British Transport Commission (Annual Report)

– in the House of Commons at 12:00 am on 29 July 1959.

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3.35 p.m.

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

I beg to move, That this House takes note of the Report and Accounts of the British Transport Commission for 1958 and of the Report reappraising the Plan for the Modernisation and Re-equipment of British Railways (Command Paper No. 813). This year's debate on the British Transport Commission's Annual Report for 1958 has a special interest for us because it is combined with a consideration of the Commission's reappraisal of the modernisation plan which it orginally sketched out four years ago. The reappraisal was set in hand last autumn, following a forecast by the Commission that the 1958 results were likely to finish up about £30 million worse than was originally predicted. It is right to put it on record that at that time the chairman of the Commission, Sir Brian Robertson, consulted my right hon. Friend on the matter. My right hon. Friend asked him to make a reappraisal of the modernisation plan in the light of the changed conditions, and the exchange of letters between my right hon. Friend and the Chairman appeared in Cmd. Paper No. 585 last November.

The 1958 Report shows that the deficit for the year was £89 million, and confirms that the forecast given last autumn was justified. I do not think that the House will want me to take up time in rehearsing in detail the causes of that decline. We have debated them before, and I think that we are all familiar with them. They are summed up in the words in the Report, at the end of paragraph 5, which says: So far as it is possible to analyse the deficit of the year it might be said that some £55 million of it could have been expected as part of the process of deficit financing leaving the balance due mainly to the decline in the traffics of the heavy industries and to the effects of the London bus strike. But although 1958 was a year of setback in finance it was also a year of great progress in mechanical and engineering development as the Report records. Indeed, our own eyes now confirm it wherever we go throughout the country on our rail services. I should like to say a word of praise to the Commission and to the railwaymen, from top to bottom, for the tremendous job that they are carrying out in modernising services and, at the same time, keeping them operating. [HON. MEMBERS: "Hear, hear."] I am happy to hear how well that statement is received by the House.

During 1958 we substantially increased the Commission's capital investment ceiling from £150 million to £175 million, to help the Commission accelerate the modernisation plan, especially in motive power, and to bring in more diesel locomotives. It is part of our general policy to get more modernisation more quickly. In the rail passenger traffic picture for 1958 there is a marginal reduction in gross receipts of about £1 million, from just under £139 million to about £138 million. In fact, however, the trend of passenger traffics since 1955 has been steadily upwards. The year 1957 showed an exceptional rise, when there was the exceptional circumstance of the fuel shortage, but even allowing for that, the trend has been upwards, and it shows clearly that modernisation is beginning to have its effect in passenger transport.

We can see the attractions in diesel main line locomotives which, apart from looking very attractive, are able to provide better time-keeping. We can also see diesel multiple units wherever we go, and are now beginning to see some of the new electrification schemes and even, in some places, new stations and better passenger accommodation—generally a foretaste of what is to come in a fully modernised rail service. It is good, there is no question about that, and the travelling public like it. Obviously, it is being appreciated wherever it has been done.

The passenger traffics have kept up for the first twenty-eight weeks of 1959 at almost exactly the same figure as in the corresponding period of 1958, and that despite exceptionally good weather and the ever-increasing wave of the universal motor car offering alternative means of transport. So, where they have managed to modernise, the railways are evidently succeeding in offering services attractive enough to hold their passengers, and possibly to increase their number.

I had the privilege of inaugurating the North Kent electrification scheme a short time ago. It is a wonderful scheme for the benefit of the commuting public and Sir Brian Robertson told me that on the lengths and at the stations where electrification has been carried out already there has been a 20 per cent. to 30 per cent. increase in traffics. This is most encouraging and many similar schemes are coming along.

The freight picture is not so good. It shows the decline we expected and in the event it was about £30 million down on the year. But behind that financial result there has been an immense amount of work going on in the complex and difficult process of modernising freight services. The House will know that last year about 35 per cent. of all freight-train mileage was done by express brake-fitted trains. That is a tremendous increase on anything done before and will result in faster, more attractive and more competitive services. The Commission has closed 270 goods depots and yards and this concentration into fewer modernised depots is an essential part of the modernising of our freight services. The modernisation of marshalling yards continues, but, inevitably, it is a long and a slow job.

The current freight rates during the year show that the railways were fully competitive—and some complaints which we have received from the road haulage interests seem to confirm this. I think-that we may say that the railways held their share of the lower total freights that were going in 1958.

The Report also refers to the big programme of track improvements, the modernisation of signalling with a colour-light system, the introduction of automatic train control and many other improvements. It reveals the major fact, by which we set great store, that the Commission has managed to achieve the level of economies which my right hon. Friend and I asked of it. We asked for a saving of £20 million in the year. In the event, the net saving for the year was £9 million. If we take into account increased costs due to wage awards and other increases, amounting to £13 million, it shows that there was a theoretical gross saving of £22 million, on which the Commission is to be congratulated. I shall not have time to comment in detail on the many other interesting points in the Report before leaving it to say a few words upon the reappraisal.

Photo of Mr David Jones Mr David Jones , Hartlepools, The

Will the hon. Gentleman give the House some information about savings? He said that in 1958 the saving which had been promised had been accomplished, but on 11th December the Minister suggested that, in addition, the Commission had been asked to save another £30 million in 1959. Can the hon. Gentleman say something about that?

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

It is too early to give any details about that, but I do not doubt that when this year's working is completed the Commission will again show a substantial saving. Naturally, I cannot at this stage say what it will amount to, but I have no doubt that it will be substantial.

Before leaving the Report I wish to make reference to the London Transport Executive and, first, to record our thanks to Sir John Elliot, who has left the Executive after long and distinguished service, and to extend my best wishes to his successor, Mr. Valentine.

I should like to mention the Victoria Line tube, which is referred to in paragraphs 127 and 128 of the Report. On a number of occasions I have been asked when we should receive the Report from the London Travel Committee and I am glad to say that it was given to my right hon. Friend yesterday by the chairman of the Committee, Mr. Alex Samuels. The Report broadly recommends the building of the Victoria Line as a useful addition to London's transport facilities in any circumstances, and we shall take an early opportunity of studying the Report with Sir Brian Robertson and considering its implications.

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

Yes. it will be published as soon as it can be printed. It is a surprisingly long document.

I wish now to turn to the reappraisal and to begin by thanking the chairman of the Commission and his colleagues for undertaking this magnum opus for us. It is a considerable work, as right hon. and hon. Members will appreciate when they read it. My right hon. Friend and I welcome the opportunity afforded by this debate to hear the views of hon. Members and we shall take them into account in our future studies of the reappraisal.

The Report is the product of an immense amount of work not only by the Commission but in the regions. It provides a valuable basis for assessing the future prospects of the railways. It is in three parts: a report on progress of the modernisation plan up to the end of 1958, a description of the plans of the Commission for the next five years and a forecast of the financial outlook. It confirms that the modernisation plan of 1955 was broadly right in outline, but it recommends that over the next four years there should be a rapid acceleration in re-equipment, especially in motive power from steam to electricity and diesel, in the wagon fleet and coaching stock, and a speeding up in the general process of rationalisation and streamlining of the railways to meet modern conditions.

Under this plan, the greater part of what was originally intended to take place by 1970 will be done by 1963, so that a very rapid acceleration is visualised. Paragraph 56 tells us that there will actually be less equipment in use in 1963 under the plan than would still have been in use in 1970 under the original plan. If this can be achieved, the Commission predicts that by 1963 there will be a working surplus of between £50 million and £100 million against central charges of about £85 million.

Photo of Mr Charles Hobson Mr Charles Hobson , Keighley

Is the hon. Gentleman proposing to return to the question of electrification? He mentioned it en passant, but is he proposing to tell the House a little more about it in view of the tremendous changes in voltages and the various decisions arrived at by the Commission? Will he give the reasons?

