HC Deb 12 December 1919 vol 122 cc1855-61

Motion made, and Question proposed, That a Supplementary sum, not exceeding £10, be granted to His Majesty, to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1925 to meet Expenditure arising from the Government Control of Railways in Great Britain and Ireland under the Regulation of the Forces Act, 1871.

Mr. NEAL

I think it necessary that I should say a few words in explaining this matter to the Committee. I know it is a matter of opinion as to whether it is necessary to introduce this as a financial question, but my right hon. Friend desires that every question that could be raised should be brought to the notice of the House. This item is nothing more nor less than one of accountancy between the two Government Departments. The Ministry of Munitions holds for disposal 1,000 lorries, 350 locomotives, and 11,000 railway wagons. It is obvious that those ought to be distributed through the agency of the railway companies. At present the Government are controlling the railways, and the Ministry of Munitions requires to be paid £5,320,000 for this rolling stock, which will come into the charge of the Ministry of Transport, and during the period of control of the railways it will be lent by this Ministry to the controlled railway companies on terms to be settled by the Treasury. I cannot think that there will be any difficulty on that account, because the railway accounts are now Government accounts, and that matter also becomes largely one of book-keeping, although it is important to have the entry as close as may be to the facts, lest the account should appear fictitious When the period of control ends and the railway companies resume their normal working, these items will then have to be debited to the railway companies upon proper terms. In other words, we are asking the Committee to sanction the transaction, and in the meantime we are trustees for the disposal of these items when the proper time comes. It is not expected, as will be seen by the fact that we are asking for only £10, that this will impose any additional charge upon the taxpayer, the fact being that we hope to be within the original Estimate which has been granted to us by the House.

Mr. HOGGE

It is quite true, as my hon. Friend remarks, that we are asked for only £10, but, if hon. Members will look at this Supplementary Estimate, they will find that that £10 is arrived at in a very curious way. The original estimate of the railway agreement was £60,000,000. It is now revised to £64,000,000 some odd hundred thousands, with the result that £5,000,000 is required. The difference between that and the revised estimate for the rolling stock gives a sum of £10, but, obviously that is based on the assumption that the deficiency on railway working is estimated at £45,000,000. I turn to Command Paper 402, which is referred to. The last paragraph of that paper, issued by my right hon. Friend on 31st October, 1919, deals with this deficiency of £45,000,000, and these words occur: Any improvement in the position is mainly due (i.) to the extraordinary increase in passenger traffic last summer, and (ii.) to the decision to apply, from 1st April, 1919, to Government traffic the same rates of increase as has been, made to the public. The latter results in a credit to the railway account of about £5,000,000, but this credit involves a corresponding charge to other Government Departments. It should be added that the present estimate of £45,000,000 as the amount of the deficit may prove to be inadequate (i.) if the drop from the summer level of passenger receipts is more marked than usual, as may well he the case in view of the unprecedented height attained, and (ii.) as a result of the dislocation of business by labour troubles on the other hand, no allowance is made for any growth of revenue from increases in goods rates which may become operative before the close of the financial year. The railway strike meant a, loss of some £5,000,000, and, if you take that as one item, then this original figure of. £45,000,000 cannot be correct. Therefore, to make this deduction that is made above in paragraph (a) seems to be unfair if you take the £45,000,000 as a fixed sum. I would like to know whether those paragraphs which the right hon. Gentleman wrote affect this figure of £45,000,000. I daresay that some book-keeping arrangement, such as is suggested, can be made even to accommodate the varying circumstances since then. I should like to know whether this paragraph holds good now, and whether we can take that as a fixed figure.

Mr. NEAL

I purposely avoided entering, or inviting the Committee to enter into, a general discussion upon the whole question of railway finance in connection with an item which is a question of accountancy between two Departments. In answer to my hon. Friend's question, I would say that the Department is advised that the figure which he mentioned is likely to prove to be substantially accurate, and that is so much so that we need not disturb the figures which are put before the Committee in this White Paper.

Major BARNES

I should like to ask one question about paragraphs (b) and (a). I do not quite understand why the Government has formed this pool of rolling stock.

Mr. NEAL

It is war stock.

Major BARNES

The Ministry of Munitions have this stock to sell, and are busy selling it, and I do not quite understand why the Ministry of Transport has come in between.

Mr. NEAL

We are the railway companies for the moment.

