HC Deb 04 June 1896 vol 41 cc428-42

(1.) Where it is certified to the Treasury by the Board of Agriculture that the making of any light railway under this Act would benefit agriculture in any district, or by the Board of Trade that by the making of any such railway a means of communication would be established between a fishing harbour or fishing village and a market, or that such railway is necessary for the development of some definite industry, but that owing to the exceptional circumstances of the district the railway would not be constructed without special assistance from the State, and the Treasury are satisfied that a railway company existing at the time will construct and work the railway if an advance is made by the Treasury under this section, the Treasury may, subject to the limitation of this Act as to the amount to be expended for the purpose of special advances, agree that the railway be aided out of public money by a special advance under this section.

Provided that:—

  1. (a) The Treasury shall not make any such special advance unless they are satisfied that landowners, local authorities, and other persons locally interested have by the free grant of land or otherwise given all reasonable assistance and facilities in their power for the construction of the railway; and
  2. (b) A special advance shall not in any case exceed such portion of the total amount required for the construction of the railway as may be prescribed by rules to be made by the Treasury under this Act; and
  3. (c) Where the Treasury agree to make any such special advance as a free grant, the Order authorising the railway may make provision as regards any parish that, during a period not exceeding fifteen years to be fixed by the Order, so much of the railway as is in that parish shall not be assessed to any local rate at a higher value than that at which the land occupied by the railway would have been assessed if it had remained in the condition in which it was immediately before it was acquired for the purpose of the railway. The Order may authorise the Board of Trade to extend any such period.

(2.) A special advance under this section may be a free grant or a loan or partly free grant and partly a loan.

(3.) Any loan for a special advance under this section shall be made on such conditions and at such rate of interest as the Treasury direct.

The first Amendment on the Paper stood in the name of Mr. HERBERT GLADSTONE (Denbighshire, W.), who proposed in Sub-section (1), after the words "under this section," to insert the words, "or upon any other adequate grounds."

* MR. SPEAKER

ruled the Amendment out of order, on the ground that the House had, after long discussion, settled certain conditions on which a special advance could be made, and to insert the proposed words would render nugatory a decision already arrived at by the House.

MR. E. STRACHEY (Somerset, S.) moved in Sub-section (A) after the word "railway" to insert the following words:— And that the railway company has not imposed any terms or conditions as to rates or otherwise as in the opinion of the Board of Trade are unfair or oppressive to the district. His Amendment, he explained, was intended to meet the case of a railway company which had not fairly and adequately dealt with the traders in a district, and the Board of Trade would, he thought, decide the question impartially. He took it, the House would consider that it would not be fair to make a large grant of public money to a railway company which looked solely to the interests of its shareholders, and which had not treated the traders and agriculturists well. If the provision which he proposed were put in the Bill it would act as an encouragement to a railway company to treat traders with fairness and liberality as regards rates, and a deterrent to companies who were inclined not to consider the interests of poor localities. The experience of this country was that in the prosperous districts there was comparatively little trouble as to railway rates. It was in the poor and scattered districts that railways were inclined to charge exorbitant rates.

THE PRESIDENT OF THE BOARD OF TRADE (Mr. C. T. RITCHIE,) Croydon

said he quite sympathised with the object which the hon. Member had in view. But he would refer him to Clause 11, Sub-section 10, under which he would see that one of the duties imposed upon the Board of Trade before they assented to an Order was to fix the maximum rates to be charged. Therefore, the object which the hon. Member had in view was already provided for.

MR. STRACHEY

said his object was that the Board of Trade should inquire into the past action of the railway company.

MR. RITCHIE

did not think that would be at all fair. If one of these light railways was required in a locality, all the Board of Trade had to do was to see that it was worked in the interests of the locality.

* SIR ALBERT ROLLIT (Islington, S.)

said the point was one of great practical importance, and he was quite satisfied that in many districts it was necessary to impose every possible safeguard. But he believed the effect of the Amendment would be to prevent the very development which was the object of his hon. Friend. He heartily sympathised with the reasons which had induced him to move it, but he thought it would defeat the object he had in view.

MR. T. LOUGH (Islington, W.)

said the right hon. Gentleman suggested that the Board of Trade and the Treasury would have done their duty to a locality when they got the railway made. He would respectfully suggest that that did not at all follow. A district might badly want a railway, and yet it might be made so as to inflict a most deadly blow upon the locality. Everything depended upon the way in which the railway treated a locality. In Ireland, the effect of making a light railway in some districts had been to destroy all the local traffic organisation. His hon. Friend, as he understood, said that when a railway was built in a locality with such serious consequences as that, no grant of public money should be given unless the Board of Trade was satisfied that the railway was going to charge reasonable fares.

