. It is ridiculous to compare railway conditions in a land half the size of Scotland, with 300,000 people, and a land that is smaller, and has 11,000,000 people. That is not the whole of the case. You have three-quarters of the population in the remainder of Scotland in one little strip measuring not more than a tenth of the whole area of Scotland. That little strip extends along the sea coast, and, in so far as it does not, is penetrated by deep arms of the sea and harbours. We hope there will be competition by coasting craft which will, whatever your tribunal may fix, in fact limit the railway rate which can be charged.

But do not let it be said that because in that North of Scotland you have only 300,000 people and because—I think I am not exaggerating in making this statement—the railways of nine-tenths of Scotland have to be carried, so far as earning power is concerned, by the railways of one-tenth, the railways of nine-tenths of Scotland have not a very great national and Imperial importance. During the War it was precisely those railways through the sparsely populated Highlands of Scotland which played not merely an important but a critical part in the maintenance of the position of this country and the Allies. The railways through those northern highlands were the railways upon which the Grand Fleet was based. Every night there left London a naval express which travelled northward with only naval officers and personnel to Thurso in order that with the shortest possible passage men might come to and fro between the great Imperial centre of operations and the sentinel fleet which alone rendered possible the victory that we won. From many important points of view it is no exaggeration to say that the railways of Scotland enabled us to win this War by outflanking the U-boats in the North Sea. Those railways played a prominent part not only in carrying people to and fro between London and Scapa Flow, but also the advanced dockyard of Invergordon was absolutely dependent, not merely for supplies, but for defence, upon those railways. There was a very considerable garrison around Invergordon, and the whole of the supplies—coal, iron, and everything else—which were necessary for the repair of the Fleet in that advanced position had to be carried by those railways. More than that, you drew upon the supplies of timber—one of your greatest reserves as it turned out—on the highlands of Scotland, and with that timber, carried South by those very railways, you were able to mine the coal which enabled you to coal the Fleet. More than even that, when you were short of food, when your east coast was unsafe for fishing vessels, you were able to bring fish into this country from the open seas, and still more, whereas usually the coal is carried by sea to the drifters which catch the fish, coal during the War had to" be carried overland along precisely these railways of the sparsely inhabited regions in order that it might be put upon fishing craft to enable them to obtain the food that eked out your supplies.

We in Scotland feel that those railways, constructed by Scottish capital, are entitled to be thought of not with the mean spirit that they run through a great land inhabited merely by a few crofters, not merely even that they supply a pleasure ground which is very useful to us as bringing wealthy Americans to spend some money in these northern regions, but because those railways were vital to this nation's existence, and we are entitled upon that basis to claim that we should not have thrown at us the fact that there is a border, which was thought to be abolished except for sentimental purposes, and that the traders on one side are to be thought of as in a separate compartment, entitled to be separately treated from the traders on the other side. We ask that the scheme which was put forward by the Railway Companies' Association for the longitudinal linking of the railways of Scotland with the railways of England shall not be cancelled. The right hon. Gentleman in his Bill has accepted the grouping of the Railways Association except in one point, and he has taken upon himself to deviate precisely where Scotland is concerned. The argument to begin with is that the Scottish railways are poor. Are there no other poor railways besides the Scottish railways? Take the great list in the Schedule. Are they all wealthy railways which are to forced into those different groups? Are all the great and wealthy railways very willingly accepting the partnership of some of those rather weak neighbours, and are you to draw a distinction if a railway happens to be a bit poorer in Scotland than in England? I believe to-day the tin mines in Cornwall are not very prosperous. I do not know the fact, but I am quite prepared to hear that the Cornish railways are not contributing very largely to the revenues of the Great Western Railway. Are you prepared to argue, converting the words of the right hon. Gentleman, that there is no justification for throwing the burden of a Cornish deficiency on to the shoulders of the Devonshire farmers? Because if you are not, you are not entitled either to argue in the same sense in regard to Scotland. The position is precisely similar.

It is said the Scottish rates for the carriage of goods are lower than the English. They are lower, I believe, in certain cases. We are not concerned with the present. We are concerned with the future. There is a certain machinery set up by this Bill. That machinery provides for a gradual reduction of rates as efficiency, economy, prosperity increase. What is likely to be the comparison, we will say, between the conditions of the Scottish railways and the conditions of such a railway as the North Eastern? The North Eastern is practically level. It goes from one great centre of population to another. The region traversed by the North Eastern is so naturally rich that the railway must be mismanaged indeed if in the course of a certain time it does not show greater profits than the Scottish railways. And what will be the result? Automatically, under the provisions of this Bill, you will have a reduction in the rates in that area, and, whatever may be the comparison between the rates to-day in Scotand and the rates in the Northern area, inevitably under the machinery to be set up under this Bill, in the course of a few years, not because of any superior merits on the part of the organisers of the North Eastern as compared with the organisers of the Scottish railways, but solely because of the greater natural richness of the area in which they are fortunate enough to be placed, the North Eastern Railway will be able to offer to the people of its district cheaper carriage than the Scottish railways. It is simply a case of Unto him that hath shall be given, or, as I think Carlyle expressed it from a different point of view, The devil take the hindmost. The following of that policy is the cause of a very great deal of our troubles in this country: Unto him that hath shall be given. Unless Parliament had intervened and compelled Parliamentary trains to be run in order to secure that a certain number of trains should serve and stop at certain places, you would have had the great centres like London and other places with magnificent services of trains, and you would have had all the smaller centres which were not worth catering for from the mercantile point of view, from the point of view of profits, relatively ill-served and deserted. We have allowed already such a concentration as has given us our slums. If you had followed the principle of compelling equal service, no matter where your inhabitants were placed so far as physical possibilities permitted of it, you would have had a more decentralised population than you have to-day, and yet you ask us to go further along the very path which has brought us to the present condition of things. You ask us to give more and more to him that hath. Because a region is naturally rich, therefore under this Bill that region is to have a handicap in its favour which will enable it to get lower rates and to add the advantage of lower rates to the advantage of the natural facilities which it enjoys, in comparison with a region which lacks natural facilities and which for that very reason will have to face higher rates.

Take another instance. You are to have a tribunal which is to have the power of adjusting rates. On what is it to judge—because it is asked to judge—as to whether the management is economical and efficient? Is it to have a great army of inspectors? They are, fortunately, not provided for in the Bill. There would be a considerable outcry at the present time, in view of the Treasury circular, if there was any attempt to provide them. If it has not an army of inspectors how is it to judge as to the relative efficiency and economy under which the different railways are being administered? It is to judge, apparently, by statistics. Statistics are elaborately provided for in this Bill. I do not complain of the provision of statistics, but it takes a very skilled man to make a just use of statistics. Let us take two cases. Consider that Highland Railway. How is that Highland Railway which has rendered such incomparable, inestimable national service worked and administered? Before the War it was worked in this manner. For three summer months all hands were devoted to getting traffic through anyhow. As regards the other nine months people were put to all kinds of odd jobs, the mending of locomotives, the mending of lines and generally preparing for the next season. What a totally different method of working a railway—and yet it was a commonsense method of working—compared with a great railway running through Lancashire. The two things are not comparable. What use are statistics drawn from these two conditions?

Of what use is it to compare the statistics of the Great Eastern Railway, running through the plains of Suffolk and Norfolk, with the statistics of a railway which starts by going over a pass 1,500 feet in height, which presently goes over another pass 1,300 in height, and in which passes of 600 feet are a mere ordinary incident in the process of its passage north? Consider the conditions when you have, as a normal preparation for what is likely to happen any day in the winter, to keep a snow-plough with three powerful engines behind it ready in case there should be a snow drift impeding a train. That plough with its engines has to be ready to proceed to the scene of the obstruction and has to go full charge into the heap of snow. If the snow happens to give, well and good, then the train may follow and make its way through; but if the snow does not give, then you have to dig the snow-plough and the three locomotives out of the snow so that they can go at it again. What earthly use are statistics when you come to compare statistics of that sort?

