§ (1) In this section the expression "charge" (except in the phrase "agreed charge") includes any charge (whether described as a charge, or as a rate, or otherwise) which is made by any carrier in respect of the carriage of merchandise.
§ (2) If at any time a representation is nude to the Minister by any body of persons who, in the opinion of the Board of Trade, are properly representative of the interests of persons engaged in the coastwise shipping business (in this section referred to as "coastal carriers") that any agreed charges or exceptional rates which are being made or charged by a railway company in competition with coastal carriers—
- (a) place coastal carriers at an undue or unfair disadvantage; or
- (b) are inadequate, having regard to the cost of affording the service or services in respect of which they are made or charged;
1822 the Minister shall consult with the Board of Trade upon the matter and if, after such consultation, it appears to him prima facie that the complaint is one which in the national interests should be investigated, he shall refer the matter to the Railway Rates Tribunal for investigation and review.
§ (3) Upon any reference to the Tribunal under the preceding sub-section, the Tribunal shall hold an inquiry and investigate all matters which appear to it to be relevant, including the circumstances in which the agreed charges or exceptional rates complained of are being made or charged by the railway company, and their adequacy or inadequacy, having regard to the cost of affording the service or services in respect of which they are made or charged, and shall have regard to the charges for the carriage of merchandise by any route which is in competition with the route to which any agreed charge or exceptional rate complained of applies, whether any such charge is payable in respect of carriage by rail, by sea, or by road, or in respect of carriage partly by one of those forms of transport and partly by another of them, or by all of them.
§ For the purposes of an inquiry under this section the Tribunal shall have the like powers of compelling the attendance of witnesses and the production of documents and of administering oaths as it has for the purposes of its functions under the Railway Acts, 1927.
§ (4) If, after examining all witnesses whose evidence it considers to be necessary and after giving all parties whom it considers to be concerned an opportunity of calling witnesses and being heard, the, Tribunal is of opinion that, having regard to all the circumstances, any agreed charges or exceptional rates made or charged by the railway company in competition with coastal carriers—
- (a) place coastal carriers at an undue or unfair disadvantage in the competition; or
- (b) are inadequate, having regard to the cost of affording the service or services in respect of which they are made or charged;
§ Any such order may, notwithstanding any provisions of this Act, be made to take, effect at such date as the Tribunal thinks fit.
§ (5) The Tribunal, on an application made by the railway company, or on a subsequent application made under sub 1823 section (2) of this section, may cancel or vary any order made under the preceding sub-section.
§ (6) There shall be constituted a panel (hereinafter referred to as the "shipping panel") consisting of six persons nominated by the President of the Board of Trade, after consultation with such persons as he may consider to be properly representative of the interests of coastal carriers, and for the purposes of the powers and duties of the Tribunal under this section there shall be added to the Tribunal one additional member selected by the Minister from the shipping panel, and sub-section (4) of section twenty-four of the Railways Act, 1921, shall not apply.
§ Sub-sections (2) and (5) of the said section twenty-four shall apply in relation to a member of the shipping panel as they apply in relation to a member of the general panel.
§ Brought up, and read the First time.
§ 3.37 p.m.
I beg to move, "That the Clause be read a Second time."
This new Clause deals with, perhaps, the most important subject the House will have to consider during the Report stage. One of the main features of the Bill is a modification of the methods by which rates may be quoted by railway companies. This new method is known as the agreed charge, and, although it will be admitted that any new arrangement which will lead to reduced rates being quoted to traders is of general advantage, certain fears have been expressed from two different quarters with regard to this method. There is, first, the case of the trader who fears that one of his rivals may get the advantage of this new arrangement and that he may fail to secure it, and thus be at a disadvantage. That point was satisfactorily dealt with in Committee. However, objection was taken from another angle, from the angle of the competitor, the person or industry, providing alternative means of transport in competition with the railways. They saw in this new power of the railways to charge lower rates an increase of the competitive power of the railways and, therefore, a danger to their traffic. This new 1824 Clause is designed to meet a complaint of that kind by the coastwise shipping industry.
It was stressed in Committee, and no one in the House will disagree, that the coastwise shipping industry is of national importance. Whatever view we may hold as to the necessity of maintaining the profits of a particular individual concern in the coastwise shipping industry, we must agree that a situation which might lead to the disappearance of the coastwise shipping industry would be prejudicial to our national interests. We were all agreed that in some way or other steps should be taken to see that there is no possibility of such a situation arising and to allay as far as reasonable and practicable the fears expressed by the coastwise shipping industry.
