HC Deb 11 December 1935 vol 307 cc1049-71

Considered in Committee, under Standing Order No. 69.

[Sir DENNIS HERBERT in the Chair.]

Motion made, and Question proposed, That, with a view to enabling effect to be given to an agreement made on the thirtieth day of November, nineteen hundred and thirty-five, between the Treasury, the Great Western Railway Company, the London Midland and Scottish Railway Company, the London and North Eastern Railway Company, and the Southern Railway Company, a copy whereof was laid before this House on the third day of December, nineteen hundred and thirty-five, it is expedient— (a) to authorise the Treasury to guarantee the payment of the principal and interest of securities to be issued by the company to be formed in pursuance of Clause 3 of the said agreement: Provided that the amount of the principal of the securities to be so guaranteed shall not in the aggregate exceed an amount sufficient to raise twenty-six million five hundred thousand pounds; (b) to authorise the issue out of the Consolidated Fund of any sums required for fulfilling the said guarantee and the payment into the Exchequer of any moneys received by way of repayment of any sums so issued; (c) to exempt the said agreement and other agreements mentioned in paragraph (b) of Clause 2 of the said agreement from stamp duty; (d) to make certain provisions ancillary to the matters aforesaid."—[Mr. W. S. Morrison.]

11.14 p.m.

Mr. BUCHANAN

When the Eleven o'Clock Rule operated last night I was saying that one of the things that struck me was that the vast railway companies of the country must have accumulated capital in shareholdings representing hundreds of millions of pounds. The London Midland and Scottish Railway Company alone must have a shareholding capacity at least far in excess of the amount we are now discussing. We take it that their share of the sum will be one-fourth, or £8,000,000. I find it difficult to be able to see why a company with so much shareholding capital cannot raise such a small sum of money itself in the open market. Why is it that the railway companies, that must have great assets and whose investments must represent such a great figure, are not able themselves to come to the open market to raise the money now? Why is it that they have to come to the Government to create a Finance Company in order to raise this money to create assets for them? When the State has granted the railway companies this loan, it will have added an asset to the railway companies. It will have made them more up-to-date and better railways, and to that extent they will have become a greater asset, not belonging to the community who are raising this money, but to private interests.

What guarantees have the community in return? I can see nothing in this proposal to safeguard the working people involved. Indeed, I have to-day a letter from certain of my constituents who view the proposal with considerable concern, because they say that every development of the railway companies in this connection in the past has meant a gradual decline in the number of railway employés. While it is said that railway traffic and railway revenue have gone up, the number of employés has remained stationary, or in many cases has decreased. The figures given this evening by the hon. Member for Seaham (Mr. Shinwell) with regard to railways and collieries showed that, just as these industries have become efficient in machinery and in power of producing wealth, and have made themselves better assets, so certain classes of workers have suffered.

It has never been claimed that the railway companies were entitled to this assistance. From a business point of view I was amazed at the Chancellor's speech. Generally speaking he argues such a case on business principles, but he did not do so last night. The only reason he gave for this proposal was not a business reason, that we should help the railway companies, but that we were incidentally providing work. It was not that the railway companies needed it, or that it would be better for the community, but that certain people would get work as a result. I do not take the view that the only way to provide useful remunerative work for the community is to provide great capitalist enterprises with either direct or, as in this case, indirect subsidies. If you can raise £36,000,000, and if work is to be provided, are there not other sections of the community who are in greater need of it than the railway companies? Are not the claims of the unemployed to this sum much greater than those of any private company? Is it not the fact that, if you raised the standard of life of the unemployed, they would equally provide useful and remunerative work by buying things with their increased allowances, as much as any railway company would, and, indeed, more.

My experience is that, in connection with roads and railways, there is generally a rake-off in the buying of land and other charges, so that what the workers receive in wages is often substantially less than the amount the House has voted. From the point of view of the provision of work, I would much prefer a grant to the working people who are in need, because I take the view that, if they had extra money, they would buy clothes and other necessaries of life, and in that way would provide as useful and indeed better social work than the provision of capital for the railways. When we are applying for poor people we are told that there should be some sort of test of need. I dissent from the view that only directors and shareholders are better than the unemployed. They queue up for subsidies but what need has been proved? Has anyone said the railways are more in need of this money than any of the great industries? During the Election I and members of the Labour party attacked subsidies. Are we now to let them go unopposed? I know how difficult it is when you have only workers who are going to get jobs, but once you start you have no right to object to sugar beet, wheat or any other form of subsidy. I think I could prove that the agricultural community are in greater want than the railways, but I take the view that none of them are in need. If you are going to maintain the private enterprise system let it be a competitive system and let those who believe in it raise the money and run the system. If they believe it has broken down, let them come to the nation and say the railways can no longer be remunerative as private interests. Let them take them over and run them with national money and national backing, and with direct guarantees to every worker, no matter how humble he may be, but I refuse to follow in the path of a policy of subsidising private enterprise. I take the view that this using of national money will ultimately lead to a serious corruption of public life. Not only will it involve capitalist interests, but it will jeopardise the interests of the working people. I should be lacking in my public duty and in my duty to my constituents if, in this matter, I and those who are associated with me, however small in numbers we may be, did not divide the House.