Take the case of wages. You force us into a separate compartment. You say, "Live on your own." You say that traders and railwaymen should get on together and exhibit a Scotland more prosperous than the North-Eastern area, and then you say when it comes to settling wages, "You have to settle with the National Board," which is recruited from three great national unions. Thus you treat these two little Scottish railway companies, because after all the Scottish companies will be quite insignificant companies. We have seen already the right hon. Gentleman make a bargain with the greater English railways, and some of the smaller English railways and the Scottish railways are asked to accept the result of that bargain. You are going to give us the same thing in future, repeatedly, in regard to labour. I am not complaining that labour should take advantage of it. The labour men would have been more than human if they did not take advantage of it. I believe they would even consider the matter with the very greatest consideration for Scottish difficulties, but we know, because we know what is the position to-day, that the tendency of these great bargains is to give you a stiff routine, from which it is difficult to depart, so that at this moment, as the result of a bargain between the State and great unions, we have, with certain modifications, men practically subject to standard conditions, although you know that those men in the highlands are merely gardeners, gardening their plot of ground and occasionally stopping from their digging in order to look after their one, two, or three trains a day. That is the result of these great bargains, yet you are going to leave these little Scottish railway systems face to face with this vast centralisation, fitted to cope with the great new amalgamated railways which you are going to set up in England.

Either you must give us freedom altogether or you must give us the advantages of amalgamation. As it is you are denying us the advantages of amalgamation and you are refusing us the advantages of freedom. In the case of wages, what is the position? I speak now before the recent reduction, but I do not think it affects the essence of the figures I give, though it may affect the precise amount. The increase in the Scottish wages was 291 over the pre-War amount while in the case of the English railways it was 227. You standardised during the War. You forced Scotland from a position which was much lower than that of England up to the level of rich England, and now, I daresay, you think that in her separate position as detached from the English railway system she will be able to readjust. What chance has she of readjustment? What chance in face of this great national organisation of labour that the little provincial railway systems will be able to get special rates of their own? Yet the rates which they will be able to charge traders will be limited by the coasting competition. Whatever your tribunal may decide it will not be free to them to charge whatever rates may be fixed. In the matter of wages I feel certain that you are preparing for Scotland one continuous series of labour disputes, because you are going to put face to face with powerful labour organisations, dealing with correspondingly powerful English companies, small Scottish companies which necessarily are poor and in difficulties.

Take the case of standardisation, for which there is provision in this Bill. Standardisation is to be dictated step by step by the Ministry. Are you going to dictate the same terms to these poor remote small companies as to the great English railway systems? If you are, you are going to place them in difficulties. Accept the proposal of the Railway Companies Association. Amalgamate the two Scottish systems with the two English systems, and your standardisation is accomplished. The Minister will simply have to deal with the whole great long system running down the island. For their own purposes those companies were standardised. Certain parts of the line are not so remunerative as others, but they are worked as one system, and the companies for their own purposes will secure standardisation. The right hon. Gentleman is simply making it difficult for his successors and difficult for Scotland by his tenacity in refusing what Scotland is asking for and what the railway companies even of England have admitted as a practicable scheme.

I heard, I think, the right hon. Gentleman himself say that you would get a great unwieldy system if you took a Scoto-English longitudinal system. He practically says so in the White Paper. There are disadvantages as well as advantages in every change you make. Obviously I am not prepared to discuss such a matter on technical grounds with the right hon. Gentleman, but I would point out that if you take one of those Scottish systems—either the East Coast or the West Coast system—as measured by its gross receipts, and therefore, presumably by the business which it does, it is only one-fifth as large as the corresponding English system—the North Western or the North Eastern. Would you tell me that the addition of one- fifth, the increase of either system from five to six, is going to render impossible the administration of that system? Further, all methods of decentralisation in the management of great concerns are not yet wholly explored. We know that in the gradual amalgamation of great concerns you get also the necessity of a certain amount of decentralisation. If it is necessary to decentralise in divisional areas, it may be necessary in regard to the Scottish railways. It does not follow that you may not get amalgamation where it is advantageous to have amalgamation. The right hon. Gentleman has a Clause, I think Clause 15, which takes special security that there shall not be co-operation between these six great amalgamated companies unless with his permission—in other words, with bureaucratic intervention and delay. You may say competition is not desirable, but that very Clause shows that the Bill intends to retain competition where it is thought to be advisable.

We Scottish Members wish to be reasonable. We hope that the right hon. Gentleman has not said his last word. We know that we have behind us a united Scotland. We speak not merely in the name of this party or that party. We believe that if we even voted against the Second Reading we should not be taking a course which would be severely criticised, but we recognise that the right hon. Gentleman has made a deal with the great English companies, and that there are many things in this Bill which we Scots would like to see accomplished. It is in the power of this House and of the Government if they put their Whips on to ride roughshod over a Scottish protest by an English vote, but it is not the custom of the House, fortunately, in my experience to do that, and it would be a sorry day when that is done. Scottish sentiment would be deeply injured. The union with Scotland has worked so well because of the self-control on the part of the representatives of England. You may out-vote this or that party, but it is a very different thing to out-vote a practically united Scotland, and it would be a very sad day in the history of this country if the sentiment bf essential unity between the North and the South of the Tweed were to be injured in such a manner.

The right hon. Gentleman is a great expert. He has the assistance of great experts in the Ministry. He has obtained his experience in the administration of one of the richest of our British railways, a railway that operates in one of the most fertile, most productive, most thickly inhabited districts. But is it likely that all these Scottish railway directors, managers and accountants, chambers of commerce, coal masters, steel traders, iron traders, and all the principal corporations—as my hon. Friends from Scotland know some of those corporations are very democratic in their composition and constitution—would show such unity, and that that unity which you have in Scotland should be based on the fact that all those men are foolish and that wisdom in the management of such difficult railways as those in Scotland is concentrated south of the border? We ask, and ask with no uncertain voice, that you should recognise the quality of Scottish nationality. Scotland is proud of her historic entity. She maintains tenaciously all the sentimental results of her history, but she did go into the Union for the purpose of joining with England in defence of this island, and in order to enjoy the utmost freedom of commerce and communication with England. We ask you to give effect to those principles. There may be some small inconveniences, but I do not believe that they are insuperable. Whatever individual Members from Scotland may do—I believe some of them may feel it a duty to protest—as a body we shall not go into the Lobby against the Bill on the Second Reading. But we wish our attitude not to be mistaken. When we go to Committee we shall hope to do an essential bargain with the Minister of Transport. He has based his Bill on a bargain with the greater English railways.

Photo of Sir Halford Mackinder Sir Halford Mackinder , Glasgow Camlachie

A bargain with some of the English railways, if the hon. Baronet prefers it in that way. We ask the Minister of Transport not to forget his bargain also with the Scottish railways. Unless we can make such a bargain we shall most certainly register our protest in the later stages of the Bill. I know I am expressing what is in harmony with the traditions of this House, as far as Scottish affairs are concerned. I hope the Minister of Transport will recognise the reasonable spirit in which we Scottish Members have approached the question. I believe we are the strongest moderating influence in the situation at the present time. We have given close study to the question and know how difficult it is. But our moderation must not be mistaken.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

I am sure I express the opinion, not merely of every Scottish Member of the House, but of almost all other Members, when I say that we are deeply grateful for the speech which has just been delivered. The speech has been of the highest encouragement to those of us who represent Scottish constituencies, and I shall take the liberty of saying that my hon. Friend deserves, not merely to represent a Scottish division, as he does, but that we Scotsmen will agree that he deserves to be a Scotsman as well. I would not add one word to the very eloquent appeal which he has made, save to make it perfectly clear that from the point of view of Labour in Scotland, we are with him and for him in his request. I will concentrate on two or three large issues raised by the Bill and put my points as briefly as possible, because it is very important that the feeling and the attitude of Labour in this country should be made plain in a controversy of this kind. First, there is the question of the representation of the railway employés upon the boards of management of the railway concerns of Great Britain. Practically every speaker so far has deplored what he regards as the decision of the railwaymen's organisation not to press their claim for a place on the boards of management, and the suggestion has been offered that that claim was made, or, at all events, was not pressed, in order that they might secure as a quid pro quo the National Wages Board and system. Since the Debate began I have been at some pains to ascertain the exact position, and I think it is correct to say that the leading representatives of the railwaymen, or, at all events, some of the leading representatives, attached too great importance to the stress which was laid by the railway companies on that very question of the place of railwaymen on the boards of directors or of management.