The particular form of the Amendment which was discussed in Committee was of giving to those engaged in coastwise shipping an opportunity to appear before the Railway Rates Tribunal, whenever application was made for approval of one of these agreed charges, and object to the granting of the application, and, if successful, to get the new agreed charge stopped. I took the line in Committee, and I take it still, that the method proposed was the wrong one. However strong the case of the coastwise shipping industry might have been for some right of appearance of that kind if they in their turn were subject to some control of their rates, as the railways are, and if they in their turn were subject to interference of this kind on behalf of the railway companies, I held that that claim could not be sustained when in fact it was only the railway company which was under these restrictions, while their competitors in coastwise shipping could reduce their charges as it suited them without any possibility of complaint being raised by the railway companies. I took the view that this House is not concerned in protecting individual interests of the shipping industry. All that we are concerned with is the protection of coastwise shipping as a national concern. Therefore, what we have to guard against is not one particular rate which may or may not prejudicially affect one particular owner of coastwise shipping, but a rate or series of rates which constitute a real threat to coastwise shipping as a national industry.
1825 I propose, therefore, as an alternative to the method which was discussed in Committee the method which this House had already adopted when the Railways Act of 1921 was passed. Exactly the same fears were expressed for the coastwise shipping at that time, and in consequence Section 39 of the 1921 Act was passed by this House. It gave to the coastwise shipping industry the power, through the Minister of Transport, to get their case stated before the Railway Rates Tribunal, and, if the case was proved, to have certain grievances redressed. It seemed to me that the course which the House adopted in 1921 was the proper course for us to-day. I therefore promised in Committee that I would consider any Amendment of Section 39, which it was alleged by the coastwise shipping industry was inoperative because of the way it had been drafted and was therefore under present circumstances not fulfilling its purpose; I promised to consider any Amendment of that Section which would give to the coastwise shipping industry an opportunity of stating a case to the Tribunal, in any circumstance where the existence of that industry is really threatened, and which at the same time would not allow opportunity to those engaged in coastwise shipping to enter into a series of merely obstructive objections to the new power which I, and I think the Committee as a whole, desire to give to the railway companies in this matter.
I am afraid I have taken some time in describing the history of this new Clause, but it was necessary to do so in order that the House might understand the reason for its appearance on the Paper to-day. I came to the conclusion, when I studied the matter, that mere verbal Amendment of Section 39 would not be sufficient. I have, therefore, entirely recast the Section. Although I maintain the machinery to some extent, have to a large extent altered the remedies which may be sought and the objections which may be raised. It will be possible for the coastwise shipping industry, if they feel that any rate or rates which are exceptional, or the new agreed charges, place coastal carriers at an unfair disadvantage or are inadequate to the cost of affording the service and—this is important, and it applies to both cases—that the complaint is one which 1826 the national interest requires to be investigated, then through me it will be possible for that complaint to go to the Rates Tribunal and to receive consideration.
The grounds of application are as I have stated. It will be necessary for the coastwise shipping industry to make to me a prima facie case upon those lines before I am satisfied that it will be possible for me to remit the matter to the tribunal. In giving to the tribunal some indication of what matters they are entitled to consider and should consider in dealing with the application, it has been necessary to cast the net rather wide. Hon. Members will notice that one of the matters to which the attention of the tribunal is directed is the competitive charge not only in respect of carriage by rail or sea, but also in respect of carriage by road.
I want the House to realise that what we are concerned with alone is the danger here to the coastwise shipping industry. It' is clearly not right for this House to give to the Rates Tribunal the power to interfere in a case where it can be shown that the removal of these special rates by the railways would not in fact have the result of turning that trade to the coastwise shipping, but would merely have the result of giving it to another competitor, the road interest. Therefore, we have included that among the considerations to which the tribunal may direct their attention. It will be necessary for the tribunal, before they can take any action, to be satisfied upon one of two alternative facts, either that the rates to which objection is taken have placed coastal carriers at an undue or unfair disadvantage, or that they are inadequate, having regard to the cost of affording the service and—this applies to both or either case—that the action of the railway company by reason of its prejudicial effect on the interests of coastwise shipping, is undesirable in the national interest. Those words make plain what the duty of the tribunal is, what are the kinds of dangers against which we propose to protect the coastwise shipping industry, and the limitation we intend to place upon mere frivolous objections taken by one privileged competitor, who is under no restrictions of law whatever, against another competitor whom this House has for many years kept under the most stringent regulations.
1827 A few words are necessary with regard to the constitution of the Railway Rates Tribunal for the purpose of applications of this kind. The Tribunal is normally constituted of one member who is experienced in railway business, one member experienced in commercial affairs, and an independent chairman of great legal standing to complete the body. Of course when a man becomes a member of the Tribunal he is supposed to act, and always does act, in a completely judicial capacity, and no one is entitled to or would regard himself as being there as a representative of an interest. But it seemed to me essential that in dealing with these particular cases of coastwise shipping there should be added to the Tribunal someone who had a special knowledge of the difficulties and the machinery of the coastwise shipping trade.
It is for that reason that I have, for the purposes of these applications and of these applications alone, added to the ordinary Tribunal a fourth member to be drawn from the panel of those who are conversant with coastwise shipping needs. The formation of a committee of four inevitably creates difficulty with regard to decisions. It is essential that there should be no possibility of an equal division of the Tribunal which would leave a question unsettled. I, therefore, have adopted, though with some reluctance, the rather clumsy expedient of giving the independent chairman a casting vote, which means that in no circumstances can there be an equal division and consequent lack of decision. That method has the merit that wherever there is a conflict of opinion on the Tribunal the final decision will always rest with the independent chairman.
