HC Deb 13 December 1935 vol 307 cc1286-372

Order for Second Reading read.

11.8 a.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I beg to move, "That the Bill be now read a Second time."

So much ground was covered the other night in the Debate upon the Committee Stage of the Money Resolution authorising the Bill, and the points that were raised by various hon. Members at that time were so fully and completely gone into by my hon. Friend the Financial Secretary in his reply, that I am really at a loss to know what further statement the House would like to have from me in moving the Second Reading of the Bill. The Bill, which is now in the hands of hon. Members, as I stated in moving the Resolution, consists only of two operative Clauses and the Schedule, in that respect following closely the precedent of the London Passenger Transport (Agreement) Act. The first Clause, as hon. Members will see, empowers the Treasury to guarantee principal and interest on securities to be issued by the Finance Company which is to be formed by the Treasury in accordance with Clause 3 of the Agreement. It is provided that the principal of the securities shall be a sufficient sum to raise £26,500,000, and it is further provided in this same Clause that any sums which may be required to fulfil this guarantee shall be paid out of the Consolidated Fund, and that any sums received by way of repayment are to be received by the Exchequer. There is a further Sub-section which provides that full information shall be given to the House of Commons about any guarantees, about the payment of any sums out of the Consolidated Fund and the receipt by the Exchequer of any sums in connection with the guarantee, and finally, about any alteration or amendment of the Agreement by any further agreement or by a certificate of the Minister of Transport. All that is in strict accordance with the usual practice in similar cases.

Then follows Clause 2, which exempts any variation of the Agreement and any subsequent agreement between the Finance Company and the railway companies from Stamp Duty. Perhaps I ought to add a word about that Clause, because it seemed to me in the course of the discussion that in some quarters there was a misunderstanding of the effect of the Clause. It is not the case that the Clause exempts the railway companies from payment of the ordinary duty upon loan capital. This is merely a provision to ensure that the duty is not paid twice over by the railways because of this particular device of the formation of a Finance Company for raising the money. Loan capital duty will be paid on the issue of securities by the Finance Company and, of course, will subsequently be repaid to the company by the railway companies, and that duty will be at the ordinary rate of 2s. 6d. per £100. There will also be a payment by the railway companies of the reduced loan capital duty of 6d. per £100 upon any securities which they may issue when these loans mature for the purpose of the repayment of the loans. That, again, is the ordinary duty payable in those circumstances, but if it were not for this Clause they might in addition to that, have to pay a further Stamp Duty upon the Agreement of another 2s. 6d. per £100, which would mean, therefore, that they would be paying duty twice over, simply because we had interposed this device of a Finance Company. That, obviously, would not be equitable, and the purpose of the Clause, therefore, is to avoid the double payment of Stamp Duty, and there, again, it is exactly the same as was done in the case of the London Passenger Transport (Agreement) Act.

The principal part of the Bill is contained in the Schedule, which is a reproduction of the agreement between the four main line railways and the Finance Company. The discussions which we have had already have pretty well elucidated most of the Clauses of this Agreement, and I do not want to take up unnecessary time in a rather boring process of trying to summarise a series of clauses in the Agreement. Therefore, I will confine myself to making a few observations upon one or two of the Clauses. Clauses 9 and 10 contain some words in brackets, and one hon. Member seemed to find something sinister in those words. There is nothing sinister in them. They deal with a possibility—no more than a possibility, but it is a possibility—that when the railway companies apply to Parliament for power to carry out those works, Parliament might refuse to give them the power in respect of one or more of the works. If so, obviously they do not want to borrow the money for that work if they have not the power to carry it out, and as it is provided that the railway companies are to bear the loss—it would be a loss—upon any money invested by the Finance Company pending its use by the railway companies, it obviously would be inequitable that a railway company should bear a loss of that kind incurred simply because Parliament had refused to give it the powers for what that money was wanted. Therefore, under Clause 9 it is relieved from any liability of that kind. Under Clause 10, if Parliament has refused to give powers in respect of any particular works to a particular railway company, it would not be fair that the railway company should be asked to pay Stamp Duty upon the capital of which it was no longer in need, since it would not have the power to carry out the work. In effect, therefore, Clause 10 cancels out the Stamp Duty on that particular part of the transaction.