9.0 P.M.

The position of the railwaymen is this: They were very anxious to secure a national wages system, and they are still very anxious to preserve that system; but we are also very anxious to maintain the claim which was previously put forward for representation on the boards of management, and we see no reason what- ever why that claim should not be pressed in the course of the Committee stage of this Bill. The second issue, and to my mind by far the more important issue, is the agreement or bargain reached in two or three Clauses of the Bill regarding the compensation to be paid to the railway companies for what was due to control. The Colwyn Committee has been very sharply criticised by some hon. Members who have taken part in the Debate. I want to approach the settlement contained in the Bill in what I think is the only way in which the settlement should be approached, namely, to ask first of all the question whether the companies have been safeguarded in any damage that would be rightly attributed to control, and, in the second place, whether this solution of that problem is a solution which is fair to the taxpayers. May I recall one or two very remarkable facts to which no reference has been made by representatives of the Government this afternoon. When the Colwyn Committee reviewed these agreements dating from the first agreement in August, 1914, and taking into account all the other agreements and understandings which accumulated since that date, they reached the conclusion that not only were the understandings very loose and vague in character, but there was a distinct danger that the railway companies were going to be safeguarded against war conditions at large rather than against conditions which could be narrowly and strictly attributed to control.

What were the actual figures which were ascertained by the Colwyn Committee? After some months of investigation we found that there were put forward claims which in the aggregate amounted to £156,000,000. In addition to that sum so ascertained, it was thought that before the end of the period of control the aggregate claims would have risen to at least £200,000,000. There are many hon. Members who, with every desire to be conservative in their estimates, place it very much higher. Suppose for the purpose of debate we take the figure of £156,000,000. This Bill provides for a settlement of £60,000,000 in round figures or, allowing for Income Tax charges, £51,000,000. That may seem to be an extraordinary concession on the part of the railway companies, but I regret I cannot take that view of it. Most impartial Members of the House will be prepared to concede that there must have been some extraordinary situation which accounted for claims amounting to £156,000,000 and which left it open for a majority of the undertakings to settle on a basis of £60,000,000. The difference is so great, that it immediately raises a most acute question as to the figure of £60,000,000 itself. Suppose we go below the surface of this settlement and ask what actually happened during the period of war control. I think it is not unfair to suggest that the balance of bargaining power was on the side of the railway companies.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

The hon. Baronet the Member for the City of London made great play in the course of his speech with criticisms of bureaucratic control and management. I think he will concede that during the War period we depended not so much on any State Department in this country as on the Railway Executive, consisting of the managers of these large undertakings, who gave their services to the community at that time. I am not criticising them in that capacity, but they certainly cannot be accused of permitting bureaucratic intervention or control. It is quite true they were latterly subject to a Department, and that there were certain regulations within which they were bound to work, but they were the people primarily and mainly responsible. It was obvious the machinery of the State for this purpose was very defective indeed.

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

The hon. Member says that the actual management of the railways was in the hands of the general managers' Executive Committee—subject, of course, to the directors—but the State did interfere against the desire both of the managers and of the directors with the alteration of the hours of labour and the increase of wages. The railway companies also wanted to raise the rates long ago. If they had done so there would have been no deficit.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

I do not think my main contention is weakened that the railway executive, and not so much the public Department, was mainly responsible. Take the merits of the understanding which existed between the State and the railway companies. It gave the companies a guarantee of net receipts based on the year 1913. By common consent that was a peak year in the history of British railways. The railway companies got the advantage of an official agreement or bargain, which I submit very largely safeguarded them, not merely against control but against other conditions arising during the War. Not only that, but the control was continued for a period beyond the War, and it is now continued under circumstances which would have imposed very great handicaps and hardships on the railway undertaking, as on all other industrial concerns in the State. The criticism of the Government's proposal which I wish chiefly to make is, that in spite of the Report of the Colwyn Committee—which I agree did not put a figure on the outstanding liability, but which indicated clearly it could only be an insignificant sum—they made a bargain for £60,000,000, and that they have not, up to this stage, explained to the House how that £60,000,000 is made up. There were various heads in dispute, such as renewals, abnormal wear and tear, and certain other difficulties and troubles of the period of railway control, but nothing so far has been stated by the Government to indicate how they arrived at the £60,000,000, or how that great sum of money, which is to be provided by the taxpayers, is being allocated over the different heads. I confess I sympathise with one remark which was made from the other side. I am not able to understand why this matter was imported into the present Bill at all. Would it not have been better for the State to have settled its liability with the railway companies, in respect of the control period, apart from this measure? I have a strong feeling that it is imported here for the purpose of lending an atmosphere of generosity to the Bill, but however well-intentioned that may be, it is wrong practice on this occasion.

Photo of Mr Arthur Neal Mr Arthur Neal , Sheffield, Hillsborough

The hon. Member will realise that any settlement that was not unanimously accepted by the whole of the controlled railways must be the subject of legislation either in this Bill or some other Bill.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

Yes, in a separate Bill or by separate treatment of some kind, but surely not by the importation of this question, which is of the most complicated and controversial character, into a Bill designed to promote the more efficient working and organisation of the railway undertakings of the country. The conclusion which some of us have reached is that the settlement on the basis of £60,000,000 is excessive. We shall be entitled to vote against the Bill on the mere absence of information, but if we review the whole agreement, we must conclude that if anything approaching £60,000,000 is given, then the railway companies are going to enjoy a protection against, not merely control, but many of the general circumstances of the War, not accorded to other industrial or commercial interests in the country. That I believe to be inconsistent both with the Act of 1871 and with the interests of the taxpayer. The only other point I desire to raise is in reference to the question of grouping and the future organisation of the railway services. If the Bill passes into law in anything like its present form we are going to set up five or six concerns which will bear a very close resemblance to trusts. You are putting your railway undertakings into compartments, and you are providing for amalgamation, and the inevitable consequence must be, what might be called without error, the "trustification" of these concerns.

I concede every argument on the question of grouping and efficiency, or, at all events, economy. It must make for economy, but there remains the question as to whether it would not be better for the community to-day to face the unification of all our railway concerns, or public ownership, rather than this mixed and dangerous scheme which the Bill introduces. I stand frankly for the public ownership of railway concerns, and I feel that that does not require anything like the amount of argument that public ownership of other undertakings involves, because they have always worked under great statutory regulations, within more or less well defined limits, and there has always been a kind of method in the public mind by which they might be publicly acquired. This country, after all, is not so very large. I think many of the arguments which have been used in favour of the case of the Scottish railways are really arguments which should be employed in favour of the treatment of railways as a whole, and if we got that combined or unified treatment, then the path to any form of public ownership would probably be easier and simpler than it is to-day. I want to make it clear, however, in conclusion, that while we oppose the Bill, we are not necessarily in favour of any State management or control of the railway undertakings in this country in the event of their being publicly acquired. Speaking quite for myself on this matter, I can imagine no public service which lends itself better to a guild organisation, because I believe that within a system of that kind you would get the co-operation of all the people who have knowledge of the working of railway concerns, and you would get the use of all their knowledge and experience for the benefit of the community as a whole. That appears to many of us to be very much sounder than any State system.

We vote against the Bill, therefore, because it falls short in the question of representation of railway employés on the management, because it is altogether excessive in the £60,000,000 settlement which it makes with the railway companies, and because it does not provide for an organisation which will minister to the early public ownership of railway undertakings in this country.

Photo of Sir Charles Murchison Sir Charles Murchison , Kingston upon Hull East

I want to intervene in this Debate to protest against the position in which Hull will be left if the provisions of this Bill are carried out as they stand, especially in regard to the grouping arrangement. It seems to me that Hull will be the only port in England which has in the past had some benefit from a certain amount of competition, and which will now lose that benefit. Other ports in the Kingdom, perhaps, have not had competition before, and are not going to have competition in any marked degree if this Bill is carried into law, but Hull will really lose a great deal unless some alteration is made in this grouping scheme. I am sorry the Minister of Transport is not in the House for the moment, because he is personally familiar with the situation and with the difficulties with which Hull is faced. For 40 years or more Hull has successfully and persistently opposed all attempts at amalgamation between the railway companies which serve the city, and they have only been enabled to do so because of the statutory right which they have under the Act of 1880, under which the Hull and Barnsley Bailway Company was promoted. The Corporation of Hull took a very active part in promoting that railway, and they did so solely because they had suffered so much in the past from want of competition; and now, if this Bill is passed in its present form, not only will they lose all the benefits of competition, but they will lose that statutory right which they have enjoyed up till now, and which has enabled them successfully to veto all suggested amalgamations between the two railway companies. I hope the right hon. Gentleman will be willing, when the Bill goes upstairs to Committee, to accept a proposal that the grouping arrangement should be altered and that the Hull and Barnsley Railway should be grouped with the North Western and Midland in Group 3, instead of, as at present arranged, with the North Eastern Railway. There would be no territorial difficulties about that, and I think it is only fair and right that the Minister should meet us on this point.

