HC Deb 08 December 1919 vol 122 cc1075-84

The provisions of the above-recited agreement which are set out in the Schedule to this Act are hereby confirmed, and shad have full force and effect, as from the date of time said agreement, as if enacted in this Act, and any payments under the said agreement and before the passing of this Act which are inconsistent with the terms of the said provisions shall be adjusted so as to give effect to those terms.


The Amendment standing on the Notice Paper in the name of the hon. and gallant Member for Bury St. Edmunds (Lieut.-Colonel W. Guinness) cannot be taken, because it would be equal to negativing the Clause.

Motion made, and Question proposed, "That the Clause stand part of the Bill.

Lieut.-Colonel GUINNESS

I did not desire to move the omission of the whole Clause as my objection is directed to the particular point of the railways which were worked under a baronial guarantee. Anyone looking at the Short Title of the Bill would understand that it merely confirms an agreement made between two consenting parties, whereas it goes much further than that. It repeals the statutory rights of Irish ratepayers, who have never been consulted, and who are in no way parties to this agreement. In certain cases in Ireland, under the Act of 1883, there is a liability on the ratepayers to contribute to the finances of the railways—a liability based on free contracts. Those contracts were made by the grand jurors, who, under the Act of 1883, were liable to make up certain dividends, not exceeding 5 per cent. There was great liberty and variety in these various baronial guarantees. In most cases the dividends of these railway companies were made up in this way to 5 per cent. They are now made up by the county councils, as the successors of the grand juries, who strike a rate on the baronies concerned after getting a contribution from the Treasury.

During the War the Government took over the Irish railways and made an agreement with them, but neglected all arrangements about the guarantees of the ratepayers and kept no accounts. They now contend that the year 1913 is a favourable basis for striking this contribution from the ratepayers. They make out that the ratepayers would have actually paid more during the War if the contribution had been based on the actual traffic receipts. How do the Government know that if they have kept no accounts? It is asserted that there was a very great increase in the agricultural traffic carried on these railways owing to the war-time tillage Regulations, quite apart from Government stores and troops. Great quantities of hay and grain have been carried to the large markets for sale and shipment to ports. Naturally the working companies did not bother about keeping accounts, because the agreement they made with time Government provided that they were to receive compensation either as in the datum year, 1913, partly at the expense of the ratepayers and partly at the expense of the Government, or wholly at the expense of tire Government if they failed to carry out their agreement in the form of an Act of Parliament. Now the Government come to the House and seek, by an Act of Parliament, to set aside these contracts which have been freely made by the local authorities in Ireland. That is more objectionable and high-handed because at the present time litigation is pending on this very question. The Galway County Council, for example, is liable in respect of a guarantee in connection with the Loughrea-Attymon Railway. The railway is a broad-gauge line worked by the Midland and Great Western. The Midland and Great Western contracted to pay 45 per cent. of its gross receipts to the guaranteed railway, and any deficiency to make up the dividend of 5 per cent. on the guaranteed. railway has to be found al the expense of the ratepayers. Whatever may have been the working expenses, it is quite certain that the gross receipts have gone up very much, partly owing to the increased traffic and partly owing to the act that the fares and rates have generally been increased. It is alleged that in many cases the increase in receipts is so great as to wipe out the whole of the deficiency for which the ratepayers are liable under their contracts arrived at many years ago. In the particular case of litigation to which I have referred the arbitration under the Act of 1883 gave a certificate as to the amount due from the county council to the railway company. The county council paid and then discovered that the certificate had been based on the figures for 1913 They are now taking proceedings to recover the money as having been paid owing to an error of fact, and the railway company is instituting a Petition of Right against the Government to pit back from the Ministry of Tranport this money, and to satisfy the county council. There is no doubt about the legal position. The county ratepayers are under no liability, and it does seem most high-handed and unjust that. Parliament should try and legislate retrospectively and impose these unexpected conditions upon the ratepayers. Probably, the explanation is that the Minister of Transport was not aware of the particular position under some of these guarantees when he moved the second reading, because he said that this datum year of 1913 would be more favourable to the ratepayers than taking the old basis of calculation. He could only have said that, thinking that the deficiency was made up by a contribution on net receipts. Net receipts may have gone down owing to the increased working charges, but everyone knows that gross receipts have gone up. Therefore, the argument of the right hon. Gentleman falls entirely to the ground when you remember that these working companies have had to pay to the guaranteed companies a proportion of the gross receipts, and in that way to relieve the liability of the ratepayers. I will read what reached me this morning from the county auditor of the Loughrea and Attymon guaranteed line. He says: I have dealt with the accounts of this line for years, and I am quite convinced that, if the ratepayers get the benefit of the contract made with them when they gave the guarantee, the actual traffic receipts will mere than cover the guaranteed dividend. 12.0 M.