I think the proposed new Clause meets the real fears expressed by the coastwise shipping industry. It meets their ease to the extent and only to the extent to which this House is entitled to meet it and that is by seeking to protect coastwise shipping as one of our great national assets. On the other hand, although I understand that the representatives of the railway companies will feel obliged to express their views upon it, I feel that the procedure now proposed is such that it will not be possible for a competitor 1828 merely to obstruct and prevent the smooth working of the new advantage which we are giving to the railways—an advantage with which all of us, I think, are in agreement. Although this new Clause is presented entirely on my own responsibility and is not the result of agreement or compromise between the parties, I believe that it will in practice satisfy the parties chiefly concerned and will be in the interests of the country as tending to preserve an important national asset.
§ 3.54 p.m.
Sir JOHN SANDEMAN ALLEN
I should like before dealing with the proposed new Clause to say how much those of us who have been engaged on this Bill appreciate the way in which the Minister has dealt with the various difficulties that have arisen from time to time during its consideration. He has devoted all his attention to those difficulties, many of which on being met were found to be exaggerated and while some difficulties still remain in the minds of certain people, we can never expect everybody to be satisfied with everything. We particularly appreciate the great care and study which the Minister has bestowed on the very grave question which is dealt with in the new Clause. I am sure that this House is determined at all costs to maintain the integrity and standing and the Imperial importance of British shipping. I am sure we should all oppose anything calculated to impair the strength and value of our shipping to the nation and I know that the Minister shares that view.
When it comes to dealing with coastal shipping and attempting to distinguish it from British shipping generally, my first point is that it is not so distinguishable. Coastal shipping is part and parcel of the British mercantile marine service and is essential for the manning and maintenance of that service. Coastal shipping is invaluable in connection with our trade. In the loading and discharging of ocean-going steamers the coastal shipping can go right alongside and can carry goods at the lowest possible price. I only mention these facts as emphasising what the Minister has said that there is no desire or intention to interfere with coastal shipping generally. Now we come to the actual difficulty which has arisen 1829 under this Bill. That difficulty arises in two ways. The railway companies naturally have absorbed a very large share of the carriage of goods and passengers which in former times was done by coastal shipping. Now the road services have come in and absorbed a great deal of the traffic with which the railways have hitherto dealt. Therefore we have had to consider the question of controlling competition as between all these various classes of transport.
As to road transport and rail transport, both being land services, they start and finish more or less on even terms, but the case of shipping is different from either. In a sense, coastal shipping is competitive with these other forms of transport, but in another sense it is not. It is to some extent in partnership with both the railways and the roads. It cannot compete in regard to the inland carriage of goods and it is dependent upon these other means of transport for its traffic. I emphasise that point because I want to guard Against the idea—I know it is unnecessary to guard against it in the case of the Minister—that coastal shipping can be compared with the road services in regard to the question of competition. Coastal shipping has to work in with the road services and with the railways. There is another difficulty. Coastal shipping serves not only the ordinary docks owned by public or private authorities, but also serves ports in which the railway companies own the docks. They are also dependent upon the railways in connection with short hauls, which make a big difference when we are considering the relative cost of carriage by coastwise steamer and by rail. Thus there are several special factors to be taken into consideration and coastal shipping stands apart from road and rail in relation to the question of competition.
There is another point which may be borne in mind. It is a curious anomaly that in this country while we have a Ministry of Transport—presided over at present by a Minister who thoroughly understands and appreciates the difficulties and duties of that Department—that Ministry has no authority over coastal shipping, though the Minister has to study its needs in relation to those modes of transport which come immediately and directly under his responsibility. It is proposed under the new Clause that the 1830 Board of Trade, which is the Department responsible for shipping, shall take a certain part in advising in regard to this question. Speaking on behalf of the coastal shipping interests, I wish to say that we appreciate the manner in which the Minister has studied all these problems and the readiness with which he has recognised the grave difficulties in which the industry may be placed.
The proposed new Clause is one which the coastal shipping interest and shipping interests generally—because all are affected—are prepared to accept. They feel that the proposed method is one which might well be tried. There is no question that the old provision dealing with this matter to which reference has been made has proved valueless. It was, no doubt, intended for the protection of shipping, but whenever any case arose which required putting it into operation, that provision was found to be useless. The Minister has wisely gone to the root of the question and has produced a new Clause which apparently will give the industry some protection when the necessity arises. On the question of agreed rates and charges it is possible that some of the agreed rates may affect coastal shipping. That is why attention was called to that matter in Committee. I am satisfied that the way in which the Minister has dealt with that subject correlates the agreed charges and the exceptional rates with the national interest. There can be no question of unnecessary annoyance to the railway companies, or unnecessary waste of time. If it is proved to the satisfaction of the Board of Trade and the Minister himself that the public interests are affected by these charges, they will be considered by the tribunal, properly constituted, who will be able to look at the matter impartially.