11.26 p.m.

Mr. D. ADAMS (Consett)

It must be exceedingly entertaining to the Socialists in this House to hear the new doctrine of Socialism enunciated by the hon. Member for Gorbals (Mr. Buchanan). The advertising media which this House is supposed to be for the small group associated with him is always used to the fullest possible extent. It will be agreed that one of the true doctrinaires of the Socialist programme, policy and philosophy is Mr. Sidney Webb (now Lord Passfield) and he has always laid it down that, if we are to acquire public industries of any description, the prelude to that ought to be the unification and improvement of the same. It is for that reason that I, as a Socialist, am glad to find that the railway companies are so advanced in their outlook, and so sensible of their statutory obligations to the public, as to appeal to the only tribunal available to them, that is, the Government of the day for this relatively small grant for which they are asking. I am always gratified when I learn that any of our premier industries, particularly those which are to a large extent under the control of Parliament, in as much as they are statutory and their deeds may be brought under review in this House, are maintaining their business in a state of efficiency. I am astonished and disappointed at the smallness of the amount, which will go only a small way towards providing employment. I say that because of the exceedingly disappointing week's Debate which we have had upon the question of the distressed areas. Analyse the position as I may, and taking the most liberal outlook upon the proposals of the Government, I am unable to find in these any hope of employment as far as the North-East Coast is concerned. When I learn that the Railways are to place orders for a large number of locomotives, additional rails and other railway material for which the Tyneside is famous, I am certain we shall get a proportionate share of the work which is ahead.

One would imagine from the statement of the hon. Member for Gorbals that this grant to the railway companies is an alternative to some grant to the working classes or to the unemployed. I have not learned that that is the case. If it were the case we on these benches would most decidedly take exception to it and demand that the workers, the unemployed people, the underpaid miners and those who are suffering from a low standard of existence should have first call. But I have not heard, not even from the hon. Member, how this proposal impinges upon the national resources or upon the Government's finances. This grant of money will make no difference so far as the State resources are concerned. There is a considerable difference between the grants made to railway companies under this scheme and some of the subsidies which have been granted in other directions. For instance, the milk subsidies were actual gifts. Many of the agricultural subsidies are gifts made to agricultural interests, directly taken from the public purse, without any public control, and handed over to private corporations or private individuals. In the present case no one has the slightest doubt that there will be any necessity to call upon the guarantees which the Government are providing. Our credit is not impaired in any degree whatever. In that way the community are getting an advantage on exceedingly cheap terms. I have no objection, where the case is legitimate and proved, to any of our great industries coming to the State for financial support. I can imagine that in a Socialist State that is precisely what will ensue. The central Government will be asked to do a certain amount of financing of various organisations in the general interests.

But there is a point upon which I lay great stress and that is that we ought not to make advances of public moneys unless we have a measure of public representation. That principle ought to be always part of the proposal when agreements are made by the Government to give support to statutory or other industrial concerns. I hope the Government have taken that matter into consideration and will so insist. If they did so it would enable us in this House to have some say with regard to the procedure of the board which is to handle the finance. I shall always press that point on any similar occasion. I think the Government have been sadly lacking in the subsidies to agriculture, shipping and elsewhere in not insisting upon having on these organisations representation which would be directly responsible to a Minister. That would enable the House to have some critical control over the money advanced. The course which the House will ultimately pursue in regard to this matter is a wise one and is in harmony with the spirit of the age in which we are living. The central authority must come to the aid of industry, and in process of time instead of permitting private enterprise to run the great industries of the country, it would take these over through public ownership and control.

11.36 p.m.