There may be some cases where the guarantee is arrived at on a different basis and where the net profits may be taken into account. If that be the case, then I admit that there is a case for separate treatment. I do strongly object to applying the first paragraph of the Schedule and tearing up existing agreements in those cases where the baronial guarantees are based on gross receipts under a free contract on behalf of the ratepayers, and I ask the Government to meet the difference either by some such provision as was embodied in the Amendment which has been ruled out of Order leaving the choice to the county councils to adopt the old basis of calculation or alternatively that of the datum year. Failing a general Amendment of this character I would ask the Government to exempt altogether those cases where the guarantee was based on gross receipts and to limit the new arrangement to those cases where the county council would certainly be liable to increase. the amount owing to the fact that the calculation is based on net receipts. I hope the Government will be willing to make some Amendment which will deal with that.


I hope my hon. and gallant Friend will not think that I am in any way discourteous to him if I deal with this matter somewhat briefly. I desire to do full justice to the question he has put before the Committee with studied moderation and also to have regard to the hour at which we are discussing this question. The circumstances giving rise to this Bill may be recapitulated. In December, 1916, the Government determined that it was necessary to take control of the Irish railways in precisely the same way and, in fact. under the same Statute as they took control of the English railways, namely, under the Regulation of the Forces Act, 1871. They entered into an agreement for the purpose with certain of the railway companies and in the agreement they had to provide not only for the normal cost of the ordinary main lines in Ireland, where they were quite able to come to terms, and to agree that the year 1913 should be the datum year as by the standard year for the purpose of the accounts as between the Government and the shareholders of the railways, but in Ireland they have had two exceptional cases to meet, which arose as to one under the Tramways and Public Companies (Ireland) Act, 1884. That case was this: About the date of that Act there were certain districts in Ireland which needed light railway development, and the construction of those railways was not sufficiently attractive to make it possible to obtain the necessary sums from the public, and the districts concerned were willing, in their own interests, to make terms with the companies who undertook to build the railways, and the Grand Jury of the county, which at that time represented local government administration, were given power to make presentments and to give certain guarantees so that the dividend should not be less than 5 per cent. These railways were, and are, still known as baronial railways. They were railways made at the request of the local authorities and for the purposes of local development. When the Local Government Act was passed the county councils became the successors of the Grand Juries, and the county councils are now liable to make good the dividend of 5 per cent. That was the state of things existing when this agreement was made in December, 1916, and, if hon. Members will turn to the Schedule of the Bill, they will see that Section 10, which deals with that class of case, is there set out. That vas the case of railways which had been leased for working purpose to some other railway company, and that class of case is dealt with in Clause 12 of the agreement, which is set out in detail in the Schedule. Under the Act of 1883 some method had to be provided for arriving at an adjustment of the accounts to see what was the liability of the local authority in terms of money in order to make good the deficiency, and the machinery which was set up under that Act was the provision of an Arbitration Board, nominated by the Board of Trade. It is very important to note that one of the arbitrators was to be the surveyor of the county.