I feel that in these circumstances, and in view of the time already spent on this matter, I need say no more on behalf of those interests for whom I can speak, except to thank the Minister for chat he has done, and to say that the coastal shipping industry is prepared to meet this matter, as it always is, I believe, in the general interest and in a spirit of co-operation and combination, and we trust and believe the railway companies will do the same, so that instead of there being any trouble about this matter, the result of the arrangement will be closer 1831 working between the transport industries. Therefore, I beg to support the Clause.
§ 4.2 p.m.
§ Mr. MACMILLAN
I should like to begin by adding my tribute to the care and courtesy with which the Minister has met, all sides in this part of the Bill, and, indeed, in all parts of the Bill while it was in progress in Committee. If I may say a word of explanation, I do not think that since I have been a Member of the House it has been my duty ever to speak on behalf of any particular interest, but on this occasion it may be for the convenience of the House if I say as a railway director what is the attitude of the railway companies towards the proposed new Clause under discussion. It would be an exaggeration to say that the railway companies welcome this Clause. It is, as the Minister told us, in no sense an agreed Clause, but, at the same time, the railway companies feel, and those who speak for them here feel, that, taking into consideration all the circumstances and and surroundings of the matter, and the history of this particular controversy, we do not propose to offer any Parliamentary opposition to the Clause.
At the same time, there are some considerations which we think it only right and fair to put before the House, because they are, to some extent, misunderstood in the House, and, we think, in the country. After all, I think it is not untrue to say that the whole history of the Parliamentary control of railway rates has been a control exercised in order to protect the users of the roads, to protect the consumers, to see that there is no unfair discrimination between one trader and another. I think that in Section 39 of the Railways Act, 1921, there appears for the first time in railway legislation a new point of view. That Section was for the purpose of protecting, not a user, not a consumer of railway service, but a competitive form of transport which might be held to be altogether destructive. We recognise that that Section has introduced a new principle. It is a principle which, we think, we can use and develop to some extent to the advantage of the railways in this and in future legislation, but the Clause before the House is, in effect, merely an extension, put in different words, perhaps put in better words, from the point of view of the shipping Industry, 1832 of the principle that underlay Section 39 of the Act of 1921. In that sense, of course, we accept it, and we trust that the words do not go further than that intention, and that what is here referred to is not the effect of some particular exception in some individual instance, but, as the Minister himself said in Committee, the effect of a broad policy undermining the whole coastal shipping industry in such a way as to be destructive of their interests. The Clause, of course, if it means that, is a very different proposition from saying that every individual item of our business when we make a rebate is to be subject to review.
Of course, there is a somewhat Gilbertian element in this situation. There are to-day three competing forms of transport for this traffic—rails, merchant shipping and roads. Two of them are absolutely free to quote whatever rates they like on any class of goods. The other is bound, and it is somewhat anomalous that it should not be the transport system which is bound that is protesting against unfair competition. It is those which are free. I think that anyone coming from outside and observing the situation, would think that it would be the other way round, and I should like to make some remark on what my hon. Friend said as to the actual history of the relations between these two forms of transport. I do not think it is the fact that there has been any policy on the part of the railway companies to undercut in any unfair or undue way so as to destroy the coastal shipping business. In point of fact, if the profits earned are any criterion, I observe that the large coastal shipping companies during the last seven or eight years have earned very substantial profits, and paid very substantial dividends, ranging from 5 to 15 per cent. on the capital employed. I am sure that those who have been encouraged, under various Trustee Acts and otherwise, to put their money into railway companies in the past would have been glad to have had such successful results from their investments.
Moreover, the figures of transport show that the tendency has been the other way. The tendency has not been to draw traffic from the merchant shipping on to the railways, but rather in the other direction, and, what is really much more important for the future, I think that, in justice to those who are responsible 1833 for managing the railway systems, it ought to be said that they have consistently attempted to develop transport on a complementary rather than upon a wholly competitive basis. In 1929, for instance, they entered into an agreement with, I think, 80 per cent. of the coastal shipping companies rather on the lines of the recent agreement come to between the railway companies and the Canal Association for the purpose of setting up local conferences and meetings with the whole object of co-ordinating the transport system, and avoiding uneconomic or unreasonable competition, and they are at present engaged in negotiating for the extension and strengthening of such an agreement.
Therefore, I hope the House and country will not suppose that, in point of fact, this Clause is introduced by the Minister because there has been, or can be, any charge against railway companies that they have been doing things which this Clause is intended to prevent. That is not the case, and we do feel that it is only just to those who control these great undertakings, that this Clause should not appear to have been made necessary by any act upon their part in the past which deserves such reprobation. Of course, from the point of view of the future, we realise that, to some extent, this is a stopgap Bill, and perhaps this is a stopgap Clause. There are bound to be future developments in order to regulate more completely these competing forms of transport. But we wish to lay particular emphasis in the fact that, while the others are free to quote what rates they like, we are still bound by statutory obligations, although Clause 30 gives the railway great advantages which they have not previously had. Therefore, although we cannot agree in the sense of accepting this Clause, which if it were used as a precedent for future legislation might be dangerous—if it were used within the present system operating in the transport world while we remained tied and the others were free to open competition, this Clause might be very dangerous to us; at the same time, taking all the circumstances into consideration, we do not propose to ask the House to divide against it, and we recognise that if it is merely an extension of the principle underlying Section 39 of the Act of 1921, we are bound to that extent to accept it.