Mr. RHYS DAVIES

I take this opportunity of once again raising a question which I have pursued on many occasions during the last four years. Indeed I should be wanting in my duty to my constituents if I did not again call attention to this problem. On page 10 of the memorandum of the Financial Resolution hon. Members will find the words to which I allude. It says: In the execution of the works comprised in the First Schedule hereto the following conditions shall be observed by the Railway Companies: all plant machinery and materials required in connection with the said works shall so far as practicable be of United Kingdom origin and all manufactured articles shall (unless the Treasury shall otherwise agree in writing) be wholly manufactured in the United Kingdom"— the next sentence is the one which is germane to my purpose— preference being given other things being equal to firms in the Special Areas as defined in the First Schedule to the Special Areas (Development and Improvement) Act, 1934. No one will deny the claim of what is called special areas to the most generous consideration from the Government in finding employment for the people in those areas, and I shall always support them in their demands. I want, however, to call attention to the point that the definition of what really are special areas is not sufficient for our purpose. I have been a representative in this House for many years of an area where the percentage of unemployment is as high as anything that can be found in some of these special areas. There are 31 townships in the county of Durham which is a special area. The percentage of unemployment over the whole of Durham is 34.8; but I have the township of Hindley, in my division of 26,000 inhabitants, which has an unemployment rate of 52.7 per cent., and Westhoughton, another town, with a rate of 34.7 per cent. The same argument applies to South Wales. In the county of Glamorgan, which comprises a special area, there are 31 townships, and 28 of these townships have a smaller percentage than the rate for the whole of my Parliamentary Division. If there is any work to be found under this Financial Resolution—I do not know and I cannot tell—I want to ask whether any money and work which accrue are going to percolate to any of the areas I have mentioned which are as distressed as those which are so defined. I do not think that hon. Members, certainly not Members of the Government, have ever understood the problem which confronts us in Lancashire. In that county we have 4,000,000 people, a bigger population than the whole of Scotland and nearly twice that of the whole of Wales. I speak, of course, as a Lancashire man on this question. There are patches in the county of Lancashire which are every bit as distressed as any part of the counties of Durham, Glamorgan and Monmouthshire. Although there are areas in Lancashire, there is nothing in this Resolution which promises to help them.

There are, of course, railway shops all over the country. There is one at Horwich in my division and that is why I am speaking now. [HON. MEMBERS: "Oh."] I would be a very poor Member of Parliament if I did not speak on behalf of those whom I represent. Let me tell the Government what has happened in the township of Horwich, which depends almost entirely on the railway shop. Eight years ago there were 4,500 men employed there. To-day there are only 2,500. When this colossal sum of nearly £30,000,000 is being guaranteed by the State, every member of the community, wherever he is living, is entitled to the same treatment by the State. Every town in the land is entitled to the same treatment in regard to moneys which are being guaranteed by the State in this respect. Whilst granting of course that a share of this money should percolate to the special areas, I ask the right hon. Gentleman to tell us whether the work which will become available is to be confined strictly to those special areas and not extended to other distressed areas such as those I have mentioned?

11.42 p.m.

Sir ERNEST SHEPPERSON

I support the Resolution which gives a guarantee to the railway companies from the State, but I would like to see at the same time a guarantee from the railway companies to the community of increased efficiency in their services to meet modern transport needs. I believe there is a future for the railway companies if they cease to adopt a defeatist attitude. We do not want to see the railways being used only by nervous old ladies, to whom time is no object, nor do we want to see them used solely for the transport of non-perishable goods. We do not want them to become merely the means by which estimable elderly gentlemen can get old-age pensions, nor do we desire that in times to come when our children's children ask us "What meant ye by these long straight mounds?" We should be compelled to reply "These were the means by which, in the olden days, when time was no object, we were content to travel." We know what the railway companies can do. The London and North Eastern Railway Company has shown by the Silver Jubilee train that a speed of 100 miles an hour can be achieved. But if the London and North Eastern Railway Company has a train that can travel, like the Silver Jubilee, from Huntingdon to London in three-quarters of an hour, why did that company yesterday make me sit in a train for two and a quarter hours for the same journey? I appeal to the companies who are getting this guarantee from the State to become more efficient.

11.44 p.m.

Mr. GALLACHER

In another Debate some of the hon. Members opposite on the Front Bench were very anxious to impress us with the idea that the Prime Minister was an honest man. I have a sort of suspicion that there is a spot of honesty about the Chancellor of the Exchequer as well. But the Chancellor opened up last night by a frank admission or acceptance of the fact that he was stealing our thunder. When we consider the question of raising a loan for the railway companies we come up against this fact, that hon. and right hon. Members opposite are always concerned with property, never with persons, and so we get from the Chancellor of the Exchequer information that a new station will be built at Euston, that bridges sill be built here and there, that new railway lines will be laid, but we get never a word at all about persons. In the discussion to-day an hon. Gentleman opposite said that if the miners get a square deal, the public will pay the money, but do we get that hon. Gentleman or other hon. Gentlemen saying, "All right, we will give them a square deal, and then we will get the money?" No. Another hon. Gentleman said the thing that is wanted is more money in the mining industry, instead of saying that what is wanted is more money in the miner's pocket. Here in this question of the railways the big problem for us to deal with is the men who are keeping the railways running. That should be the big problem for us, at any rate. When we are talking about handing out public money for the development of the railways, are we going to have a new station, but old conditions for the persons employed in the new station, new lines, but the old slavery for the men working on the lines? Is there to be nothing new so far as the men are concerned?

