§ Considered in Committee, under Standing Order No. 69.
§ [Sir DENNIS HERBERT in the Chair.]
Motion made, and Question proposed,
That, with a view to enabling effect to be given to an agreement made on the thirtieth day of November, nineteen hundred and thirty-five, between the Treasury, the Great Western Railway Company, the London Midland and Scottish Railway Company, the London and North Eastern Railway Company, and the Southern Railway Company, a copy whereof was laid before this House on the third day of December, nineteen hundred and thirty-five, it is expedient—
(a) to authorise the Treasury to guarantee the payment of the principal and interest of securities to be issued by the
company to be formed in pursuance of Clause 3 of the said agreement:
Provided that the amount of the principal of the securities to be so guaranteed shall not in the aggregate exceed an amount sufficient to raise twenty-six million five hundred thousand pounds;
(b) to authorise the issue out of the Consolidated Fund of any sums required for fulfilling the said guarantee and the payment into the Exchequer of any moneys received by way of repayment of any sums so issued;
(c) to exempt the said agreement and other agreements mentioned in paragraph (b) of Clause 2 of the said agreement from stamp duty;
(d) to make certain provisions ancillary to the matters aforesaid."—(King's Recommendation signified.)—[Mr. Chamberlain.]
§ 10.15 p.m.
§ The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)
Hon. Members who were Members of the late House of Commons will remember that in June I had occasion to introduce a very similar Resolution to that which is now on the Paper. That Resolution was in connection with the scheme for the extension of works by the London Passenger Transport Board. The present Resolution is in connection with another project, and this time it concerns not London alone but a very much wider field, namely the whole country as covered by the four main-line railways. This project is just another example of the policy of His Majesty's Government in promoting further useful schemes of public works which offer a prospect of providing considerable employment and of adding to the valuable assets of the country.
I remember that on the last occasion to which I have referred the Resolution was received with approbation, I might almost say with enthusiasm, by the Opposition, some of whom even suggested that it was a piece of their thunder which had been stolen by the Government. I am quite ready to argue that point, but I would only express the hope that the present project will receive full approval from the benches opposite. In this case, the works to be provided by the four main-line railways are of a very extensive character. They are described more fully in the schedule to Command Paper 5027, but I may just summarise them by saying that there are, among them, new lines, extensions of existing lines, electrification of existing lines, reconstruction of a number of 866 stations including the re-construction of Euston, which is the most important and largest single item in the list, the construction of over 400 new steam locomotives, the construction also of a number of other vehicles and the provision of safety signalling and other equipment. Altogether it may be said that this project, if carried through, will provide employment in a great number of different districts in the country, including, I hope, the special areas, which are to have preference, other things being equal, and that it will add considerably to the comfort, convenience and safety of passengers.
I would add that this programme is entirely additional to the ordinary programmes of the railways which from time to time are published in the papers. It is a programme which could not have been carried through if it had not been possible for the Government to offer the railways peculiarly favourable financial terms for the raising of the necessary funds. The Resolution, upon which I am speaking, will authorise a Bill, the Second Reading of which will be taken on Friday. It will be only a short Bill, containing two operative Clauses. It will be particularly necessary that the Bill be passed before Christmas, in order that we may be quite certain of making sure of the present financial situation, and that the work will be put in hand as soon as possible. For that reason I am going to cut my remarks as short as possible this evening, in order that other Members may have an opportunity of making any points that they wish to make. I would, however, remind them that there will be further opportunities for debate on the Report stage and on the Bill itself, and I hope, therefore, that it will be possible for me to get the Committee stage of this Resolution by eleven o'clock this evening.
For the benefit of hon. Members who were not Members of the last Parliament, I think it would perhaps be convenient if I were just briefly to describe the method of procedure which it is proposed to adopt in order to carry out the finance of this proposal. The method is the formation by the Treasury of a Finance Company. This Finance Company, when formed, will issue securities, which will be guaranteed as to principal and interest by the Treasury, for the 867 purpose of raising a sum of £26,500,000, and from the Finance Company in turn the railway companies will borrow as and when they require the money to undertake the works specified in the Schedules, provided, of course, that the railway companies obtain from Parliament the powers which it will be necessary for them to get before they can put the works in hand.
The loan which is to be raised by the Finance Company will be of comparatively short duration. Hon. Members will no doubt appreciate that, the shorter the period the lower the rate of interest that will have to be charged. It will be from 15 to 25 years. The exact period is left to be settled by the Treasury in the light of the market conditions prevailing. The loan, when it matures, will have to be repaid, and the railway companies, as there is no sinking fund, with one small exception, will have to borrow again, in order to repay the sums which they have borrowed from the Finance Company, when those sums become due.