THE ATTORNEY GENERAL

pointed out that that was not the Amendment.

MR. LOUGH

begged pardon, and resumed his seat.

MR. HERBERT ROBERTS (Denbighshire, W.)

said it seemed to him very important to make it quite clear that the Board of Trade was to have distinct authority to regulate not only the rates but all terms. He felt bound to admit that the wording of the Amendment was rather unfortunate, but his experience led him to the conclusion that unless some such words as these were accepted, it would be difficult in many cases for these railways to be built.

MR. J. BRYCE (Aberdeen, S.)

said his hon. Friend proposed, that before giving a company this exceptionable advantage, the Board of Trade was to inquire whether it was imposing terms, or conditions, or rates, which were not fair and reasonable to the district. Section 2 provided that the Board of Trade were to lay down, and make part of the Order, the rates and terms upon which the light railway was to be worked, but his hon. Friend referred to the provisions and present action of the main company. His hon. Friend's view was that the special advance which the Treasury had power to make was not to be made to a railway which had disentitled itself to assistance by having imposed rates and conditions which were of an unsatisfactory character. It would be very little use for the Board of Trade to prescribe low rates and easy conditions under Section 2 if, at the same time, the rates and conditions which the main line of railway applied to the district continued to be unfair. He admitted the question was one of some difficulty, but he thought it would be agreed that if the rates which the company charged upon that part of its main line with which the connection of the light railways was made were unfair at present, it would be of very little advantage to the district if the branch railway had low rates fixed upon it.

MR. HENRY BROADHURST (Leicester)

said the special object of the Amendment was to deal with that portion of the Bill which contemplated light railways being made by existing railway companies. What they wanted to direct the attention of the House to was the fact that all existing railway companies did not assist the special industries which it was the object of this Bill to develop. They wanted to see that if these immense monopolists came to Parliament to obtain the sanction of the State to develop these light railways they should only do so under the strictest regulations and conditions as to the tariff under which the goods in the rural districts were carried. He understood the principle of the Bill was to make a contribution of 25 per cent. by the State where certain conditions were complied with with regard to light railways. What the State must do was to see that they had at least 25 per cent. more control and influence over the making of those railways than they had hitherto possessed. That was the object of the Amendment.

* SIR HENRY MEYSEY-THOMPSON) (Stafford, Handsworth

said hon. Members opposite seemed to have an idea that railway directors were both knaves and fools. [Cries of "No!"] Hon. Members dissented, but he was judging from their utterances in the House. They were accused at one moment of neglecting to make branches which would have been profitable to their shareholders, and at another of seeking to make money at the public expense. The object of the clause was how to induce existing railway companies to make unprofitable branches. If the branches were likely to prove profitable, the railway companies would make them without any Bill at all. But the question was, when a district wanted a railway which under existing conditions and laws was not likely to prove profitable, how were they going to induce a railway company to make it? He could assure hon. Members that there would not be any rush for this bonus on the part of railway companies. The difficulty would be to induce them to make these unprofitable branches at all, and the House ought to set to work to make it possible to bring about this result. If they wanted to hamper or obstruct the objects of the Bill, then the best way they could invent for the purpose was to say that as a preliminary they should have an inquiry into the conduct of a railway company for the last 50 years, and if the Board of Trade found anything not in accordance with their wishes they should have the power of revising the whole of the rates of large railways. That would be a bar to the branch railways being made. He thought the Board of Trade had all the powers they could reasonably wish to have given them, and he, therefore, opposed the Amendment, which could serve no good purpose.

DR. CLARK (Caithness)

, whilst not very strongly in favour of the Amendment, did not see what possible harm could be done by its acceptance. In the first place, the Bill laid down conditions as to the owners of land, who must give the land free; as to the rating authorities, who must not rate a new railway any higher than the land was previously rated, and, indeed, as to every class affected by the Bill, and that being so, why should there not also be some condition or limitation imposed with regard to railway companies? If the Board of Trade had the power it was sought to give them, they might bring pressure to bear on a railway company which had acted unfairly and oppressively in a district, and thus bring about a very beneficial change. The words merely gave a permissive power, and there was nothing obligatory in the matter.