I would also call attention to Clause 11. Hon. Members will note that that Clause deals with the collateral security which is to be given by the railway companies to the Finance Company for the money borrowed from it. The railway companies are to get powers to issue 4 per cent. debenture stock which will be handed to the Finance Company as and when the money is borrowed from them, and that debenture stock will be redeemed later on when the railway companies repay their borrowings. Clause 14 is, perhaps, not quite clear. That clause deals with a special case applicable to only two of the four railway companies—the London Midland and Scottish and the London and North Eastern. In the case of those two railways, part of their programme consists in the replacement of equipment before the expiration of its normal life. In the ordinary course, the practice with regard to the renewal of a wasting asset, say a locomotive would be paid for out of revenue, that is, out of the depreciations set aside year by year for the purpose. Accordingly, it would not be in conformity with business principles now to charge to capital instead of to revenue the cost of that renewal. Therefore, under Clause 14 it is provided that the accrued depreciation in respect of the equipment which is being replaced before the expiration of its normal life shall be paid off by means of a sinking fund over 15 years, so that that accrued depreciation will be paid for out of revenue, and not out of capital.


Can the right hon. Gentleman tell the House exactly what the net saving would be to the railway companies of the lower rate of interest? He has drawn attention to the fact that the money is to be redeemed in 4 per cent. debentures. How much benefit would the railway companies get from the lower rate of interest which the Treasury commands?


I think the hon. Member does not follow me. The 4 per cent. debentures are issued only as collateral security to the Finance Company during the currency of the loan. The loan is to last for a period to be determined hereafter, which is not to be less than 15 years or more than 25 years. Let us say that it is 20 years.


The 4 per cent. will not be paid in the meantime?


Let me explain. In the course of the 20 years the railway companies will, borrow from the Finance Company a certain sum of money. They will issue to the Finance Company the 4 per cent. debentures, which will be held as collateral security. They do not pay on that. It is simply held as collateral security. At the end of the 20 years, when the loan to the railway company is paid off, the railway company will issue new stock of its own, and will redeem the 4 per cent. debentures.


Will it get the benefit of the Treasury rate?


Not the 4 per cent. but the rate of interest at which the Finance Company can raise the money. That is what the railway companies will have the benefit of, and not the 4 per cent. There is only one other Clause with which I would deal, and that is Clause 17, from which it will be seen that the Treasury will have power to get all the information that they can reasonably require from the railway companies in order to make sure that the various conditions laid down in the agreement are being carried out. I should like to make a short reference to some of the criticisms that were made by the right hon. Member for South Hackney (Mr. H. Morrison) and the hon. Member for Gorbals (Mr. Buchanan). Both of them appeared to suggest that this project was merely the opening phase of a sort of Rake's Progress upon which the Government were about to embark, so that they might bolster up a decaying capitalist system by the indiscriminate use of public credit to finance private enterprise. There is no foundation for a belief of that kind.

That is not the effect of this project, nor has it ever been the intention of the Government to embark upon any process of inviting private enterprise in the shape of companies or firms to come to the Government and say, "If only you will give us some financial assistance or lend us your credit, if that be particularly favourable, we shall be able to build a great factory"—as was suggested by the hon. Member for Gorbals—"and give employment to thousands of men." We have never had any idea of doing anything of that kind. It stands to sense that the Government could not do that. How could you pick out one firm in a particular trade and say that the Government would give them specially favourable financial terms, at the expense of all their competitors? It could not be done.


It has been done already.




It has been done by guarantees. There is the assistance that was given to the Royal Mail Steam Packet Company and others, who got Government grants or credits.


I am afraid the hon. Member is referring to a practice of the Labour Government.


I am referring to the Trade Facilities Act.


The Trade Facilities Act dealt only with industries as a whole, and not with particular industries.


No. What about the Royal Mail Steam Packet Company?


Of course, there are particular instances, but the circumstances of the Trade Facilities Act were special, and our experience of the Trade Facilities Act is not such as to encourage the present Government to wish to revive it.


That is what you are doing.