Photo of Sir Harry Hope Sir Harry Hope , Stirlingshire and Clackmannanshire Western

It is, I think, universally recognised that a strong, efficient, and cheap transport service is essential if this country is going to maintain its position in the future against its possible competitors. Therefore, the onus rests upon the right hon. Gentleman the Minister of Transport to prove that this Bill is a Bill which will give to this country a transport service of that character. One of the main principles of the Bill is compulsory grouping. Most of us realise that there will be some saving to be gained, some economy to be effected, by the amalgamation of companies. Personally, I am ready to agree that to continue the present 102 subsidiary companies along with the present 20 constituent companies is a state of affairs which does not lend itself to efficiency, and therefore I agree that in the direction of amalgamation we may make a step forward. While, however, the Bill makes groups of companies, we see that each group will have rates so fixed that it will be able to earn the 1913 net receipts, plus 5 per cent. interest on capital brought in since 1914. Therefore, it follows that in one group there may be higher rates of freight and higher fares for passengers than in another group. What I want to bring forward is the effect that will have on Scotland. We recognise that if we are going to have higher freight rates in Scotland than in the North-East of England the trade of Scotland is going to be most seriously prejudiced. That contingency has been considered, not only by all the organised trades of Scotland and all the Chambers of Commerce in Scotland, but by the great municipalities of Edinburgh, Glasgow, Aberdeen, Perth, Dundee, and Paisley. As my hon. Friend the Member for Camlachie (Sir H. Mackinder) so well said, every one of these bodies, whether they be bodies of traders, Chambers of Commerce, or municipalities, have arrived at one unanimous decision, namely, that Scotland should be dealt with in accordance with the natural flow of its traffic. In Scotland we have large tracts of sparsely populated territory where railway traffic is small. As regards tons per route mile, we have taken from the Ministry of Transport's own statistics, No.7, the figures for the four weeks ending 18th July, 1920. We have tons per route mile in Scotland of 45,000, while in England the density of traffic is 85,000. That shows, as it were, that the density of traffic in Scotland is little more than one-half what it is in England. In that same period, on the Caledonian Railway, the tons per route mile were 58,000; on the North British Railway, 54,000; on the Glasgow and South Western Railway, 47,000; on the Highland Railway, 18,000; and on the Great North of Scotland, 12,000. Comparing those figures with the English lines, we see an enormous difference. The North Eastern had 92,000; the Great Northern, 108,000; the London and North Western, 101,000; and the Midland, 164,000 tons.

We have in the Lowlands of Scotland, in that part between Glasgow and Edinburgh—a small part of the country—the very same industries as there are in the North of England. Clydeside has the same industries as Tyneside. Unless those industries have something like the same railway rates for their products as the North of England district our Scottish trade must suffer seriously. That is why the Scottish people unanimously ask this House not to assent to the severing of Scotland from its English partners. I hold very strongly that the whole question of railway rates should not be considered as an English question, but from a national point of view. The right hon. Gentleman has told the country that it would be a very hard thing if English traders had to pay a higher rate for their products because the English lines were linked up with the Scottish lines. We look at this matter in Scotland from a national point of view, and we see that any small burden that we in Scotland might impose on England would be a very little thing indeed in comparison with the position which might be created if Scotland were seriously prejudiced and reduced in industry and work. I am going to quote a finding of the Association of the Chambers of Commerce—not the Scottish Chambers of Commerce, but the British Chambers of Commerce. They came to this resolution: No scheme of grouping will be satisfactory which is not on sound financial lines, and it will not be in the interests of trade as a whole that the prosperous companies should be grouped together and the poorer companies left to take their chance. That is a statesmanlike view to take of this situation, and we ask the right hon. Gentleman to recognise that. In Scotland we remember, as a matter of great importance, that when the Forth Bridge was built, it was not built by a Scottish railway company alone. Seventy per cent. of it was built by English railway companies. At the present time 70 per cent. is owned by the North Eastern, Great Northern and Midland, and only 30 per cent. by the North British Company. Therefore the English companies recognise the value of Scotland to their traffic, and have a practical interest in maintaining the prosperity of Scotland. On this point Scotland is unanimous, and I only hope the right hon. Gentleman will pay heed to the statements made by the hon. Member for Camlachie.

In Scotland we are much alarmed at this Bill in the same way as many people in England are alarmed. We see that an enormous bureaucratic system is being established, and that the Railway and Canal Commissioners may, as the right hon. Baronet the Member for the City of London (Sir F. Banbury) said, on the application of any body or persons representing the public or trade order the expenditure on capital account of £100,000 in each case. It would be a very heavy outlay if any group were forced to spend that sum on any one object, and several of those schemes might be brought forward. Will people put their money into railway stocks if fresh outlays of capital may be forced upon them? We shall be doing the very thing to undermine the confidence of the public in our British railways if this power is taken out of the shareholders' hands, and if they are forced to spend these monies even while their own directors may think this too great an expense to incur. We shall see how bureaucracy is to flourish when the Railway and Canal Commission may also order the standardisation of "ways, plant and equipment." The railway companies of this country will be far more likely to manage their business well if they are left to themselves than if a bureaucratic body, sitting in London, interferes and meddles in these matters. The establishment of a tribunal of such a kind as I have indicated, and the setting up of the Rates Tribunal, which is empowered to carry out many various and detailed works, as defined in Clauses 16 to 55. We say that in order that that Rates Tribunal should be able to go into all the minute details of management into which it is empowered to go, it will practically have to have a manager's staff. Here you are going to have what I call duplicate organisation, and that at an enormous cost. Who is going to pay it? We have been accustomed in the last few years to see the Government go into bureaucratic schemes and land the country into enormous expense. We are continuing that policy but with this difference. Instead of footing the bill themselves they are going to put it on to the railway companies. What will be the result of that? It means that the enormous expenditure for this duplicate organisation is going to add to the railway rates and the passenger fares. At the present time these are too high. The country cannot stand them at present, to say nothing of an increase. People in Scotland cannot take their usual holidays at present on account of the high fares. What, then, are they to say when they see officials of this new bureaucracy going to places, at their expense, that they cannot afford to go to themselves.

At a time like this, when the right hon. Gentleman is, as it were, reorganising our transport system, there is rising into being something which one would have thought he would have taken into account, and which does not appear to have been taken into account—I refer to the enormous development of road traffic by the char-a-banc. I do not know what is the case in England, but I do know that in Scotland we have an enormous road traffic of short-distance passenger journeys in development at the present time. At Edinburgh, Glasgow, Stirling, and other towns we have this char-a-banc traffic carrying passengers a distance of 20 miles, or thereabouts, at a less rate than what the railways can do it; consequently people are using these road vehicles, and not the railways The railway companies are losing that revenue. What will be the result of that diminishing revenue? The deficiency will have to be made up by higher fares and rates, and the detrimental effect of that on the general position of the railways can be imagined. This aspect of the case has been taken absolutely no notice of by the right hon. Gentleman. We in Scotland consider that the char-a-banc traffic ought to pay the county rate assessment which is for the upkeep of our county roads; that they should pay a sum equal to the damage they do, and for the use which they make of the roads. If they did so the railway companies might be helped to that extent in the lessening of the county rate assessment. The North British Railway Company pays £45,000 annually county rate assessments.

We consider that the inclusion of this £51,000,000 of money is wrong if the companies are not entitled to it. If they are entitled to it, give it to them. But apparently the right hon. Gentleman tries to help the passage of the Bill by saying to the representatives of the companies in this House, "Vote for my Bill and you will get your money: refuse me my Bill and you will not get the money." That method is contrary to British Parliamentary traditions. The House of Commons is not accustomed to that kind of treatment. Let the matter go before an impartial tribunal or a judicial authority and the railway companies would get justice and be given that to which they are entitled. It may be all very well for some companies to say, "Oh, let us get a share of what is going," but there is a difference. The Highland Railway Company is one which only works at high pressure four months out of the twelve, but during the War the plant worked the whole of the twelve months through, and that company and those employed by it carried on a magnificent work. Let every company's case be considered by a fair judicial tribunal which will allocate to it what is just. As a Scottish Member, I appeal to the right hon. Gentleman not to turn a deaf ear to the unanimous opinion of Scotland, and if he flouts Scottish public opinion in the manner he has done in the past, he will find he is doing an unstatesmanlike act. He will be showing that this is not a national settlement which will make for the development of our industries as a whole, nor looking at the question from a national point of view, but he will be trying to force upon Scotland a system which we know is unwise from a railway point of view, and it will be most detrimental to the whole of the industries in Scotland.

