I beg to move, That the Bill be now read a Second time.
This is a short and, I hope, uncontroversial Bill. The major nationalised industries, as the House knows, agreed to match the restraint shown by private sector firms under the C.B.I. undertaking on prices. My right hon. Friend the Chancellor of the Exchequer made clear on 19th July last year the importance he attached to the C.B.I. initiative, which, the House may feel has been one of the key factors in slowing down the rate of price increases over the last six months.
The major nationalised industries are, of course, members of the C.B.I., so it was only natural and right that they should match the efforts made by private sector industry. The fares charged by British Railways and the subsidiaries of the National Bus Company bear very directly on the purses of the travelling public. Moreover, a symbolic importance, out of proportion to the sums involved, is often attached to fare increases. It was quite clear to British Railways and the N.B.C., no less than to the Government, that for them to stand apart from the C.B.I.'s initiative would have been extremely damaging to its prospects of success.
From the purely commercial point of view, however, it was difficult for the N.B.C. and British Railways to hold their fare increases to the limits set: their situation demanded far higher and steeper increases. British Railways made a surplus in 1970 but in 1971 it made a loss of about £15 million. The N.B.C. lost £8 million in 1970 and its likely loss in 1971 is about £1 million. Against this background, holding down increases of fares and charges, although unquestionably in the national interest, meant that, without special assistance, large losses would be inevitable for both nationalised boards in 1972.
This might have been acceptable, of course, if there was a prospect of these losses being made up from future profits, but the trading situation of both is difficult. British Railways, for example, is faced with a long-term decline in its coal traffic, which in 1970 still accounted for nearly half its freight revenue and well over half its tonnage. The N.B.C., too, is faced in many areas with a long-term decline of passengers, largely because of the rise in car ownership.
The prospects that either of these nationalised industries could recoup the losses arising from price restraint out of their ordinary revenue are therefore very slight, and both would have been pushed by their acceptance of the C.B.I. restraint into a breach of their statutory financial obligation to break even, taking one year with another. It was in all these circumstances that my right hon. Friend concluded that a special grant in aid should be made to each board. That is the reason for the Bill.
Clause 1 provides for a grant of £27 million to be paid to British Railways and another of £7 million to the N.B.C. These amounts have been determined after the most detailed consultations with the boards themselves and they are intended to ensure that each, given good management, should be able to break even over a year.
These amounts are somewhat less than the boards' initial estimates of their likely deficits, but we have felt obliged to take into account only the extent to which the forecast of the deficits could be attributed to their holding down increases in fares and charges in accordance with the C.B.I. initiative. Moreover, as I have said, we consider that, with good management, both hoards should be enabled to break even.
Perhaps I can draw the attention of the House to a particular feature of the drafting of Clause 1. The grants are fixed in advance. The amounts will not be open to review should the boards find, for example, that their costs in 1972 are rising above current estimates—but, conversely, if they can improve their present prospects with good management, they will be able to reap the financial benefit.
No, Sir, it is quite separate from that grant.
The boards' incentives to good management are to be preserved, simply because, if they can do better than the forecast deficit, they will reap the benefit. If not, because the amount is fixed, they must face that consequence too.
The suggestion has been made in some distinguished quarters—indeed, by the right hon. Member for Sheffield, Park (Mr. Mulley)—that the granting of this special assistance conflicts with the financial disciplines created by the 1968 Transport Act. This is not the case. It is precisely to preserve these disciplines that this special assistance is being afforded.
The major purpose of the 1968 Act was to relieve British Railways of the cost of services which the Government, for social or economic reasons, consider to be reasonable and which would otherwise not be within the Board's commercial interest to provide. Those are the unremunerative services to which my hon. Friend the Member for Harwich (Mr. Ridsdale) referred.
It is in this way that non-commercial objectives under the 1968 Act can be undertaken while maintaining the kind of disciplines which encourage effective management. On the same principle, but with no connection with the grant for unremunerative services, the Government's action in this case to relieve these boards of deficits arising not from ordinary commercial decision but from a decision taken in the general public interest in connection with the C.B.I. initiative, runs on all fours with the philosophy behind that Act and is entirely consistent with the Government's own policy.
The Government in no way regard these grants as compensation to the Boards for accepting the C.B.I. restraint. Rather, they are payments designed to enable the two nationalised industries to comply with their statutory financial duty in circumstances in which the public interest requires them to act in a way which would otherwise place them in breach of those duties.
Clause 2 enables British Railways to respond to the Government's request to the nationalised industries to bring forward investment in order to promote extra employment. Present plans are to bring forward investment projects costing more than £50 million. They include such things as the three Isle of Wight ferries, the new ferry for the Harwich-Hook service, 600 new Inter-city coaches, 360 new hopper wagons and so on. This acceleration of capital projects will entail additional expenditure of about £5 million in 1972 and £15 million in 1973.
This will create or secure from loss more than 1,000 jobs in shipyards and about 800 jobs in railway workshops at Derby, York and Shildon, together with a substantial number of other jobs with contractors and private firms. All the schemes must be subject to the normal criteria for investment in the nationalised industries. In other words, they are all investment projects which, undertaken as a part of this exercise, would nevertheless have been undertaken in any case, though they would not have come forward so quickly.
As I have said, this is a simple Bill. It is, I believe, uncontroversial. I commend it to the House.
The Under-Secretary of State has been extremely brief. This is a very short Bill, but it merits our serious consideration. It provides what is neither more nor less than a straight payment to British Railways and the National Bus Company for doing a job for the Government—whatever gloss the hon. Gentleman may put on it. Both organisations were told that they had to comply with the C.B.I. initiative and restrain their price and fare increases to a limit of 5 per cent. Neither organisation could so restrain itself without incurring heavy loss—the hon. Gentleman has conceded as much.
We must ask ourselves why this so-called C.B.I. initiative was necessary. It was necessary, I suggest, because of the Government's total failure to redeem their election pledges on prices and economic management generally. British Railways are particularly vulnerable to inflation, being a 63 per cent. labour-intensive industry. They are also extremely sensitive to all movements in the national economy.
The National Bus Company has also suffered all the usual difficulties of other bus operators, with falling passenger revenue and increasing costs. Its outgoing chairman said on his departure that he had been beaten by rapid cost inflation. In addition, it has had to take over the burden of railway replacement and rural services. County and district councils have been most reluctant to make an appropriate financial contribution, and there has been any amount of disputes in the traffic courts in establishing maintenance costs. The Minister knows this very well. All too often either fares are increased or services are withdrawn.
The Minister's proposals, and my right hon. Friend's proposals, which are still under discussion, to relax licensing laws in the rural areas to permit more private mini-bus and fare-paying lifts, are no proper substitute for regular scheduled services, and public and private bus operators and local authorities have made it known that they are against too much relaxation of existing licensing regulations.
The reconstruction of the capital debt of British Railways in the 1968 Transport Act, which wrote off no less than £1,200 million worth of historic capital debt, has helped them for no longer than two years. After 15 years of mounting, and morale-damaging, deficits, we have seen profits of £14·7 million in 1969 and of £9·5 million in 1970. Now, after only two years' operation of that Transport Act, we are witnessing a return of a very familiar scene. We are told that a budgeted surplus by British Railways of £17 million for 1971 may turn out to be a loss of a similar figure.
Why is this so? It is the result of a trade recession for which the Government seem to bear no responsibility, judging by the hon. Gentleman's rather casual approach to the problem this evening. The trade recession has hit British Railways very severely indeed, especially in their coal and steel traffics which are the lifeblood of railway traffic operation.
The recession last year is calculated to have cost them no less than £18½ million loss of revenue; the Post Office strike —£1·4 million; the Ford dispute—£1 million; the miners' overtime ban in November—2 million. And the miners' current more serious conflict will be calamitous to this year's accounts. Even the Menai Bridge disaster has taken its toll.
These instances show how dependent British Railways are on movements in the direction, the conduct and the course of economic management and business in general. Any chance of their breaking even this year—never mind taking up the £27 million bonus contained in the Bill—will depend completely on a revival of our economy which, of course, rests with the Under-Secretary's Cabinet colleagues: there is not much sign of that.
The weakness of the Bill, as we see it, this is a once-for-all 12-month exer-—the hon. Gentleman expresses surprise or disbelief or astonishment: he does not pretend, does he, that the Bill is something that will go on? As I understand it, this is a once-for-all 12-month exercise. We shall no doubt return to that aspect, if that is possible, in Committee.
The £27 million means, in effect, that because of the C.B.I. initiative and Government pressure only a 5 per cent. increase in railway fares is in prospect at the end of March. What happens after the expiry of the C.B.I. appeal? British Railways and the National Bus Company will almost certainly have to impose increases to cover the grant in the Bill in addition to containing further increases in costs which may arise meanwhile. Fare increases will have been held back, but the grant will disappear. Therefore, the budgets of both organisations for 1973 will start that much worse off.