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

I am not clear what the hon. Gentleman is asking. Is he asking whether electrification is proceeding on the present plan?

Photo of Mr Charles Hobson Mr Charles Hobson , Keighley

The hon. Gentleman has made a general statement about electrification. There is quite a bit about electrification in the reappraisal, including the advocation of some rather costly changes. Surely he proposes to say something about that.

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

I see nothing to dissent from in the general plan which the Commission outlines for electrification and dieselisation. It all seems to me to go in the right direction to give us a very efficient, modernised service. If the hon. Member has a different view I shall be interested to hear it, if he catches your eye, Mr. Speaker, in the course of the debate.

I was about to observe that the prospect of solvency in 1963, now predicted by the Commission, is roughly a year or so behind its original prediction that it would achieve solvency by 1961–62. After making this comprehensive reappraisal, considering all the work that lies behind this document, the Commission has, I think, made a very courageous prediction. Sir Brian Robertson and his colleagues are to be congratulated upon putting forward a forecast which they firmly believe they can carry out.

Photo of Mr Ernest Popplewell Mr Ernest Popplewell , Newcastle upon Tyne West

The Commission's Report suggests that a £50 million to £100 million surplus might be achieved by 1963, but surely that is on the assumption that production continues to rise by 2 per cent. or 3 per cent. every year. I believe that the difficulty of the Commission is that the production position is more or less stabilised and is not rising at that level. Perhaps the Minister might mention this point, as it is a cardinal one in the Commission's prediction.

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

I am assuming that hon. Members have read the Report. I am not going through the Report detail by detail. It will be a comfort to the hon. Gentleman to know that industrial production is rising and that the prospect of that surplus being achieved is reasonably hopeful.

A number of important issues raised by reappraisal cannot be answered by the Government without a great deal of study. This study we are proceeding to do now with the Commission, so that we can reach conclusions on the many important questions that there are.

On the major issue of modernisation, I can be quite clear. The Government see nothing in this Report to deter them from maintaining their general policy of supporting the Commission in completing the modernisation of the railways. Perhaps the outlook is less promising than it was, but we are still convinced that this country needs a rail service and needs it modernised as quickly as possible. We believe that the prospect now given is firm enough to build on.

Here, perhaps I might say to hon. Gentlemen on the Liberal benches—[HON. MEMBERS: "One."]—that this answers the aspect raised in the Amendment which they have on the Order Paper. Inevitably, there are anxieties and risks in committing such large sums of money as this for the modernisation of the railways. There are all kinds of uncertainties in the picture, but we take the view that a railway service, and a modernised one, is essential to the life of the country.

On the prospect which the Commission has put before us we should press on and get that modernisation done. That, therefore, is the background of our financial appreciation. Conscious of the anxieties and risks, we still feel that the prospect justifies us in going ahead. Although the deficit, is now running at a higher level than was originally predicted, I would remind hon. Members that we always expected that the deficit would increase before it began to fall.

Now I turn to some of the major aspects of reappraisal and would say a word on passenger traffic. The reappraisal forecasts a 15 per cent. increase by 1963. That is, of course, a big increase, but it still seems possible. Modernisation of the the passenger service is undoubtedly attracting considerably increased traffics wherever it has been introduced, whether by electrification or dieselisation. I have referred to the North Kent electrification scheme, because I have been associated with it personally, but there are many other schemes with which we are all familiar and where there have been quite dramatic increases. So it seems that a modernised service has a potential which may well cause that forecast of the Commission's to mature.

As commuter traffics improve, whether by electrification or dieselation, they will increase the radius of commuter travel. That, again, will cause some people to use the service from an even bigger radius. With the increasing prosperity of the community and, therefore, the greater use of transport, it seems a fair prospect that this considerable increase will be reached at the end of four years.

Photo of Mr David Jones Mr David Jones , Hartlepools, The

I am sorry to interrupt the Parliamentary Secretary again, but I do not quite follow his argument. He says that where lines have been modernised and electrified the amount of traffic has considerably increased. Then why close so many branch lines? Why not electrify them?

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

The hon. Gentleman will realise why these closures are being made. Wherever there is any prospect of increasing traffic to the point of profitability, the Commission is modernising. It has to take a view whether there is a potential there. On many of these branch lines there is no prospect whatsoever of attracting traffic ever to make a profit, and it then has no alternative but to close down the line.

I would say a word on the Commission's view of fares. Not only does it expect an increase in the volume of passenger traffic, but it expects increased returns because of increased fares. The Transport Tribunal has now approved new ceilings, and the Commission is considering what actual revision it should make. The Commission clearly recognises, in the reappraisal, that it is dealing in a sensitive market here, because of the competition of the motor car, and it evidently intends a cautious approach.

We have asked the Commission to do all that is possible to design a fare structure to give an incentive to spread the peak of daily commuter traffic. Anything it can do in that direction will be good not only for the economics of the railways, but enormously for the comfort of the travelling public. The Commission has undertaken to do its best in that matter.

I will now turn to freight traffic.

Photo of Mr Sydney Allen Mr Sydney Allen , Crewe

Before the Parliamentary Secretary leaves passenger questions, may I ask whether he is aware of the very small increase in the rates of passenger traffic fares over many years? I remember going, as a small boy, from Liverpool to London, when my return fare was 33s. That was before the First World War. Today, the fare is 65s. I defy anybody to point to any oommodity that has gone up in price by only that proportion since 1914.

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

The Commission has developed its argument in detail in the paragraphs with which I dealt, and I think that it makes out a strong argument for its point of view.

I turn to freight traffics. The Commission expects in its reappraisal that freights will recover to the 1957 level by 1963 and that the increases on minerals and merchandise will balance the expected fall in coal traffic. That, again, is a stiff target that it has undertaken.

Hon. Members will have seen that before making this forecast the Commission, in addition to its own very thorough and careful studies throughout the regions, has consulted the Coal Board and other nationalised boards and also the Iron and Steel Federation, the F.B.I., the N.U.M. and the A.B.C.C., as set out in paragraphs 66 and 67 and subsequently. It is evident that the Commission, in making these forecasts—both of freight and passenger traffics—has made a most exhaustive and careful study of the prospects and taken into account all possible information and expert opinion

In reading those paragraphs I felt the Commission had argued cogently to support its case. My right hon. Friend and and I accept this as a fair basis on which to work. The tunnel of darkness through which we must go is a little longer than we thought and perhaps the light is not so bright at the end, but it is still there to be seen. I think that we must accept it as what The Times calls it, a challenging Report.

The Commission has also asked for an increased rate of capital spending for the next four years. This year the capital expenditure ceiling is £212 million. It is by far the highest it has ever been. For the railways, it is £178 million, which is a very big increase of £30 million over last year, but the Commission ask for next year an extra £9 million, rising to an extra £32 million for railways alone in the coming years. I can only say, at this stage that we will give very careful attention to the programme which has been put before us. The public reception of the reappraisal was, on the whole, favourable, both in the newspapers and in public comment. Some anxiety, perhaps, about the financial prospects and some about the closure of uneconomic services has been expressed, but there is evidently general approval by the public for our policy of modernising the railways.

I come to the Amendment put down by the Opposition, which, … while welcoming the progress being made in the modernisation and re-equipment of the railways, regrets the actions of Her Majesty's Government which have damaged the financial solvency of the British Transport Commission and led to the curtailment in the services it should render in the national interest. It really is astonishing to me to see this hostile attack on the Government for damaging the financial solvency of the Commission. In fact, it is only in this House, by right hon. and hon. Members opposite, that my right hon. Friend and I are attacked and accused of pursuing policies which injure the railways. There is no echo of these charges outside. The country as a whole is very pleased that we are providing the basis for this modernisation. The anxiety, so far as it exists, is rather the reverse of that—that we may be giving them too much. With no backing to it from public opinion, the charge is really a synthetic one, manufactured to give a basis for crabbing the outstanding success of the policies of my right hon. Friend.