I know that this is proposed as a loan to the railway companies, but I am very suspicious of the railway companies. I do not know as much about finance as does the Chancellor, but I do not like his explanation of this business. He says that after the railway companies get the power, they will raise the money later on to repay the loans. He is forming this finance company in order to help the railway companies with a loan when money is cheap. Well, there is not much prospect of the rate going down, but the right hon. Gentleman tells us that while the railway companies pay the interest on the cheap money now, later on they will have to raise another loan to pay the money back. Is he going to tell us that he is getting money cheap and will loan it to the railway companies, and later on the companies will have to raise a loan of dear money in order to pay him for the loan of cheap money? Is that it? I do not accept the story he tells us about the railway companies having to pay back later on. I am satisfied that once the railway companies get the money, they will stick to it, and what I am concerned about is to see to it that something is done in connection with this raising of a loan for the development of railway property to ensure that there is a corresponding development in the wellbeing and conditions of the men working on the stations along the railway lines. On this I am prepared to fight, and I am certain that every Member on these benches will be prepared to fight. I am prepared to say: "Not a penny for railway development unless it is clearly understood there is to be development of better conditions and shorter hours for the railway workers, and the restoration of the cuts." Will you be prepared to lay down those conditions? If you want to rush along the railways at greater speed, then you must see that the railway workers have short hours and sufficient wages to ensure that the best attention is given to your speed.

It is strange that we should find an hon. Member concerned about speed on the railways while nobody seems much concerned about speeding-up here. I would take £2,000,000 or £3,000,000 from this finance company and make a new building here, where the air would be fresh and where Members instead of lying back asleep would be able to take some intelligent participation in the Debate. If intelligent interest were taken in the work done here, somebody would have moved the other night that the right hon. Gentleman who represents the Colonial Office should be put out and kept out. It is only because we refuse to reorganise this place that such behaviour as we saw in that exhibition can take place. My concern, and the concern of hon. Members on this side, is to see that the railway workers get a square deal in connection with any public money that is spent.

11.53 p.m.

Mr. ENTWISTLE

I want to take up a point raised by the hon. Member for Westhoughton (Mr. Rhys Davies). I am very concerned in this as regards my constituency of Bolton. It is mainly a cotton town, but it used to be one of the most important engineering centres in the country. So far as engineering is concerned, it is in an appallingly depressed condition; whereas there used to be a large number of important engineering works, there is only one large one left, and a few small firms. I want to ask the Government whether the interpretation of the Clause about preference being given to the special areas precludes contracts being made in districts which are not special areas under the statutory definition? A special area is defined geographically, but in my view the intention of this Clause is to give preference where an industry is depressed. It would be most undesirable that these restrictions should be so limited that you could not place a contract in an area where that particular industry is very depressed. I can give an instance of how a Clause similar to this has worked very harshly to a firm in my Division. They had already provided certain plant to, I think, the London Transport Board, and in the ordinary way they would have got a repeat order, but they did not receive it, simply because they were not held to be in a special area within the meaning of the Clause. I would like the Government to consider whether it is not possible to amend these words "special area" or to add some words which would include a depressed industry in an area which is not a special area within the statutory definition of that area.

Mr. POTTS

It has been suggested to me that I should not keep the House tonight and that I should have an opportunity of speaking on Friday. On the understanding that I shall be allowed to speak on Friday, I will not speak to-night.

11.57 p.m.

Mr. G. HARDIE

The Chancellor of the Exchequer told us that the money would be forthcoming at once, but that what was not used at once would be lent somewhere in order to keep it busy. Since he proposes to borrow money cheaply and to lend it cheaply, where does he expect to invest it so as to get sufficient interest to pay for it? It means that while he is prepared to give the railway companies the greatest possible advantage from the loan, he must, if he is going to relend part of the money that is not being used, lend it at higher interest. It seems very unfair to place the companies in this advantageous position. If the Government are going to enter upon a system of helping to finance private enterprise, it will open the gates to all kinds of possibilities. The only excuse given by the Chancellor for this rush was that it would take a long time for the railway companies to get the necessary legislation in this House. That excuse, however, simply charges the companies—and I hope the right hon. Member for Hillhead (Sir R. Home) is listening—with lack of foresight in their own business. If they had been keen business men, instead of lawyers who know nothing about railways, they would have understood years ago that the development was bound to come. There was every indication of the growth of certain centres and of the need of transport of all kinds, and the statement of the Chancellor means that as the railway companies have failed in every respect, the Government have had to come to their assistance if they are to carry out necessary developments. There will be repercussions of this development which should be provided against. Subsidiary companies will be formed to take advantage of the enhanced values of land and property which will result from the development. If the Government, representing the people, are going to help an industry, they should at the same time pass legislation to prevent the values created by the spending of this money going into the hands of private companies. I have no doubt that the right hon. Member for Hillhead is well aware of the struggle going on now in order to have these subsidiary companies drawing in every possible penny. Lord Ashfield has given an illustration of the plunder and theft that went on in connection with land values when the tube railway was extended beyond Golders Green. He was not in any way "bud-mouthed," as we say in Scotland, about making a statement. We want guarantees on all these points, because it is what is going on in the background that will tell the tale in the end. I want some guarantee as to the work that is going to be done and where it is to be done. In Glasgow, where there are many railway works, the local authorities have incurred heavy financial responsibilities in providing houses, mostly for railway workers, in certain districts, but in the past very little consideration has been paid to that fact by private enterprise. The capitalists want to be free to "lift the whole caboodle" to some place where they think their works will do better in their own interests, paying no regard to the nation or the community. I ask for this guarantee—that where works are already established and it is only a question of changing their machinery, those works shall be retained and the workers skilled in railway work retained.