§ Mr. MACMILLAN
The hon. Member, perhaps, was not in the House when I said I thought it might be for the convenience of the House that I should state as a railway director, what was the view of the railway companies on this Clause. Perhaps at this stage the general view of the railways should be made known. The railways, of course, have in this matter, as in other matters, a duty both to the public and to their shareholders. We are sometimes attacked because the rates are too high, and at other times because they are too low. Last night an hon. Member in this House made an attack on one of the great railways because it charged too much. The whole object of this Clause is to prevent them from charging too little. One might think, from what fell from the hon. Gentleman, that there is an insinuation that because the railways control certain docks and harbours, they are able to use that power to the disadvantage of coastal shipping. That is not the case, because coastal shipping, in this instance, is a user, and absolutely protected by all the conditions which make it necessary for railways owning docks to charge the same rates to all the users of their system. But we are also frequently attacked, especially by the independent dock and harbour authorities, on the ground that the charges made are too low, and are unfairly attracting traffic which ought to go to the independent docks. So that we find ourselves in the peculiar position of a double attack both on the ground of dearness and of cheapness.
We recognise, as I say, that this Clause is the result of a Debate which we had in Committee, when the Minister definitely pledged himself that he would go thoroughly into the matter with a view to the re-statement of the Section in the Act of 1921, and although I think, on the strict logic of the matter, we might be justified in an attitude of definite opposition to this Clause, yet, taking the wider point of view, I think we may take the attitude—while this is in no sense an agreed Clause—of not asking the House to divide against it, and of determining in the future to exploit, if we can, this new principle in regard to unfair and 1835 uneconomic competition in other directions than merely those of shipping.
§ 4.15 p.m.
§ Sir GERVAIS RENTOUL
As I had the privilege of moving an Amendment in Committee on this matter, and of endeavouring to impress its importance upon the Minister, I trust at no undue length, I also should like to express what I believe is the satisfaction of the coastal shipping industry that the Minister has seen his way to table this Clause. It certainly goes a long way towards removing the legitimate apprehensions that were felt by the coastal shipping industry and expressed during the Committee stage, but with regard to a long and complicated Clause of this kind, we can only say that the proof of the pudding is in the eating, and it is difficult to declare in advance that any Clause will be completely satisfactory in meeting the objections raised until it has been tested by practical experience. I certainly should like to express my agreement with the Minister that this is a much more satisfactory way of dealing with the matter than a mere amendment of Section 39 of the Railways Act, 1921.
My hon. Friend the Member for Stockton-on-Tees (Mr. Macmillan), speaking on behalf of the railway companies, said that while they did not wholly welcome this Clause, they did not intend to oppose it, and that in any event it must not be thought that they were admitting in any way that there was justification for the fears which were entertained and expressed by the coastal shipping industry. Well, I do not know about that. I did venture to give the Committee a few instances of cases where the rates had been cut to an altogether extraordinary extent between places where they happened to compete with coastal shipping. For instance, between London and Bristol the railway companies cut the standard rate by 62 per cent., between London and Leith by 55 per cent., between Liverpool and London by 54 per cent., between London and Hull by 51 per cent., between London and Edinburgh by 50 per cent., and between London and Glasgow by 51 per cent. It is certainly a little difficult to discover any similar cuts in other parts of the country and between places where they do not directly compete with coastal shipping; and it is only 1836 fair to make that comment in reply to the statement of my hon. Friend.
Owing to the immense size of the railway units, the coastal trade, a very much smaller industry, is hound to be apprehensive. Therefore, while thanking the Minister for his action, I think it only right to stress once again the very great importance, from the point of view of coastal shipping, of the railway companies fixing their short haul and their dock charges so as to enable coastal shipping to serve more and more as feeders to the railways, if one may put it in that way. Competition must inevitably exist between them, but that competition should be on fair and economic lines, and I believe that this Clause will go a long way towards bringing that about. It must be remembered, after all, that the railway companies, vis-à-vis coastal shipping, have very great advantages. Ships are more or less self-contained economic units. They have to pay their way or else lay up, whereas the railway units, on the other hand, are immense, and so widespread are the activities of the railways that it is extremely difficult to say whether or not any rate is really an economic rate.