We are not doing that. We make a definite distinction between what I have described as the indiscriminate use of Government credit or Government finance for private enterprise, and a project of this kind, which deals with statutory undertakings. Here we are dealing with statutory undertakings, as we were in the case of the London Passenger Transport Board. We consider that that makes a definite distinction, and one that should be observed. We feel that in a case of this kind it is not merely facilitating a great enterprise, which involves the expenditure of many millions of money and covers a very wide field; it is not merely that it gives rise to a considerable amount of employment, but these statutory bodies are also carrying on a great public service, which affects not only those who are employed in manufactures, but the whole public who are served by the undertakings. It is not a mere question of their saying, "If you help us, we can give employment." It is helping the undertakings to give the public a better service, for the public to be carried in greater numbers with greater convenience to themselves, in greater comfort and safety, without costing the taxpayer a single penny, merely by making use of the exceptionally low rate of interest which has been brought about by the confidence created by the policy of the Government. It appears to us a sound business proposition which it would be quite wrong for the Government to refuse. That is the policy which has been declared over and over again, and I repeat that this is merely a single instance of how that policy can be put into operation.

I hope that this will not be the last project of the kind which we shall be able to lay before the House of Commons, but I am bound to say that I have nothing else in my mind at the moment, and in view of the limitations to which we must bind ourselves, I do not think that there can be a great many instances of the sort. As far as this project is concerned, it is a response to an appeal made to the Government very often—and not from one side of the House alone—that if the credit of the Government can be advantageously and safely used to promote an enterprise which is going to develop the resources of the country, give better conditions and employment to a large number of people, that they should not hesitate to do so. I commend the project to the House not only because it is a response to that appeal, but also because it is a provision for the comparatively near future—and that is a consideration which should be borne in mind. It has been pointed out by various hon. Members in the last Parliament that a great deal of the improvement in employment which has been such a marked feature of the last year or two, has been due to the intense activity of the building industry, and hon. Members have said that it is not reasonable to expect that that activity will be maintained. I agree. The rate of house building at the present time is such that if it were continued it is quite certain that in a comparatively short period the country would be over-built.


Not Scotland.


I am talking of the country as a whole; I do not say that it is the case in every single instance. But when you have over 300,000 houses being built every year, a rate which is in advance of the ordinary demand for houses, and when we have caught up with the arrears, we must expect that the rate is bound to diminish. To seine extent its place will be taken by the extra house building which will be required to carry out the new programmes of local authorities to deal with overcrowding. But hon. Members on more than one occasion have said that we shall have to consider in the not too distant future a condition of affairs when the building industry will begin to slacken off, and when the great amount of employment which is brought about by the activities of this industry will therefore slacken, and that we shall have to think of something to take its place. Here is something which will take its place; and I would remark that it is probable that the peak of the expenditure on this project, and also in the case of the London Passenger Transport Board will probably just coincide with the period when we may expect the activity on housebuilding to be diminishing. Therefore, I claim for the project that it is not only wise but timely, that it is a matter of importance in our planning for the future, and, therefore, should receive the full approval of the House.

11.31 a.m.


I have to act as a substitute for the right hon. Member for South Hackney (Mr. H. Morrison), who is engaged on other public duties, and I cannot hope to address the House with his knowledge of the administrative and constructive side of the railway services of this country. Nevertheless, let me say at once something which it is necessary to say ill order that there should be no misunderstanding of our attitude in general on this issue. We may have to make during the Debate some criticism with regard to the railway systems and their administration, but nothing that we may say by way of criticism is intended in any way to lessen public confidence in the administration of this great and vital service to the nation. Let me say publicly that anyone who has a fairly wide experience of travel in other countries will agree that our railway system compares most favourably with that of other countries. The daily service we get—although we often grumble, and probably shall continue to grumble—the daily work and service of a large body of workers of this country, one of the most honourable sections of the community, proves that very good loyal work must be put in daily to achieve the results which have been achieved by our railway service. I think it right to say that at the outset, so that whatever criticisms we may have to utter will be governed by that overriding consideration.

I am grateful to the Chancellor of the Exchequer for the explanations which he has given on one or two points raised by my hon. Friends during the discussion of the Financial Resolution. His explanation with regard to the Stamp Duty was clear and his explanation with regard to the apportionment of any loss which may arise on account of the failure of a railway company to carry through a particular Railway Bill, was also reasonable and clear. I do not propose to say anything on the details of the scheme further than to point out that there is nothing at all in the proposals submitted which holds out any hope of the proper representation of the Government or of the national interest, In respect of such work and such administration as will be carried on by reason of the public aid which is to be given to the industry.