MR. COURTENAY WARNER (Stafford, Lichfield)

remarked that the hon. Member for Islington (Sir A. Rollit) had said that this provision would only apply to the railway company that constructed the line. But the language of the Bill was: "If the Treasury are satisfied that a railway company existing at the time will construct and work the railway." The provision, therefore, affected the railway company that worked the line. Replying to a reference made by the hon. Member for Handsworth, he said he had never heard hon. Members on his side call railway directors either knaves or fools, nor did they think they were. The directors were clever men, chosen for their aptitude and business capacity to conduct the affairs of the railway companies. But they properly conducted those affairs in the interests of their shareholders, and the result was they took a slightly biassed view on questions of this sort in favour of their own company as against the people who used their line. It was for that reason it was desired to introduce some such protection as was afforded by this Amendment.

MR. R. J. PRICE (Norfolk, E.)

observed that if in his county they were to look for light railways, they would have to look to the existing railway companies both to construct and work them. In Norfolk there were two systems of railway, one of which had treated the agricultural community very fairly—namely, the Great Eastern. The other was a joint line of the Great Northern and Midland, which had not given the same facilities to agriculturists and others as had the Great Eastern. In fact, so far from giving facilities from the points at which they competed with the Great Eastern, they had prevented the Great Eastern giving facilities under some agreement which subsisted between the companies. He did not doubt that the introduction of these words would result in the two companies taking up a different attitude. He felt they had not been quite well treated by the Treasury Bench. The right hon. Gentleman the President of the Board of Trade had replied to something which he thought was the sense of the Amendment, but which was not. It had been pointed out by the right hon. Member for Aberdeen that the right hon. Gentleman had not understood the effect of the Amendment, and that the subsequent clause he had assumed would meet the Amendment, did not really do so. They should now like to hear from the right hon. Gentleman some argument as to why the Amendment, in its real sense, could not be accepted by the Government.

MR. RITCHIE

replied that when the hon. Gentleman explained what the real purport of the Amendment was, he distinctly stated that in his opinion it would be most antagonistic to the interests of a district which required a light railway. If the Board of Trade were to impose conditions on a railway company with regard to the rates for traffic on their main line, the effect would be to prevent this power under the Bill being exercised, and the district obtaining a railway which was much needed.

MR. D. LLOYD-GEORGE (Carnarvon Boroughs)

remarked that as the clause stood at present, no free grant was to be made for the purpose of constructing a light railway in any district, unless, first of all, terms were arrived at with a railway company. Hon. Members on that side, in previous discussions, endeavoured to obtain the insertion of the words "County Council," and to induce the Government to make the County Councils and District Councils participate in the free grants, pointing out that unless this were done, the districts would be at the mercy of the railway companies. Such an Amendment, however, was refused, and it now became incumbent upon the Government to make some kind of provision for the protection of those poorer districts against the possible tyranny of the railway companies. In his own county there were two or three large agricultural districts where they had not got any railways at the present moment. When this Bill became law, there would be an attempt to put it into operation, though he was doubtful whether, as it was at present framed, it could be put into operation. But he was positive that, unless the Government accepted some such Amendment as this, such districts as he had indicated would be subjected to unfair terms.

Question put: "That those words be there inserted."

The House divided:—Ayes, 85; Noes, 183.—(Division List, No. 217.)

MR. E. STRACHEY (Somerset, S.) moved to amend the clause by providing that special advances out of public funds for the construction of light railways should not, in any case, exceed one-half of the total amount required for the construction of the railway as might be prescribed by the rules to be made by the Treasury. When he raised this question in Grand Committee, in identically the same form, he received the support of the Chancellor of the Exchequer, who said that, speaking as the guardian of the public purse, he himself had no objection to the proposal.

MR. RITCHIE

said his right hon. Friend only made an abstract statement, to the effect that perhaps, as Chancellor of the Exchequer, he ought not to object to the limitation of the amount.

MR. STRACHEY

said that was so. He had no intention of misrepresenting the right hon. Gentleman. No doubt the right hon. Gentleman had in his mind, and he thought hon. Members should have in their minds, the probability that this was only the beginning of a very large matter indeed, and that in future the House would probably be asked to vote other large sums of money as free loans to railway companies.

MR. RITCHIE

said he thought he might save time if he said at once that he was willing to accept the words "not exceeding one-half."

Words suggested by Mr. Ritchie inserted.