Secondly, the shipping companies' routes are limited and fixed by nature. They cannot be extended in the way that railway routes can he. The coastal shipping companies can only compete to a very small extent with the railways, and at the same time they are largely dependent on the railways for their short hauls. It is satisfactory to learn that the railway companies have regarded coastal shipping as complementary to themselves. That is, I think, the proper point of view in the national interest. Equally, it can fairly be stated, I think, on behalf of the coastal shipping industry, that they are ready and anxious to co-operate with the railways on fair terms and to cultivate cordial relations between these two industries, both of them of very great national importance. I do not want to take up the time of the House, but I was anxious to express the gratification of the coastal shipping industry that the Minister had, by putting down this Clause, not only endeavoured to meet the objections that were raised, but recognised the importance of coastal shipping in the national interest and striven to meet their legitimate point of view.
§ 4.21 p.m.
§ Mr. SOMERVELL
I should like to make a few remarks on the position of this Clause in the statutory transport structure of this country as we have it at present. We know that it has a parent in Section 39 of the Railways Act, 1921. No application was in fact ever made under that Section, and if my hon. Friend the Member for the West Derby Division (Sir J. Sandeman Allen) is right, it was so framed that no application could be made; so here at any rate we are for the first time considering an effective Clause of this nature, and this is the first attempt in our legislation to protect a public carrier against the competition of a competitor. This is really a novel principle in our transport legislation. We all agree with the hon. Member for West Derby that coastwise shipping is of national interest, but it is equally true to say that the railways of this country, and indeed the proper development of the road transport of this country, are equally of national interest, and the object of our transport policy must be to develop the best and most efficient co-ordinated system.
I submit that it is an anomaly in our transport legislation that this Clause is not reciprocal. There are obvious reasons Why it cannot be, but it is surely undesirable, as part of a permanent policy, that one particular group of undertakings should be protected against what is called or may prove to be unfair competition against their competitors, whereas there is no reciprocal protection to the railway companies. I cannot help overhearing the hon. Member for the West Derby Division say that there is no unfair competition. That may be, but there has been successful competition so far as the carriage of coal to London is concerned, and there may well be in the future unfair competition, for the benevolent presence of the hon. Member may not always control the activities of those engaged in coastwise shipping, and we are here legislating for the future as well as for the present. I think the House should bear in mind, in passing this Bill, that at present we have got this non-reciprocal privilege conferred on those engaged in coastwise shipping.
The second point on which I should like to say a few words is in regard to what this Clause in fact protects the 1838 coastwise shipping industry against. What is placing coastal carriers "at an undue or unfair disadvantage?" Did, for example, the taxi-cab, when it was invented, place the old horse-cab at an undue or unfair disadvantage? Is it intended by this Clause really to eliminate effective competition? If so, I think that clearer words might have been used. Is it merely intended to protect coastwise shipping against unfair competition: and, if so, are not the Tribunal left a little in the air as to what unfair competition is, or what principles they are to apply? It is perhaps worth noticing that representations can, at any rate in the first instance, be made on two alternative grounds, either that coastal carriers are placed at an undue or unfair disadvantage, or that the charges made by the railways are in fact inadequate, having regard to the cost of the service. There is no doubt a difficulty in saying when that is the case, but it is apparently contemplated that that may happen without there being any undue or unfair disadvantage on the coastal carrier. If we are going to control competition by means of an independent Tribunal and by applications of this kind, it is important that we should know what sort of competition it is that we desire to prevent taking place.
With regard to the Tribunal, one appreciates what the Minister said about the difficulty of getting a satisfactory tribunal to deal with this matter and the desirability of putting on it someone familiar with coastwise traffic. The words "representative of the interests of coastal carriers," I think, occur in the 1921 Act in setting out the names of the people who may go on what I call, loosely perhaps, the optional panels, but I think possibly in this case there is not the same gap as there is in the 1921 Act between a person going on a body as representative of an interest and a person going on to the Tribunal. We have, however, the Minister's assurance that it is intended, when he takes his seat on the Tribunal, that it should be in a judicial capacity, not as representative of the interests affected. In conclusion, it is with some diffidence that I venture these questionings with regard to a Clause in a Bill which all of us, or anyhow the vast majority of us who have taken any interest in the transport question, welcome whole-heartedly 1839 as a real attempt, and a successful attempt, to deal with at any rate a number of the very difficult problems which have confronted the Minister in the arduous task which he has had before him.
§ 4.30 p.m.
§ Sir ROBERT HORNE
The hon. and learned Member for Crewe (Mr. Somervell), who has just sat down, has made a very interesting contribution to this Debate, and he has raised certain points which require emphasising. I happen to be a railway director, as hon. Members may know, but I hope that when I come to speak in this House I perform my duty as a Member of Parliament, and that I do not forget what is owing to the House for the privileges which I enjoy by being a Member of the House. The advantage of being a railway director, as far as these Debates are concerned, is that there is a certain amount of information and experience available to one who is actively engaged in that office which it not available to other Members of the House, so that one can occasionally make a contribution which is useful in illuminating points which may not be entirely clear; just as the hon. Member for the West Derby Division (Sir J. Sandeman Allen), being interested in coastwise shipping, is able to indicate points that may not occur to many of those who are not as familiar with that form of transport as he is.