We should not, therefore, delude ourselves into thinking that the Bill will dispose of the difficulties of public transport. It merely postpones the crucial decision on how we should deal with the dividing line between commercial criteria and the political, social and economic obligations of these nationalised undertakings. Certainly, in the case of British Railways, the Measure is only the forerunner of what must be a further reappraisal of railway finances. I am not being party political about these serious matters, but we should ask ourselves whether it is right to finance a business, namely British Railways, whose turnover is directly affected by the level of the nation's economic activity, by capital which is wholly of a fixed interest character.
Would it not be fairer to substitute equity capital for some of the interest bearing debt to the Minister? The anticipated loss for 1971 will be after paying interest charges of no less than £43 million. That has been the position in British Railways accountancy for as long as I can remember. Interest payments are a prior charge on the business, quite unlike private business practice. Surely the time is overdue for putting British Railways' finance on a fairer basis. The balance sheet at best is misleading; at worst it is unorthodox and grossly unfair to the true performance of the industry.
There is something undignified about the recent—dare I say devious—but certainly admittedly ingenious new Railway Finance Company, whereby railway tax losses are set against private enterprise firms' profits. A major State enterprise ought not to have recourse to such a device. Presumably it had the sanction of the Under-Secretary's right hon. Friend. But the British Railways Board must have impressed upon him how much it prefers more open methods of conducting its business. So long as this state of affairs exists, the Minister should be seeking tonight permanent and continuing powers of assistance, and not the seemingly temporary once-for-all payment contained in the Bill.
We shall not oppose the Bill, but I give notice that the time is not far away when we shall want a clearer and more fundamental approach to our public transport finance from the Government.
I welcome the Bill, which was explained so well by my hon. Friend the Under-Secretary.
The hon. Member for Leicester, North-East (Mr. Bradley) asked why the Bill was necessary. He said that it was to redeem Conservative election promises. We should face facts. The Bill is necessary because we have had to face a phenomenal rate of wage inflation. As the hon. Member rightly said, no industry is as much affected by wage inflation as the railways. British Railways, even before the present wage demand of 11 per cent., has had to meet wage increases of 20 per cent. over the last two years. It was for that reason that I had an Adjournment Motion in the House on 11th May, 1971, which my hon. Friend the Under-Secretary answered, when I pressed him on many of the arguments which are now being put forward to the House.
I pressed him on the need to consider the long-term investment in the railways. I pressed him to consider particularly the position of railway commuters, and especially those who use buses. I realise the kind of fare increases they have had to face. Bearing in mind the market economy alone, this is something that they would be unable to afford, without at least taking drastic measures to curtail their way of life. That is why I wanted to see a new outlook towards financing British Railways, and why I welcomed the Chancellor's initiative in July when he called for a policy of wage restraint. At least it was the beginning of a voluntary prices and incomes agreement, which was so necessary if we were to face some of the economic facts.
I welcome the Bill as a pointer. But the danger that I see hovering over this policy is one from which, understandably perhaps, the hon. Member for Leicester, North-East ran away completely; that is, how can we have this kind of policy of wishing to have long-term investment and to keep railway fares stable if at the same time demands come from the railway unions ahead of what it is possible for the management to bear? It is because of the 20 per cent. wage increases of the last two years and because of the present demand for 11 per cent. in the pipeline, and further demands, that we need to have a limitation put on them if we are to carry on a long-term progressive policy towards the railways.
I should declare an interest. As president of one of the three railway trade unions, I should be glad if the hon. Gentleman could indicate when any pay claim, or the satisfaction of any pay claim, of any of the unions of British Railways has exceeded the average for the rest of the country at any time?
I am glad that the hon. Gentleman has declared his interest. Nothing pleases me more than to argue in the House with someone who has a direct interest in railway wages. I assure the hon. Gentleman that my railway constituents—they may be his members—are concerned because they are losing employment because of the present demands which the railway unions are putting on the Government. [HON. MEMBERS: "Oh."] That is so. Members of the hon. Gentleman's union have attended my meetings, and they have said this. Hon. Gentlemen opposite may not like it, but the House has to face this.
I am not suggesting that railwaymen in my constituency are overpaid. But the pressure of wage demand, which continues all the time whether in the railways or any other industry, but particularly in the railways, means that lower paid workers in British Railways in my constituency have been laid off and have been losing their jobs.
Could the hon. Gentleman comment on the level of productivity British Railways has achieved, as opposed to almost every other section of industry in Britain? As far as I am aware, over the last 12 years British Railways and its employees have accepted a reduction in the level of staff far in excess of any other industry. The level to which the staff has now decreased more than compensates for any wage or salary increases given to them by British Railways.
I do not have all the facts at my fingertips. But although wages have doubled in British Railways over the last five to 10-year period, the staff employed has been halved. To that extent, the laying off of staff, with wages going ahead of productivity, causes unemployment. That is denied by hon. Gentlemen opposite, but it is a fact of life. It is happening. I welcome the presence of the hon. Member for Leicester, North-East because it enables one to argue with him.
I am telling the House of the strong views of my constituents. Of course they want the railwaymen to be properly paid and of course they welcome in- creased productivity on the railways, but they sincerely believe that there is a relationship between the wage demands now being made and the fares which they are asked to pay. They are as desperate about the fares they have to pay as unions may be in asking for wage increases. That is why I have to argue on the Floor of the House as strongly for them as the hon. Member may argue for his union members. Many of my constituents are low paid workers and they are facing great difficulties because of the rise in the cost of living.
That is why I support the Government's prices and incomes policy, because without a voluntary prices and incomes policy—
There would be if Labour Members would co-operate in trying to bring one about. The difficulty is that although we have proposed a voluntary prices and incomes policy, so many Labour Members are trying to undermine it.
The criteria must be to try to keep wage and price increases within a 5 per cent. limit. Unless we have that voluntary limitation, we shall have further price rises and further difficulties. There will be further increases in fares and further cuts in the services that my constituents need. I lay the blame not on the Government, but at the door of the trade unions, because they are constantly making demands ahead of what productivity on the railways can stand.
Mr. Bob Brown (Newcastle-upon-Tyne, West):
If the hon. Gentleman is appealing for a genuine prices and incomes policy, he will find some support among the Opposition. However, how does he find any justice in the drivel we are hearing tonight, when he suggests that railwaymen should voluntarily agree to wage increases of no more than 5 per cent., although there has been an increase in food prices since the election of 14 per cent., when the Government have allowed 30 per cent. to doctors and dentists?
Wage increases paid by British Railways over the last two years, plus the current demand of 11 per cent., make the equivalent of a 30 per cent. increase in wages over two years.
Such increases affect the lower paid workers and no one, least of all me, will say that they should not be helped. But the basis must be voluntary restraint. Without that restraint, there will be increased unemployment among the very men who desire jobs most earnestly, and for that reason I commend the Bill. I congratulate my hon. Friend on having introduced it, and I welcome this opportunity of a contretemps with the shadow Minister, who is a trade union leader, because it has permitted me to tell him what is felt by many people in my constituency.
I do not want to waste too much time in this debate, which is about a grant to the railways, in discussing wider economic issues, but after listening to what has been said, I must point out that Tory words on the subject of wages mean exactly what anyone wants them to mean. We are told that there is no prices and incomes policy, that a Bill has to be brought in to establish a prices and incomes policy allowing price increases of only 5 per cent., that we must have wage restraint at all costs; and yet we all know that at the top of the scale there is no wage restraint.
Salaries and perquisites at the top of the scale have been rising far faster than 5 per cent. I will not mention M.P.s, but there are others. Only this week I have heard of a scheme by a firm in the City of London allowing executives to put down 2p a share to buy at any time in future shares at their present price of 585p. That is an extremely good offer, far in excess of anything offered to the railwaymen.
We could have a useful debate about the principles upon which wages should be paid, but one discrepancy which has always struck me as remarkable is the extremely low wage of a train driver who takes a heavy express through busy junctions and into stations and the high wage of an airways pilot. The differential is out of all proportion. Both are assisted by much technical apparatus and rightly so, but I should have thought that the responsibility for bringing a Scottish express through fog and snow, as is frequently the case, from Aberdeen to London, is, if not as great, certainly in the same range as that of flying an aircraft on so many days a week, but the payments bear no relation. It is slightly curious that the Government should be prepared directly to intervene in one nationalised industry and, although they may find it necessary to make a similar intervention in another, they are so far stoutly resisting doing so.
However, I have risen to draw attention to the difference between what the Government are willing to do for the Railways Board and what they are willing to do for my shipping company. We, too, have suffered from a number of increases in cost, not of 5 per cent., but of 10 per cent., and not in one year, but in every year. We have been waiting for years and years for a payment which would enable us to keep within the norm set by the Government. We have not had it. We are still awaiting a final decision about a subsidy to keep down freight costs to Orkney and Shetland
It is widely believed that somehow the South subsidises the North, that the rural areas draw enormous subsidies for transport, while the urban areas pay; but that is no longer so. We have been told that £1,200 million has been written off the capital of the railways and we know that year after year subsidies, overt or covert, have to be paid to the railways for travel in the South. And yet in the North, when we ask not for £27 million, and far less do we ask for £1,200 million, but for an amount very much less than that, there is continual delay. I trust that the Minister will draw the attention of his colleagues to that state of affairs, because it is totally unfair and totally anomalous.