Over the current four years the capital expenditure that has been provided for the Commission has been £568 million. If we add to that the £227 million to date for deficit financing, that gives an average rate of spending on the Commission of nearly £200 million a year over these four years. We can compare that with the rate of spending during the Labour Administration in the four years from 1948 to 1951, in which they were responsible, of £53 million per annum.

Photo of Mr David Jones Mr David Jones , Hartlepools, The

There were not deficits then.

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

It does not surprise me that I get objections from hon. Members opposite, because, naturally, this is not welcome to them, but I am certain that if the Labour Government had been able to raise the rate of capital expenditure and financial provision for the railways even to half the present rate of spending that there would have been paeans of praise by hon. Members opposite for what they were doing for the railways—paeans of praise for themselves. Now that we are doing it, we get this crabbing from them and a thoroughly dog-in-the-manger attitude.

I recognise that a horse coming out of their stable with "Transport House" over the door has a natural jealousy for his tradition as champion of the "Railway Stakes". But he cuts an undignified figure when he retires to the stable and sits in the manger. He certainly will not hold the championship in any stakes; in fact, he has probably lost it to us already.

The right hon. Member for Vauxhall (Mr. G. R. Strauss), in his speech last December on the Second Reading of the Transport (Borrowing Powers) Bill, evidently seeking to minimise the importance of the massive financing of the modernisation scheme, said that any Government would have to go on providing the money for modernising the railways today. That is true only if the Government have the capital resources available. Hon. and right hon. Members opposite did not finance the modernisation of the railways in their day. I should imagine that it was because they did not have the financial resources available. It is useless to say that this is simply a matter of years. They governed according to their political beliefs and the result was that the nation's earning power was restricted. The nation's earning power has expanded in the last four years under good Tory Government. [An HON. MEMBER: "There was the war."] I am not aware of any war between 1948 and 1951.

The fact is that today the modernisa tion scheme is able to go forward because this Conservative Government has been following sound financial policies which have caused national earning power to grow so that capital formation could also grow. Therefore, there is more for the railways. The Opposition must not be allowed to obscure the magnitude of the achievement by the Government. The Opposition have decided to divide the House tonight—

Photo of Mr Charles Hobson Mr Charles Hobson , Keighley

How does the hon. Gentleman know?

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

The Opposition put a hostile Amendment on the Order Paper in the names of their leaders, but perhaps the hon. Member who interrupted knows better. If arguments will convince the hon. Member, he will be very easily convinced, for the arguments are all on our side and there is only party doctrine on the other.

The hon. Member for Enfield, East (Mr. Ernest Davies) has given us some indication in the past of his ideas on future policy for the railways. I hope that we are going to hear a very full explanation today. If hon. and right hon. Members opposite put down a hostile Amendment let them describe how they would carry on the programme for the future. What the hon. Member has told us before is that his party would renationalise road haulage and control C licences. [HON. MEMBERS: "Hear, hear."] I am glad to hear some support for that, but we have heard about this pipe dream of integration before and have never seen it. I hope that the hon. Member will go into more detail and tell us how it is to be brought about

The more the hon. Member talks about it the better we shall be pleased, because it will find no favour in the country. Already, the nation has voted twice to show that it will not have it. Obviously, it is determined to do so for a third time, so I hope that hon. Members opposite will give us a very full dissertation on the subject. [Interruption.] I am not surprised that hon. Members opposite do not like this, because it is near the bone.

I acknowledge that nationalisation of road haulage would give the railways a short-term advantage because, of course, that would clip the wings of road haulage and give a share of its present traffics to the railways. But even that advantage would be brief, because the record shows quite clearly that a Government committed to policies of nationalisation will quickly be in financial disaster again. Then there will not be the capital resources to modernise the railways at all. [Laughter.] I make that point with all the force I can. Right hon. and hon. Members opposite are very unwise to laugh at it. If they try their hand again at government they will quickly find their difficulties of maintaining the earning power of the nation. The prospect of modernising the railways on the lines which right hon. and hon. Gentlemen opposite have indicated are obviously very thin.

I want to make one remark about controlling C licences. In the interim Report we have had the benefit of the survey on C licences, a most valuable and interesting document, and it refutes the allegation that this class of vehicle is operated inefficiently. That completely knocks the bottom out of the case of the hon. Member for Enfield, East, and there is no wonder that he keeps denigrating it. He has tried to reduce its authority by saying that it is a biased document. It is nothing of the kind. It was composed by statisticians, completely independently. In fact, one of them was the joint author of the 1952 Report. This is the time-honoured tactic of the courts: "Weak brief, abuse your opponent's attorney".

Photo of Mr Ernest Popplewell Mr Ernest Popplewell , Newcastle upon Tyne West

Is this a Departmental Report? If so, will it be published?

Photo of Mr Ernest Popplewell Mr Ernest Popplewell , Newcastle upon Tyne West

This is new. I have not seen it. Will the Minister tell us where we can get it?

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

It has been published and I think that it can be obtained from the Stationery Office T shall be pleased to let the hon. Member have a copy. He will find it most enlightening and very helpful in resolving his policy.

Coming back to the reappraisal, I want particularly to deal with a point raised by the hon. Member for The Hartlepools (Mr. D. Jones) earlier—the major problem of the rationalisation of the railway system. The Report is quite emphatic that there must be a more rapid closing of uneconomic services. I refer hon. Members to paragraphs 18 to 30 of the Report. This is not an initiative which comes from the Government. This is the carefully judged opinion of the expert railwaymen. Hon. and right hon. Gentlemen on both sides of the House know very well that the railway system as it exists today was laid out in circumstances completely different from the present, when the railways were virtually a monopoly and when the only form of competition was the "penetrating lines' duplicating existing services, which worsen our problem today and make an even bigger railway network with which we have to deal.

The reappraisal is quite definite that what should be contemplated in the coming four years is a much more radical rationalisation than we have seen in the last four years. The view is taken that many of these services can never be economic. I think that we ought to trust the judgment of the railwaymen in this matter. It has not been uncommon to hear from right hon. and hon. Gentlemen opposite charges against us that we interfere with the Commission. Here is an issue on which hon. Members should take their own advice. This is the Commission's initiative, and we should proceed on this plan of eliminating uneconomic services. The Commission forecast that about 10 per cent. of the total route mileage should be closed down over the coming four years.

Where these are passenger services, inevitably when they are closed it inconveniences the few remaining travellers who are using them. I know this situation probably better than most, because I have to answer many Adjournment debates initiated by hon. Members on both sides of the House who are anxious about some proposed closure or closures in their constituencies. I also receive delegations on the subject, and I sympathise most sincerely with those remaining travellers who still use the service which the Commission proposes to close.

Photo of Mr Thomas Brown Mr Thomas Brown , Ince

May I put a question about the closure of lines in rural districts? Will the Department be prepared to take note of local authorities who make representations to it that it is inadvisable, in the interests of the inhabitants of that rural district, to close a certain railway?

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

There is provision in the 1947 Act for transport users' consultative committees to consider proposals for closing any section and to hear the objections of local authorities and others who are interested in it. That procedure is followed in every case. I have looked into many of these cases in detail. The difficulty in most of them is that the services are hopelessly unecomonic.