I think that it worth while to bring before the House what precisely is the character of the legislation which is sought to be enacted by this new Clause. I regard it as an experiment, and because it is an experiment, and although there are certain disadvantages connected with it, I do not propose to enter any opposition to its passage through the House. It is well, however, that hon. Members should realise what kind of experiment it is, and I enter the caveat from my own point of view here and now that what is done in this case should be regarded as an experiment and should not be counted as a precedent We shall have to be guided by experience in deciding whether it will be a useful provision and whether we shall either have to extend it or to withdraw it. As my hon. and learned Friend the Member for Crewe pointed out, it contains an 1840 anomaly. It provides that coastwise shipping shall be entitled to appeal against rates which they regard as unduly undercutting their particular traffic, but there is no provision which will apply to coastwise shipping that they shall be held to any such duty in respect to other forms of transport.
So far as experience has gone, while it is true that some figures may be given to show that in particular instances railway rates were cut down in order to enable the railways to compete with some forms of coastwise shipping, we all know that coastwise shipping has been cutting rates in order to get traffic from the railways. Every railway company has had the experience of finding that its traffic has been seriously injured by rates at which coastwise shipping has been enabled to carry goods. In such circumstances as these, it is a distinct anomaly that the coastwise shipping should be left entirely free while being given the opportunity of complaining against a competitor. That is an anomaly which probably will not be allowed for many years to continue, and it may very well be—and I hope the hon. Member for the West Derby Division will take note of it—that in future the result of this legislation will be that coastwise shipping will he brought under some such provision in regard to their charges, and will be treated as having a duty to other forms of transport such as they seek to impose on the railways to-day.
There is a curious feature in this Bill. Hitherto, legislation has taken the line of putting restrictions upon railway companies as to rates, not with a view to keeping them from going down, but with a view to keeping them from going up. The protection which has hitherto been given has been afforded to the customers of the railways, but now for the first time the railway companies are not to be allowed to reduce rates if protests are made successfully by certain interested parties. That is something quite new in our legislation.
I hope that the right hon. Gentleman will keep the whole question of undue preference in his mind.
§ Sir R. HORNE
I am keeping the whole doctrine of undue preference in my mind. It is the very foundation of what I am saying. So far as railway rates are concerned as between one trader and 1841 another, the railways are not entitled to give one trader better terms than they give to another. That has never applied as between one form of transport and another in this country or in any other country that I know of. Here is a suggestion that rates are not allowed to be lowered if another form of transport can show that it is being damnified by the decrease that is being made. That is something, I suggest, which is rather startling. How has this particular consideration arisen? It has come about in this way. The Legislature has recognised the necessity for freeing the railways from certain restrictions, which today are very unbusinesslike and applied only to the days when the railways had a complete monopoly of the transport system of the country. Certain restrictions were put upon them with regard to the kind of arrangements they could make in charging rates to their customers. Now the fact is very well appreciated that, in order to enable the business of this country to be continued upon a businesslike footing, these restrictions should be taken off. It is in the presence of the railway's new freedom from these restrictions that the coastwise shipping industry comes forward and asks that it shall be protected against the possibility that the railways may use that freedom to put their rates down to a point at which coastwise shipping could not compete.
That, indeed, is the foundation of the whole of the legislation which it is now proposed to pass. I recognise that such circumstances might arise, although to me it is inconceivable that any one railway company or group of railway companies would set out deliberately to destroy coastwise shipping. As has been very well said to-day repeatedly, the great effort of recent times has been to make these forms of transport complementary to each other. That must be the ideal at which we should all aim, namely, that all forms of transport should not cut each others throats and render the position of one or the other more difficult, but that they should co-operate in order to bring about a system of transport which should be efficient for carrying on the business of the country. Accordingly, I cannot readily conceive of circumstances arising which are going to bring this Clause into operation. Perhaps it is meant to be kept in terrorem, and it is hoped that 1842 some different ideas will emerge in the course of experience which will make it entirely unnecessary to keep it on the Statute Book. At any rate, it is an experiment, and the difficulties of the experiment are made clear by the phraseology which is used in seeking to protect the coastwise shipping people against the evils which they fear.
As my hon. and learned Friend the Member for Crewe has pointed out, it is very difficult to construe what undue or unfair disadvantage to coastwise shipping is, or how, on any particular occasion, the Tribunal can come to the conclusion that it is an unfair disadvantage to coastwise shipping that rates should be reduced to a particular level unless it went to the length of strangling coastwise shipping. As I try to think of the circumstances in which unfair disadvantage may come to be construed, it seems to me not to differ very much from the succeeding alternative of charging rates which are below the cost of transport. Nobody would say that the railway companies were imposing an unfair disadvantage on coastwise shipping if their rates were such that they yielded them an adequate remuneration for the traffic. If you said otherwise, it would stop all progress and you might compel the railway companies to keep up their rates to a figure which would yield them too much remuneration in order to enable the coastwise shipping to live. Nobody would make that claim. If therefore you think what unfair disadvantage means, it results in something very like unduly reducing the rate below what I may call the cost of production in order to defeat their competitors.
