During the short time that I have been in the House, Supply days have been used, by and large, to discuss other items. We have taken that opportunity to discuss matters of very real and relevant significance for the country's future. On this occasion, however, we have decided to use the time, as it was originally intended, to discuss Supply. I believe that there is no more important or vital aspect of our present position than the economic crisis, and a Supplementary Estimate of the order of £30 million is quite clearly a matter of great significance.
The total amount referred to in the Vote is £168 million, which is an increase of £30 million. When in June, 1967, we discussed the British Railways deficit of £153 million which makes up almost all this amount, several hon. Members on this side expressed alarm at what was taking place; at the sheer size of a deficit of £153 million; and, more important, at the fact that the Government appeared to be making no significant changes of policy which could reduce the amount. Sadly, our worst fears have been realised and, once again, we find ourselves with an enormous deficit. The plain fact is that the British Railways deficit is now assuming the dimensions of a national disaster.
We have to consider that recently we hive been discussing a policy to reintroduce prescription charges which involved a great deal of controversy and trouble, and was related to a sum of £25 million. We have to consider the very real alarm and misery which will stem from the Government's decision to reduce expenditure on Scottish housing by £7 million over a period of two years, which is only one-fourteenth of the amount of this year's railway deficit. We have to consider the dangers to our national security and to our substantial assets east of Suez because of a recent Government decision in that regard; and that all our defence capability there could have been continued in the 'eighties, and not the 'seventies, if we were able to take the amount represented by just one year of the deficit.
Consideration of all those aspects gives some idea of the amount of money of which we are now speaking. The fact is that this year's deficit is equivalent to 5s. per week every week for the average family. In effect, what we are doing is paying an extra insurance stamp of 5s. every week just because of the deficit.
We on this side are not in any way trying to suggest that the elimination of the deficit is easy: on the other hand, when hon. Members opposite and people outside talk about the social consequences of action on the railways we should also remember the importance in social priority of a sum of over £150 million. It is a very substantial amount. We therefore believe that at a time of economic stringency, at a time when the Government are very carefully scrutinising all items of expenditure, when nothing is sacrosanct and sacred cows no longer exist, we should look very carefully at the deficit relating to this Supplementary Estimate and at all aspects of our policy.
The importance of the amount is not just a question of money. In our debate on 26th June last, I was very impressed by the speech of the hon. Member for Central Ayrshire (Mr. Manuel), who often speaks in our railway debates. On that occasion he made a very sensible and important statement. The hon. Gentleman then said:
The railwaymen would be jubilant if they managed a substantial reduction in the deficit. It would give them greater heart and give greater impetus to the success of British Railways than anything else."—[OFFICIAL REPORT, 26th June, 1967; Vol. 749, c. 135.]
That is absolutely true. The existence of a substantial deficit has a very devastating effect on the morale of railwaymen. The one real asset the railways have are the men who work on them. There could be no greater body of people so committed heart and soul to the future of this great industry.
We shall have to ask many questions about this Supplementary Estimate, and I hope that the Minister will answer them fully. The first and obvious one must be why there has been such a very substantial error in calculations, and what steps are being taken to prevent this happening in the future. We often have under-estimates—our debates in recent years have seen several examples in which the overspending of money has caused major controversy—but we now have a major overspending of £30 million in one year, and when we have such a major difference without any significant changes of policy taking place in between questions must be asked.
These are not just my own fears. The Estimates Committee, when considering a memorandum submitted by British Railways only a few weeks ago, pointed out in a Report published in December that it was very alarmed. In page 7 of its Report we read:
Your Committee feel bound to point out that Supplementary Estimates for the British Railways Board are becoming a regular occurrence. Apart from the disturbing picture this presents of the failure of the railways to pay their way"—
that is obvious—
there appears to be a continuing inability on the part of those concerned to make accurate estimates. For example, in their Eighth Report for Session 1966–67 the Estimates Committee reported to the House an increased deficit for the British Railways Board, due largely to a loss of freight receipts caused by the economic climate. This is virtually an identical account to that which Your Committee are now reporting. While accepting that the present economic situation was difficult to forecast, Your Committee consider that the British Railways Board should have been able, as a result of their experience last year, to make their estimates for the current year more realistic.
That is a very carefully worded and very sensible comment. We might not
think such a major mistake so disastrous if it had not happened before, but, as the Committee points out, we now have exactly the same question arising and exactly the same explanation given, though the same sort of disaster has happened in a previous year.
Our first question, therefore, is: what steps are the Government taking to make sure that this will not happen again? When the Government are thinking in terms of very tight budgeting and of trying to work out amounts to the nearest £1 million in so many social spheres, we must know what steps they intend to take to make sure that a mistake of £30 million will not occur again. The Government's answer to that question is one in which every hon. Member and every taxpayer will have a very real interest.