It is quite obvious that when the new agreement for the taking over of the railways came into effect all the old system of accounting had to go by the board. A new state of things had arisen. They took in the case of these railways, as in the case of all the other railways, the year 1913 as being the standard year, and it was believed—I think with good cause—that in so doing they were treating the local authorities with generosity, because it so happened that the year 1913 exceeded by about £200,000 the average of preceding years. This view appears to have been concurred in by everyone concerned. Certainly, I think I am right in saying, it was concurred in by the county council of Galway, to which my hon. and gallant Friend has made special reference, because their surveyor, as well as the auditor, gave the certificate, and the county council, without pressure of any description, made a series of payments under certificates given by their surveyor and others and in the terms of the agreement made in December, 1916. They were perfectly content with the provision, and, so far as I know, they were perfectly content until a few days ago. One of the provisions of the agreement was that the Government should, if necessary, get confirmation by Statute of the agreement. If they failed to do that, and if the railway companies that were borrowing railway companies were damnified in any way, the Government would make good instead of the county council. What is it, then, that has caused this trouble now? May I say that there is a natural desire on the part of Ireland to get a little money out of the British taxpayer—


Scotsmen have been doing it all night.


I will not enter into that controversy between my hon. Friends on either side of the Gangway opposite. What is it that has caused the trouble? It so happens that the accounts of the county councils have to be audited by Local Government auditors. and every Member of this House is familiar with the microscopic accuracy and care with which Local Government auditors investigate accounts, not so much with a view of finding out whether there is anything seriously wrong and whether there is something technically wrong. One of these Gentlemen, in pursuance of his duties, seems to have thought that these certificates which had been given were not strictly the certificates within the Statute, nor were they. The Board of Arbitrators had no longer anything to arbitrate about. The sum was the fixed sum of the 1913 year, and they had acted with the concurrence of everyone and given their certificates as though the 1913 figures were strictly applicable to the latter half-year. The auditor said, "Technically this is wrong," and I think the auditor technically is right; but I see no justification whatever for the county council seeking to evade the obligation which they undertook. That obligation is a limited one.


Is this the auditor sent from Dublin Castle?


I do not know. He is the Local Government Board auditor, who audits local accounts in Ireland. The auditor having discovered a technical objection, the county council seek to transform what is a pure technicality into a matter of substance, and they are extremely fortunate in getting the very able and generous advocacy of the hon. and gallant Gentleman. He is now inviting the Committee to strike out Clause 1 of the Bill. He has attempted, by an Amendment which has been ruled out of order, to do something a little less than that, and now he says, "Strike out Clause 1." When you have taken out Clause 1 what is there left? Clause 2, which tells us the Act may be called the Irish Railways Confirmation and Agreement Act, and a Schedule suspended in mid-air. Of course, that is not what he invites the Committee to do really. What he is really trying to do is to see what kind of bargain he can get out of a beginner, hoping to get one which may satisfy the county council. He cites the ease of the Loughrea and Attymon Light Railway, in respect. of which the Galway County Council has made payment amountng to somewhere between £1,000 and £2,000 in two years. This railway happens to come in categories covered by both Clause 15 and Clause 12, because it is a baronial railway guaranteed by the county council, and it is also a leased railway worked by the Midland and Great Western. He asks under these circumstances will the British taxpayer take over this obligation altogether, not only as to this railway, which means £2,000, but will you take over the Whole obligations of the whole of the railways in Ireland?

Lieut.-Colonel GUINNESS

That is not my object. My object was to give a choice to the county council of going on under the old system or coming in under this new system, which is alleged to be more favourable.


I understand the hon. and gallant Gentleman's object perfectly well. I am dealing with his Motion to reject Clause 1. If the Clause goes, the whole Bill goes, and the effect of it is that the whole of the great trunk lines of Ireland are immediately relieved, and it thus involves a charge upon the British Exchequer of something like £60,000 per annum, because there is some little grievance which is the subject of litigation with regard to the Loughrea and Attymon Railway. There is a way in which lawyers very often get rid of these troubles, and if it will assist my hon. and gallant Friend, and incidentally assist us to conclude this Debate, I am prepared to say at once that the cost of that litigation shall be borne by the State, because it is quite right that the parties who have been put to litigation with the existing state of the law warrants should not bear the cost of that litigation. One step further, and this is as far as I can go. I think there are two or three other railways in Ireland which have the characteristics of being baronial railways, and at the same time being railways which are worked under leases by other companies. I understand my hon. Friend's point there to be this: Seeing that the payments to be made depend upon the gross receipts, even if these railways are worked at a loss, still the subsidy would have to be paid. He does not say it is just, but what he says is, "Is it lawful?"; and, speaking as he well may on behalf of the company, he asks that the law shall prevail quite irrespective of what the real merits of the case may be. I am not in a position to give the pledge that that shall be done, but I will endeavour to meet. my hon. Friend to this extent, that before this Bill is finally disposed of in another place, if the few railway companies concerned present a statement of facts and figures to the Minister which would justify him in exercising a discretion in the matter, having regard to his public duty, full consideration and weight shall be given to their statement, and the matter will be open for discussion in another place. For these reasons I hope the hon. Member will not press the matter now.