The hon. Member for The Hartle-pools, who knows the railway service better than I do, knows perfectly well that in many cases there is no prospect in the world of ever making the service profitable. The potential is just not there. Naturally, because the services are there, somebody uses them, and it is, therefore, an inconvenience when they are closed. Wherever there is any prospect of the Commission developing a service by modernising it, the Commission certainly does so.

The transport users' consultative committees are bodies which hear objections. They have a most onerous task to perform. They were set up under the 1947 Act, and they represent local authorities, industry, the farming industry trade union interests and others and are directly representative of user interests. They have the very difficult task of hearing objections and, in the majority of cases, of hearing an overwhelming case for closing a particular section of railway. They would very much like to be able to help the people who will be affected, but they simply cannot find a case for advising the Commission to keep the section open. I want to say a word of thanks to the members of these committees for carrying out a very difficult task.

Photo of Captain James Duncan Captain James Duncan , South Angus

There is one other body of people on these transport users' consultative committees, and that is the British Transport Commission itself. Would not my hon. Friend look into the matter and consider whether the committees would not be regarded as more independent if the British Transport Commission's officials and members were not members of them?

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

There are only two members of the Transport Commission on a body of 20. I do not think that it can be said that they are dominating it. It is helpful to have them as members so that they can supply the facts on many of the problems which come before the committees. I think that the composition of the Committees is about right.

The closure of goods depôts is a very important part of rationalisation and is going ahead fast, to concentrate freight handling in the modernised goods depôts, and here the problems are very-much less. There is the problem of manpower, but no problems for the travelling public.

This part of modernisation, this rationalisation, cannot be done completely painlessly. It is impossible to do it without inconvenience to some people in some places. It is, nevertheless, an essential part of what the railways must do if we are to have a modernised system which will meet today's needs at economic rates and be consistent with the Commission's statutory obligation, laid down in the 1947 Act, that it should break even, taking one year with another, and should achieve solvency. My right hon. Friend and I therefore broadly support the Commission in its difficult operation. We shall look with the Commission at the great acceleration which it proposes and see what are the implications of such a wide range of closures.

In this context, the Commission refers, in paragraph 62, to its obligations of public interest in maintaining services, which run alongside its obligations to operate as a commercial undertaking. We shall look at this factor and at the Commission's proposals for completely uneconomic services, together.

The reappraisal also asks that the financial structure should be looked at afresh. The Commission has made the point that, although it is far from a monopoly operator today, it does not have the normal capital structure of competitive business. It has no equity-capital to give flexibility by covering the fluctuations of good times and bad times. Ii finds the single burden of fixed-interest charges a handicap. My right hon. Friend and I do not know what Sir Brian Robertson has in mind on this, but we shall be prepared to give very careful consideration to any ideas that he puts forward. Before considering shifting from the present structure of central charges with a straight obligation to repay interest and capital, we must be sure that it will strengthen financial discipline and accountability, rather than the reverse.

Despite Opposition strictures on the test of profitability, it is still the most reliable test to show whether a concern is making full economic use of the resources of manpower and capital at its disposal, in terms not only of its own management, but of serving the nation as a whole.

I certainly do not contend that the present structure is ideal. It may be that we can think of something better, and I shall be interested to hear what the Liberal view is today in supporting their Amendment. I read with interest the comment in one of the national dailies— I think that it was the Financial Times—that while deficits are running at such a high level accountability is unsatisfactory. It was suggested that a clearer picture would emerge with regional accountability. There are technical and accounting difficulties in this suggestion, but it may be possible to overcome them.

We will certainly include that as a feature of the study we are now undertaking. It is in line with our general policy to increase regional responsibility and autonomy. This is already showing excellent results. If this can be done and if it will help, we will consider it favourably.

I will now refer briefly to the manpower aspect in the reappraisal. I would not for one moment underestimate the huge problems presented in the manpower field. The Commission makes it clear that the human problem involved in the modernisation scheme, and especially in the acceleration, is a vast one. Last year the total manpower on the railways was reduced by 23,000, from about 573,000 to about 550,000. This kind of reduction in the total establishment on the railways will continue. Indeed, it may even be accelerated.

The Commission is to be congratulated on the general spirit of co-operation, that it has managed with the help of the trade unions, to secure, in dealing with this very difficult problem of reducing the number of jobs, having to switch men from one job to another, and, indeed, in the last resort, of redundancies. As the House knows, the Commission has concluded a redundancy agreement with the trade unions concerned, and that is brought into operation wherever necessary. It consults the trade unions wherever there is a change or a reduction to be made.

I know that many hon. Members are very concerned about the Commission's policy on workshops. I shall not go into that in detail now. I am sure that hon. Members interested will make speeches on that. My right hon. Friend and I have had representations from hon. Members on both sides of the House about both the railway workshops and the private workshops. We have been told by hon. Members on both sides that both of these are being treated more favourably than the other. [HON. MEMBERS: "They are."] They cannot both be This is entirely a matter of management for the Commission, but my right hon. Friend and I have discussed this with the Chairman of the British Transport Commission. He issued a public statement on the subject last May which, broadly, maintained the policy on workshops which the Commission was previously following. I say with all confidence that I am sure that the Commission is holding a fair balance between the interests of railway workshops and the interests of private workshops.

The huge reductions in equipment which are going on—for instance, the predicted reduction in wagon equipment from over 1 million wagons to about 750,000 wagons by the end of 1963—are bound completely to alter the picture, especially when the wooden wagon is eliminated and the all-steel wagon comes in, which will mean that wagon repairing will practically disappear. I agree that some very hard cases result from that. With the rapid disappearance of the steam locomotive, which was constructed almost entirely in the railway workshops, and with the alternatives of the diesel and electric motor units, where the power units are supplied from outside, the picture of what the workshops have to do is changing.

The Commission has done all that it can to mitigate the difficulties these changes bring about, and it will continue to do so. I want my congratulations to the Commission to extend to the trade union leaders who have played such a responsible and helpful part in this difficult problem.

Photo of Mr Ernest Popplewell Mr Ernest Popplewell , Newcastle upon Tyne West

Is the House to understand from what the Parliamentary Secretary says that the workshop policy is left entirely in the hands of the Commission? If the Commission desires to produce diesel and electric motor power component parts, is it entitled to do so? Is it entirely in the Commission's hands. Do I understand, also, that the question of wagon repair and building jobs is left entirely to the Commission? For instance, instead of the Commission hiving off to private industry the building of London Transport coaches and wagons, can it build these wagons itself if it so determines?

Photo of Sir Richard Nugent Sir Richard Nugent , Guildford

I think that I had better send the hon. Member a copy of the Commission's statement on this. The broad answer is that the Commission is free to work out its own policy on these matters. It must live within its capital expenditure and it must also be guided by economic considerations. That is precisely what it does in deciding whether to use private industry or its own resources for any of these particular supplies.

I have already spoken for longer than I intended, and I wish to bring my remarks to a close. The reappraisal gives us a half-term report of the progress of the modernisation plan and a forecast of a large measure of its completion in the next four years. We can sound a note of satisfaction at the stage of modernisation already reached. It is ahead of schedule. But this satisfaction must be tinged with caution in the face of the evident stiffening of the struggle to hold and, even more so, increase traffics. Nevertheless, the forecast justifies the Government in continuing to give the Commission full support in the great task of modernisation. Our policy is to go on to achieve the great benefits which this will bring to the life of our people. I confidently ask the House to approve the Motion.

4.30 p.m.

Photo of Mr Ernest Davies Mr Ernest Davies , Enfield East

I beg to move, at the end of the Question to add: and while welcoming the progress being made in the modernisation and re-equipment of the railways, regrets the actions of Her Majesty's Government which have damaged the financial solvency of the British Transport Commission and led to the curtailment in the services it should render in the national interest". In the first third of his speech the Joint Parliamentary Secretary dealt with the results of 1958 and paid tribute to the British Transport Commission. We certainly share those thoughts—we have no quarrel whatsoever with him there—but when he came to the middle part of his speech he certainly jumped the track and made some rather naive comments on our Amendment.