12.2 a.m.

The FINANCIAL SECRETARY to the TREASURY (Mr. W. S. Morrison)

It may be for the convenience of the Committee if I now reply to a few of the observations which have been made on this Financial Resolution. The Committee will not expect me to cover all the ground traversed by hon. Members. The discussion has ranged over a fairly wide area, including topics as various as the system of land valuation and the ventilation of this House, and some of the observations have appeared to be addressed not so much to His Majesty's Government as to the right hon. Member for Hillhead (Sir R. Horne), who is quite well able to look after himself. Coming to the serious points of criticism advanced by the right hon. Member for South Hackney (Mr. H. Morrison) yesterday I should like to acknowledge that his treatment of the proposal seemed to be sympathetic, if not enthusiastic. He refrained from opposing the Resolution, though at the same time making it perfectly plain that he had certain reservations. He asked, first, whether all the works specified in the Schedule were abnormal works. The answer is that they are, at this time. It was explicit during the negotiations between the Treasury and the railway companies that the works to be undertaken as a result of this operation would be works which the railway companies would not have done at this particular time but for this Measure.

I would like to make it clear that the normal replacement and renewal work of the railway companies will go on side by side with this extra work. The right hon. Gentleman said that he had looked at the works in the schedule and that they appeared to be the sort of works which railway companies undertake. So they are, and they are works which railway companies can be supposed to undertake some time, but the works specified in the Schedule to the Agreement are none of them works which the railway companies would undertake at this time if it were not for the financial help set out in the Agreement. The answer to the right hon. Gentleman's question is in the affirmative. They are all works which otherwise would not have been put in hand.

The reservation, as I understand it, that has been put in many guises during the discussion, was that the Motion betokened a failure of private enterprise, as if we were rushing to rescue the tottering railway companies. The exact opposite is the case. The argument would be germane if this financial arrangement were being come to in order to enable the railway companies to continue running, but that is not so. The railways are running efficiently and well; they are transporting day by day millions of passengers and thousands of tons of goods.

The purpose of this Motion is not to enable the railway companies to carry out their normal function of transport, or even the normal renewals and replacements, but to enable them to carry out something extra to their ordinary duties by putting in hand works before their normal time, works which will give employment and assist industry.

Quite a distorted picture has been given of these negotiations by some hon. Members opposite. This is not a case of the railway companies coming to the Government and asking for assistance to prevent them from going to ruin, but of the Government going to the railway companies and saying: "Now that the state of the money market is in its present favourable position, can you not do something if we lend you credit, by putting works in hand?"

Mr. MAXION

Why did not you come to me?

Mr. McGOVERN

The Independent Labour party would spend the money for you.

Mr. MORRISON

I have no doubt that the hon. Member would spend all the money he could get hold of. It is not a case of the railway companies coming for assistance, but of the Government, taking a view of the conditions of the money market, who thought it was possible to help employment if the railway companies could carry out these works.

Mr. GARRO-JONES

Why did the Government choose the railway companies? Why did they not, if the railways are so efficient, choose the roads or road transport?

Mr. MORRISON

If the hon. Member considered for a moment he would see the answer to his own question. The roads are already being dealt with. The railways are among our greatest public statutory undertakings. They are the very ones which may affect particular sections of industry over a very wide area. They are being asked to accelerate their normal method of replacement and to assist the provision of work over a wide area.

Mr. A. V. ALEXANDER

Is this not rather a different picture from that which was put before us by the right hon. Gentleman the Member for Hillhead (Sir R. Horne)?

Sir R. HORNE

There is no contradiction at all.

Mr. MORRISON

The right hon. Gentleman the Member for South Hackney read us a little, good-natured lecture on the iniquity of doing anything to assist private undertakings such as the railways. But the right hon. Member seemed to think there was some impropriety in this granting of credit to private bodies, though he admitted last night that the chances of the Exchequer having to pay them anything at the end of the operations was very slight. The right hon. Gentleman's criticism might have been more justified if the Treasury had offered to the railways any portion of the taxpayers' money. There is nothing of the kind proposed. Indeed the only proposal of that kind which has ever been put into operation was put into operation by hon. Members opposite when they were in the Government. The right hon. Member for South Hackney was Minister of Transport in a Government which included some of the hon. and right hon. Gentlemen I see opposite, and that Government, by its own Development Act of 1929 did not give credit to the railway companies, but handed over a grant of public money to pay the interest on loans put out by the railway companies.