In the first place, I wish to congratulate the hon. Member (Mr. Neal) on his debut. I am not surprised that he has dealt with this matter with great efficiency and great ability, because we had experience of him before on an Irish Bill in one of the Committee rooms, and the Irish Members then came to the conclusion that he was the first Englishman they had ever met who had sufficient intelligence to understand an Irish question. To-night he has given us another illustration of that. I do not think there is any man on that bench who could have got up and made such a. speech. It would have taken them about six months to have mastered the question. While congratulating the hon. Gentleman on his speech and on the capacity which he has shown in giving the soft answer which turneth away the wrath of the hon and gallant Member (Lieut.-Colonel Guinness), I might also congratulate the hon. and gallant Member on having drawn the speech from the representative of the Ministry of Transport. We learn now that this Bill is really brought in to remedy the muddling and plundering of the Local Government Board in Dublin. That clears the matter to some extent. We know now that it is the stupidity of Dublin Castle once more which has put my hon. Friend to the trouble of making this explanation. He did not know until I told him that it was Dublin Castle again. He will learn in time that all the mischief and trouble in Ireland springs from Dublin Castle, and every time that he has to speak on an Irish subject he will feel inclined to curse Dublin Castle from the bottom of his heart. We see another illustration in the fact that when a railway is built in Ireland Dublin Castle insists on calling it a tramway. The Attorney-General (Mr. Henry) could explain the whole system, but I cannot explain the reason, and I do not know that the Attorney-General can either.

I do not quarrel with my hon. Friend's attitude on the subject of leased railways. I think that on that point he is absolutely right, but in dealing with the baronial railways I agree entirely with my hon. and gallant Friend (Lieutenant-Colonel Guinness) that this Bill introduces two very vicious principles. The first is that it is an interference with legal proceedings which are now pending. That has happened under the Defence of the Realm Act in this country, and it has been commented on adversely in the High Courts here and also in the House of Lords, that the Government by special legislation attempted to override decrees of the High Court. This Bill also seeks to do another thing which is wrong—namely, to pass legislation which is to have a retrospective effect. I hope that my hon. Friend during the rest of his career will endeavour to steer clear of dangerous principles of that kind. There is not much use in putting the Committee to the trouble of a division, because between the blarney of my hon. Friend and the sweet reasonableness which he has shown in his speech, combined with the advantage which he possesses of the Coalition majority, it would not be much use to go to a division, and so I confine myself to saying that I agree entirely with the provision which deals with the leased lines, and that I am glad to hear that the Ministry of Transport is prepared to make fair terms with any of the baronial lines which now submit their case to it, and I have not the slightest doubt from my experience of the hon. Gentleman and his Department, that they will give a fair and reasonable hearing to any case that is put before them.

Lieut.-Colonel GUINNESS

I certainly do not wish to divide the Committee. I agree that the hon. Gentleman has done his best to meet the case. I do, however, wish to correct one statement. He appeared to think that my interest was chiefly in the companies. I do not worry about them. They are being looked after. It is the county councils who represent the ratepayers for whom I am concerned, and therefore I hope that he will consider their representations. I have no doubt that any county council which feels itself aggrieved will be very glad to take advantage of the offer which has been made.

Question put, and agreed to.

Clause 2 ordered to stand part of the Bill.

Schedule agreed to.

Bill Reported, without Amendment; read the third time, and passed.