Secondly, I should like to ask about payments to the National Bus Company. There are great difficulties in the provision of bus services in many rural areas. I am not aware whether the Bill will make any contribution to a solution of those difficulties, but perhaps the Minister will deal with that.
In the North of Scotland there is a line which runs through some of the finest scenery at least in the country and probably in Europe. It is a very important link and it will become more important if we join the Common Market. Moreover, there are other lines in the North, for instance, in Aberdeenshire, which may become increasingly important, particularly if it turns out that we have a major change in the economy.
If it is Government policy, as it should be, to encourage capital expenditure, partly to promote employment, no doubt, and partly for the long-term benefit of the country, I wonder whether the Minister could ask British Railways to consider fines in the North of Scotland. There are two lines north of Inverness which are in a twilight condition. Very little is done to improve them, or to bring them up to date, or to increase the number of services. The services run at anomalous times of the day and night and do not satisfactorily connect with other services for people who want to go to the South, and they are most inconvenient for people who wish to come to London, and for that reason they are loss mating and expensive. I suggest that a more frequent type of service might be initiated. A good deal of capital expenditure could be laid out with advantage to the ultimate economy of the railways.
Certainly. It is a beginning and it can be increased. It is small but it shows that in principle the Government are prepared to spend money on the railways as part of their justifiable attempt to cure unemployment. It is conceivable that some lines may have to be reopened if major sources of oil are discovered in the North Sea. Having accepted the principle of State assistance, this might be extended in other directions to the railways.
For years we have been trying to get assistance for our ferries in Orkney and Shetland. While we have got some, we have certainly not got it on this scale. We have been trying for years to get minimal assistance, yet now we have this Bill rushed forward to assist British Railways because it is felt that £40 million is something they can lay out, partly to preserve an incomes policy which they say on other occasions does not exist and partly, rightly, to utilise under-used resources and bring people back into employment.
Like my hon. Friend the Member for Harwich (Mr. Ridsdale) I welcome the Government's initiative in bringing this Bill forward and I congratulate the Under-Secretary upon it. I was surprised to hear the hon. Member for Leicester North-East (Mr. Bradley) taking what seemed to be a "Jonah-like" view. As he is a distinguished railwayman it somewhat surprised me to find him entering into that rôle with some zest. One of the things that strikes me most as a constituency Member is the great will there is in the railways to make the most of opportunities and existing facilities. To do this they will need capital above all and it is to that particular end that these moneys are being applied.
I am sure that my hon. Friend the Member for Leicester, North-East (Mr. Bradley) would agree with what the hon. Gentleman says about the will in the railways to make the best of what they have and to make a success of things. The point he was making was that this is merely replacing revenues, it is not a contribution to the backlog of capital deficit which has built up over many years.
I take the right hon. Member's point. I want to deal with ways in which the revenue could be replaced other than having to turn to the Government when a specific crisis arises. I ask my hon. Friend to look carefully at the increasing opportunity there is in the railways—and the increasing social and amenity pressure—for transferring freight from the roads to the railways.
On 10th December of last year the East Anglian Daily Times had a leading article headed:
The Right Lines".
It pointed out the risks to East Suffolk —becoming known as the "Juggernaut country" because of the effect of road
transport on our already overcrowded roads—and went on to say:
Some of the heavy traffic ought to be carried on an efficient rail system though no one ought to accept the simplistic belief that some of our roads, relieved of their burdens, would then regain the adequacy which they lost ten or twenty years ago. The campaign to switch heavy loads on to the rail system ought to be in conjunction with the long battle…to bring major road improvements to East Anglia, particularly in an east-west direction.
That is particularly our special problem with the build up of Common Market activity and freight traffic from Felixstowe.
It is interesting to note that one firm in the constituency of my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton), known as Freightliners Limited, was able to announce in December of last year the completion of a rail link between Felixstowe and North London capable of handling 60 containers a day in each direction and taking something like 120 heavy lorries off the roads. I put this forward as being one of the ways in which the amenity position can be improved along with the financial position of the railways. I hope that my hon. Friend's Department will show an initiative, impetus and encouragement that will encourage this kind of development.
The 23rd December issue of Country Life said:
It is clear that the pendulum has swung too far in favour of road traffic in recent years, to the detriment of the railway network. Only the Government can break the vicious circle that makes the railways an uneconomic means of transporting freight owing to a steadily reducing amount of business. But even if the number of heavy lorries on the roads could be reduced, the problem would only be partially solved.
It is clear that these things must go hand in hand.
One of the best ways of keeping a fair balance will be to preserve an open mind on the matter of closures. There are some passenger and freight services which may at one point be uneconomic but which may, in a couple of years' time, have altered their financial position entirely. The decision over the reopening of Needham Market Station in the constituency of my hon. and gallant Friend the Member for Eye (Sir H. Harrison) is an example. There may be many more stations particularly in the rural areas which could be re-developed in this way where there is a genuine market demand.
In approaching the future of the railways I hope that the Government will not just look at the statistics as they stand on any one of the so-called non-profitable railways but will seek to determine how far they can genuinely be made to pay. I hope my hon. Friend will look carefully at the potential and social importance of railways such as the Ipswich-Lowestoft-East Suffolk line. There is far more that can be done to revive that type of railway in terms of the needs of the community than is being done or has been done in recent years.
Those of us on this side of the House who are actively engaged in railway work heartily concur with many of the arguments of the hon. Member for Ipswich (Mr. Money). What he said about taking traffic off the roads and putting it on the railways has been said from this side of the House for many years. The hon. Gentleman's speech was in direct contrast with that of the hon. Member for Harwich (Mr. Ridsdale), who tried to create the impression that all railwaymen, or at least those in his constituency, were satisfied with their lot. That is not the experience of my union, the National Union of Railwaymen, which is receiving letters from branches throughout the country asking the union's negotiating committee to expedite pay increases in order to meet the excessive cost of living.
I disagree. However, speaking on behalf of railwaymen, I say that they still think that they are underpaid. Railway shopmen, in whose work I was engaged before I became a Member of the House, are very perturbed about what is likely to happen as a result of the British Railway Board's proposal to make 5,500 railway shopmen redundant.
Since September, 1971, the railway unions have been showing how the problems resulting from redundancy can be alleviated. They have co-operated with the British Railways Board and in the joint working party in considering ways of dealing with the problem. They have met the Minister for Transport Industries on at least one occasion to discuss this. I understand that these redundancies arise mainly from the rundown of the wagon fleet from 299,000 to 173,000. We are told that there will be extensive redundancies in the very near future.
The railway unions are not Luddites; they are realists. They have co-operated to a considerable extent in the modernisation programme, as a result of which the number of workshop staff has been cut by half. They have encouraged modernisation in railway workships. They have encouraged new methods of working and streamlining.
The Minister said twice, "We can get by, given good management". Does he suggest that we have had bad management or that we have not had good management in the past or even during the present? Some of us who have been engaged in railway work have been perturbed for some time at the number of top personnel brought in from outside. Many ordinary railway workmen who rose to the top, particularly under private enterprise, did a wonderful job. Perhaps the Minister will comment on this aspect. Many of us in the railways would be much happier if many of the people engaged in the industry were given better promotion opportunities.
Most of the £30 million involved in the Bill will go to private industry. This annoys many of the trade unions. At the same time, the Minister proposes to close a number of railway workshops. I hope that he will give the trade unions involved an assurance that every effort will be made to ensure that there are no redundancies among railway workshop staff.
I accept the Bill, but with reservations, although after the speeches of the hon. Member for Leicester, North-East (Mr. Bradley) and the right hon. Member for Orkney and Shetland (Mr. Grimond), I came to the conclusion that I should be better advised to welcome it. Putting myself in the shoes of my hon. Friend the Under-Secretary of State and the Minister for Transport Industries, I regard the Bill as a grim necessity because the Government must take some action about British Rail—bearing in mind the need to constrain inflation—which is a fine industry providing a line service. My hon. Friend outlined the alternatives before him. When one studies them, one can only come to the conclusion that this alternative is by far the best. I therefore support the Bill.
I welcome the news that there is to be additional investment providing additional employment including employment for railway workshops. I was surprised that the hon. Member for Leicester, North-East should be so critical. I hope that he will be here later tonight when we deal with the remaining stages of the Iron and Steel Bill. Also, it would perhaps be wise if hon. Members opposite attended the debate on the coal industry tomorrow. The criticism of the Members opposite about the handling of the steel industry is far from compatible with the criticism from them of this Bill. To subsidise or give grants to nationalised industries is less than palatable to Conservatives, and I am sure that my hon. Friend the Under-Secretary of State is aware of that.
In the Committee which considered the Iron and Steel Bill, my hon. Friend the Minister for Industry had to listen to a number of attacks about the so-called lack of understanding and sympathy of Conservative Governments for nationalised industries in general and the steel industry in particular. The Steel Corporation is reputed to be constrained and restricted by the present Government. Surely this Bill runs counter to this, and if hon. Members opposite who were on the Standing Committee of the Iron and Steel Bill were here now they would realise that my right hon. and hon. Friends have taken a very bold step indeed.