Mr. McGOVERN

The Liberals made them do it.

Mr. MORRISON

What happened on that occasion was that in 1929 hon. Members opposite handed over to private undertakings the sum of £9,000,000 of the taxpayers' money and said, "Good-bye to all that." I would suggest to the right hon. Gentleman opposite that it is not for them to criticise the Government for this particular proposal to lend credit. We are not handing over any money to the railway companies. We are not even lending them money. What we are lending them is credit. Between the position of the Government to-day and the position of the right hon. Gentleman when they were in power there are many different circumstances, but the most important difference in the circumstances as they exist to-day, and as they existed in 1929, is that we have some credit to lend.

I was asked by the right hon. Gentleman for the figure of haw many man-years of employment these schemes would give. I am informed by the wise men who know what a man-year is that the ordinary basis for calculating this figure is that the expenditure of £1,000,000 gives 4,000 man-years of employment. By a simple sum in arithmetic which even I am able to solve, therefore, the number of man-years of employment given by these proposals would be 120,000. That would be no small contribution to employment in this country.

An additional point of criticism is that we have put no representatives of the Government on the boards of the railways. I may say that when hon. Members opposite in 1929 handed over, not credit, but money, to the railways, they did not seek to place any representative of the Government on the boards of the companies. The Government do put representatives on the boards of various companies, but there are generally one or two reasons operating when this is done. The company may be doing work in which the Government are interested, as in the case of the Suez Canal, Imperial Airways, cables and wireless, whose operations affect such large interests of national policy. The only other case is under the Trade Facilities Act, when some company, perhaps, which is just starting with a board which, in the opinion of the Treasury, requires strengthening with expert advice. In those cases it may be thought desirable to put Government representatives on the board. But in the case of the railway companies neither of these conditions applies. In the first place, they are large industrial concerns in this country, and there is no question of international policy. I am aware that the Treasury contains a number of devoted, intelligent, and even erudite public servants, but I have never yet learned that an intimate knowledge of the working of the main-line railways is part of the equipment of a Civil servant, no matter how erudite he is. We do not think that we should strengthen the boards of the railway companies to any appreciable extent by this method, and we think it better to leave the management of the railways to men who have made it their life study.

Another suggested reason why we should have Government representatives on the boards is that it would enable us to know what was going on. But we are dealing here with statutory companies which are not either experimental or new concerns, and there is ample power under Clause 17 for the Government to get all the information they require as to what is being done by the railway companies. Therefore, there is no real force in the argument that we should have representatives on the boards.

With regard to the provision in the contract that the work is to be given, other things being equal, in the special areas, those words, of course, do not mean that areas outside the special areas will not have any of this work. I agree, however, that this point is one of substance. It is not now the time, on this Financial Resolution, to go into and alter the definition of a special area; but if, on the matter being gone into, it is found that there is a point of substance and that some variation is neded in the definition of what is meant by a special area for the purposes of this agreement, I have not the least doubt that the railway companies will agree to modify the agreement accordingly.

It has been said that some expense would be incurred by the formation of this company. Of course, you cannot form a company without a little expense, but it will be exceedingly small in this case, on the analogy of the London Passenger Transport Board. The directors will receive no remuneration, and it is merely for the purpose of giving the necessary elasticity for managing the loan. There are, too, compensating factors which make this proposal a very good business one for the Committee to endorse. In the first place, the expenses of issuing one guaranteed loan are likely to be much less than if four separate loans were raised by the railway companies; and, as my right hon. Friend mentioned last night, it is reasonable to suppose that there will be a financial advantage through the Finance Company investing the whole of the money that is not immediately required for the works of the railway companies, as against the railway companies separately investing the surplus in smaller amounts at different times. Thirdly, the real and important justification for this procedure, which it is right that the Committee should always keep in mind, is that it enables the money to be raised at the particularly favourable rates which are now prevailing. Whatever little expense is involved the railway companies, as the agreement says, have agreed that it is worth while in order to secure the rates which now exist, have agreed to defray the cost of forming the company. I ask the Committee to consider the Resolution favourably. The point of urgency has been made abundantly clear. It is a Resolution which will do a great deal of good towards employment throughout industry and will improve at the same time the convenience and the safety of railway passengers.

12.21 a.m.

Mr. E. SMITH

After the case that has been made out by the Financial Secretary from the side of the Government, we on this side would be lacking in our duty if we did not state the point of view of the people we represent. If it is right to guarantee principal and interest to the extent proposed, why stop at this? I come from an area the centre of which is the most densely populated in the world. The local authorities during the past few years have sent resolution after resolution to the Government asking that the railway should be electrified, but they have obtained no satisfaction. It is acknowledged by the experts in the railway world that if any line needs electrifying it is the loop line in the Staffordshire area. We have this guarantee of principal and interest to the companies, but there is not a word about guaranteeing the lives of the workers which are invested in railway companies.