That is the procedure. It may perhaps give rise to two questions, which I will answer in anticipation. The first is: Why is it necessary to have a device of this kind? Why have a statutory company? Why not let the railway companies themselves raise the money? That is a very natural and reasonable question, and it is one which, as I say, I anticipated. The reason is this: The railway companies will have to get statutory powers before they can carry out these works at all. That will take some time. By forming the Finance Company, the money can be raised at once, and we do not have to wait, therefore, until the statutory powers have been obtained by the railways. At the present time, as I have said, the prevailing rates of interest are exceptionally low. I have no reason to suppose that in the course of the next few months they are going to rise, but I cannot say that they will not rise, and, as the whole project is really dependent upon the power of the railway companies to obtain this money very cheaply, it is just making certain of the project by raising the money now, when we know that the conditions are favourable.
There is a second point, which is not of such importance. The Finance Company will raise the whole of the money 868 at once. The whole of the money will, of course, not be required at once, and what is not required will be invested by the Finance Company until it is wanted. Of course it would be possible for the railways to do the same thing, but I think the House will probably agree that it is reasonable to suppose that the Finance Company, dealing with the whole sum, will be able to invest what is not at once required more conveniently than four separate railways, each undertaking to invest a smaller amount on its own account.
The second question that may be asked is, Why is the total amount which the Finance Company will be authorised to raise only £26,500,000, whereas the total cost of the works that are in prospect is estimated at £29,500,000—a difference of £3,000,000 between the two figures? The answer is that the other £3,000,000 will be provided by the railways themselves, or some of them, out of their own resources. The agreement itself is scheduled in this Command Paper. There are a number of Clauses and, if I had had a greater amount of time, I would have devoted myself to explaining some of them in more detail.
§ Mr. CHAMBERLAIN
If we do not get the Committee stage by eleven o'clock to-night it will throw the Timetable out of order and there is a risk that we may not get the Bill before Christmas, which I am sure the Committee will not wish. I do not want to shirk any questions that anyone may desire to put on any particular Clause and, although I think that most of the Clauses are self-explanatory, there may be some obscure points on which Members would desire further information and, if so, the Financial Secretary or I will answer them. Without saying any more at this stage, I commend the Resolution to the Committee.
§ 10.29 p.m.
§ Mr. HERBERT MORRISON
The Committee will appreciate that, owing to the arrangement arrived at through the usual channels, we are commencing, as the right hon. Gentleman has said, very late in the consideration of this Resolution. I do not know whether the Government has any suggestion to make to meet the difficulty, but there are several 869 Members who wish to speak on this side and, while we do not wish to raise undue difficulties, we should like it to be possible in some way for facilities to be given for adequate discussion, which is obviously impossible if the Resolution is to go through by eleven o'clock to-night. I hope the Government may be able to make some suggestion upon that point in order to facilitate business. I should like to say, in the first place, as I said some weeks ago, that, in important financial matters of this kind which affect the relationships between the State and great private statutory undertakings, it is unfortunate that such arrangements between the State and private capital should be announced in the middle of an election campaign. It is undesirable and it leads people to suspect that the railway companies and the Government have come to an agreement for political purposes. The Government are open to be shot at in that direction, and that is our business. But it will be a pity, looking at the matter from the point of view of their own interests and the respect which this House has for such undertakings, if these great statutory undertakings, which have constant relations with the State and with Ministers, should lend themselves to a situation which leads not unreasonably to the interpretation that the railway companies have co-operated with the Government for the purpose of electoral advantage.
§ Sir ROBERT HORNE
Let me assure the right hon. Gentleman at once that these negotiations were entered into between the railway companies and the Government long before there was any thought of any Election.
§ Mr. MORRISON
That I understand, but if the negotiations were conducted for a long time, it is a pity that they did not finish well before the Election. Frankly, if I had represented the railway companies and had been in the position of the right hon. Gentleman as chairman of a railway company, I should have said within 10 days of the Election, "There is going to be no public agreement until this Election is over." That is what he ought to have done. I suppose that this device which the Government are using does not come within the category of unification referred to in connection with mining royalties yesterday. But what 870 does it indicate? This Financial Resolution very clearly indicates that private enterprise or private capital can no longer stand upon its own feet in particular undertakings. That is an admission of very serious import and, involves the Committee and the country in considerations of what should be the best method and the consequences of these financial guarantees on the part of the State to private statutory undertakings. At any rate the bringing forward of this Resolution by the Chancellor of the Exchequer is an admission that the old boast that private capital can finance itself and can be self-reliant without intervention by the State is no longer true, and we now get the position established that the State has to prop up private capitalist undertakings in order that they can function. I warn hon. Gentlemen opposite that the distance from that point to the recognition of the full Socialist case is not very far, and to that extent we are not undisposed to welcome this Resolution to-night as a good example and as an argument which will be useful to us, and that in fact private capitalism is in part breaking down and can no longer stand upon its own feet.