Let us consider this from another point of view. Would hon. Members opposite, let alone former Ministers in Government, or even a Conservative Government, contemplate similar subsidies for the private sector of British industry? Today the private sector of British industry is having to stand up to the C.B.I. undertaking, and meet pressures from its own resources—they neither ask for nor expect a subsidy. The private sector of industry, aided and abetted by the nationalised industries, through the C.B.I. gave this price guarantee. I would remind the hon. Member for Leicester, North-East that the C.B.I. has nationalised industries among its members and the nationalised industries undertook to support the initiative given by Mr. Partridge of the C.B.I. So to a certain extent the nationalised industries must share responsibility for the lead which has been given by this organisation.
When I first knew of this initiative by the C.B.I. I was sceptical, slightly critical, and certainly mildly cynical about its chances of success. With hindsight I consider that this initiative, underwritten by the Chancellor of the Exchequer in his statement, has brought about much greater stability in prices. Therefore, with hindsight, I now support the step which was taken—an initiative which has given respite from uncontrolled inflation.
This lead will be successful only if it results in reduced wage demands throughout industry. What I fear is that the Jack Joneses and the Scanlons and, in the coal industry, the Dalys and Gormleys, and perhaps some in the railway industry will not follow this constraint. Hon. Members opposite, particularly those who have been taking part in the picketing by the coal miners, may have gained the sympathy of the coal miners, but they must bear in mind that they are also no more and no less than an instrument of inflation. This supports the point made by my hon. Friend the Member for Harwich (Mr. Ridsdale).
Therefore, in putting this Bill before the House with £34 million to the Railways Board and the National Bus Company and £5 million to the Railways Board or their subsidiaries, my right hon. Friend has in my view taken a bold step.
What those who are critical or cynical about the Measure ask is, will this be an invitation to the N.U.R. and perhaps hon. Members opposite to justify claims by the railwaymen? What assurance have we had from Sir Sidney Greene? What is the position of the chairman of British Rail, Mr. Richard Marsh, and the negotiators who have to settle the future wage agreements on the railways. What my right hon. Friend must bear in mind is that by making this grant he will inevitably place the management of British Rail under new pressures, and this is one of the difficulties which will have to be faced in making this generous and bold step forward. Will he indicate the wage claim that will have to be considered?
I am not going to deal with a settlement. I was asking a question at this stage. It requires even greater responsibility on the part of all concerned not to exploit the passenger, the consuming public, as a result of this very generously bold initiative by the Government. This is the point which I wish to raise.
So have coal miners got to live and so have power workers got to live. Perhaps the hon. Member will allow me to finish my speech and then some other hon. Members will be able to make their contributions.
I have said that my right hon. Friend and the Government, as far as British Rail is concerned, have taken a bold measure which I certainly support and would wish to back in this debate tonight. It is absolutely right to make this an outright grant, not a loan which can be a handicap and disincentive to management in the future. I share the views put forward by my hon Friend on this issue. The comment by the hon. Member for Leicester, North-East, that this grant should be permanent caused me to be critical, particularly when it is implied that it might be raised year by year. Would such an offer be made to private industry? What sort of cloud cuckoo land do we live in when it is suggested that grants such as this be offered to State or nationalised industries? So much for the financial obligations of nationalised industries as reviewed by a Labour Government. There is even the suggestion that there is to be a further writing down in capital. The hon. Member may have forgotten that in 1968 there was a drastic writing down of capital.
I want to raise three points in particular. Quite obviously—it is well known —British Rail is contemplating fare increases of between 10 per cent. and 15 per cent. Obviously some fare increases will have to be considered. What information have we about that?
My second point relates to that which my hon. Friend the Member for Harwich raised. Anyone talking to railwaymen will know that they say they are underpaid; and the coal miners say they are underpaid; and the power workers say they are underpaid. I very much hope that the hon. Member for Carlisle will intervene in the debate on the coal industry tomorrow and decide whether a railwayman is worth more than a coal miner or not. One might gain the impression that it is the coal miner who is worth more, but I hope that hon. Members will not interrupt me now but discuss that tomorrow. It was failure to contain wage claims two years ago that caused recent inflation.
My third point is about the management of British Rail. My hon. Friend referred to the challenge which faces the management of the British Rail. This I accept but hon. Members have had brought to their attention the fact that London Transport is running into a deficit of possibly up to £5 million a year through fare evasion. From time to time we have had brought to our attention the fact that some fares are not collected on British Rail. We have no idea what the amount of this fare evasion amounts to. One figure given to me is that it may be as high as £3 million on the commuter services in and out of our major cities, particularly London. Obviously, passengers, particularly those on the commuter services at the beginning and at the end of the day, want to be able to board or leave their trains, with speed and ease, but there must be rigid inspection. Without good morale and good standards of management on British Rail, both at the main line stations and the branch stations, it will be difficult to stop this fare evasion. What new measures for the issue, checking and collection of tickets are contemplated in order to meet this deficit?
I had not intended to intervene for long. I say again that this is a bold step. Morale on British Railways is good. Visitors are impressed by our passenger services. They are impressed by the im- provements in British Rail. I very much hope that this generous and bold step will be accepted as a challenge by British Rail and that it will be accepted responsibly by the N.U.R. and other unions. In this way we can see British Rail pulling out of its present difficulties, and being able to look forward to better times, and so I beg to support the Bill.
In this sparsely filled House we are considering a Bill which is of great importance. It is a landmark in the economic policy of the Government, but it has been almost surreptitiously introduced. It has been described as a short Bill, which it certainly is, and as a small Bill, which it certainly is not, in that it deals with £39 million of the taxpayers' money. The Bill is said to deal with a temporary situation. Anyone who believes that is living in cloud cuckoo land.
We are being asked to hand over £39 million for two specific purposes. The first is contained in Clause 1. We are being asked to hand over £34 million not to enable the nationalised industries to give more wages, not to enable uneconomic railway services to be run, but to enable British Railways to keep down fares to help the Government's nonexistent prices and incomes policy. This is an intervention by statutory means to try to put forward an incomes policy the existence of which the Government have denied.
We are asked to provide £34 million because the British Transport Board and the National Bus Company have agreed to abide by the voluntary price restraint of the C.B.I. which comes to an end in August, 1972. Yet, according to the Explanatory Memorandum, we are asked to provide this subsidy to deal with what otherwise would be a loss in 1972. The purpose surely is to enable the Government to backtrack on what they said during the election. They are bringing in a prices and incomes policy by a side wind. As my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) said, how can we possibly have voluntary wage restraint when we read in the newspapers almost every day of enormous increases in directors' emoluments and the various stratagems employed by companies who are making large profits to distribute shares?
No. If we are to have a prices and incomes policy, it must be worked out properly and not introduced in this way, which is fair in some aspects but not in others. I do not believe, for example, in a prices and incomes policy based on percentage increases, because proper adjustments cannot be made between the poorly paid and the well paid at the point where the prices and incomes policy begins.
The second purpose of the Bill is to enable the Government to alleviate possible further unemployment by encouraging British Railways to invest money to prevent unemployment from getting worse. The Government are acknowledging that they subscribe to the idea of a mixed economy, which they deny in theory but subscribe to in practice by bringing forward the Bill. If the Government think it right to provide a subsidy—and I believe it is—the transport industry should be regarded as a public service, as I have always maintained.
The Under-Secretary of State referred to problems in certain areas, the lack of use of the railways and rural buses, which he said was because people had private motor cars. That is right, but the people who depend on railways and buses are the elderly, the poorer people and the younger people who are not able to own and drive their own motor cars, Yet which method are the Government choosing to help? They are giving a straightforward grant of £34 million. The burden of what the Under-Secretary said was this: if British Railways or the National Bus Company, with financial discipline, can do better and make a profit, good luck to them; the Government will neither reduce the sum nor increase it. But what is happening in the meantime? In my area the Crosville Bus Company, which is a subsidiary of the National Bus Company, is withdrawing services. Voluntary restraint comes to an end in August, 1972, yet the subsidy covers the whole of 1972. Are proposals in the pipeline for a considerable increase in September, 1972, when the C.B.I.'s voluntary restraint comes to an end?
I entirely agree that it is the Government's duty to support the transport services and to keep fares at a modest level. It is of general benefit to the community, and passengers who are least able to pay for their own transport are directly subsidised. The Government have a duty to see that there is much more capital investment to deal with the unemployment, which is much more serious than they expected. Under the Labour Government very often five men were doing four men's work. Naturally, if wages go up and the margins get tighter, four men will be doing four men's work, but the Government's duty is to encourage capital investment to bolster the economy to provide work for that fifth man.