We have had some experience of this kind of thing. At Rugby, for example, the effect of introducing electrification in signalling is that there is to be one signal box where hitherto there have been five. I agree that it results in efficiency, but let us examine the effects of efficiency on those engaged in the industry. In 1913 the railways employed 618,000. In 1921, as a result of a greater volume of passengers being carried, they employed 736,000, but that was not the position for very long. As a result of greater efficiency and electrification we find that in 1935 the railway companies are employing only 597,000. Year after year the numbers employed by the railway companies have been reduced. Efficiency has been increased, but all the time at the expense of the men employed in the railway industry. In 1926, 13,000 men were discharged; in 1927, 6,000; in 1928, 25,000; in 1929, 41,000; in 1931, 18,000; and in 1932, 31,000. What is the effect on the individual employé? In 1931, five men were employed where six men had been employed in 1921, and by 1934, four men were employed where five men had been employed in 1931. Although the interest is being guaranteed in this Resolution, not a word has been said about guaranteeing the livelihood of the people engaged in the industry, and we who are on this side of the House intend to see that we get some guarantee as far as they are concerned.

12.27 a.m.

Mr. GARRO-JONES

I do not intend to keep the House for more than two minutes—[HON. MEMBERS: "Oh!"]—I am not apologising in any way for keeping the House. It would be very unseemly if the House were to show any haste in passing this Resolution without having the question fully satisfied. I should like to have a brief explanation of Clause 9, which says: Any losses on capital account which may be made by the Finance Company in the investment of the unborrowed proceeds of its securities (except such losses as the Treasury may determine to be fairly attributable to the investment of moneys in respect of which Parliament has refused to grant borrowing powers) shall be treated as moneys borrowed by the Railway Companies. It is the words in parenthesis that I completely fail to understand. No doubt there is a very good explanation, but I should like to have it. The second point is that the maximum amount which the Treasury is guaranteeing is not this nominal figure of £26,500,000, but a sum sufficient to advance that amount to the railway companies after certain exemptions from stamp duty, which are also direct losses to the Exchequer. If the railway companies obtained this money through the ordinary Money Market it would be a very expensive item, probably at least 2 per cent. Apparently the whole of that is being saved by this method, and moneys which would have had to be paid in stamp duty are being saved by the railway companies. This is really a direct subsidy to the railway companies in the raising of this money. Subject to satisfactory answers on those two points, neither I nor any other hon. Member will vote against this Measure, but I assure hon. Members opposite that it is not one that we receive with any enthusiasm, particularly in view of the claim by the hon. Gentleman that this very transaction is an illustration of the vaunted efficiency of private enterprise.

All these works are either necessary or they are not necessary. The Chancellor of the Exchequer told us during the Election that no works which were not of direct public benefit would be put into operation. Are these works directly necessary or not? If they are directly necessary, then the railway companies are not showing efficiency if they cannot finance them and put them into operation. The railway companies it is true, are able to survive, but then they are the pampered statutory companies of the State. Every form of competition which menaces the railway companies is suppressed by the Government. I have heard the right hon. Gentleman, the Member for Epping

(Mr. Churchill) stand at that Box and say what a terrible thing it would be if by the advent of some new form of transport the vast amount of capital invested in these railways were to be endangered. Therefore, by every conceivable method of pampering, favouritism and financial privileges, the Government are assisting the railways to maintain themselves. To bring this forward as a reason and as an example of the efficiency of the railways is a travesty of the facts, and it will be with some feeling of shame that I shall allow this to be passed through the House.

Question put.

The Committee divided: Ayes, 164; Noes, 2.