I want to make it quite clear that in putting this Amendment on the Order Paper we do not in any way reflect on the Commission itself, but that we are attacking the Government, not for proceeding with modernisation, as the hon. Gentleman suggested, but for the policies they have pursued which, in our view, have caused, or at least contributed to, the Commission's very serious financial position.

Nobody would have thought from the hon. Gentleman's speech that the Minister of Transport has come under some very considerable criticism during recent months; that he has been the subject of three critical Reports—two of which are relevant to the affairs of the Commission—and that these Reports also provide us with support for our Amendment.

Before coming to the reasons why we think that our Amendment deserves the support of the House, I want to deal, as did the Parliamentary Secretary, with the Reports. In many ways, the reappraisal Report supersedes the Report and Accounts for 1958. As it were, it brings those up-to-date, and looks to the future. Despite the bad financial results, it is important, as the hon. Gentleman appreciated, not to overlook the Commission's very considerable achievements during 1958, in difficult circumstances. It is very difficult to proceed with normal operations—and to improve operations—at a time when a vast plan of capital investment and reconstruction of the system is being carried out. However, we must also keep in perspective the results over the whole period of nationalisation since 1948, and compare them, perhaps, with results in the pre-war period, when there was a considerable deterioration in the railway system.

I would remind the House that during the first eight years of nationalisation, right up to 1956, the Commission succeeded in earning a working surplus, before payment of interest, and that in the three years 1951–53 it had an overall surplus after meeting all central charges, including interest. It is significant that it was after 1953 that the Commission started to run into difficulties. That is significant, because it was in that year that the Government's transport policy of breaking up the Commission in favour of private enterprise, and supplanting planned transport with a competitive system, began to have its disastrous effects.

Despite the handicaps under which the Commission suffered during 1958, it has had some considerable achievements. One that must not be overlooked is that in the face of the tremendous increase in private transport, private motoring and the like, more passengers are now being carried by British Railways than were carried before the war. In 1958, the number of passengers carried was a record since nationalisation—except for the Suez year, when the carryings were artificially inflated.

In addition, freight carryings are still very considerable, in spite of the recession—for which the Government are, of course, responsible—which led to a fall in the heavy traffics. Anybody studying the Report will be confirmed in the belief that the railways are, and will remain, a tremendous carrier of goods and passengers, and cannot be dispensed with. I do not think that any hon. Member would quarrel with that statement.

As was stated by the Parliamentary Secretary, and by my hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen) in an intervention, fares and charges are, in real terms, below those obtaining before the war; that is to say, comparing the pre-war purchasing power of the £ with that of today the fares and charges are less in real terms—

Photo of Mr Sydney Allen Mr Sydney Allen , Crewe

When I said "pre-war", I did not mean before this last war, but pre-1913.

Photo of Mr Ernest Davies Mr Ernest Davies , Enfield East

I appreciate that, but in its Report the Commission publishes diagrams comparing present results with those of before the last war, and that, I think, is the significant period.

That result is certainly not true of any consumer goods produced by private enterprise. This is a nationalised industry which, in real terms, has succeeded in keeping the cost of its services below the pre-war cost. That, of course, is due to the increased efficiency—[Interruption.] If the noble Lord the Member for Dorset, South (Viscount Hinching-brooke) will read the Report and study the diagrams he will see that what I have said is correct—

Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , South Dorset

The hon. Gentleman is making it appear as though this was a triumph for nationalisation and the Commission. The plain fact is that, for social and policy reasons, successive Governments have required the Commission to keep its fares and freight charges down.

Photo of Mr Ernest Davies Mr Ernest Davies , Enfield East

I intended to deal with that point later. One of our charges against the Government is that their action in this respect is responsible for the Commission's present financial position—

Photo of Mr Ernest Davies Mr Ernest Davies , Enfield East

I am sorry, but I want to develop my argument. If, later, the hon. Member wishes to challenge me on certain aspects that I consider worthy of challenge I shall gladly give way, but I have much to say. The Parliamentary Secretary took some time—I make no complaint of that—and other hon. Members want to speak.

We should not minimise the achievements of the Commission since 1948 despite the very considerable change there has been in the transport pattern including, mainly, the great growth in private transport. These achievements are largely due to the work of the Commission's staff in its various undertakings, and I would share in the tribute paid to the staff by the hon. Gentleman. Here it is worth while drawing attention to paragraph 12 of the Report which states: The Commission take this opportunity to pay tribute to the men and women who work in all the ramifications of this great undertaking, whose careers are bound up with public transport in one form or another and who are, in spite of some derogation, among the best servants which the public possess. … The staff of no private undertakings work under the same glare of public criticism as those employed on the railways and road transport and in the catering and other branches of the Commission. I am sure that the whole House will agree with that and will wish to pay tribute to the work which is being done.

Railways the world over are being affected by the same set of circumstances, and are experiencing this deficit operation, whether they be nationalised or operated by private enterprise. The same thing is true of the United States as it is of Britain, Germany and France, and, consequently, the order of the day is, "Modernise or die".

If one turns to the less happy picture of finance, one must continue, I regret to say, to take a gloomy view. First, I would draw attention to the fact that since nationalisation the Commission has paid out on its capital and loans no less than £475 million in interest. It has paid that out in interest at the same time as it has financed a considerable part of its capital investment out of its depreciation and maintenance allocations.

Under private enterprise, a large part of that interest would have been earned for the equity capital, and if the earnings had not been adequate, the dividend, of course, would have been passed and the money would not have been paid out. In other words, the holders of equity capital would have received nothing. The Commission, because of the nature of its capital, has to pay this interest—this fixed interest—on all its capital in the fat years and in the lean years.

I would further point out that private companies would have claimed that profits were earned up to 1956, because the profits of private enterprise companies are normally declared before debenture interest is charged. They are declared as profits, and then the debenture interest charges are deducted. Therefore, the Commission could claim that it was operating at a profit up to 1956.

Looking ahead, the reappraisal Report confirms the worst predictions which we have made from these benches throughout these debates. Ministers then accused us of being defeatist or pessimistic, but the figures which have appeared on future prospects and interest charges confirm, unfortunately, everything which has been said from this side of the House. In fact, the figure of £90 million for interest charges by 1963 is a figure which I quoted in the debate on the Transport (Borrowing Powers) Bill in December last year and in January of this year.

I claimed then, and I repeat now, that the Government plan for financing the deficit is a crazy plan and is a crippling form of finance. In fact, it is "Alice in Wonderland" economics. Let us consider it, though it is very difficult to do so. In the first year, the Commission borrows to meet the deficit, and in the following year it borrows to meet the interest on the deficit and to meet the deficit for that year. In the next year, it borrows to meet the interest on the deficit and the interest on the interest borrowed to meet the interest borrowed to meet the interest borrowed to meet the deficit. This is "The House that Harold Built."

As the Parliamentary Secretary pointed out, the reappraisal estimates that, on the present basis, the working surplus can be from £50 million to £100 million by 1963. That is a wide margin, and it is also a wide guess, but it shows how many imponderables there are. The Commission estimates that interest charges will be £90 million in 1963, rising to £110 million in 1965. Therefore, on the most optimistic of its estimates there is bound to be a deficit. The Commission cannot escape continuing to operate on a deficit, and this gives us very serious concern when we consider the question of capital reconstruction, to which I will come later.

I would point out that both the Commission and the Minister have so far been wrong in their estimates. These estimates have proved to be a long way out, and the results have been far worse than estimated, but the reason for this is not the action taken by the Commission, but the policies which the Ministry has pursued. Therefore, the Ministry has far less excuse for being wrong than the Commission.