It is no use saying, as do hon. Gentlemen opposite, that driving up wages causes unemployment. That does not follow. We must have economic efficiency in the community, and we are much more likely to get economic efficiency with higher wages and with people getting eight hours' work done in eight hours. It is equally important from the point of view of economic expansion to encourage capital expenditure to take up the slack. If the Minister thinks the House will accept that this is a temporary situation and that inflation will be cured, he is living in cloud cuckoo land. This situation will have to be dealt with year by year.
I represent a farming community. For a number of years farmers have had a hard deal. They have done much better this year and, if we go into the Common Market, they will do better still. It is largely artificial, but they will do better. If the Government think that this will not force up the cost of living, they are wrong. Farmers cannot have better prices unless the price of food is driven up. As food represents a major portion of most people's budget, especially lower budgets, there is bound to be a tremendous pressure for wage increases. The inflation which is driving up the cost of nationalised industries this year will recur next year and the year after. We are on a galloping inflationary spiral which many advanced civilisation have had to face before today. It is nothing new in history. It has happened before, and it will continue.
The Government are not facing reality. I certainly support the Bill, but I do not support this way of subsidising British Railways. One needs an overall picture of the whole situation. Is transport a public service? If it is, the Government should declare it to be so. A subsidy this year as a temporary measure is no good. Either the transport companies should be allowed to put up fares and run economically or there should be a permanent grant or subsidy to transport as a public service, which I think is the right course for the Government to take.
I think I am correct in saying, Mr. Deputy Speaker, that this is the first time that you when occupying the Chair have been kind enough to call me to speak. As an old friend may I, somewhat belatedly, offer you my congratulations on your present position.
The hon. and learned Member for Montgomery (Mr. Hooson) said that the Government had brought in the Bill surreptitiously. I do not see how that can be so, since it is the first Government business of the day. How much further forward could it possibly be?
I thought the hon. and learned Gentleman said that in the following sentence. I may be wrong, but that was the impression I had.
This is said to be a short Bill. Nevertheless, it provides for the spending of £34 million of public money. As a member of the Expenditure Committee and Chairman of one of the Sub-Committees, I spend a great deal of time looking at Government expenditure. The House should not let such a Bill go through easily or quickly just because it is said to be a short Bill. It will lead to the spending of a considerable amount of public money and therefore should be examined.
I would ask my hon. Friend the Under-Secretary of State to say how the sum of £27 million required by the railways was computed. Was this operation undertaken by chartered accountants in his Department? Were cost and works accountants, who really understand these figures, brought in? If they were able to calculate that this figure represented the exact cost to the railways, then they were extremely clever.
I have been engaged for some years in looking at the situation on the East Suffolk railway line. My hon. Friend the Member for Lowestoft (Mr. Prior), who is not taking part in this debate because he is a member of the Cabinet, in those days was always concerned that the right figures could not be obtained from the railway companies. They tried to say that the costs of a line, such as that in East Suffolk, which I take as an example, involved an element of loss. They never seemed to take into account the situation on a feeder line in creating traffic on the main line. The whole calculation is thrown out if the feeder line is closed. Then the passenger concerned uses his car to go the rest of the way. This is why the traffic on the feeder lines is so important. Therefore, I should like some assurance from my hon. Friend that this point is carefully considered by the actuaries in putting forward accounts on behalf of the railway authorities.
It has been said that with good management there will not be losses in the future. It is with that thought in mind that I support the Bill. I would not agree with hon. Members opposite in believing that this should be a permanent arrangement. There should not be the impression that this money should be easily obtained, and there should be a spur to good management. I hope that there is good management and I am not querying this matter tonight. I wish to know whether good use is being made of capital assets in the railways, particularly on feeder lines.
I believe that in the nationalised industries—and this also applies to a number of private companies—the best use is not made of spare land which today is so valuable. I remember that when we were looking into the cost of keeping open the East Suffolk line, we had the advice of a great railwayman who lives in my constituency, Mr. Gerard Fiennes, who was at that time the general manager of the eastern section of British Rail. He said that if the line were kept open we could use one line and capitalise on the lines that were over. However, these lines have never been taken up and I should think that this applies to many other railway lines. This means that capital in that form is not being fully utilised. This is why we must be careful to see that capital is being properly employed.
What strikes me as rather extraordinary is that the amount of money required to finance a bus service is only a quarter of that required by the railways—some £7 million as against £27 million. From my own experience in the eastern counties, in the area where I live, I have observed that the buses are far more empty than the railways in the area. The feeder line is often crowded but the buses are under-used. One realises that the buses are used by the elderly and other people who are visiting friends and relatives in hospital. They are there for the people who require an occasional service. I believe that one of the reasons that the bus services require only £7 million is that those companies keep more exact accounts than do the railways. It is therefore easier to see what the costs are.
Could my hon. Friend quote the figure of cost per mile in terms of fares as between the National Bus Company and British Rail? I would aver that the National Bus Company's cost is in excess of 5p per mile, whereas British Rail in East Anglia is trying to make do on a passenger cost per mile of 1·2p.
I am sure my hon. Friend will be able to develop that point if he is able to take part in this debate, because he is obviously very learned on this subject. My point was that the bus companies keep much more accurate accounts in regard to costing.
I hope that the Chairman of the Railways Board and the bus company authorities will see that there is good management and, above all, proper use of assets. It is important that assets which are not earning money should be liquefied.
As a railway shop man on long leave, I think that I am entitled to intervene in this debate. However, it was the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) who brought me into it because, some six or seven times, he said that this was a bold step on the part of the Railways Board. It so happens that tonight I have received a letter from the Minister for Transport Industries telling me that there will be fewer railway jobs in Scotland in the year 1972. Already we see a situation where the Barassie workshops, at present employing a labour force of 500, are to be closed. Even worse, the future is very uncertain at the Swindon and Ashford workshops.
My own railway workshops were under the hammer of redundancy for two years. I do not know whether hon. Members know how it feels to a man who has to work in that sort of atmosphere, where his wife, family and other dependants face an extremely uncertain future. When I was elected to this House, I was a redundant railwayman, and many thousands were made redundant with me. When hon. Members talk about British Railways taking a bold step, they forget the existence of ordinary human beings and that some 5,500 of them will be under the hammer in the railway workshops alone.
The Assistant-General Secretary of the N.U.R., Sid Weighel, is coming to this House tomorrow night. Representatives of the Scottish General Council are coming the following night. The mood of the country has changed a great deal, and this Government have failed to judge it. Railwaymen will not stand by any longer and take what they have taken before. They have seen their numbers reduced from 330,000 to 180,000, and there comes a time when we must call quits. The railways play an important rôle in the country's economy, and that rôle will not diminish in the future.
To appreciate the folly of declaring too many redundancies, one has only to look at the situation in Los Angeles where it has been found necessary to rebuild the railways. Nearer to home one has the example of the Glasgow network where, against the best advice of railwaymen, the track was taken up. Everyone regrets that today since the existence of that network would have relieved a great deal of traffic congestion.
All that we see is the result of accountants' thinking. It is not railwaymen's thinking.
The Railways Board's offer of £34 million is inadequate. Jobs must be safeguarded for men who are under the hammer. If the proposed redundancies are implemented, I am sure that the National Union of Railwaymen and A.S.L.E.F. will not tolerate the situation. They accepted it before, but they will not do so again.
What do right hon. and hon. Gentlemen opposite imagine that railwaymen take into account when they ask for an increase? Upstairs in Committee, there is a Bill which will increase Scottish rents, and rates accordingly, by some £2·50 a week. If the railwaymen claim an extra £2, it means that they will soon ask not to have it since they will have to pay more than a wage increase of that kind in additional rent, rates and income tax. A man with two children earning £19 a week will say, "Do not give me the increase. I cannot afford it in the light of the new Housing Bill." Right hon. and hon. Members opposite have to consider the increased cost of living, their iniquitous Housing Bill and the additional income tax that a railwayman will have to pay on any wage increase and ask themselves what he will get at the end of the day. It is clear from some of the figures which have been produced that a man receiving £2 or £3 extra will lose money.
Obviously, this Bill will receive a Second Reading. However, the mood of the country is such that the attitude of the railway unions will be the same as that of the miners. The time has come to say, "Enough".
The hon. Member for Glasgow, Central (Mr. Tom McMillan), has spoken from a great depth of experience and sincerity in regretting, as he must, the degree of redundancy likely to come in the sector of industry in which he has spent most of his working career. We sympathise with him very much on that score—
That is true. But I think that people live best by facing realities. If there is a decline in an industry, surely it is important to redeploy and retrain its manpower so that those made redundant are able to move to new industries—
At a time of high unemployment, obviously it is difficult. But it will not be difficult when the economy picks up again and there is a need for labour. When that happens, industries will want labour which has been retrained. I welcome the Government's policy in that respect.
They may wish to go, as and when we enter the Common Market. But we have a great reservoir of industrial skill which may attract German capital to this country and mean the building of new factories. That is to be welcomed. It will depend on the willingness of those with industrial skills to accept new training for new industries.
I welcome the Bill, but not the circumstances that have given rise to it. Without the Bill fares would have to rise under the statutory responsibility of the railways to break even. By avoiding this the Government are at least removing or reducing one of the factors which enter into demands for increased prices for manufactured goods, arising from higher freight costs, or increased wages resulting from higher fares.