MR. J. CALDWELL (Lanark, Mid) moved to omit Sub-section (c). He said that this sub-section meant the limitation of the local rate in the future so far as light railways were concerned to the amount with which the land was rated before it was acquired for the purposes of the railway. Of course, it might be said that if a railway was constructed through a parish, the parish would benefit so much that it might be content to receive the same rate as it received on the land before the railway was constructed. The same thing might be said of the case of the landowner—the railway passing through his estate benefited it so much that it ought to provide land for it for nothing. It was proposed in the sub-section to compel the parish to abandon its right of rating the railway, but it did not compel the landowner to give his land for nothing. If the principle were adopted at all, it must be in a very much wider sense. When the Government introduced a new principle of this kind into legislation, it was very necessary that the House should consider it very carefully. If the principle had been adopted with regard to all light railways he would not object so much; but it was confined to one particular class only—namely, light railways constructed and worked by an existing railway company. No Imperial grant was to be given when the railway was constructed and worked by a County Council. It was obvious that there might be districts in which it would be impossible to get an existing company to construct a railway, and the County Council or private promoters constructing a railway would not get the benefit of the clause. That was, in his opinion, a most invidious distinction. He objected to this special advantage being given to existing railway companies. The clause seemed to be framed on the idea that railways were assessed on the value of their land and buildings. As a matter of fact, railways were rated according to their carrying capacity. They were rated on their earnings. As the clause was introduced by the Government, the period was to be a perpetual one, but now it had been modified to 15 years; therefore they had seen that it was necessary to make some modification as to the period. But even as it stood, 15 years was an unreasonable time to allow for an exemption of this kind. In the meantime there might be a development of coal fields in the neighbourhood, the erection of houses, and, in the course of a few years, the line might become a prosperous one. Then there was the danger of introducing this principle even in the case of light railways, because it was certain that a principle of this kind, applied to any special case, gave a push to the same principle being applied elsewhere. Of all the cases where they gave a privilege in the nature of an exemption like this, a railway company was the very last case which ought to be selected. A branch line would not be. For example, the Mailing railway, about which the House heard something the other night, would not pay the people of the locality to make it, neither would it pay the County Council; but to the railway company a line like this acted as a feeder to their general system not otherwise obtainable. Therefore, the House had to take into consideration the fact that a light railway was being promoted by an existing railway company, the earning capacity of the line, and when once constructed, it would be an important feeder to the main railway system. He also urged that it was unfair to make this Order a compulsory one, that the Board of Trade should be able by an Order, without the consent of the County Council or the rating authorities, to compel local ratepayers to make what was a substantial contribution to the railway. It was a novel principle.

MR. LLOYD-GEORGE

did not think that it was altogether reasonable to exclude this sub-section, because, in the case of a general railway made for the use of a locality, some indulgence should be extended in the matter of rating. If a railway was successful to the extent of being able to pay a dividend of 4 or 5 per cent., then the sub-section should not operate; if it was not a success, then the Board of Trade should have the right to extend its operation for 10 or 15 years, or for any other reasonable period. He suggested that the Amendment should be withdrawn, and that five years should be substituted for 15 years in the sub-section.

MR. RITCHIE

said that if it met the views of hon. Members opposite, he was willing to agree to the compromise of ten years. Five years was too short a period.

MR. BROADHURST

thought that there was a general inclination on the part of the House to give some encouragement to railways, but when a railway had succeeded to the extent of being able to pay 3 per cent., he thought that the locality which provided the employment should share in the prosperity. He thought that the hon. Gentleman might accept seven years.

MR. RITCHIE

pointed out that the words in the sub-section were "not exceeding 15 years." It was not obligatory on the part of the Commissioners or the Board of Trade to exempt at all. The object was to get the locality to show some desire to assist the formation of the line. He thought that his proposal ought to be accepted as a fair period.

MR. BRYCE

thought there was a deal of force in what had been said by the Mover of the Amendment. It had also to be remembered, however, that the House was proceeding with this legislation in a kind of eleemosynary spirit towards the localities, and after having made a grant of public money they did not wish the locality to take the opportunity of raising the valuation. On the whole, he thought that the compromise suggested by the right hon. Gentleman was a fair one.

MR. CALDWELL

said he was quite willing to accept the compromise suggested. He withdrew the Amendment.

Amendment, by leave, withdrawn.

MR. LLOYD-GEORGE moved the omission of ''fifteen'' years, for the purpose of inserting ''ten'' years.

Amendment agreed to.