In 1956–57, the House was asked to vote £250 million for deficit financing. It was considered to be enough to last the Commission until 1963, but in 1957, some months after the House had agreed to that, when the position was already deteriorating, the then Chancellor of the Exchequer, the right hon. Member for Monmouth (Mr. P. Thorneycroft), in the debate on the economic situation, dealing with the position of the Commission, said: So that it should know exactly how it stands, the Commission has accordingly been informed that for 1958"— that is, the year we are now dealing with— the amount will not be in excess of the ascertained deficit for 1957, as certified by the auditors in due course; and that for 1959 finances will be reduced in accordance with the forecast on which the White Paper is based."—[OFFICIAL REPORT, 29th Oct., 1957; Vol. 575, c. 57.] That was the decree of the then Chancellor of the Exchequer.

Now, we are dealing with 1958, and the deficit is £89 million, which is £34·4 million greater than was estimated, and the Government are meeting it. In other words, what the Chancellor of the Exchequer then said the Government had to ignore. I suppose that £89 million is not in excess of the ascertained deficit of £54·6 million, which was the estimate for 1957.

Here, again, this is typical of the Government. They lay down policies one day which they cannot abide by and then have to desert them the next. How can the Commission operate with any foreknowledge of the position when the Government are changing their attitude in this way? It was inevitable, as we pointed out at the time, that the Minister would have to ask the House to raise the amount permitted for deficit financing. That should have warned them at the time of the effects of the policies which they were going to pursue, and of the disastrous effect which their policy of economic stagnation was bound to have on the Commission.

It is reasonable to question whether even the present depressing estimate of the reappraisal Report will be fulfilled, I suggest that it certainly will not if the present Government continue to be responsible for the mismanagement of the Commission's business, and if they continue a policy of interfering with its affairs. On the Government's past record, the Commission certainly will not be able to fulfil the estimates.

Let us take a look at the record of the Government where the Commission are concerned. In the first place, the inflationary policy pursued by the Government initially led to rising costs and wage demands, with requests for increased charges following, because they were necessary to meet them. The Commission was prevented or delayed in raising the charges to meet those costs. This was followed by deflationary policies which resulted in great losses of traffic, particularly the heavy freight traffic. It was followed by another standstill on charges and the restriction or curtailment of the new capital programme on which the Commission was embarking.

One can look a little more closely at some of the interference of which the Minister was guilty. The recent Select Committee on the Nationalised Industries, in effect, censured the Minister of Transoort for excessive interference in the affairs of the civil airways Corporations beyond his statutory powers. In the case of the Transport Commission he has been guilty of that to an even greater degree, and with far more harmful effects than in the case of the civil airways Corporations. In previous debates in this House I have given a long catalogue of his sins in this respect, but unfortunately, he has not stopped sinning and he is certainly not repentant.

I do not wish to repeat this long catalogue, but I should like to refer to one or two items with which the House is well acquainted. The Minister's predecessors began with the interference in the fares of London Transport in March, 1952, at the time of the London County Council elections. The interference was for political reasons. We know that. Despite the Transport Tribunal's authorisation for those fares to go up, the Government at that time prevented them going up and brought about a standstill over a period. Then, not to be outdone by his predecessors, in February, 1956, when the Commission had applied to the present Minister of Transport for an increase of 10 per cent. in freight charges, he refused to allow them to be increased by more than 5 per cent.—only half the required increase—although the 1947 Act required him to consult and consider the advice of the Transport Tribunal.

Contrary to this statutory requirement, the right hon. Gentleman announced in this House that he would permit the Commission to increase its fares and freight charges by only 5 per cent., although it had been proved by the Commission that on commercial grounds, so that it could meet its statutory obligation to pay its way, it was essential that these fares and freight charges should go up by 10 per cent.

Later, the Minister followed the statutory requirement of referring the matter to the Transport Tribunal after he had limited the increase to 5 per cent. Then the Tribunal reported that it was contrary to the Commission's financial interest not to permit the charges to go up by 10 per cent. The Tribunal said that it was "urgently necessary "—those were its words—for the charges to be raised to the full extent. In other words, the Minister ignored the advice of the Tribunal which he was statutorily required to take, and he made regulations limiting the amount to which the charges could be raised.

What more could the Minister do to damage the Commission's financial state? He did more. He used the good old Army technique of putting the Commission up against a wall and persuading it to volunteer not to raise its charges for six months. He has very persuasive powers when it comes to dealing with the Commission and he reports to the House that it has acted voluntarily in doing such things.

Of course, the net result of these interferences in the commercial right of the Commission to charge rates essential to enable it to pay its way—rates which were below the economic cost of operating the undertakings—has been that charges have never been able to catch up with costs because, although they were justified, they were too little and too late, thanks to the Minister. That is one reason why we are moving our Amendment to the Motion. But we can go further than this. There is the same disastrous sequence of events concerning the false economies—so-called economies—which the Minister has again persuaded the Commission to carry out. When the Commission agrees to make economies of £10 million he "ups the ante" to £20 million. That is the way that he has behaved.

The Minister is a great one at making speeches. We have heard a lot about his speeches recently. I recall one that he made on 13th March, 1958, after the Industrial Court's award to the London busmen. At Sevenoaks, he said: As to the award itself, that is for the London Transport to consider and not the Government. That was fair enough. But then he went on to say, according to a newspaper report: With the full agreement of his colleagues he"— that is, the Minister— had made it plain to London Transport some time ago that he could not support or defend further general increases in London Transport fares … 'This award, if it is agreed by the parties, would not therefore increase the inflationary pressure as has too often happened in the past …' I had already told the British Transport Commission, in a letter dated 22nd October, that in accordance with the Government's financial policy no increase could be made in the advances due to the British Transport Commission under the Railway Finances Act, 1957. In other words, the Government are not prepared to find the money to cover any further increase in the Commission's deficit caused by an increase in costs.

It was typical that the letter to which he referred and which he sent in October had never been mentioned in this House, but was mentioned in a speech outside in March following. But that speech certainly did not help towards a settlement of the bus dispute which followed. When that was settled he again rushed to the country, this time to Camberley, to make another speech, in which, again, after the strike had been settled, he then repeated that The London Transport Executive know quite clearly the financial circumstances to which they have to conform. Then he said: These have not been eased in any way by the Government and therefore the London Transport Executive are fully aware that any settlement has to be held by savings, cuts, or economies within the strict limits laid down last autumn. I refer to these matters because here again is evidence that the Minister was forcing action upon the Commission: in this case, economies to meet rising costs, cuts in the services which made it impossible for the Commission to meet its statutory obligation. In other words, if there is a wage award and the costs go up substantially, although the Commission is required under the Act, as it is, to pay its way, he says that the only way to meet the increased costs is by economies, not by higher charges. There is no alternative. The Minister refuses to allow an increase in charges on the one hand, and he forces economies, on the other hand, which have led to a threat to the maintenance of the public services.

On top of these specific actions—and there are many more with which I have not time to weary the House—is the destructive transport policy followed by the Government since 1951, directed against the Commission and in favour of private enterprise, and particularly their political friends the road hauliers. The denationalisation of road haulage which they attempted and failed to effect completely because of the success of the publicly operated B.R.S., was only one of their destructive steps. Amendments to the 1947 Act took away from the Commission the responsibility of providing an efficient, adequate, economical and properly integrated system of public inland transport, and substituted a duty confined to providing railway services and certain other services which might appear to be expedient. In fact, they destroyed the objective of the 1947 Act which was to provide an adequate, efficient public service throughout the country.