I want to reinforce the speech of my hon. and gallant Friend the Member for Eye (Sir H. Harrison). I am a constituent of his. I support what he said about some of the problems of the feeder services. I want my hon. Friend the Under-Secretary to take into account a capital investment point which certainly arises in East Suffolk and may arise elsewhere. The East Suffolk line have certain disabilities, notably that it has lost all its freight. The enormous tonnage going into and coming out of the farms in the region does not go by rail; most of it goes by way of heavy lorries, and much of the rest, consisting of material from the food-processing industries in Yarmouth, goes round by way of Norwich. The coastal route now does not have the remunerative freight traffic which it would have in the ordinary way.
The area also has a higher ratio of manned level crossings per mile than anywhere else in the country. As a result, although passenger traffic has been reasonably buoyant, the current running losses require a substantial subsidy. It may be a question not so much of power as of authority, but I regret that it is not now possible to make the laboursaving capital investment which would help the present unremunerative branch line to break even over the years. A fairly substantial capital investment is required in order to mechanise most of the manned level crossings and to complete the work that the railways have done in reducing current costs. The railways have been greatly helped in this respect by the railway unions. I pay tribute to them. The East Suffolk line pioneered the pay-train concept, in which the guard takes the money and issues the tickets. Stations have had their staffs removed, except at manned level crossings, and this has enabled substantial economies to be made.
Nevertheless, the Government pay out an annual subsidy to recoup the loss on running account. British Rail is not interested in undertaking capital investment to keep open a line which, on strict economics, it would close; nor does it know whether the Government of the day will renew the subsidy from year to year. No one is in a position to make a sound economic plan and to carry it out. There is a deadlock, which I do not like to see. Taking a 10-or20-year view, it should be possible to make this line a viable proposition. In addition to commuters in employment, the line is definitely needed for social purposes, and it will probably be needed for other purposes in the future.
We have a civic college at each end of the line, and there are several schools in between. There is holiday traffic, and it will also help if we could get some of the enormous agricultural loads back on to the railway. This is difficult. I am a farmer, and I know how expensive it is to send produce by rail. It is much easier to send it all the way by lorry. But the lorries are enormously big; they are knocking the roads to pieces. It may be that in a year or two new technology will enable some agricultural produce to be put back on the line.
For these reasons, I hope that the Under-Secretary will consider this point so that a plan can be made and, if necessary, financed.
The Bill provides for the Government to make grants to two public transport undertakings in consequence of the restraint that they will exercise on price and fare increases during 1972.
The question which I ask basically in my short speech is: why, among the bodies receiving money, is there no mention of the Scottish Transport Group which has undertaken to abide by the C.B.I.'s request until August, 1972?
I understand that one of the subsidiaries of the National Bus Company, the United Bus Company in the North of England, is already applying to increase its fares, presumably to take effect immediately after August, 1972. I do not know whether that is the correct date. At any rate, there is an application from a subsidiary of the National Bus Company, but no application for increased fares from the Scottish Transport Group.
There seems to be something severely lacking in transport financing in Scotland. Again, this particular need appears to be missing from the Bill, because £7 million is to be voted tonight for the National Bus Company, but not a penny for the Scottish Transport Group.
I want the Under-Secretary to do his best to answer some questions which I intend putting to him on this matter.
A few years ago, when we lost the Waverley railway route in the Borders, the Government of the day said that, by that measure, they would save £750,000 a year which they would otherwise have to pay as annual subsidy on an unremunerative line. They took away the railway line, but made no financial provision for its replacement by bus services. Had they taken away £700,000 and given an annual subsidy of £50,000 to the Scottish Bus Company, it might have made sense. But no, they placed a statutory requirement on the Scottish Bus Company to provide extra services while at the same time maintaining the general statutory requirement to balance the books.
It is impossible for the Scottish Bus Company to carry out two contradictory instructions from the Government without direct Government financial help. I have no doubt that the Under-Secretary will refer me to Section 34 of the Transport Act, 1968, which enables local authorities to make grants to bus services in rural areas of which the Government would pay 50 per cent. Looking back, this Section was wholly unrealistic, because often local authorities in areas requiring assistance are poor, small, local authorities.
There are three town councils within my constituency where, if 1p were put on the rate, there would be a yield of less than £1,000. These are the very authorities which require assistance for transport in their areas. Therefore, Section 34 of the 1968 Act has been shown to be totally inadequate in dealing with the problem of how to keep essential services going in rural areas.
The machinery is defective because of the number of local authorities involved. I wonder whether the Under-Secretary can tell me how many local authorities there are on the Edinburgh-Carlisle route which used to be traversed by the Waverley railway route and are now covered by the Scottish Bus Group? If he does not care to hazard a figure, I will tell him. There are eleven. This is a real problem. How can we expect eleven local authorities collectively and unanimously to agree on the precise need for a particular service or the precise rate of grant they are prepared to provide? It is impossible to operate this cumbersome machinery because the initiative has to come from the local authorities.
The Scottish Bus Group can do nothing except say, "The Government tell us to balance our books and to maintain these services which incur a loss". The group cannot do both and it is entitled to expect financial help. If by no other means, that help should appear in the Bill. As the group has undertaken to abide by the restraint, it must do so, presumably, at the expense of balancing its books next year or, at any rate, by not increasing fares in areas where it incurs losses. It is high time the Gov- ernment gave the group direct financial assistance.
One reason why the group gets nothing is that the machinery for controlling Scottish transport is inadequate. The railways in Scotland come under the Ministry of Transport, now part of the Department of the Environment. The bus services in Scotland come under the Secretary of State for Scotland, whose name appears on the back of the Bill.
Apparently no benefit will accrue to the Scottish Bus Group. There is no Scottish Minister here to take part in our discussions or answer any of our questions. I should like the Government to consider whether the whole of the Scottish bus network should not come under the Department of the Environment, together with the railways, so that there could be comprehensive planning and financing of buses—or, preferably the other way round, with the railways in Scotland coming under the Secretary of State. Somebody should have joint responsibility.
On the Borders the Minister of Transport of the day overruled the Secretary of State, saying, "I will close this line. I am responsible for railways", leaving the Secretary of State for Scotland with the responsibility for road transport in the area but with no funds to support it. We do not want a similar situation to arise again.
We welcome the limited amount of help to the National Bus Company and to the railways in England and in Scotland, but I hope that the Under-Secretary would deal in his reply with the point that I have raised.
When I entered the Chamber today I had no intention of participating in the debate. However, having listened to some of the ill-informed and unjustified criticisms which have been levelled at the railway unions, and consequently at the management, I feel constrained to say something in their defence.
The hon. Member for Harwich (Mr. Ridsdale) has apparently been inundated with pleas from low-paid railwaymen who want him to ensure that they do not get a wage increase. No doubt they prefer to carry on in low-paid jobs. The hon. Gentleman should point out to his constituents that there is no direct relationship between the level of their income and the fact that there has been a reduction in the number of staff employed on the railways.
The reduction in the numbers employed by British Rail did not just happen. It was planned over many years by unions and management. This is the price of progress. The staff and the railway unions worked with management in the interests of securing modernisation and productivity.
The figures of salary increases quoted by the hon. Gentleman were wrong. I know from having been involved in wage negotiations as a union representative that on every occasion that an increase has been secured, there has also been an agreement between unions and management for the achievement of productivity to compensate for the increase in wages.
The hon. Gentleman talked about a possible 11 per cent. That is hypothetical. He should not talk of a possible 11 per cent. added to percentage increases already given and say that this is a total percentage. Anyone who has negotiated knows that one starts off with a figure in mind but does not necessarily expect to come out with that figure.
Does my hon. Friend also recall that the hon. Member for Harwich (Mr. Ridsdale) talked of 5 per cent. as the limit which the Government want for wage increases? That is news to the House and I am sure that it will be news to the Government.
Yes, if any figure is involved, it is more like 7 per cent. Railwaymen will consider this Bill with great interest, certainly not with glee and pleasure.
The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) was not so outspoken in his attack on the unions. He was more subtle, but equally dangerous. I regret that he is no longer here. In referring to the total of £39 million in the Bill, he hoped that the unions and management would not decide to exploit the passenger public. In fact, for years, railwaymen have been exploited by the country and by the passenger public. As railwaymen, we have subsidised the industry ourselves in the interests of the public. This £39 million will not change the situation. Whether it is in grant or not, it will not affect the right of railway men to a reasonable standard of living.
Five per cent. increases for railwaymen would mean a lower standard of living than they had 12 months ago, because their purchasing power has dropped so steeply. Far from exploiting the public, the railways, both management and unions, have carried a burden of responsibility in ensuring that a service has been provided—for which the workers often paid out of their low incomes.
When the Bill has been agreed, I hope it will be recognised that, in view of the railwaymen's contribution, we would not be giving them anything by giving this increase. We are merely trying to do what we should have done years ago and must do constantly in future—trying to ensure that the railways can provide the sort of efficient service that the country has a right to demand and that it should be paid for not by the workers in the industry but by the people who use and enjoy the industry.