Major BARNES

I quite agree, but I want to point out the difficulty which I think may arise. The railway companies have their own stock, and the Government is getting its own stock, which will go into the service of the railway companies, who, I understand, make up the account. I take it that the whole of the railway companies' accounts will not be made up by the Ministry of Transport. It appears to me that the Ministry of Transport will have to charge rent to the railways for the use of this stock, in order to enable the accounts to be made up properly. It seems to me that it would have been very much simpler if the railway companies had simply bought this stock over and taken it into their own stock. That would have relieved us from the necessity of these cross transactions, and I should like to know why it was not done. With regard to the larger question of railway agreements I do not propose to open that up at any length, but we find, happily, that the Estimate has gone down from £100,000,000 to £60,000,000, and now we learn that this year it is to be £45,000,000. I think that is a gratifying progress of diminution, and one hopes that before long it may disappear under the energetic administration of the Minister of Transport. Tracing the matter back from this Command Paper 224, through Command Paper 402, back to Command Paper 147, which was brought before the Committee on Estimates earlier in the year; I gather that, in addition to the figure of £45,000,000, which is put down as a deficit, there is a kind of floating deficit which it is not possible to allocate to any year. For instance, Command Paper 147 states that the figures given there will show a profit to the Government of something like £24,000,000, but those figures do not take into account allowances for provision for wear and tear. Then there is a note (No. 7) which says that this extra wear and tear is estimated as likely to result in a figure of about £40,000,000. This is a figure which, I understand, has not been taken into account at all as yet in any of the figures that have been placed before the House, but is a figure we may have to face at some future time. It reappears, I think, in Command Paper 402, where it is pointed out that, up to the 31st March, 1919, there was a profit on the working of the railways which might be estimated at from £2,000,000 to £7,000,000, according as a certain figure for receipts was taken. It says, "For the period 5th August, 1914 31st March, 1919, the revenue earned from all sources exceeds the expenditure." That is to say, there is a profit, which is very satisfactory. That profit is £2,000,000 or £7,000,000, according to the value put upon certain services rendered to the Government. If they are valued at £10,000,000 the profit is £2,000,000, and if they are valued at £15,000,000 the profit is £7,000,000. The Paper says: There are, however, to be set against this margin serious deferred liabilities in respect of replacing stores of materials, arrears of maintenance, and abnormal wear and tear. The earlier Paper estimates this liability at £40,000,000. The point I want to make is that the figure at present put before us, showing a deficit on this year of £45,000,000, does not take into account these deferred liabilities, which may amount to a considerable sum, so that the rate of diminution is not quite so satisfactory or such a firm figure. When the final settlement comes—I do not know whether that will be at the end of period of possession under the Ministry of Transport—there will have to be taken into account these deferred liabilities, and so far as we have any estimates before us we may be faced then with a further deficit of at least £40,000,000. The whole thing is rather involved, and one has to follow it through from one Paper to another, and I thought that this would be a good opportunity to obtain a statement from the right hon. Gentleman as to whether the statements I have made represent the position.

Lieut.-Colonel SPENDER CLAY

There is a question of payment for locomotives. I have asked questions on this subject, and I understand there are some 154 engines. I am unable to find out what price has been paid to the Ministry of Munitions for those locomotives, which were being distributed by the Ministry of Transport. Can the right hon. Gentleman say what price has been paid to the. Ministry of Munitions for those engines which have been allocated or whether payment is being withheld and the engines are being lent, and, if so, on what terms?

Sir E. GEDDES

With regard to the pool of wagons, those wagons were built or acquired during the life of the Ministry of Munitions and were run upon the railways very much upon the same lines as privately-owned wagons are run upon the railways to-day and have been ever since railways began in this country. They were the private property of the Ministry of Munitions on Government account. When the Ministry of Transport came into being those wagons were continued, in the hands of the Ministry of Munitions. In the ordinary process of winding up its business and sorting out what should go to this Department and what should go to that, the question of the final disposal of these wagons arose. It was, therefore, proposed that, as the private wagon-owners' situation under the Ministry of Transport Act was being reviewed, it would be better and more in keeping with sound organisation to transfer these wagons, which were under the individual control of the Ministry of Munitions, and throw them into the general pool of railway wagons for general use, as very good use could be made of them, and the need of the Ministry of Munitions for them was being reduced. It is true that instead of transferring this State property from the entrenchment of one Department to that of a more appropriate Department they could have been sold out and out to the railway companies. The terms upon which the railway companies have got them at present—that is only account keeping—is that the railway side is debited with interest and a percentage for renewals. The, running repairs are done and charged to the working expenses, so that as long as they are working for the railways in the general position of railway wagons and allocated where they are now, and as long as the railways are controlled it is merely a question of book-keeping. When the whole question of wagons is decided undoubtedly these ought to be dealt with on those lines. It would be very bad policy to keep a small quantity of wagons like this in the Government's hands with some contract arrangement for their repair, and so far as this particular entry in the Supplementary Estimates is concerned it is merely a book entry between the two Departments. The Ministry of Transport will keep track of all the wagons now and deal with them eventually on whatever lines the House decides that we are to deal with the wagon situation.

As regards the locomotives, there are large locomotives for which contracts were placed during the War and which were delivered after the Armistice and did not go abroad. I think there are nearly 300. They are a heavy type of locomotive and they have been a great assistance in helping the railways, which are very much in arrears, largely due to the moulders' strike, with locomotive repairs. They are also being used by the railways on, practically speaking, the same lines as the wagons. They are being transferred from the Ministry of Munitions, which is winding up its outstanding business. We do not want to sell them. This is simply transferring them from one Department to another, and from now on the Ministry of Transport will have to look after them and eventually dispose of them. The same thing applies to the lorries. I think there are 1,365 lorries which have been left with what is, in fact, from the financial point of view the State Railway Department, because the State is responsible for the working expenses, and they have been left on the same terms and the Ministry of Munitions want to get them off their books. That is what is being done now. As to the question of the hon. and gallant Gentleman (Major Davies) as to the £40,000,000 and whether that would cause a deficit in another year, I think he is confusing the current expenditure of the year and the arrears of expenditure during the period of control prior to this year. The deferred maintenance and the extra hire and repair is an outstanding liability which undoubtedly has got to be met. It is in excess, but it is not an annual charge. It will not be a deficit on the working of the railways in the future. It is a sum which the State will have to meet, and undoubtedly it knocks out far more than the whole of the £2,000,000 to X7,000,000 of fictitious profit made during the period ending 31st March last. But it is not going to be a deficit on the working of the railways during any future year, except in so far as it is debited. At present I should think the railways are not only maintaining themselves to their proper standard, but are overtaking arrears of maintenance and renewal.

Question put, and agreed to.

Resolutions to be reported upon Monday next.

Committee to sit again upon Monday next.