Photo of Mr Ernest Davies Mr Ernest Davies , Enfield East

The hon. Gentleman says, "At much too high a cost", but at that time the Commission was paying its way. When the Tory Government came in, a surplus was being earned and profits were being made.

Photo of Mr John Peyton Mr John Peyton , Yeovil

The hon. Gentleman is attacking private enterprise very strongly. Can he say whether or not he thinks it is a good thing for the economy in general that road haulage rates have gone down by 25 per cent. since denationalisation?

Photo of Mr Ernest Davies Mr Ernest Davies , Enfield East

In the first place, the hon. Gentleman is wrong in assuming that they have gone down to the extent which he stated. In the second place, we all know that they have gone down because of the manner in which many private enterprise road haulage firms are operating. Their drivers are being worked beyond the statutory permitted number of hours, records are being falsified and the law is not being adequately enforced by the Minister.

Photo of Mr Harold Watkinson Mr Harold Watkinson , Woking

Really, these wild charges are getting worse. I will certainly give notice that I will answer that point when I wind up the debate. My Department certainly enforces and implements the regulations, and the right hon. Gentleman knows that very well.

Photo of Mr Ernest Davies Mr Ernest Davies , Enfield East

I know perfectly well that when cases are brought to the Minister's attention he courteously refers them to the enforcement officers, but, as I have frequently stated, there are not enough enforcement officers. If the Minister wanted to enforce the law he could increase, and should increase, very substantially the number of enforcement officers.

Concerning the cuts in services which the reappraisal Report suggests—and this is one of the most serious aspects of the Report, I think—there is a necessity for one word of warning. I think that the whole House agrees that there must be some cuts due to the change in travelling habits and to the changes in the needs of the transport users. The railways have, of course, followed a policy of shedding uneconomic services over a very long period, particularly where alternative facilities exist. But it is necessary, I think, to draw a line and to limit the extent to which these cuts should continue. One wonders how long this strip-tease act, as it were, can continue without the system catching its death of cold.

The railways operate on very high fixed costs, the costs arising from the initial cost of the system, the maintenance charges and an inherent inability to reduce operating costs proportionately to the reduction in traffics. For the railways to pay their way there must be a spreading of these costs over a great volume of traffic. The attracting of more traffics and not the elimination of essential services is the answer to the difficulties of the railways.

To cut out facilities that would otherwise attract traffics is no answer. There is a danger in this negative policy. I would say that this is, also, bad for the staff. Staff morale cannot help but be affected. It cannot be expected to maintain its enthusiasm when it sees the system on which it depends for its livelihood gradually shrinking under its eyes. If this process continues indefinitely we shall be left with no railways at all, because it will be impossible to have a viable railway system.

It may be that the Minister will reply that the Commission favours this contraction. It may be that it does, though to what extent I am not in a position to know. But I do know that the policy of contraction has gone further, and is planned in the Report to go much further, than the top executives in the railway administration and even the Minister's favourite children, the area boards, favour. They are opposed, I understand, to the extent of this curtailment.

Of course, the corollary of this retraction is the position of the railway workshops, to which reference has been made during the debate so far. I do not wish to deal with that matter because my hon. Friends are in a better position to do so both from constituency and union points of view. However, I would point out one thing, which is that the main trouble concerning the railway workshops today is that during the passage of the 1947 Act an Amendment was moved by the Tory Party, which, to my regret, was accepted by the then Minister of Transport, preventing the Commission from selling any of its products outside its own undertakings. Had that Amendment not been inserted in the Act at Tory instigation the Commission would be able to compete in the open market today and keep many of its workshop employees at work.

Photo of Mr Thomas Price Mr Thomas Price , Westhoughton

Will my hon. Friend allow me to make a short comment on that matter? Does the Minister recall that the railway workshops, during the difficult war years, when we needed all the production we could get, were extensively used for producing tanks and military equipment of all kinds and that even under today's planning for military defence they no longer enjoy those facilities, which very often they would have the resources to meet, to take up the slack in excess capacity?

Photo of Mr Ernest Davies Mr Ernest Davies , Enfield East

I agree with my hon. Friend, and I regret that the Commission is not permitted to pursue that policy.

The Government have presented this reappraisal Report to the House without really stating their attitude towards it except to accept the modernisation plan as it stands. The Parliamentary Secretary did not help us a great deal to understand what the Government's plan or policy is in regard to the Report. I want to know from the Minister whether we can be assured that the assumptions on which the plan is based will be realised. There are three in particular.

First, will it leave to the Commission freedom from interference and allow it to operate commercially as far as fares and charges are concerned? Will it cease playing ducks and drakes with its finances in this regard for party political purposes? Secondly, can the Commission rely on the Government to give it an assurance that it can proceed with its capital investment programme to the extent outlined in the Report without chopping and changing it as in the past? Here, again, there is nothing worse for the morale of its keen and enthusiastic staff than for it to set out on a task only to find that it is suddenly stopped. Continuity is essential if the plan is to succeed, because it is a long-term plan and is phased accordingly.

Thirdly, what are the Government going to do about capital reconstruction? The Parliamentary Secretary referred to this matter and said that it needed consideration. He gave some principles on which it should be considered, and I do not entirely dissent from some of those. But in the view of the Opposition some such reconstruction is necessary, indeed inevitable, and should have been effected long ago. It has become urgent because the Government have delayed acting to assist the Commission for so long and have interfered to such an extent and engaged in such unrealistic financing that on its present capital structure the Commission can never pay its way.

Neither the Minister nor the Commission can possibly persuade themselves into believing that the Commission can ever earn sufficient to meet the heavy charge of £110 million of interest in 1965. But for nationalisation the railway shareholders who opposed it would have lost their money years ago. Modernisation would have been impossible as the railways were rapidly approaching bankruptcy. They would have been unable to raise the capital to modernise as is being done today by the Government.

I would remind the House that in 1935 an Act was passed which permitted the Government to advance capital to the railways to enable them to modernise. In the Memorandum which accompanied the Bill it was stated: … the Companies will be enabled to put in hand as soon as practicable an extensive programme of reconstruction and improvement estimated to cost about £30 million. The proposed works … could not at present have been carried out without the financial facilities arranged. This shows that the railways, before the war, were not in a position to carry out the modernisation which was essential to their success.

The sooner there is a capital reconstruction, the better for all those who use and work upon the railways. No undertaking facing insolvency, as, unhappily, the Commission does today, according to the reappraisal Report, can be a happy one and provide the best service to those who use it. It will be necessary to find out the maximum economic contribution which the present investment in the railways can make and then to reduce the capital accordingly. Its capital must be adjusted to the level at which presumed future earnings will at least bear all outgoings, including interest charges. That is because a viable transport system is vital to the economy.

I have spoken rather longer than I intended and I apologise, but I have touched only on a certain number of points which we can level against the Government on their transport policy. While the Opposition welcome the operational achievements of the Transport Commission, which more than justify the nationalisation of transport, and while they support in principle the modernisation plan as reappraised, both Reports convincingly confirm the view long held by us on this side that but for the policies and actions of the Government, and of the present Minister in particular, the Commission's finances would not have deteriorated to a point where the maintenance of a transport system in the national interest is in grave danger.

Because of the Government's record in transport matters, governed by doctrinaire considerations, we have no confidence that the assumptions on which the plan is based will be realised or that the rise in industrial production and the increase in the standard of living, on which they depend, for instance, will be forthcoming under a Tory Government. For these reasons, and because the Government have always lacked a constructive transport policy, only by a change to a policy of a planned publicly-owned transport system operated in the national interest—that means a change of Government—can there be a final solution of the difficulties of the Commission, and that must await the General Election.

5.12 p.m.

Photo of Mr George Lindgren Mr George Lindgren , Wellingborough

I beg to second the Amendment.