Photo of Mr James Kidd Mr James Kidd , Linlithgowshire

The Minister of Transport at the very outset of his speech brought forward what we all expect from a technical expert, that is figures, and he quoted as an example that the cost in Scotland was .9 per ton as against .4 in America. If his figures meant anything at all he intended the House to assume that the administration of British railways was 2½ times worse than in America. Perhaps when the right hon. Gentleman replies he will give us some other figures, and tell us how the cost of plant and capital outlay in America is so much less than it is in the Highlands of Scotland. If the right hon. Gentleman could roll out the hills of Scotland and fill up the lakes, then we might understand the comparison.

I ask the right hon. Gentleman before the close of this Debate to favour the House, and the Labour party in particular, with another set of figures. I should like to hear from him what the percentage of accidents is on American railways in regard to railway servants and the general public. I should like him also to contrast those figures with the accidents to railway servants in Great Britain and to the general public arising from railway accidents. I cannot speak with expert knowledge upon this subject, but speaking with a general knowledge of the industries in America as contrasted with this country, and with a knowledge of the mode of conducting the mining industry in America in contrast with the mode adopted in this country, I venture to say that the railway accidents in America are far in excess of the railway accidents in this country, and therefore the inference is that we attach a little more value to human life in this country and a little less to the almighty dollar. I hope if this Bill goes through, and the right hon. Gentleman undertakes the control of the railway system of this country, that he will pursue British methods and abjure American methods, even if they do return a better revenue by ignoring unduly public safety.

Speaking as a member of the public, I am entitled to ask the right hon. Gentleman what was wrong with the pre-War railway system in this country. We understand that during the War our railways had to be divorced from their natural work, and instead of running in co-operation with industry and promoting the national prosperity, they were concentrated upon the work of being auxiliaries to the fighting forces. The mere fact that they were such valuable auxiliaries is conclusive proof that in pre-War days the railway system of this country was conducted in an eminently satisfactory way. Speaking again as a humble member of the British public, and as one who is lucky enough not to be a shareholder, what grounds have I to object to competition amongst the railway companies? We have heard a good deal about the extravagance of the railway companies in the past; at any rate, the old extravagance did stimulate commerce, but I am afraid the new extravagance will strangle it. If the railway rates are fixed, how can the extravagance of the companies be hurtful to the public who are protected by these fixed rates. The right hon. Gentleman enquires how otherwise than from the public could the costs be redeemed. In the past it was redeemed by the increased energy and initiative of the old railway system, and we certainly shall not have that increased energy in the future from a bureaucratic system, and there will be no chance of redeeming losses in that way.

The right hon. Gentleman is going to set up a rates tribunal. It is only by the grace of this tribunal that the revenue of the railway companies is to be earned, and from that revenue the salaries of the rates tribunal members are to be paid. Is that not a little like putting the gamekeeper in the pay of the poacher, which is a very excellent device for the poacher, but what about the preservation of the game, which is represented in this case by the public interest. Then the right hon. Gentleman, with a kind of uneasy soul on this point, realised that personal initiative, individual enterprise, had made this country, and he tried to run in harness his new bureaucratic system with individual enterprise stimulated by profit. If the revenue of the railways is to exceed the standard revenue, then to the extent of 80 per cent. that increase is to go to the traders, while to the extent of 20 per cent. it is to go to the shareholders. Is this not our old friend Excess Profits Duty back in another form? Supposing I am managing a railway company, if I know that any increase in my revenue is to be consumed to the extent of 80 per cent., then I shall be regardless of the extra charges cast upon myself. I do not want to say anything except what is eminently respectful to the right hon. Gentleman, whose ability in a certain domain is recognised by all; but might I say this? A man may be a most excellent administrator of a railway, and yet disqualified from visualising the national view and introducing a railway system appropriate to the national commerce and the national condition. The administrative mind and the legislative mind are so separate and distinct, that I think it has always been assumed that they are mutually exclusive. That fact, at least, has been accepted so far as the Parliamentary institutions of this country are concerned, and one would like to see that fact recognised a good deal more to-day.

10.0 P.M.

I am sorry I have to return to Scotland, otherwise I should have liked to have replied at length to the right hon. Gentleman's rather elephantine humour at the expense of our common country. I just, want to say, before I leave, there is a proverb that says, "It is an ill bird that fouls its ain nest." I would only say this further word. I listened to the excellent speech of the right hon. Baronet (Sir F. Banbury) in which he referred to the promises that were given to us when the Transport Department was set up. When I contrast those promises with the achievement of to-day, I recall the lines, By the rubbish in our wake,And the noble noise we make,Be sure, be sure, we're going to do some splendid things. Many ardent supporters of the Government are left by the Bill to make the choice, loyalty to the Government or duty to their country. When I think of the way in which the right hon. Gentleman has jettisoned the Northern part of Great Britain, and jettisoned the various enterprises which have opened up the Highlands to everybody—Highlands which, under his rule, would have remained a close preserve, except to the man enjoying the luxury of a car—when I think of all that, then I have only to say this, in bidding "Goodnight" to the right hon. Gentleman. I have decided to make my choice, and, if it is possible at all, by any effort of mine, to defeat his Measure, I shall certainly do so.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Ladywood

The Minister of Transport, in the course of his speech this afternoon, expressed in rather strong terms his view that a great mistake was made by the chairman of the companies and by representatives of the unions, in waiving the idea of representation of working men upon the boards of the companies, and the hon. Member for Central Edinburgh (Mr. W. Graham) has told us that that claim is not waived by the railwaymen, and that, as a matter of fact, that representation is one of the grounds on which his party is going to vote against the Bill. I have a good deal of sympathy with the idea that the direction of great industrial concerns should not be the monopoly of any one class. I think it is easy to see that the presence of working men upon a board might be helpful to their colleagues, by giving them an insight into certain things of which otherwise they would not have any perception, and I am quite certain, on the other hand, that it would be a great education for working-men members of the board, who would in that way get to understand some of the difficulties by which directors are confronted. But, in spite of the attractive features of working men being directors, I must confess I have never yet been able to frame any plan which, to my mind, did not offer just as great possibilities of mischief as of good. How are these directors to be appointed? Are they going to be appointed by the shareholders? If so, they are not doing what they are sent there to do. They are not representing the men. If, on the other hand, they are appointed by the men, they are placed in a different position from all the rest of their colleagues. They are appointed by a different body, and inevitably you would get this result, that they would be regarded and judged by their constituents according to what they were able to get out of the board for them. That seems to me to put them in a very invidious and an unfair position, and, therefore, although I do think that working men will be found on boards of directors sooner or later, I hope that the first experiment in that direction will be somewhere less in the limelight than would be the case of railway directors.

I merely rise to put another aspect of this Bill before the House. I have noticed that when a particular subject occurs too frequently in the speeches of an hon. Member, the time arrives when he gets to be considered by the House as a crank, and his opinions on a subject are apt to be discounted, and to carry little weight. For that reason, I would have been glad if somebody had risen to point out what may be the effect of this Bill upon the canals and inland waterways, but, just for the same reason that my Noble Friend the Member for Hitchin (Lord R. Cecil) always has to mention the League of Nations in every speech he makes, I have to raise this subject tonight, because there is no one else who cares enough or knows enough about it to do so. I listened very carefully to the speech of the right hon. Gentleman, and I noticed that the word "canal" only occurred in it once, when he was referring to the fact that the railways and waterways were in difficulties. Yes, they are in difficulties, and the right hon. Gentleman is doing his best, by means of this Bill, to get the railways out of the difficulties. But what is he doing to get the canals out of their difficulties? I suppose he regards this Bill, and justifiably so, as the coping stone of his work at the Ministry of Transport, and I want to express the hope that in the few months of office which yet remain to him he will take into consideration the future of the canals, and that he will justify his position as Minister of Transport and not as Minister of Railways, by attempting to frame an outline of legislation which will assuredly be necessary for the canals sooner or later.