The Financial Secretary to the Treasury in his reply to my right hon. Friend on the Financial Resolution was a little expansive in his remarks as to the qualifications of those who control and direct the administration of the railway system. He was rather hard, I thought, upon the experienced and erudite—I think that was the word he used—officials of His Majesty's Treasury in that connection, but I seem to recollect that one of the principal administrators of the railway services in this country was formerly on the staff of the Treasury. I fail to understand why the hon. and learned Gentleman should have put that sort of argument before the House. The right hon. Gentleman the Member for Hillhead (Sir R. Horne) is the chairman of a large and important railway company, but the right hon. Gentleman had not, in my recollection, had any very close or corporeal association with the administration of railway companies previously, though he played a very important part at one time as Chancellor of the Exchequer in rendering public services comparable with those rendered by the principal Civil servants at the Treasury.

I do not think our argument that there should be public representation, where public credit and public finance are concerned, was very well answered by the Financial Secretary to the Treasury. I think it will be found that again and again, not only in great public institutions but in many forms of ordinary industrial activity, people are placed in charge of the direction of policy who could not claim to have that life-long and intimate experience of the details of the business concerned, which the Financial Secretary seemed to regard as essential in the case of directors either of railway companies or of the finance company which is to supply, shall I say the munitions to the railway companies. I scarcely think therefore that my hon. friends will be diverted by the hon. and learned Gentleman's argument from pressing at a later stage if they wish to do so for proper representation of the public, in regard to the actual working of this scheme, in which the public is coming to the help of the companies.

I was interested to hear repeated by the Chancellor of the Exchequer the claim that the Government are able to bring forward this proposal because they are in command of cheap credit, and that the reason for that cheap credit is the confidence aroused in the country by the Government's policy. I spent some time in this House prior to 1931, and, from an orthodox point of view, I am unable to understand on what the Chancellor bases his claim for having secured confidence in regard to finance. If the right hon. Gentleman had provided not extraordinary, but even ordinary amortisation of the National Debt, if he had followed generally the orthodox methods expected from a Chancellor of the Exchequer, I could have understood his claim. But I suggest that the fact of money being available at cheap rates to-day is not due to the policy of the Government. I suggest, that it is quite fortuitous first, because of the large amount of surplus capital which is unable to find an outlet in this period of depression, and secondly, because of the actual and at times active restrictions, perhaps I should not say of the Treasury but of the City, on the usual course of investments abroad. Those are probably two main reasons why the Chancellor of the Exchequer to-day is able to come to Parliament and point to such a considerable volume of credit being available at a cheap rate. I do not propose to spend any further time on that point beyond saying that we do not accept the promises of the right hon. Gentleman's argument.

I am rather pleased from my own point of view to find that the Chancellor of the Exchequer seems to have undergone a process of conversion in regard to a policy of this kind. I listened carefully just now to his expression of his willingness, under certain conditions, to back schemes of this kind in order to provide employment as well as to be of service to the nation. That expression seemed to me to be in strange contrast with what the right hon. Gentleman has said on previous occasions. Perhaps I may be allowed to quote from the OFFICIAL REPORT: The continually repeated cry that the Government have no policy on employment always has behind it the implication that there can be no policy which does not involve a large expenditure of public money, Whether directly in public works carried out by the Government or in subventions to other bodies doing similar things. I believe that to contain a complete fallacy. There may be circumstances when it is right and sound to follow a policy of that kind, but not for the purpose of providing employment, because the whole experience of the past shows that, for the purpose of providing employment, this policy of public works is always disappointing."—[OFFICIAL RETORT, 14th February, 1935; col. 2208, Vol. 297.] I suggest that the announcement by the Government of this scheme in the course of the Election campaign and the remarks of the right hon. Gentleman this morning indicate a reversion of the view expressed in that passage from the right hon. Gentleman's previous speech. At any rate, it would be interesting to hear his answer on that point. We want to understand the right hon. Gentleman's policy in this matter. We do not want always to be critical. We wish to have a measure of constructive suggestion as well. We do not wish to misjudge the right hon. Gentleman. I must say that I am confirmed in my own opinion this morning by his remarks.

It has been pointed out to the Government that a good deal of the internal prosperity, such as it is, which has been occasioned by a large expenditure on housing and similar services might come to an end, and it has been pressed upon them that they would then have to look around and think of something. Apparently they did that in the middle of the General Election campaign, and thought of something which, in my view, is entirely contrary in spirit to the right hon. Gentleman's own announcement on the matter which I have quoted as having been given in this House on the 14th February last. It is also interesting to me to give that reference—if Mr. Speaker will permit me to put this in at this point—as to the measure of contribution to the prosperity of the country of internal schemes like housing, when I understood from so many of the right hon. Gentleman's friends that the recovery has been largely due to the fiscal policy of the Government.