Division No. 9.] AYES. [12.33 a.m.
Acland, Rt. Hon. Sir F. Dyke Errington, E. Morrison, W. S. (Cirencester)
Acland, R. T. D. (Barnstaple) Evans, D. O. (Cardigan) Muirhead, Lt.-Col. A. J.
Agnew, Lieut.-Comdr. P. G. Everard, W. L. Munro, P. M.
Allen, Lt.-Col. J. Sandeman (B'kn'hd) Fraser, Capt. Sir I. Neven-Spence, Maj. B. H.
Amery, Rt. Hon. L. C. M. S. Furness, S. N. Nicolson, Hon. H. G.
Anderson, Sir A. Garrett (C. cf Ldn.) Ganzoni, Sir J. Orr-Ewing, I. L.
Apsley, Lord George, Major G. Lloyd (Pembroke) Palmer, G. E. H.
Aske, Sir R. W. George, Megan Lloyd (Anglesey) Peake, O.
Astor, Major Hon. J. J. (Dover) Gledhill, G. Peat, C. U.
Astor, Hon. W. W. (Fulham, E.) Gluckstein, L. H. Penny, Sir G.
Atholl, Duchess of Glyn, Major Sir R. G. C. Percy, Rt. Hon. Lord E.
Baldwin-Webb, Col. J. Goldie, N. B. Peters, Dr. S. J.
Balfour, Capt. H. H. (Isle of Thanet) Goodman, Col. A. W. Porritt, R. W.
Balniel, Lord Graham Captain A. C. (Wirral) Proctor, Major H. A.
Barclay-Harvey, C. M. Greene, W. P. C. (Worcester) Ramsay, Captain A. H. M.
Baxter, A. Beverley Gridley, Sir A. B. Rankin, R.
Beaumont, Hon. R. E. B. (Portsm'h) Grimston, R. V. Rathbone, J. R. (Bodmin)
Beit, Sir A. L. Guest, Maj. Hon. O.(C'mb'rw'll, N. W.) Rayner, Major R. H.
Bird, Sir R. B. Gunston, Capt. D. W. Reed, A. C. (Exeter)
Blindell, J. Guy, J. C. M. Reid, W. Allan (Derby)
Bower, Comdr. R. T. Hacking, Rt. Hon. D. H. Rickards, G. W. (Skipton)
Boyce, H. Leslie Harris, Sir P. A. Roberts, W. (Cumberland, N.)
Braithwaite, Major A. N. Hartington, Marquess of Ropner, Colonel L.
Brocklebank, C. E. R. Haslam, Sir J. (Bolton) Ross Taylor, W. (Woodbridge)
Brown, Rt. Hon. E. (Leith) Heilgers, Captain F. F. A. Russell, A. West (Tynemouth)
Browne, A. C. (Belfast, W.) Hepburn, P. G. T. Buchan- Russell, S. H. M. (Darwen)
Bull, B. B. Holdsworth, H. Scott, Lord William
Cartland, J. R. H. Holmes, J. S. Seely, Sir H. M.
Carver, Major W. H. Horne, Rt. Hon. Sir R. S. Shepperson, Sir E. W.
Cazalet, Thelma (Islington, E.) Horsbrugh, Florence Southby, Comdr. A. R. J.
Chamberlain, Rt. Hn. N. (Edgb't'n) Hudson, Capt. A. U. M. (Hack., N.) Spears, Brig.-Gen. E. L.
Channon, H. James, Wing-Commander A. W. Spens, W. P.
Chapman, A. (Rutherglen) Joel, D. J. B. Storey, S.
Chorlton, A. E. L. Keeling, E. H. Strauss, H. G. (Norwich)
Clydesdale, Marquess of Kerr, J. G. (Scottish Universities) Stuart, Hon. J. (Moray and Nairn)
Colman, N. C. D. Lamb, Sir J. O. Sutcliffe, H.
Colville, Lt.-Col. D. J. Latham, Sir P. Tate, Mavis C.
Cook, T. R. A. M. (Norfolk, N.) Leech, Dr. J. W. Taylor, C. S. (Eastbourne)
Cooke, J. D. (Hammersmith, S.) Lennox-Boyd, A. T. L. Thomas, J. P. L. (Hereford)
Courthope, Col. Sir G. L. Levy, T. Thomson, Sir J. D. W.
Craven-Ellis, W. Liddall, W. S. Titchfield, Marquess of
Cross, R. H. Lindsay, K. M. Tree, A. R. L. F.
Crowder, J. F. E. Llewellin, Lieut.-Col. J. J. Tufnell, Lieut.-Com. R. L.
Cruddas, Col. B. Lloyd, G. W. Wakefield, W. W.
Culverwell, C. T. Lyons, A. M. Ward, Lieut.-Col. Sir A. L. (Hull)
Davies, Major G. F. (Yeovil) Mabane, W. (Huddersfield) Ward, Irene (Wallsend)
Dorman-Smith, Major R. H. M'Connell, 'Sir J. Warrender, Sir V.
Duckworth, W. R. (Moss Side) McKie, J. H. Waterhouse, Captain C.
Duggan, H. J. Macmillan, H. (Stockton-on-Tees) Wickham, Lt.-Col. E. T. R.
Duncan, J. A. L. Macnamara, Capt. J. R. J. Willoughby de Eresby, Lord
Dunne, P. R. R. Maitland, A. Windsor-Clive, Lieut.-Colonel G.
Eastwood, J. F. Margesson, Capt. Rt. Hon. H. D. R. Young, A. S. L. (Partick)
Eckersley, P. T. Mayhew, Lt.-Col. J.
Elliot, Rt. Han. W. E. Mellor, Sir J. S. P. (Tamworth) TELLERS FOR THE AYES.—
Emery, J. F. Mills, Major j. D. (New Forest) Dr. Morris-Jones and Captain
Entwistle, C. F. Morris, J. P. (Salford, N.) Arthur Hope.
NOES.
Maxton, J. Stephen, C. TELLERS FOR THE NOES.—
Mr. Buchanan and Mr. McGovern.

Resolution to be reported To-morrow.

The remaining Orders were read, and postponed.

It being after Half-past Eleven of the Clock upon Wednesday Evening, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.