There is another element which is very properly introduced into this new Clause. The tribunal is not to be allowed to come to a conclusion adverse to the rates unless something else is proved to the tribunal's satisfaction. What is that something else? It is that prejudice to the coastwise shipping is so great as really to be detrimental to the national interests. When we consider the kind of case in which the benefit to the public of having a reduced rate will be outweighed by a national interest great enough to preserve a higher rate for the sake of coastwise shipping, I come to the conclusion that the case presented by this new Clause is likely to be an imaginary one. 1843 I do not think that we shall ever see the circumstances that will bring the Clause into active operation. For myself, I am not entering into any active opposition. I regard the proposed Clause as an experiment. I do not think it will ever be found to be operative, and from that point of view I am prepared, while not accepting the Clause as a precedent in any way, to see the experiment tried.
§ 4.43 p.m.
§ Sir STAFFORD CRIPPS
The right hon. Gentleman the Member for Hillhead (Sir R. Horne) after putting forward the expert view of the railway aspect of this problem, told the House that he is prepared to see the experiment carried out, but that it will be ineffective. I agree with him. It certainly points to a paradise for the lawyers if it does nothing else, because it suggests two tests (a) and (b), neither of which I venture to suggest, are capable of decision at all. As regards (a), the question is whether the charge places coastal carriers in an undue or unfair disadvantage in competition. The tribunal will have to decide what is fair and what is unfair competition, and they are given no guidance whatever as to what degree of competition may be fair and proper under this Bill. There is no indication how one is to decide when competition ceases to be legitimate and becomes unfair.
As to the charges being inadequate having regard to the cost of affording the services in respect of which they are made or charged, it has been universally admitted that it is impossible to ascertain the cost of any service on the railway if you try to isolate it.
Time and again it has been admitted that it is impossible to isolate passenger traffic costs from goods traffic costs, owing to the vast complexity of the railway accountancy system. Here one is not even given the guidance of whether the inadequacy is to be established if overheads are included or by taking merely the out of-pocket costs. It has always been a contention of railway accountants and managers that it pays them to take traffic over and above a given minimum volume if that traffic merely pays them the out-of-pocket expenses and the slightest bit more, because it gives them some help towards their overheads. Is the Tribunal to try to arrive at a cost which includes 1844 a fair proportion of the overheads, or at a cost which is merely the out-of-pocket costs to the railway company, that is, the extra coal, say, which is burned in hauling 10 more tons from Bristol to London; or is it to be the average cost of hauling goods of that class from Bristol to London? It is vital for the Tribunal to know which of those tests is to be applied if they are to be able to begin to apply any test at all.
Though I know the difficulties there are in drafting Clauses of this sort, I suggest to the hon. Gentleman that it is hardly fair to leave things to the Tribunal in this perfectly vague and general way without any guidance whatsoever as to the criterion of competition which the House has in mind. First of all, what sort and what degree of competition is considered legitimate—is it a matter which depends merely upon price arid facilities and nothing more—and what factors are to be taken into account in ascertaining whether the charge is adequate or inadequate in view of the factors in the cost? Until those are determined I venture to suggest that this will be an entirely illusory Clause for protecting anyone. The railway companies will always be able to show that their costs, on some basis or another, match the charges, as they have always been able to do in the past, and they will equally be able to show that their competition is only the legitimate competition that one would expect between two competitive forms of transport.
The House is not deciding here whether it desires to take forms of transport as a basis of competition or whether it does not, although that is a fundamental and vital question. Does the House desire competition between road, rail, coastwise and other forms of transport to continue as in the past, or is this Measure designed to eliminate that type of competition to some, and if so to what, extent? I think anyone trying to administer this Clause is entitled to an answer to that question. The right hon. Gentleman suggested that the railway companies would never drop their charges in competition with coastal snipping. I am sure he knows quite well that the manager of a railway company, if he sees a large block of traffic going from one point to another, will do anything to get it on to his line; and so will the coastwise shipping people. It is idle to suggest 1845 that the railway companies have some particular benevolence as competitors with other forms of transport. We have here two very highly competitive forms of transport, and the House is going to try to protect one of them for the reason, I suppose, that it is the weaker of the two. Obviously, the railway companies have greater competitive strength than the coastwise shipping concerns; they are much larger, they have more capital behind them, and much greater facilities for canvassing and obtaining trade and granting flat rates over whole blocks of trade.
I suggest that this Clause is not going to be any solution of the competitive difficulties between coastwise and railway traffic. There is only one solution, and that is to bring all transport facilities under a single control of some sort or another. You cannot eliminate competition and at the same time preserve what you call fair competition. You have either got to get rid of your competition or, logically, allow it free play, so that the consumer may get what is called the benefit. I suggest that this is only one further step towards the end at which the hon. Gentleman will ultimately have to arrive, and that is the unification of transport under national control.
§ Question, "That the Clause be read a Second time," put, and agreed to.
§ Clause added to the Bill.