I should like to know from somebody speaking for the Government whether all these works which it is proposed to put in hand are strictly abnormal works which in no case the railway companies would have put in hand without this State guarantee. I am bound to say that in looking through the list of works which are to be financed under a guarantee of the taxpayers quite a number of them are the kind of works which I should have expected the railway companies to put in hand anyway. Frankly, I am not disposed to agree that the railway companies would not have done this work if the State had not given a guarantee.
What I am apprehensive about is this: If private undertakings get into the habit of thought that they can go to politicians, to Ministers—they are politicians—and can tell them: "Look here, we can provide a certain amount of employment and, incidentally, we can provide you with a good electoral story if the State provides a guarantee for the expenditure," I say to the Committee in all seriousness and with very great earnestness that if that process continues far it will not be long before private 871 undertakings have degenerated from the former status which hon. Members regarded them as holding, that of courageous private enterprises, and will have degenerated into a poor law, public assistance frame of mind. It will be exceedingly serious if captains of industry like the right hon. and learned Member for Hillhead (Sir R. Horne), the chairman of a great railway company, gets the idea into his mind: "It is no longer necessary for my company to be self-reliant, no longer necessary for it to show enterprise, because I can, provided that a right case is put up, get assistance or a guarantee from the State that will help us in our troubles." When you get to that point that private undertakings can no longer be relied upon to stand on their own feet, you are in danger of demoralising them and destroying their self-reliance and their initiative, and when you get to that point you had far better be occupied in socialising transport as a public concern than in playing about with private undertakings in this way.
I should like to know how much of this programme is strictly abronmal work which the companies would not have put in hand in any case. I shall need a good deal of convincing, and so will my hon. Friends, that all this work, certainly the bulk of it, would not have been done in any case even if the State had not put up this guarantee. The Chancellor of the Exchequer has not told us how many man years of employment will be given by this work. The present Colonial Secretary used to be a great authority on man years. I am not saying that in any critical way. I have very great sympathy for the life he led at that moment, and I have sympathy of another sort for the life he leads at the present time. Perhaps sympathy is not the word, but I will let it pass. The Chancellor of the Exchequer has not told us, and we ought to be told, how many man years of employment this programme involves. The House ought to have this information. Another point is that the Chancellor of the Exchequer referred to the guarantee which the Government gave with the assent of this House to the London Passenger Transport Board, but I would point out that this guarantee is in a very different category from that given to the London Passenger Transport Board. That Transport Board is a public 872 authority. It was defined as a public authority by Act of Parliament and it has the status of a public authority. These railway companies are private capitalist undertakings. It is true that they are statutory undertakings but nevertheless they are private undertakings. I will be quite frank about this matter. We on this side cannot look upon guarantees to private statutory undertakings with the friendliness that we should look upon State guarantees to public authorities conducting a service primarily for the public advantage.
I have roughly covered the points with which we are concerned, and I would add this: We have an apprehension that this addition to railway capital, with a State guarantee, without any conditions, without any concern as to the internal finance of the railway companies, without any element of public control following that State guarantee, is dangerous from the point of view of the public interest. It is undoubtedly the case that British railways are grossly over-capitalised at the present time. They are carrying a very high proportion of capital which undoubtedly is no longer productive. When trade unions are met by the railway companies and arguments are submitted to the Railway Rates Tribunal about charges the argument is often based—I think not so much in the case of the tribunal which is concerned with the standard revenue under the Railways Act, 1921—on the amount of interest per £100 of nominal ordinary stock that is paid to the shareholders. That argument is no longer sound in the case of British railways. It is time that there was a complete clean up of railway finance and a reconstruction of the capital of railway undertakings. It is wrong, and indeed unhealthy, that the railways should nominally be carrying a capital which is seriously in excess of the real productive capital employed in these undertakings.