What is the position of the canals to-day? When I speak of canals I hope hon. Members will understand I am speaking of all inland waterways, which include the great navigable rivers of the country, the conditions of which approximate to those on the Continent. The charges which are made by these waterways are those allowed by the Order Confirmation Act, 1893–94, supplemented by the additions permitted by the Minister himself under the Ministry of Transport Act. These charges are to continue until February, 1923. But what is to happen when that date arrives? Unless some further legislation is ready, the waterways will have to go back to the Order Confirmation Act, 1893–94, and to their pre-War charges, and I need hardly tell the House that that spells bankruptcy for them. This is not an occasion for me to sketch out any future policy with regard to canals. I do not suppose I should be in order if I attempted to do so. But, in my judgment, the principle adopted by my right hon. Friend in this Bill with regard to the railways, the principle of arranging them in groups, would be a proper system to adopt with regard to the waterways. Although the conditions affecting waterways are different from those affecting railways, and therefore certain other matters will have to be introduced to make the grouping somewhat different from the railway grouping, yet I think that that is the method which sooner or later will have to be adopted with regard to canals. That, however, is a matter for future legislation to which I would like my right hon. Friend to apply his mind.

I want the position of the canals and waterways safeguarded under this Bill so that it shall not be possible for these new and very powerful groups of amalgamated railways to crush out competition by waterways before they are established in a secure position. The waterways have had rather rough usage from the railways in the past. One-third of their length is either owned or controlled by the railways which use their power in order to block the development of the waterways. The railways have adopted a process which I think I may fairly compare with "dumping" by foreign manufacturers so often referred to in this House. They have given special and exceptional rates, sometimes below cost, and they have actually given free service-cartage, warehousing, and so on, where there has been competition with waterways. Although it is very natural that traders should welcome these advantages, and make the most of them, and not be desirous of seeing them brought to an end, yet I submit the time has come when, if these things are to continue, the traders should see where they are going to lead them, should understand the object with which these concessions are made, and should appreciate the results which will follow if the object is attained. There are two safeguards which I would like to see introduced into this Bill in order to protect the position of the waterways pending further legislation. The first concerns the question of exceptional rates. What does this Bill do about exceptional rates? It provides that existing exceptional rates are to be first of all adjusted so as to bring them up to bear the same proportion as the new standard rates to the old class rates, and these adjusted rates are to be continued for a period of 12 months. At the end of 12 months they will cease to operate, but there is a proviso that if any trader asks that the rate shall be continued and the companies raise no objection, they will automatically be continued. But there is no notice to be given to any other body, and especially to the waterways, and they are not empowered to raise any objection to the continuation of the rate. The first safeguard I ask for is that, before the rates are continued by agreement between the trader and the railway, it should be possible for the inland waterway to be heard upon the question which shall be decided by the new Rates Tribunal. Then there is the case of new exceptional rates. Any new exceptional rate is to be reported to the Minister and may not come into operation for 14 days. The Minister can refer the question of the new exceptional rate to the Rates Tribunal, but there is nothing in the Bill which directs him to hear any objection on the part of inland waterways, and I submit some provision ought to be inserted under which a competing waterway should have notification of the proposed new exceptional rate, and should also have an opportunity of making a case before the Ministry or before the Rates Tribunal. The third point has reference to the variation of existing exceptional rates. A variation cannot take place unless it is approved by the Rates Tribunal. Under Clause 68 there is a list of bodies which have a locus standi before the Board and before the Rates Tribunal, but the waterways do not appear among them. That shows that the canals have, as usual, been forgotten. That is my first point with regard to exceptional rates.

My second point concerns the position of railway-owned portions of canals. It is perfectly obvious that the future of canals lies in the direction of grouping the various undertakings, and one cannot leave out of account these railway-owned canals, which not infrequently form a section of a through route and an important section. These should be taken from the railways and given to the canal groups. Experience teaches us that although frequently canals are a serious loss to the railways, yet the latter will oppose their being taken away from them because it will add to the power of the competing canal group, and enable that competition to be carried on which they desire to avoid. It would simplify the formation of these canal groups in the future if the right hon. Gentleman would insert in this Bill a provision that in the event of a proposed transfer of any railway-owned part of a canal to a trust or body of Commissioners, that transfer should not be opposed by the railways except on the matters of terms. I think a provision of that kind would not be out of place in the present Bill in order to safeguard the waterway. These points which I have ventured to put before my right hon. Friend are not really Committee points. They will require attention in Committee, but they do raise the whole subject of the future of canals, and the possibility of erecting them into a national instrument of transport, as they ought to be. I hope, therefore, that my right hon. Friend will treat them with sympathetic consideration, and that, when we come to the Committee stage, he will give his favourable attention to the possibilities of amending the Bill on the lines which I have ventured to suggest.

Photo of Mr Leslie Scott Mr Leslie Scott , Liverpool Exchange

Before I deal with an analogous subject to that with which the hon. Member (Mr. N. Chamberlain) has just been dealing—namely, coastwise traffic—I should like to say a few words on the general position with regard to this Bill. I cannot help thinking that, in some of the speeches to-day, sight has been lost of the fundamental fact of the present position. That fundamental fact is that the position of the railways at the present moment is quite unprecedented in the history of this country. As a result of the War, and it may be as a result partly of Government action in rela- tion to the railways, the railways at the present minute, in the absence of an arrangement such as we have in this Bill, would be handed over in a month or two's time bankrupt, in a condition in which the capital would be practically lost to the whole of their shareholders, and a financial crisis of the first magnitude would be produced in this country. That is the first broad fact. The second broad fact is that for many weeks past we have been in the throes of one of the greatest industrial disputes that this country has known in one of its great trades; and there was plainly every chance of a similar dispute breaking out upon the railways unless some means could be taken to bring the owners and the men together on terms acceptable to both. These two fundamental facts had to be dealt with somehow; and there is, in addition, another important fact, although it is not so critical as these two. Before the War we were all very much alive to the fact that the competition between the different separate undertakings in this country was not leading to efficiency, and was leading to waste.

In these circumstances, what was the Government to do? Some speakers have suggested that it was the part of the Government to stand by, not to negotiate, but to leave this House to make what legislation it thought fit, without any preliminary arrangements with either the men or the railway companies. The railways have been in the possession of the Government throughout the War, and for practical purposes, from many points of view, have been, as it were, Government property or on lease to the Government; and the time was coming for them to hand the railways back to the real owners. In these circumstances, was not it natural that the Government should, if possible, try and come to an arrangement with the owners of the railways which would be acceptable to them, before coming to this House to put before it their proposals for legislation? Had they not done so, had they not negotiated with the owners, and ascertained what the owners were willing to do, would not this House at once have said to the Government, "What is the use of coming here without having ascertained in the least what the owners are likely to be willing to accept?" To complain of the Government having made a bargain shows, I venture to think, a want of perception of the practical politics of the whole situation. If that be true, and if there be, therefore, a valid answer to the criticism that the Bill is founded upon an agreement, does not the corollary also follow that, since the Bill does represent a Parliamentary agreement with practically the whole of the railway companies—

Lieut.-Colonel A. MURRAY:

Except Scotland.

Photo of Mr Leslie Scott Mr Leslie Scott , Liverpool Exchange

Except Scotland, I should say. I have, however, just a percentage of Scottish blood in me, and that leads me to think it quite possible that, in the Committee stage, the Scottish Members, on behalf of the Scottish railways, will come to some suitable arrangement with the Government, and for that reason I am not so despondent as to hold that there is a prospect of the Scottish antagonism continuing without any possibility of compromise. With that exception, and with the exception of the much-respected chairman of one of our great railways—and with the exception of him alone—the big railways of this country are, for practical purposes, agreed that the settlement contained in this Bill is a very fair, workmanlike, politic, and economic settlement of the whole difficulty. That is the broad fact of the situation. Let us see where we are. I am not without knowledge of the attitude of the railway companies to the very important question of their claims upon the Government in the event of the companies' concerns being handed over to the companies without any arrangement. Whatever figure be the right figure at which those claims would in the result after the most protracted legislation, have been assessed is a matter of minor importance. The broad fact is that the railway companies thought, and not without much reason—it is not the part of a lawyer to say good reason, but not without much reason—that they had claims against the Government vastly in excess of the figure at which the Government have very successfully settled those claims. Under these circumstances, with the prospect of endless litigation and grave disputes with the men, is it not a matter of immense congratulation to the whole nation that the Government is able to say, "We have arranged with the companies and the companies have arranged with the men"? That is the broad, big, dominant fact of the present situation. It is said this Bill is bureaucratic in character, that it is going to continue bureaucratic control in an intensified form when it is brought into application. I challenge that proposition completely. I say it is untrue. Bureaucratic control, as I understand it, means control by a Government Department interfering with the management of an industry. That, fortunately, the years of war, and more particularly the years since the War, have taught the whole nation is bad, and if the Government were inclined to play with the accursed thing in 1919, as was suggested by the right hon. Gentleman (Mr. Clynes), should not we rejoice that since 1919 they, with the nation, have learnt better, and to-day, whatever they thought then, they say: "We do not want internationalisation, we do not want bureaucratic control, and if there are any elements of bureaucratic control left in this Bill, which are really bureaucratic control and not merely proper safeguards to the public, take them out in Committee." The undertaking given by the right hon. Gentleman to-day seemed to me one of the most satisfactory undertakings on the question of policy, of the greatest importance to everyone, that I have had the good fortune to hear from that Box, and if that is the true character of this Bill, as I certainly think it is—

