Orders of the Day — Railway Freight Charges (Increase)

Part of the debate – in the House of Commons at 12:00 am on 10th May 1950.

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Photo of Mr Alfred Barnes Mr Alfred Barnes , East Ham South 12:00 am, 10th May 1950

In what way could these two people, whoever they may be, alter the facts of the situation? That is the point we must consider. All that represents is a policy of delay. That is what hon. Members opposite desire—a policy of delay to place the railways in an increasing difficulty, so that they can use that and point to it as the failure of nationalisation. Is that a good position to adopt, in a business issue of this kind, where receipts cannot possibly cover expenses, because the expenses are on a price level of 125 per cent. over pre-war and one's own price level is based on receipts of 55 per cent. over pre-war? I suggest to the right hon. and learned Gentleman that all he proposes is to bring in people from industries whose price levels are above those of the railways to examine the problem of the railways. That is what this question comes down to.

I take it that these people are not out of work, but are in business. They cannot be engaged in the railway business unless they are already officers of the railway system, and I therefore assume that they must be engaged in private business and with some experience of railway administration in the past. If they are engaged in private business now, let the right hon. and learned Gentleman quote me any industry whose prices are not higher than those of our railway industry. What case can be made out for bringing persons from industries whose charges are higher than those on the railways to show them how to get their costs below the economic level?

In this instance, of course, what we are now doing is due to the fact that, for seven years, Parliament or the Government, which controlled the railways, did not adjust their price levels to the existing levels. This is the final stage in that process, and it was provided for in the Transport Act. It was recognised in the Act, when it was passed through Parliament, that before the new charges scheme could come into operation circumstances might arise which would necessitate the adjustment of the existing charges and Parliament, in the Act, made the provision necessary for this situation.

Hon. Members have stated repeatedly this evening that the increase of 16⅔ per cent., and the revenue of £26 million which it is estimated to yield, will not wipe out the deficiency and the cumulative deficiency on British Transport account. It has never been suggested that it would. It had always been made plain, from the time when I first announced the request of the British Transport Commission for the use of this machinery for that purpose, that all it is designed to do is to prevent the loss accumulating, because, if losses accumulated to too high a figure, they would destroy the efficiency of the charges scheme.

It is not for the purpose of liquidating the whole of the existing loss of the Commission; it is for the purpose of safeguarding the situation, which was apparent in the speeches delivered both by the hon. Baronet the Member for Abingdon and the hon. Member for Merioneth (Mr. Emrys Roberts). Their major concern was that when the charges scheme did come along it would, in fact, remove very substantially, if not completely, the anomalies that existed in our railway rates schemes in the past. We have always made it plain that the 16⅔ per cent. is designed to secure sufficient revenue to prevent the cumulative loss destroying the whole efficiency of that scheme. I want to emphasise that this only applies to the freight side of the industry, and does not represent any increase in passenger fares.

Now I come to the question of a subsidy. The problem of the permanent way and a subsidy was thoroughly considered before the final decision was made to propose, by these Regulations, an increase of 16⅔ per cent., and I have never hesitated, in all the discussions which I have had on this subject when it has been before Parliament, to express my own opposition to a subsidy for the railways. After all, a subsidy does not remove the charge from the industry; it merely removes it from the users of the service to the taxpayers. I took the view that the hardness of the Budgetary position is just as much a difficulty in our economic situation as is a charge of this description, imposed direct on freights. I suggest—and I have noticed in HANSARD— that not one Member opposite, however much he has criticised this proposal, has advocated a subsidy in place of increased charges. The whole of the Opposition's case has been one of hopeless delay by an inquiry. None of them is prepared to face the issue of either a subsidy or increased charges.

There is a further reason why I am opposed to a subsidy for the purpose of meeting this difficulty. The charges scheme is designed, eventually, to put both road and rail transport in this country on an entirely different footing—and a permanent footing—from what it has been on in the past. I am satisfied that once a subsidy is given to a service of this kind, all sorts of difficulties that ought to be met by economies and by efficient management would probably be sacrificed to the idea of a subsidy. Not only that: this Debate, and the consideration of the incidence of an increased charge, bring to bear on the problem of economies and efficiency public opinion, Parliamentary opinion, and Press opinion.

With regard to nationalised services, I think we get a better result by facing up to a problem of this kind in the way we have tonight. Despite our differences of opinion, I am confident that, in that way, we ultimately get a sounder economic system in the country. By the fierceness of our Debates and by bringing the searchlight of public criticism to bear on the administration of any public service we get, as I say, a sounder economic system than by attempting to bury the problem in the form of a subsidy. In this case, the subsidy would take the form of the Treasury meeting the interest charges on the compensation given to old railway shareholders. I am satisfied that every time railway workers attempted to improve their conditions in order to keep them in line with the general movement of improved conditions in the country, they would find that the effect of a subsidy, its cost on the Budget, and the fact that it represented the payment of interest on the capital item of compensation, would have a very injurious effect on our railways.