MR. CALDWELL moved, in the same clause, an Amendment providing that where any such special advance is made by the Treasury, the local assessment shall not be at a higher rate than the value at which the land occupied by the railway would have been assessed if it had remained in the condition in which it was immediately before it was acquired for the purpose of the railway:— but before such provision is made in any Order the local and rating authorities of every such parish shall be notified of the intention to insert such provision, and shall be entitled to be heard by themselves, their counsel, and witnesses in opposition to the same. He pointed out that the exemption might be sprung on the local authorities at any time without any confirmation by the Board of Trade. Exemption should not be assented to merely by general assent, but special notice should be given to the rating authority before action was taken. It was a question of abandoning the right of taxation, which otherwise was the legal right of the parish.

MR. BRYCE

suggested that the words "by themselves, their counsel, and witnesses" should be omitted.

MR. CALDWELL

agreed to omit those words.

* SIR ALBERT ROLLIT

said he hoped that the Government would accept the Amendment. He objected altogether to the principle of exemptions or partial exemptions from the rates. Hon. Members forgot that when exemptions were made, the burden fell on the other private ratepayers of the locality. Railway companies had already considerable exemptions from rating. There was a precedent against this provision, which had caused considerable grievance and ill-feeling in rating matters; he referred to the provision in the private Act dealing with the Law Courts. The Strand Union had continuously protested against this partial exemption, and yet a similar provision was to be inserted in the present Bill.

MR. RITCHIE

accepted the Amendment.

Amendment agreed to.

MR. CALDWELL moved, as a consequential Amendment, to leave out the words, "The Order may authorise the Board of Trade to extend any such period."

Amendment agreed to.

MR. CALDWELL moved to insert the following words at the end of sub-section (c):— and the period may be extended by the Board of Trade under the provisions of this Act, after due notice to the local and rating authorities of every such parish, and after an opportunity afforded them to be heard in opposition to said extension.

MR. RITCHIE

said that he would undertake to provide before a later stage that where the Board of Trade had power to extend the period, notice should be given to the rating authorities and they should be heard before the extension was made.

Amendment, by leave, withdrawn.

MR. LLOYD-GEORGE moved to add the following sub-section after Sub-section (c):— (d) If at any time within ten years after the opening of the railway in respect of which a special advance is made as a free grant, its net receipts produce a return equal to three per cent. on the capital invested in the railway by the company, the said company shall refund to the Treasury the amount so advanced. He said that if a railway, for the construction of which the Treasury had made a free grant, came in the course of years to pay a dividend, it was unfair to the general taxpayer that the money advanced on the ground of the impoverishment of the district should not be returned.

MR. RITCHIE

said that the Government could not accept the Amendment. The dividend might be earned owing to peculiar and temporary circumstances, and it would be hard in such a case to demand the repayment of the advance.

MR. LLOYD-GEORGE

said that the Amendment might be made permissive to the Treasury.

MR. RITCHIE

said that the Treasury would not like the duty of deciding when the time had arrived for the repayment of the advance.

MR. BROADHURST

said that the Amendment contemplated the case of a railway, constructed by a free grant, becoming prosperous, and surely such a case should be provided for. It would be exceedingly undesirable that the general taxpayer should make a contribution towards a commercial venture at its start, and should not, when that undertaking became profitable, receive any return for his contribution. There would be no power to lower the rates according to the profit-earning capacity of the railway, and the only way for the taxpayer to share in the prosperity of the line would be to have the State contribution returned. The money so returned could then be employed in assisting schemes in other parts of the country. If they were to have the Bill, let them have as much justice and reason in it as possible.

MR. RITCHIE

pointed out that Sub-section (3) provided for special loans being made on such conditions as the Treasury might direct. If that provision were made to apply to free grants also, the object of the Amendment would be fulfilled.

DR. CLARK

thought that the suggestion of the President of the Board of Trade was a distinct improvement on the Amendment. There were different methods of dealing with this question in different countries. The Indian Government, when it made advances to railways, claimed one-half of the profits after a dividend of 5 per cent. had been paid. In Belgium the dividend which might be paid was limited, and all profits beyond that had to be spent on the development of the line or on other public purposes. It was desirable to prevent a repetition of the Highland Railway case, where 6 per cent. was being paid on the ordinary capital, while the Treasury got nothing for its contribution towards an extension of that line.

MR. LLOYD-GEORGE

said that he was willing to withdraw his Amendment in favour of that suggested by the President of the Board of Trade.

Amendment, by leave, withdrawn.

MR. LLOYD-GEORGE moved in Sub-section (3) to insert the words "free grant or" before the word "loan."

Amendment agreed to.

Clause 6,—