Photo of Mr Leslie Scott Mr Leslie Scott , Liverpool Exchange

I regret immensely that for the first time during the many years I have sat in the House with my right hon. Friend I have the misfortune to differ from him. He and I always think alike on everything. But, for all that, let us test the Bill for a moment. What is the criterion? Where a Government Department is given discretion upon its own judgment to control an industry, that is bureaucratic control. Where an industry is submitted to certain controls of an independent tribunal acting judicially that is not bureaucratic control, and where you have a monopoly which cannot be exercised except under statutory powers, Parliament, in conferring a monopoly, must, as it seems to me, for the protection of the public at large, impose certain limitations in the way of a control by an independent tribunal to see that the exercise of the monopoly does not injure the public. That is the principle that has been accepted by Parliament ever since the initiation of railways in this country. The Railway and Canal Traffic Courts which followed, first of all, the High Court in 1834, exercises control over rates, traffic, and a number of other things, and that is the only kind of control that there is in the Bill. The Minister says that if there is any other control he will take it out in Committee.

Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

Then he will have to take out all the Clauses.

Photo of Mr Leslie Scott Mr Leslie Scott , Liverpool Exchange

My right hon. Friend will have an opportunity of advancing that argument clause by clause and line by line throughout the Committee.

Photo of Mr Leslie Scott Mr Leslie Scott , Liverpool Exchange

Then I will take a back seat. So much for the general merits of the Bill. With respect to the labour agreement which is referred to in the Bill, which I understand is in process of ratification and is being worked out at the present time, you, Mr. Speaker, must feel a parental pride in seeing the institution in this great industry of the councils which so deservedly bear your name. In addition there is a prospect of a permanence of peace, due to the character of the machinery that is being worked up. It would not be right to go into details, which have not yet been made public, and which have not yet been completely ratified, but I think the nation is entitled to congratulate itself on the prospect of machinery in a great industry which is likely to prevent the recurrence of bad disputes or, at any rate, to prevent the happening of disputes without considerable notice in advance of the dispute, so that public opinion may have an opportunity of operating and the disputants may have an opportunity of coming to an agreement before the dispute has produced wide divergence. The right hon. Member for Platting (Mr. Clynes) referred to the question of representatives of the men being directors on the Boards. I do not propose to go into the merits of that proposal, but I agree entirely with the views expressed by the hon. Member for Ladywood (Mr. N. Chamberlain). I do think it important that the House should know exactly the attitude of the railway unions in regard to that matter. The "Railway Review," the weekly paper of the railwaymen, published on 20th May, that is only a few days ago, contained this passage:

"NATIONALISATION REJECTED.

The Government has not seen its way to nationalise the railways, although it was prepared, even against the decision of the railway companies, to provide for the representation of employés on the boards of directors. If the railway system were a public service the N.U.R. would desire to share with Parliament the responsibility of control and management, but with private enterprise, controlled by shareholders, the position is quite different. It will only require a little reflection to realise that the position of representative employés on the boards of directors which were running the railways primarily for dividends and only secondarily for the public service would be untenable."

That is the considered view of the N.U.R. in this matter, and that being so, it would be the gravest mistake of policy if the Government were not in this Bill to adhere to the view that the Bill is based upon an agreement, and that the men have willingly and without pressure consented to the terms of that agreement, which include the provision that there should be no representatives of the men as directors on the boards, and particularly in view of the fact that the companies have, quite candidly, opposed any such proposal. If the Government Whips were taken off and it was permitted for the House to vote freely in this matter of directors, and if by chance—I think it unlikely—there were a majority in favour of the men being directors on these Boards, it would rip up that agreement which has been made, which to my mind is so vital a necessity to this country and is so great an achievement in the difficulties of the present position, and I for one would express a very strong hope that, as a definite agreement has been come to between the owners and the men, the matter should not be allowed to be reopened to the possible prejudice of this Bill which to my mind is so important to the country.

I say no more on the general question, but if the House will bear with me for a moment I would like to refer to a matter analogous to that which was referred to by the last speaker—the question of the coasting trade. The Minister of Transport is responsible under the Ministry of Transport Act for all transport services, and, though he is not responsible for the shipping, yet he is responsible for promoting no policy and no legislation which would have the effect of damaging our shipping. That being the position, what is the position as regards the Bill? There is not a single word in it on the subject of coastwise shipping, but it is the fact that the competition by the railways, through exceptional rates, has brought the coastwise shipping of this country nearly to a standstill. Even as long ago as 1919, on the Third Reading of the Ministry of Transport Bill, the right hon. Gentleman, then Minister Designate, said this: Many hon. Members are familiar with the position of the coastal traffic of this country. It was, roughly speaking, I think about 70,000,000 tons a year. To-day, on account of the subsidy to railways—because that £60,000,000 is a subsidy—the coastal traffic is practically dead, and the 70,000,000 tons, or such part of it as under present disturbed industrial conditions it is desired to move, and there are large quantities, cannot be carried coastwise because consignors cannot afford to pay the rates which the coastal steamers demand when they can send it at lower subsidised railway rates. A very large proportion of the 70,000,000 tons of coastal traffic is to-day waiting to get away, on the railways at the lower rate and all coastal business is dead. That is a bad thing. It is stopping the development of trade, and it is killing a very valuable and important business. After all, our coastal traffic corresponds to the water-borne traffic on the great waterways of Europe. We have not those waterways, but we have the sea around our coasts, and that is really the comparison. That traffic is dead to-day because the railways are subsidised."—[OFFICIAL REPORT, 10th July, 1919; col. 2075, Vol. 117.] It is dead still. The Railway Rates Advisory Committee, presided over so ably by my friend Mr. Gore-Browne, in its Report issued last December, says: The foregoing shows that it is of first rate importance that the exceptional railway rates which were brought into operation to meet competition by water should not be continued or form the basis of new rates if carriage by coasting vessels or canals is to be preserved, which in our opinion is essential. The shipping involved in the coastwise trade is a very important one, and the preservation of alternative rates from port to port is of great moment to the trading community. However, we do not think that the railways should be free from the wholesome incentive to efficiency afforded by coastwise competition. As the House knows, from our great ports, where the ocean steamers arrive, only half the goods go by the railways. The other half goes to smaller ports by coastal steamers, or they so went before the War. If you in any way paralyse the coastal trade you at once get congestion at every one of our great ports, the railways are congested, everybody suffers, and the small ports are starved out of existence. Of course, in the case of emergency, such as was in prospect a few weeks ago, when it might have been necessary for the Government suddenly to feed the whole population, the services of the coastal steamers would have been imperatively necessary. Sixty per cent. of the population of the country live within 15 miles of one or other of our ports. It is vitally important to get the coastal trade in operation again. We find, in fact, that less than half of the trade that was running in 1914 was running at the end of last year, and to-day, I believe, the proportion is still less. The Rates Advisory Committee reported that it was essential to raise these exceptional rates. The shipowners have been in consultation with the Ministry on the subject. The answer was that to deal with these rates would occupy a staff of about 400 railway clerks for four years. I asked a question as to whether any temporary relief was possible and the answer was that further advice from the Rates Advisory Committee had not been received. I asked to-day what provision was contained in this Bill for dealing permanently with the situation, and the answer I got—a true answer—was that the provisions are contained in Part III of the Bill, which deals with the fixing of rates. Therefore, we have it quite clear that there is nothing in the Bill expressly directed to that purpose. Cannot something be done? I agree that a short cut by means of the raising of rates may be impracticable. I express no opinion on that. But can nothing be done? There are two things which can be done. The Bill should contain an express enunciation of the principle that if a rate is so cut as to create unfair competition with the coastal trade that should be a ground for opposing the exceptional rate; and, secondly, that shipowners affected by the proposal for such an exceptional rate should be given the right of audience before the Rates Tribunal—a right to be heard and nothing more.