In doing so, may I declare my interest in that I am associated with the railway industry and I speak on behalf of its clerical, professional and technical workers? After the rather straight talking of my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) to the Minister, may I tell the Minister that the workers in the industry consider him to be the worst Minister of Transport that this country has seen? They have no confidence in him. As one of the industry's leaders said publicly quite recently, the less they see of him the better it is for him.

However, there is one thing for which we cannot blame the Minister. Ever since the invention of the internal combustion engine, there has been growing difficulty for the railway transport system. Some of us are old enough to remember the old "square deal for the railways" campaign during the inter-war years. Even the present Prime Minister was a director of the Great Western Railway, and, of course, he supported the "square deal for the railways" campaign, but nothing was done, except to pass the Railways (Agreement) Act, 1935, to which my hon. Friend referred, and to discuss the possibility of further Government-financed loans for capital development.

The first effective step taken to deal with the problem which arose before the war was the passing of the Transport Act, 1947. The House of Commons works on a political basis. Hon. Members on both sides of the House have political ideals, but hon. and right hon. Members opposite cannot get away from the fact that the only way to make the transport industry viable is by integration on the basis of the 1947 Act. The problems with which we have to deal today arise directly from the fact that the Minister's predecessors undermined the basis of the 1947 Act and brought about the present difficulties of the Commission. We must remind hon. and right hon. Members opposite that the previous Minister of Transport and Civil Aviation referred to those who accepted the heavy responsibility of service on nationalised boards on behalf of the country as Quislings. When Ministers of State refer to such people as Quislings, is it surprising that we wonder whether their hearts are in the effort to make any nationalised industry pay?

The most serious problem that we have to face is that there is a very grave danger of the public transport system collapsing—road transport, road and rail freight, and passenger services as well. Modernisation and rationalisation are a step forward, but let me make it plain that, from my point of view, modernisation and rationalisation on their own will never deal with the present difficulties of the public transport system.

I am sorry that the Joint Parliamentary Secretary went into political tirades, because generally we have more affection for him than for the Minister, but he referred to C licences and wondered what we are to do with them. Any Government that tackles the problem of the maintenance of a railway system will have to deal with C licences. The C licence is maintained at the expense of the Treasury, the national Exchequer. The services of C-licence operators are largely run at a cost over and above that for which the railway service could provide the transport. They are largely run for prestige purposes by manufacturers or distributors. If manufacturers want to maintain their own transport system for prestige purposes, then I, for one, see no reason why they should not pay heavily for it, because we cannot maintain a transport system which is only partially used and expect the workers in the industry or the taxpayers to meet the cost.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

Do I understand the hon. Gentleman to say that in the final analysis he would prevent a manufacturer having permission to carry his own goods in his own vans?

Photo of Mr George Lindgren Mr George Lindgren , Wellingborough

I will make it clear. There are only two choices, as I see it. There should either be restriction according to the type of traffic carried—I am talking about long-distance traffic, not the milkman, the baker or the butcher making local deliveries—or, if it is maintained for prestige purposes, the operators should pay a considerably higher licence fee for the prestige of running their own transport.

Photo of Mr Leslie Thomas Mr Leslie Thomas , Canterbury

Surely, C-licence holders run their vehicles for economic reasons, not entirely for prestige reasons.

Photo of Mr George Lindgren Mr George Lindgren , Wellingborough

The hon. Gentleman may not know, but the Chancellor of the Exchequer, very largely, pays for the C-licence holder running his own transport system. I do not say all, but very many of them are running their service at a cost well above that at which the same transport service could be provided by the established transport organisations, whether British Road Services or the railways.

I look at this matter from the point of view of national economics. Here we have a railway system half used or less than half used, while the roads of the country are strained to the limit. The obvious thing to do is to ensure that our public transport system is fully used and our roads are not overstrained. The Joint Parliamentary Secretary referred often to profit and loss. There is more than one way of looking at profit and loss. If it is true, as I suggest, that there is a danger of our public transport system being undermined, what will be the effect of such a result on our country's economy, if there is no rail commuter service and no railway system? What would be the effect on industry if there were no railway system to take the surplus traffics which the C-licence holder does not want to carry or which the road hauliers do not want to carry and leave to the railways?

The railways are there to be used. If they are not allowed fully to meet their costs, those costs will have to be met in one way or another. My hon. Friend the Member for Enfield, East referred to Government interference and to interference by the Minister in freight charges. In addition to interference by Ministers of Transport of various Governments, there has been public resistance to rail fare increases and bus fare increases. I must admit that I have sometimes been surprised when a trade union branch which itself has put in an application for a wage increase and secured it has opposed any likely increases in transport charges which were to result from an increase in wages or salaries paid to railway men.

The country and the Government must make up their minds—the Government do not seem to have made up their mind yet—whether they are prepared to accept a public transport system and to meet the cosl of the social value of it to which the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) referred earlier as the reason for interference by previous Tory Governments with the Commission's ability to increase its fares.

Photo of Mr George Lindgren Mr George Lindgren , Wellingborough

I do not remember it being done before 1952. The first interference with a decision of the Tribunal was in 1952 by the then Prime Minister, the right hon. Member for Woodford (Sir W. Churchill). If the noble Lord can give me any other reference, I shall, of course, give way to him and apologise.

One must realise that there is a social value to be derived from the operation of both goods and passenger services, or, as has been suggested today by the Joint Parliamentary Secretary, the transport system must pay its way. If it is to pay its way, it must be free. But the British Transport Commission is not free. It cannot relate its charges to the costs it has to meet. It still operates under the restriction of being a common carrier and it cannot refuse traffic. More often than not, it has to carry traffics which road hauliers refuse to carry

If we are to have a free-for-all and competition, the competition must be on a fair basis. We must let the railways compete with the road hauliers on a basis of freedom. It is suggested that the railways can do that, but, in fact, they cannot. The railways are still common carriers. They are still restricted in the various rates which they can charge. They must still go through the procedure of application to the Tribunal, and they still have to run the risk of a Tory Minister of Transport refusing to allow them to make the charges for which they are given authority.

If my calculations are right—again, I am quite prepared to be corrected if I am wrong—taking into account the present modernisation programme and the rest of the capital structure of the B.T.C., the total figure of capital is about £3,000 million. That is a fantastic capital burden for the railways to have to bear when one considers that much of the capital is well over 100 years old. This £3,000 million has to be serviced by a much smaller, though, we hope, more efficient system of operation.

I join with my hon. Friend the Member for Enfield, East in saying, quite frankly, that the British Transport Commission just cannot service that £3,000 million. After all, the operation of a railway system is a high-cost business. It has to operate for 168 hours a week. The cost must be carried, but the system can use its capital fully only during periods of peak operation. As my hon. Friend said, we are in this fantastic situation that, not only do the railway workers work to provide for the interest charges on the capital invested in the industry, but they have even to work to carry interest charges on the moneys borrowed to finance the deficit of the industry.

On behalf of the salaried workers of the British Transport Commission, I say that we welcome the modernisation plan. We shall do everything we can to assist in modernisation and rationalisation. We shall co-operate to the full. We do not object to a smaller railway system. Contrary, perhaps, to the view of some of my hon. Friends, we agree that many of the lines which were put down in the early days of the railway boom were put down in a period of competition and were never really justified. They have not been able to justify themselves for many years. We do not object to a smaller, more efficient railway industry in this country.

We ask that the Government, who are now financing this modernisation pro gramme and who have welcomed it today, should make it possible for the Transport Commission to meet the costs of the capital invested in the industry. No worker likes to be associated with an in dustry which is losing money or which is always being criticised for working under a deficiency. Therefore, there is, because of the mere fact of morale with in the industry, a duty on the Government to ensure that—