I now come to the problem of efficiency. Apart from the fact that an inquiry would represent delay, no evidence has been submitted to the Consultative Committee, certainly not in this Debate today, to prove the inefficiency of the Transport Commission or of the Railway Executive. Members opposite have no right, in my view, to demand an inquiry into the administration of a public body of men unless they can produce some evidence to show that such an inquiry is desirable. I took the precaution to circulate in HANSARD a series of figures representing the normal test that any person could apply to any administration so that members of the public, or anyone else, could decide for themselves whether there was efficiency or inefficiency.

Today, not a single Member opposite has attempted to bulid up a case on any of those figures, or has made any reference to a single figure or fact contained in that information in an endeavour to prove any of them incorrect. Why have they not done that? The figures were all set out in detail. If hon. Members opposite could have upset those figures, they would then have begun to build up a case for an inquiry They have entirely ignored all the facts which the tribunal and I and my advisers have considered, and the tests we have applied as to whether an alternative is necessary.

Let me give the House a few of these figures. Like the hon. Member for Monmouth I do not enjoy, or appreciate, quoting many figures to the House, nor do I like talking at undue length. Nevertheless, I feel it is essential tonight that I should mention certain figures. I have referred to the fact that costs have been steadily rising against the railway administration. No one denies that.

What is the best test we can apply to any business or any management if they are facing rising costs? It is: Are they exercising within their general administration the utmost economy against an adverse factor of that kind? The test of the overall position is the overall expenses. Despite improvements, the total expenses of British Railways have remained relatively steady—£311 million in 1948, £312 million in 1949 and the estimated figure for this year of £314 million. In three years the total expenses of railway administration have gone up only 1 per cent. as against the general rise in prices of all goods bought outside. That is the position which hon. Members opposite have to upset if they wish to level an accusation of inefficiency against a public concern and ask for another inquiry. They have been unable to do so.

Let me take another aspect to prove, as I contend, that we are liquidating the final responsibility of Parliament towards the railway industry. The total passenger and freight receipts in 1947, when the Transport Commission took over, was £349 million on the basis of present charges. These have progressively declined until, in 1950, they are estimated at £319 million—a loss of £30 million. That is the crux of the whole situation. It has been the decline in the revenue of the railway undertaking that has produced these losses. If hon. Members have come in late, and have not had the advantage of hearing the whole argument, they cannot complain now if I attempt to answer some of the criticism that has been levelled. From 1947 to 1950 Government traffic declined by £21 million from £54 million to £33 million. That £21 million represents the final stages of the abnormal war traffic channelled through the railways and obscuring their position. This decline in Government traffic represents £14 million of passenger traffic and £7 million of freight. In the case of freight receipts in that period, they have kept remarkably steady.

That shows it has not been a decline in commercial traffic, or freight traffic, which has caused the difficulties on the railways. As a matter of fact, it has only declined from £183, million to £180 million, a net loss of £3 million, whereas the Government freight traffic declined by £7 million. Passenger receipts in that period fell altogether by £26 million. Of that, £14 million represented a decline in the Government-sponsored passenger traffic, and £12 million of it was represented by a decline in civilian traffic.

I suggest that when one faces a situation of that kind no one can prove that, so far, there has been any considerable loss of volume of traffic to the railways either through inefficiency or through any other process which they may have adopted. But I want to emphasise this other point to show the difficulties which the railway management have had to face. In this period during which, owing to investment control and restriction, the railways have not been able to modernise their service, have not been able to build the coaches they require, so as to be able to go out and compete for traffic. Then, in 1947, we had the fuel crisis, as a result of which, by direction, we had to cut services by 10 per cent. While all these difficulties were facing railway managements, and other sides of my Department, the records show that road transport services, i.e., scheduled public services, in that period expanded by 7,300,000 miles a week. I want to emphasise these points.

Hon. Members often accuse us of trying to build up a monopoly. They talk about our "throttling "and handicapping the roads. The figures I am giving show that in this period, when the railways were suffering from severe handicaps which largely sprang from national requirements and from political circumstances and Parliamentary control, the road passenger services expanded by 7,300,000 miles a week. I have excluded the London Transport services from these figures.

Now I want to turn to the impact of this 16⅔ per cent. increase on industrial costs and on the cost of living. I want to say——