What do I mean by unfair competition? In this context I understand it to mean this: If the railway companies are carrying at a rate which is actually less than the cost of carriage, that is unfair competition. I go one step further. If the result of the exceptional rates is to put an unnecessary burden on the traders who pay the ordinary standard rates, primâfacie that is unfair competition, and wrong. It is not right that the railway companies should cut exceptional rates for the purpose of competing with coastal traffic at the expense of inland traders who have to pay the ordinary rates. Thirdly, it is unfair competition if the objective of that competition is to destroy a competitor. In that category I would mention the notorious facts in connection with the canals of this country. We know that the canals of this country have been put out of action by competition of this kind. When we are trying to co-ordinate our transport services for the general advantage of the community I submit this principle is one which might be properly enunciated in a Bill, possibly affecting other services besides that service which is its immediate subject. I ask the right hon. Gentleman if in Committee he will have a Clause inserted to make this a relevant matter for consideration by the Rates Tribunal when that body is dealing with proposals for exceptional rates, and also to concede the right of audience I have suggested. There is a good deal to be said for the view that the proposal to substitute standard rates will operate towards solving this problem. The Bill says that standard rates are to be fixed at such a figure as will produce a certain given income, namely, the 1913 net income. If standard rates are so fixed, as to produce just exactly that income, then, if exceptional rates are granted, the result, necessarily, will be to produce an income below the 1913 net figure. Consequently, there will be a stronger incentive to the railway companies to avoid exceptional rates than they have had in the past. The position of the coastal trade is so serious, however, that definite steps should be taken, on the lines I have indicated, in the Bill itself, apart from the tendency of the proposals. One other subject to which I wish to refer is, the position of the railway docks in this country in relation to the docks of our public trusts. Under the Bill, I understand it is intended to give dock authorities a right of audience before the Rates Tribunal, but I suggest that should be made clear. Conservatory authorities and dock authorities have, I believe, a right of audience before the Railway and Canal Commission Court, and they should be given the right of audience before the other tribunals concerned, such as the amalgamation tribunal and the local advisory committees which constitute the conciliation boards. No harm would be done, because they already have the right for certain purposes, before the Railway and Canal Commission Court, under the Act of 1888. I also submit that in the statutory accounts which have to be kept in addition to the revenue account, there should be a separate account for railway dock concerns. It is essential to know the separate costs of the railway dock concerns, because they may compete unfairly with the concerns of the public trusts. If the trust dock authorities know what is the financial position of the railway docks and have the right of audience on questions of rates and so forth, the fear of unfair competition between the railways and the dock authorities will be, for all practical purposes, removed. A great many representations have reached me on the danger of abolishing exceptional rates because of the risk of taking away from individual traders or concerns the rights which have been granted to them in the past and upon the strength of which money has been invested. We all recognise that there are cases where it would be confiscation summarily to raise a rate granted under these circumstances without compensation, but I venture to think the provisions of the Bill for the full discussion of such matters before the Rates Tribunal, together with the right of audience to the persons affected, should prevent injustice being done on those lines, and, subject to that, I cannot help feeling strongly that the general standardisation of rates and the abolition of these millions of exceptional rates on the lines indicated by the Rates Advisory Committee, and contained in the Bill, is a policy which will be for the advantage of the nation as a whole.

Photo of Mr James Gilbert Mr James Gilbert , Southwark Central

There is one point to which I would like to draw the attention of the Minister of Transport, and that is a matter which affects very much the Port of London Authority, of which I happen to be a member. Any improvement or change in railway facilities must affect the facilities of the great Port of London, where we deal with something like 1,500,000 tons of goods over what are called the dock railways, and we have to rely on the other railway companies who have running powers in and out of the docks in order to deal with a large part of that traffic. I am only anxious, if I can, to obtain the sympathetic consideration of the Minister of Transport to Amendments which will be put down for the Committee stage in order to make the position of the Port of London Authority clear, and I feel confident, from the interest which the right hon. Gentleman has taken in the working of that authority, that he will give those Amendments his careful and sympathetic consideration. For upwards of 40 years goods for export from the docks have been carried at an inclusive charge from manufacturers' premises in the country to alongside the ship, to the great benefit of the export trade and of the port. Further, in the past all the docks in the Port of London have been grouped, with the result of the rates being the same. Traders are not required to concern themselves with the particular dock at which to load or to discharge a cargo. The docks are situated in different parts of the river, but we get a through rate to any of the docks in London. The reason why I raise these points is that we are advised that the standard charges under the Bill appear to be station to station rates, and cannot, therefore, cover railway services on the premises of the Authority, but only services on the undertakings of the amalgamated companies. Furthermore, under the Bill the railway companies are limited to performing collection and delivery services and to charging for such services by road only. In the case of traffic to the docks, terminal services of loading, etc., are not performed by the railway companies on their own undertakings, and cannot presumably be the subject of a charge by them. I do not think I need add any more to these details, because I am certain the right hon. Gentleman will appreciate the points that I am raising and that it is very necessary, if we are to continue the import and export trade of the Port of London, that we should get these facilities for through rates and for the railway companies collecting any dock charges that there may be on certain goods which are being sent through the Port of London Authority. If I can get the right hon. Gentleman's favourable consideration to Amendments put down with the object of protecting the Port of London Authority on these points I shall be very grateful indeed.

Another matter, in which I have taken some personal interest, is that of the Committees to be set up to deal with labour, under Part IV of this Bill, which are referred to in Clauses 56, 57, 58, 59, and 60. Clause 60 specially exempts the men to whom the Central Wages Board shall not apply, and Sub-section (a) mentions, men employed on or about the manipulation of traffic on railways of the railway companies hereinafter mentioned, other than men employed wholly or mainly in a clerical or supervising capacity, or as police officers, dockmen, seamen, shopmen, or artisans. The men in whom I am particularly interested are the police officers who serve the railway companies. Hon. Members will remember that there has been quite a revolution in the remuneration and terms of service of the civilian police of this country during the last two years. A Committee was set up, called the Des-borough Committee, which made strong recommendations as regards the pay of the civilian police and their terms of service, but the recommendations of that Committee did not apply to the railway police.

Under their terms of service the railway police are not allowed to belong to any trade union. Therefore they are very anxious that some body should be set up to protect their interests in the various railway companies. They suggest that the best way of dealing with their particular case would be to establish a police federation on the same or similar lines to that set up for the civilian police. The Civilian Police Federation deals with the question of wages and duties, and the various points which arise in employment of that kind. The right hon. Gentleman did a very great deal last year, by the establishment of a Negotiating Committee, representatives of the railway police and the railway managements, in assisting the railway police. In view of this Bill, the men are very anxious that the Government should set up a special committee to safeguard their interests. The railway police have practically to deal with all other classes of railway men. Their duties are very difficult to perform—probably more difficult than those of civilian police. They have to watch and control other railway employés, working alongside them, and in small provincial towns these railwaymen are very often their neighbours. Hon. Members know that a great amount of pilfering has been going on on the railways since the War, and the railway police have often to arrest their co-workers. A great many points have not yet been decided by the negotiating committee. Amendments will be put down to this Bill suggesting the establishment of a federation on the lines of that of the civilian police, and I hope the Minister of Transport will look upon them with the same sympathy which he showed in regard to the question of the negotiating committee last year, and will accept the proposal for a Railway Police Federation. I believe you have an extremely able body of men in the railway police service. We want the type of men that does this class of work to be of a good class, above suspicion; and the way to get that type of men for the whole of the railway service is to have a federation that will satisfy the police officers of the railway service. The matter was first taken in hand 12 months ago. I believe it was found that the various railway companies had different terms of employment and different rates of wages. The rates of pay and practical duties of the civilian police have been standardised all over the country. The Home Secretary said a few months ago that standardisation was good for the civil police. If so, I respectfully suggest it is also good for the railway police. I hope the Minister in charge of the Bill will favourably consider the Amendment, which will be put down with the object of setting up this Railway Police Federation.

Motion made, and Question, "That the Debate be now adjourned," put, and agreed to.—[Mr. Lambert.]

Debate to be resumed upon Monday next (30th May).

The remaining Orders were read, and postponed.