I support what my hon. Friends have said about the proposed closure of railway workshops, the withdrawal of passenger services and the closure of feeder services, the branch lines to which the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) referred.
Many of us appreciate what congestion on the roads means to the travelling public. Many academics have estimated the cost at £600 million to £1,000 million. I would put it half way between the two. That figure is growing fast, yet the Government agree to the closure of branch lines and the withdrawal of passenger services.
We have to acknowledge that in its economic policy the Railways Board must act in accordance with its master's voice—that of the Government of the day. For a number of years the Government of the day, through the appropriate Minister, have given the orders. I do not speak only of the present Government: to do so would be unfair, because more than one Government have been guilty of getting their economics wrong.
Unfortunately, the Treasury, when facing the needs of such a public enterprise as the railways, considers the matter from the profitability point of view. It asks: is it viable? No one ever questions the real value of the social service given to the community. When we close a line we are taking from thousands of people a method of transport. Is it not ridiculous that we should be building new motorways to run in parallel with one of the finest railway systems in the world while at the same time advocating closing down or reducing that railway system in what is said to be the interests of economy? I wonder what the economists of the future will think of the transport economists of today?
Wage negotiations have been referred to. Those of us who have come up through the transport industry know only too well the price of working on the railways. It was right that one of my hon. Friends should refer not only to the effect of closures and economies on railway and workshop personnel but to the terrifying effect on their wives and families. I have known railwaymen who, because of redundancy, have moved about the country from place to place not once or twice but several times. That being so, can anyone on either side of the House associated with either road or rail transport expect transport workers to be enthusiastic? How can we expect them to understand the Minister who lays down the law yet says that the decision whether or not a service shall remain in operation is a matter of day-to-day decision by the board? That is not the whole story. Right from the days of the Railway Executive, Governments have interfered with the commercial running of the railways. By having to control the necessary increases in fares from time to time, the Railways Board, and the Railway Executive of many years ago, were robbed of many millions of pounds by Government interference.
The Under-Secretary will understand that. The Railways Board was instructed to operate commercially by the Transport Act, 1962. By the same Act, its hands were tied behind its back. It was made almost impossible for the Railway Execu- tive and, in later years, the Railways Board, to operate on a fair commercial basis.
I ask the Under-Secretary to convey to his right hon. Friend the sentiments expressed in the various speeches tonight about the effects upon the travelling public, the congestion on our roads and the effects upon the environment, which are very great but have not been touched upon whilst' I have been in the Chamber this evening. That is very important. Far more assistance is required if we are seriously to deal with unemployment. I appeal to the Government to make a start with the railway workshops and to do far more than what is intended in the Bill.
As my hon. Friend the Member for Leicester, North-East (Mr. Bradley) said, echoed by the hon. and learned Member for Montgomery (Mr. Hooson), despite the Bill's limited scope and the smallness of the House tonight, it is an important Bill. It is important because it poses the problems of public transport, although, candidly, it does little to solve them. It is generally agreed by both sides of the House that the maintenance of an efficient system of public transport is a serious problem that somehow or other we have to try to solve. The Bill is not controversial in the sense that apart, perhaps, from some hon. Members opposite, we are all agreed that we should pay the sums set out to the British Railways Board and to the National Bus Company.
I regret the form of the Bill in the sense that it is drawn very narrowly and almost precludes any kind of Amendment or discussion in Committee. It would be very difficult to put down an Amendment. No doubt that is deliberately the case. We can debate that at a future stage. I do not complain about it. It is a money Bill. Every word of it, except the Title and the Preamble, is in italics. We understand that we are somewhat circumscribed from that point of view. But it is very limited.
Before Liberal right hon. and hon. Members left the Chamber, I thought that the Liberal Party was suggesting that the Bill is designed to deal with possible wage applications or something else of that sort. As I thought that the Under-Secretary made clear, the sums set out in the first Section of the Bill are wholly and exclusively to meet the calculations over which the Treasury has no doubt poured much midnight oil as to the sums reasonably to be given to these two bodies to compensate them for limiting any fares increases during the period of the C.B.I. voluntary initiative to not more than 5 per cent. It is only for that purpose and it does not go any way to meet any of the other problems.
One problem has been discussed with force and eloquence by a number of my hon. Friends—the hon. Members for Carlisle (Mr. Ron Lewis), for Leeds, South-East (Mr. Cohen), for St. Helens (Mr. Spriggs), and for Glasgow, Central (Mr. Tom McMillan), who all spoke with great experience of the railway industry, as did my hon. Friend the Member for Leicester, North-East (Mr. Bradley). I must point out to the hon. Member for Sheffield, Hallam (Mr. J. S. Osborn) that private industry is quite different in this respect from public industry and that wage increases must not be limited by the financial viability of what may be an essential public service.
We are already in great trouble because this principle has been wrongly applied to coal. The incomes and standards of living of those who provide public services must not be allowed to continue to fall merely because on the balance sheet the profit and loss account show and that the industry is not paying its way, although the country would broadly agree that what it would regard as justifiable wage increases should be paid. I hope that such a situation will not develop on the railways.
I was glad to see the profits which the railways made in 1969 and 1970 after a long period of deficit financing. It is understood that the figures probably did not include realistic depreciation allowances and certainly were nowhere near providing the kind of self-financing necessary for the railways to achieve the provision of a thoroughly efficient public service. Both sides of the House accept that we had to put an end to deficit financing in the 1968 legislation and we all know what a tremendous increase in morale there has been on the railways since 1968 for that reason.
At the same time, with the wisdom of hindsight we can see that this is not necessarily a permanent situation, perma- nent in the sense that exactly the right amount of historic capital debt was written off. There is no great political argument in this, but a great change for the worst has overtaken public transport since 1968.
Some hon. Members have dealt with the difficulties which county councils have experienced in meeting the modest requirements imposed upon them by Section 34 of the Transport Act when they want to subsidise rural bus services. Although 50 per cent. of the subsidy may be obtained by Government grant and half of the local authority contribution is usually obtained by a general rate subsidy, so that the actual cost to the authority is never more than a quarter, inflationary pressures on local authorities in other directions mean that there is hardly any council of any political complexion prepared to undertake new sources of rate expenditure, even though there might be enormous social demand for them.
This is also true in terms of railway finances. There have been great changes. I was impressed by the speech of the hon. Member for Ipswich (Mr. Money), who made as eloquent a plea as I have ever heard for quantity licensing, which was provided in the 1968 Act. Presumably, he did not know that one of the first actions of his right hon. Friend the Minister was to refuse to have anything to do with quantity licensing.
I am only too ready to concede that any device or administrative arrangement to move freight from the road to railways will pose difficulties and will not be liked by the road hauliers. It is important, in terms of railway finance and socially, to get more freight on to the railways. If a bigger volume of freight could be organised I expect that the charges could be reduced. It is no good making eloquent speeches about the environment—and I regretted the transfer of the Transport Ministry into the octopus of the Department of the Environment—if we do not take account of the social factors. It seems that the environmental considerations involved in maintaining an adequate rail and public transport service are less well catered for at the new Ministry. All this talk about this being a once-for-all Measure to meet a special problem ignores the fact that there is a social benefit in further use of public transport.
What we would have liked is some permanent arrangement, not necessarily in the form of a Bill, but an undertaking by the Under-Secretary that in future the Government would try to find a way of avoiding increases in fares to increase revenue on transport services. This is a "chicken and egg" situation. Any hon. Member who uses the bus service knows that as the fares go up, fewer people use the buses. The marginal passengers either walk a little further or use their own cars. Often people use their own cars because they are more reliable. As a result the cost per passenger rises and fares have to be increased. We cannot accept a situation in which the wages of operators are conditioned only by the amount of revenue received. The railway and bus services are labour-intensive and scope for productivity is limited. There have been tremendous strides in productivity, for example through the one-man bus system. There has been no lack of co-operation.
Grants for unremunerative services have formed an important part of railway finances. The decision sharply to cut the grants for the London region will have an adverse effect on the Railway Board's operations, as it will on the commuter's pocket. I guess that next year the amount of these grants will be less than last year, just as the amount last year was less than the year before. I shall be happy if I am wrong about that. The expectation of the railways of more freight through quantity licensing which would have resulted as the freightliner operations developed, the amendments in respect of carriers' licences and the loss on grants for unremunerative railway services are all reasons why it would be wholly wrong to say that the Transport Act, 1968—a great piece of Labour legislation—should be totally inviolate and, like the laws of the Medes and Persians, could not be amended. We should be willing to look at these matters and to have the principle of special assistance accepted for future years.
Perhaps my predecessors in 1967 and 1968 were wildly wrong in that they did not foresee the coming of a Conservative Government and the enormous trade recession which has completely ruined railway finances. The concept in 1968 —and it was not denied by anyone involved—was that we should work on the basis of a fully employed economy. Any drop from the norm has disastrous effects on railway finances.