My last point is that these are new developments, and it is probable but not certain that the State will not have to make any financial contribution at the end of the day, assuming that the railway companies do not fail. If they fail presumably the Finance Company would have certain rights in respect of the debentures it is to receive as collateral security. But if this process is going to extend the State guarantee to provide capital we are bound to raise the ques- 873 tion, and we shall do when we get an opportunity of raising it in a concrete form, as to the desirability of saying to the great undertakings that if they want a State guarantee there must be a reasonable proportion, it may be a small proportion but it will have to grow, of representatives of the State on boards of directors. That is the line upon which the Opposition are thinking. At any rate, it ought to be a consideration which Ministers should have in mind in view of these developments which the Government are encouraging and under which private enterprise will tend to extend over an increasing field in order to get State money. We, therefore, are in the position that we shall not, although we have some misgivings, resist the Resolution to-night. We appreciate that there will be some advantages to the public in the improvement of travelling facilities and we do not propose to vote against the Resolution or to divide the House. But that decision has been come to with some doubt and after some discussion, because we really are rather apprehensive on the two points—the tendency of capitalist undertaking to form up in a Poor Law queue at Whitehall outside Ministers' doors waiting for some assistance by the State, and that the guarantee is not accompanied by proper State representation in the internal management of the undertaking. We intend, therefore, not to dissent from the Resolution, but our dissent must be taken to be subject to the very serious reservations I have indicated.
§ 10.44 p.m.
§ Mr. D. EVANS
I do not wish to stand between the Committee and its approval of the Resolution, but I want to associate myself with some of the remarks made by the right hon. Member for South Hackney (Mr. H. Morrison). My friends and I do not propose to oppose the Resolution, and one reason why I do not propose to take up the time of the House now is that I am anxious to see this work, whatever extent it may cover, put in hand at the earliest possible moment. We believe that it will give facilities for employment to many people who are now unemployed. I appeal to the Committee to consider this Resolution on its merits. I do not know what were the motives of the Government in announcing the scheme at the 874 particular moment when it was announced. Let us, at any rate, forget that matter and consider the merits of the Resolution itself. In view of the fact that the Chancellor of the Exchequer has indicated that there will be other opportunities of discussing it, I do not propose at this stage to do more than ask for some further information from the Financial Secretary to the Treasury. I associate myself with the remarks of the right hon. Gentleman the Member for South Hackney. I, too, wish to have an assurance, such as he asked for, that the work to be done under this scheme is extra to the work which would normally be included in the programme of the railway companies for the next five years.
As to the allocation of the money which is to be provided I notice that the Great Western Railway Company, under this Resolution, is to spend an extra sum of about £5,000,000 or £6,000,000 over five or six years. That seems a very small amount and I should have thought that the Great Western Railway Company, with its financial structure as it now is, could easily have provided that money out of its own resources. I also want some assurance with regard to the guarantee of work for the special areas. There is a provision under the agreement that work is to be given to firms in the special areas. What check is there upon the railway companies in that respect. What means are there of discovering whether the work is being given to firms in the special areas and upon what terms. I understand the Minister of Transport is to supervise the allocation of the work. What machinery is there in his department to secure that a fair share of the work is given to the distressed areas? I am thinking particularly of South Wales.
In regard to the work in the schedule of the Great Western Railway Company I would point out that beyond the rebuilding of one station, Llanelly, and a small branch line at Porthcawl, there is not any work on that great railway system for South Wales although South Wales has, I think, been responsible to a great degree for providing the revenue of the Great Western Railway. What security is there that special work will be provided in a distressed area like South Wales by the Great Western Railway Company. Suggestions have been made in the Press that railway extensions 875 should be provided to connect the coal areas with the western region of Wales so as to distribute the coal more economically in West Wales. We have heard from the Prime Minister and other Ministers that one of the great drawbacks in connection with the distressed areas is the fact that those areas are not good distributing centres. What is proposed to be done by the Great Western Railway Company to make the South Wales area which has provided such a large amount of its revenue in the past, a better distributing centre for Wales and the West of England.
There is also the question of the electrification of the railways. There is not a word in this schedule about electrification except in regard to the London Midland and Scottish and the London and North Eastern railways. Surely there must be ample opportunity for suitable schemes of electrification in South Wales and Glamorganshire. I should like to have further elucidation on these points from the Minister. And again, on the point which the Chancellor explained of the necessity for having a Finance Company, does it not increase the cost of this financing to have this buffer Company? In that case the whole of the money will not go towards providing work for the unemployed.
§ Mr. H. MORRISON
I ought to make it clear that whatever we may do tonight, the Chancellor will understand that on the Committee and other stages of the Bill we must be free to move Amendments. Perhaps the Chancellor would indicate the future course of the Measure?