The second question that we on this side are entitled to ask is whether the Government consider that this is a matter that will not arise again, but that there will be an improvement in the financial position of British Railways. When we recall that my hon. Friend the Member for Worcester (Mr. Peter Walker) pointed out in our June debate that we have made a capital investment of £1,200 million in British Railways over the last 10 years, it seems incomprehensible that we should have a deficit which has been growing under this Government and which, looking to the immediate future, appears likely to continue to grow.
It is worrying if we take into account the reasons given by the British Railways Board in statements to the Estimates Committee. All the reasons given for this Supplementary Estimate and the size of the deficit would appear to be factors which are not improving, but are getting worse. We look at the four essential reasons which British Railways gave in the statement, contained in Appendix 2 of the Report on pages 44 and 45. The first reason was an absence of upturn in the level of economic activity.
Do hon. Members on either side of the House, having heard the Chancellor of the Exchequer and other Ministers including the Prime Minister speaking in recent debates, consider that this factor will disappear as a result of the Government's economic policies? The slashing of Government expenditure and the further dampening measures on the economy which we all know are to come, but we do not know exactly when they will come, will unquestionably have a serious effect on the level of economic activity.
I well remember listening to speeches by hon. Members opposite in which they said that it was possible to have a growth rate not of 5 per cent. such as we had in the last two years of Conservative Government, but of 6 per cent. by investment programmes. Then we had the National Plan, which suggested 4 per cent., and later the former Chancellor spoke of 3 per cent. Under the present Government the economy has hardly grown at all. On average, it has been a growth of 1 per cent. and the prospect for the future is that things will get worse. Do the Government estimate an improvement in this factor in the immediate future? I cannot see a remarkable upturn in economic activity. We must discount this factor when we are looking for an improvement.
The second reason given to the Estimates Committee was that coal traffic has been hit. Hon. Members opposite are constantly reminding us that the future of the coal industry is not so bright as it once was. This is a vital factor for British Railways. As the Minister pointed out on 26th June, one-third of the freight receipts come from coal and about 90 per cent. of the freight total comes from coal and steel. Can we look for an improvement here? In all previous debates on the railways we have had the unknown factor of a White Paper on Fuel Policy, but this is now available. Despite devaluation, it seems that it will be the basis of fuel estimates at least over the next five years.
The White Paper tells us that the amount of coal required between now and 1970 will fall by about 20 million tons per year. Here is another factor in which the coal industry is heading for a rapid contraction and this unquestionably will have a very considerable effect on British Railways. This was given as a reason for decline. The Supplementary Estimate this year and looking to the immediate future makes it a factor which can only deteriorate. Every estimate made by this Government about the amount of coal which would be required and consumed has, unfortunately, proved over-pessimistic. If we have the suggestion of a 20 million ton reduction over the next few years, it might be more serious. We can see no sign of improvement here. The third reason was that iron and steel has been seriously affected by the recession. I suggest that the recession will not disappear. From the meagre reports by the British Steel Corporation now that the industry is under public ownership, there seems no immediate prospect of a considerable improvement in the iron and steel industry. To that extent the Government cannot look for much progress.
The fourth factor, a smaller one in total, is the question of industrial stoppages and disputes. It was pointed out to the Committee that £2 million had been taken up by disputes over freight terminals and also the dock strike and the A.S.L.E.F. strike. Although we have been given an assurance that industrial relations would flourish under the present Government, I think that it was right of my hon. Friend the Member for Worcester to point out in a recent speech that industrial relations on British Railways are not flourishing and morale is perhaps at an all-time low.
In all this tale of gloom presented to the Estimates Committee, there was one hopeful factor. It was the statement that freightliner business had been improving and the amount received from it in one particular case had been an underestimate. We on this side of the House have consistently pointed out that the whole freightliner network, planned and financed by the previous Government, offers an enormous potential for British Railways. Is it not a tragedy that tomorrow in Standing Committee we shall be starting proceedings on the Transport Bill which will take away from British Railways total control of the freightliner system, which is the one real growth factor? We can see on the basis of present Government policy no wonderful improvement in the situation; in fact, we see it getting worse.
When we have a deficit of £150 million, when we see the situation getting worse at a time of economic stringency this is a matter of very real concern for every Minister, for the Cabinet, for every hon. Member and for every taxpayer. When he was speaking of the problem in the debate on 26th June, the Parliamen- tary Secretary to the Ministry of Transport pointed out that there were two essential tasks. He said that the first was a question of accountancy and how to look at the figures. The second was a question of remedying the underlying causes. There is no question that on looking at the accountancy the Minister has kept his promise, because in the Committee tomorrow we shall be starting on a remarkable Bill which will change round the accounts of British Railways very considerably.
The best summary of this new situation was given in the magazine Modern Railways, in the January issue, by Mr. Fiennes, who is known to the Minister. The heading was:
They have shuffled the deficit under the rug.
This is the whole basis of the policy which the Government are bringing forward under the Bill. They are changing the figures round. Instead of a deficit it will be called a loan or a grant.