I wish to say a few words about Clause 2. I had much sympathy with the intervention of the hon. Member for Sudbury and Woodbridge (Mr. Stainton), who described the£5 million as a derisory sum and much too small to meet the situation. Several of my hon. Friends have explained in detail the problems facing the railway workshops. The sum should be more than £5 million. The sum of £50 million would not be out of place for bringing forward essential railway investment. The Under-Secretary of State may be familiar with the plans of the Railways Board for Southern Region, and particularly for improving the commuter trains to London, which is greatly overdue. The railways cannot possibly finance these developments by themselves. We have been talking about freight. I hope that in more enlightened days we shall have a scheme to require industry to use the railways to a greater extent. The railways could profitably use a very large investment in wagons.
Clause 2(2) refers to
…any project…pursuant to an agreement entered into with the Secretary of State".
As this is a public Bill, a copy of the agreement should be published. Is this a running agreement under which the amount can be increased at any time between now and April, 1974?
Must every project be the subject of a separate agreement? There is not, then, a list which has been arrived at between the Railways Board and the Secretary of State? If this is an open-ended agreement, I should have thought that the Railways Board would have no difficulty in finding projects to the value of £50 million up to 1st April, 1974. At a time when we have over 1 million unemployed, I should have thought this would meet a situation we have, unusual in politics, of being able to hit two targets at one stroke. As we know, the Conservative Party is very keen in its political strategy to do things "at a stroke". I suggest to that party that here is something which it can do "at a stroke" to help reduce unemployment and to help public transport.
As I have said, we are not opposed to the sum involved. Indeed, for reasons which we would like to argue, we feel that the Government should now commit themselves to making provision each year for special circumstances should they arise. We should like to argue that in Committee, though we shall, perhaps, not be able to do so.
There is the very big question, one which should concern all Members of Parliament: what are we going to do to see that public transport finance is not totally eroded by the need to put up fares, or to reduce services, to meet the sacred argument that revenue has to meet outgoings? The question is whether the Secretary of State for the Environment, if he is concerned, as I am sure he is, with preserving environmental factors and making the environment and amenities better, will agree there is a case for a social cost-benefit analysis to be done for public transport, and whether both the National Bus Company and British Railways should have some subsidy additional to their revenues before they have to put up fares.
Every time fares go up, a number of people take to their motor cars; they even buy motor cars to take to them; and all those motor cars add to the congestion on the road. I noticed last year's road estimates. They remind me of the year in which I was the Minister and overspent and had to come to the House when, I am glad to say, I got a supplementary estimate for overspending. Last year the Vote for new roads was under-spent by £6 million. That is the sort of sum which might be added as a starter to the sums already specified in the Bill.
I recommend my hon. Friends to give the Bill an unopposed Second Reading. We shall certainly not wish to hold it up in Committee, but I ask the Government to give us an opportunity for a thoroughgoing discussion on public transport, for it concerns practically every family in the country.
With permission, Mr. Deputy Speaker, I will reply to the debate.
The House has ranged very widely indeed, possibly beyond the strict limits of the Bill. It seems to me that there have been four broad features of the debate. There have been the contributions, mainly from the other side of the House, of the railwaymen, who have spoken with knowledge and experience of the industry. There have been the contributions of the right hon. Gentleman the Member for Sheffield, Park (Mr. Mulley) and his hon. Friends. There have been the rather special contributions from the East Anglians, contributions which I have been very glad to hear, and led by my hon. and gallant Friend the Member for Eye (Sir H. Harrison) and my hon. Friend the Member for Harwich (Mr. Ridsdale). And then there has been the most extraordinary contribution of a whole minibus load of Liberals. I have never seen so many here on so narrow a subject, and they all made their contributions.
However, I must deal with the Bill, and not with the other threads which have been followed in the debate, and which, I say with respect, are not strictly within the Bill. Essentially the Bill is not about unremunerative services; it is not about British Railways workshops; it is not about lorries and congestion on the roads. It is about providing to British Rail and the National Bus Company a total of £34 million to assist them in meeting their statutory obligation to break even one year with another. Because they acceded to the C.B.I. initiative in the national interest, they find it impossible to maintain that statutory obligation, and the Government feel it right to put them in a position where they can do so.
I shall touch on the points raised, but I am essentially trying to deal with the Bill as I have been asked to present it.
There are four considerations on the Clause providing £27 million for British Rail and £7 million for the National Bus Company. First, does the House approve of the C.B.I. initiative? I think that a majority of hon. Members do. Secondly, does the House now think that the nationalised industries should play their part within that initiative? Once again, it is common ground that they should, and certainly the chairmen thought they should. Thirdly, is it common ground that, because of the difficult trading position of British Railways and the National Bus Company, acceding to that initiative would lead them into deficit? Again, I think it is agreed that that is so.
It follows from those three facts that we want the C.B.I. initiative, we want the nationalised industries to subscribe to it and we recognise that this will leave them in deficit. It follows as night the day that some provision has to be made to British Railways and the National Bus Company to allow them to carry out their statutory duty to break even, taking one year with another.
The hon. Gentleman has not been in the House and I think I should get on, as the debate has already gone on for a long time and the House has other business.
Clause 2 deals strictly with the bringing forward of new types of capital investment which British Railways can make to generate employment. I am sure it is common ground that in the present circumstances of high unemployment, which we all regret, it is right that British Railways should be encouraged to do this, but even the right hon. Member for Sheffield, Park did not have this right. The £5 million referred to in Clause 2 is not money that the Government are giving to British Railways for particular capital projects. It is simply to meet the additional cost of accelerating a programme of capital investment which would have been undertaken anyway. British Railways will have to pay additional interest on capital expenditure which is being brought forward to this year, next year and the following year. The £5 million simply takes account of that additional cost to British Railways of accelerating the investment and creating the new jobs.
My hon. Friend will deal with this matter if it is relevant to his speech, but I must get on with mine. My hon. Friends, speaking with knowledge and eloquence on behalf of various transport considerations in East Anglia, raised several questions. My hon. Friend the Member for Harwich rightly put some of the blame for inflation and the difficulties of the nationalised industries where it belongs—on excessive wage increases in the general economy, although I would not say particularly in these two nationalised industries.
My hon. Friend the Member for Ipswich (Mr. Money) raised a number of questions. The main answer I give him when he makes the point about transfer from road to rail is that my right hon. Friend, only a few weeks ago, announced that of 79 rail services outside London for which grant renewals have been requested no fewer than 71 have been agreed. In the East Anglia area my hon. Friend will be pleased to learn that the Colchester-Clacton line has received a further grant and that the Ipswich-Felixstowe line has received a further grant. I wish I were able to help my hon. Friend the Member for Norfolk, South (Mr. John E. B. Hill) in respect of the East Suffolk line. I am not able to do so tonight, but I will look into the matter as he requested.
I am sorry, but I must get on. My hon. and gallant Friend the Member for Eye, who has great experience in these matters, asked the proper question as to how the figures were computed. I hope he will accept from me that this was examined most carefully with most vigorous scrutiny and that it had to be and indeed was agreed with the Treasury. I will write to my hon. and gallant Friend setting out in rather greater detail how the figures were arrived at.
Yes. My hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) asked whether this might not be inflationary in the sense that British Rail might be encouraged to settle for higher figures than otherwise. There is no incentive for British Rail to go in for that. It is not an encouragement to inflation to leave the board in a position where it is barely able to meets its statutory obligations even with the additional grant.
So far as the Liberal Party is concerned, the one question I must deal with is that put to me by the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel), who asked about the Scottish Transport Group. He is right that it is the responsibility of my right hon. Friend the Secretary of State for Scotland but I understand that, although the Group proposes to restrain its fare increases in 1972, it does not expect to incur a major deficit. Therefore, it is not in the same position as British Rail and the National Bus Company—in other words, it is not in danger of contravening its statutory obligations.
Surely there is no reason to say that because the Group is carrying out the same policy as the company in England the Government will give them no assistance. If they provide a more attractive and modern service for my constituents, the Group will incur a deficit. In that case will the Government provide the money?
Not in this Bill.
I turn to the speeches made from the Opposition Front Bench. The hon. Member for Leicester, North-East (Mr. Bradley) was not quite right—and, unusually, not quite fair—when he said that this was a Bill to pay British Rail and the National Bus Company for doing a job for the Government. I must ask him to accept that they were doing a job in the national interest as they saw it. It is in the national interest to help reduce inflation and I am sure the hon. Gentleman recognises this factor.
Secondly, the hon. Gentleman was not right when he said that the Government had called in the two industries in question and told them to toe the line of the C.B.I. initiative. This is not so. The two chairmen gladly did so and agreed to this in the national interest, although quite fairly they pointed out the financial consequences. This is the reason the Bill has been brought before the House tonight.
The right hon. Member for Sheffield, Park made a number of remarks about general railway and bus company financing. These are matters which the House could debate at length, but this is not the opportunity or occasion to do so. However, I assure the right hon. Gentleman and the House that I will make certain the points he has raised are considered by my right hon. Friend, and it may well be that we shall return to a wider debate on this issue at another time.