§ Mr. CHAMBERLAIN
In reply to that request for information, it is obviously impossible to give any reply to-night to the questions raised by the right hon. Gentleman and others. For reasons which I have given before, we are extremely anxious to get the Committee stage of the Resolution to-night. I think the succeeding stages will give the House all the opportunity they require to have the questions elaborated and discussed. It is proposed to take the Report stage of the Resolution to-morrow night—that will be exempted business after eleven o'clock—but to devote the whole of Friday to the discussion of the Bill; and, 876 of course, all these points that have been raised on the Resolution can be raised also on the Bill, because the agreement will be a Schedule to the Bill.
§ 10.53 p.m.
§ Mr. BUCHANAN
I am afraid that I cannot accept the Chancellor's suggestion on this matter, and speaking for myself and my friends it is our purpose to divide on this Resolution to-night. We were not parties to the earlier discussions which delayed this Bill, and if this Bill be delayed the responsibility is not on us. If people like to go and upset other arrangements which have been made and throw them aside they must not shift the responsibility for that on somebody else. The second Debate to-morrow will be on the distressed areas, on a Motion moved by the hon. Member for Seaham (Mr. Shinwell). Everyone knows that there will be a Division on it and that it cannot finish much before 11.15, and thereafter the discussion on this railway development must be very limited. Some cognizance ought to be had of the fact that more and more private Members ought to insist between 11 and 11.30 on some right to the adherence of private Members' time. It is for Mr. Speaker to say what discussion will be allowed on any stage of a Bill, and once the Financial Resolution has gone through this House, perhaps the most valuable opportunity for discussion has gone, because once you have granted finance, that becomes the overriding power and in many respects is the final consideration.
Let me say to my Liberal friends who supported a subsidy on the last occasion when it was discussed in this House that I am not here to sneer at the smallness of the numbers of the Liberal party, because we have an affinity in that regard, and largeness or smallness does not usually make a case right or wrong, but I thought we had a common belief that we should fight against the use of State money for private subsidies. The last occasion on which the right hon. Gentleman and I crossed swords on this question was on the grant of £4,000,000 or something like that for the building of the "Queen Mary." It was then held out that public money ought to be used for the building of a great ship, and the same reason was given that some kind of work 877 would be given to someone or other. To-night everybody could come to this House and say the same thing. I have only just left a constituent of mine who has a cap factory and makes children's wear, and he tells me with great sincerity that if the Government would only guarantee him capital and interest for the next five years, he could build a great factory and employ tens of thousands of people. Every private capitalist in Britain would say the same.
Indeed, when I hear this talk about private enterprise I look at the Co-operative movement, which is not a statutory undertaking, and those of you who boast of great financial genius may take a lesson from that movement. Here is the great Co-operative movement, run by working people of diverse political views and interest, expanding day by day and week by week, without coming and begging of this or any other Government for financial guarantees. If they did, the first people to rise in this House and object would be the Conservative Members, led by the right hon. and learned Member for Hillhead (Sir R. Horne). Just imagine the Co-operative movement coming here and asking from the late Labour Government, headed by the right hon. Member for Hillsborough (Mr. A. V. Alexander) for a loan. It would simply mean that the Co-operative movement had come begging and borrowing from the Exchequer.
I must differ from most of my colleagues on all sides of the House, just as I differed on the "Queen Mary," on this idea that it is providing work. To that I most emphatically and deliberately dissent. I am a Socialist, and, generally speaking, I take the view that the more efficient you make capital, the more you make it more comfortable for me to travel, and even more safe, the greater you have made the difficulties of the working people. What has happened with your amalgamations, taking your mining and your shipping industries? You have amalgamated your industries and made them more efficient and able to produce more, but each time you have done it you have led to social wastage, and that social wastage is the human beings who have put their lives into the 878 industry. I see a distinguished Member opposite from the same city as myself, and I knew he would be here to-night when we were discussing railways, but I do not know what Scotland is to get out of this. Scotland is to get the additional carriage and storage sidings at Edinburgh, Craigendoran, and Cowlairs, and additional facilities at Bathgate Junction and Broxburn. I know we may get a share here and there. There is the London, Midland and Scottish Railway Company. I plead guilty to not being an authority on finance. The two things I dodge, as I am not an authority on them, are finance and foreign affairs. I find my interest in Gorbals enough. I do not know the capital of the London, Midland and Scottish Railway, but it must run into a considerable sum of money—
§ It being Eleven of the Clock, The CHAIRMAN left the Chair to make his Report to the House.
§ Committee report Progress; to sit again To-morrow.