If this particular measure of cheap finance is to be so satisfactory from the right hon. Gentleman's point of view in regard to this very large and important industry, why is that not possible for use in regard to other industries as well? I should have imagined, from the spirit of some of the things that the Chancellor said this morning, that this could not be the same Government which is giving large cash subsidies to so many other industries in the country. He talked to-day about the mistake of the indiscriminate use of Government aid and credit, but I should have thought there had been no Government in recent history which had been more indiscriminate in its use of credit or cash payments by way of subsidies for industry. If, however, there is in their minds, in these schemes of finance, something really efficacious, and if they have this vast body of credit at a time when we are so often reminded of the position by the use of the terms "idle men and idle money", why cannot this actual method be applied to far more industries? I should have thought he could have given a powerful argument to my hon. Friends who represent the workers' section of the mining industry of this country, that if this can be applied so well to the case of the railway companies, it does not seem to be too much to ask that something might be done in respect of other industries also. I am only using the argument of the right hon. Gentleman, and he must not take it that I am personally very strongly in favour of subsidising industry in this way.

There is another point that I should like to mention. The Chancellor of the Exchequer made some play with the fact that this work is to be carried out without a penny of cost to the country and the taxpayer. That depends, of course, whether he never has to meet anything in respect of contingent liabilities.


indicated assent.


That is point No. 1. We have had many promises of that kind before from right hon. Gentlemen on the Treasury Bench. Contingent liabilities might have to be met, and in that case there would be a cost to the taxpayer, but in view of the explanation which the right hon. Gentleman gave to my hon. Friend when he interpolated a question this morning, it is clear that if there is going to be a substantial gain on the cost of raising capital to the railway companies, if you capitalise the savings to the railway companies in annual credit, it must mean, I should think, in effect a gift to the railway companies of anything from £10,000,000 to £12,000,000 on a capitalised basis for the period of the loan.


indicated dissent.


I see the right hon. and learned Gentleman who so ably represents the Great Western Railway Company shaking his head. Perhaps he will give us the figure, because it will be very interesting to have it. At any rate, whatever the benefit in the equity is, it goes to the railway stockholders. Nevertheless, in the long run there will be added some millions to the railway companies' indebtedness to debenture holders, and I expect we shall hear the usual cry from some stockholders against capital expenditure until their dividends are paid. I think the whole position of the present capitalisation of the railway companies ought to have been examined and dealt with before another scheme of this kind was brought to this House. I think it is essential, in regard to this great public service, that as soon as may be the capital position of those companies should be put on a healthy basis. I have not seen any authentic figure recently of the total paid-up capital, but, judging from the figure as I knew it in 1929, and estimating roughly what have been the additional capital commitments of the companies since 1929, I should say that the four railway companies to-day have a commitment which cannot be much less—it may be more—than £1,250,000,000, but the market value to-day of that £1,250,000,000 surely cannot be very much above £700,000,000, even if it at the present time reaches that. I feel that when one is dealing with a matter of this kind, one ought to press, in the interests of the country and of the House, if further requests be made, that there should be a real overhaul and cutting out of the dead wood at present to be found in the capitalisation of the companies.

I turn now to the actual projects which are contained in the White Paper. I would agree at once with the Government in their submission to the House, in regard to the work which is to be financed by the method shown in the White Paper, that there is no doubt there is need of this work. I should say that it includes some arrears of work which are necessary for the maintenance of efficiency and for the beginning of a provision for national railway development. There have been a good many discussions in the post-war years on this question of national railway development, and I think it is perhaps pertinent to say at this point that a good deal of the controversy which arose in the early days after the war seems to be subsidising as far as this is concerned, and that there is a very general recognition that the railway companies are, and must continue to be, a very vital part of the transport service of the country. I am reminded of that comment by the Commissioners who sat on the Royal Commission on Transport, in paragraph 44 of their report, in which they said: Notwithstanding their recent competitors on the roads and in the air, railways hold their place, and so far as can be seen are indispensable for many purposes. Having defined those purposes, they said: It is clear that the maintenance of an efficient railway system is a national necessity. I admit that much of the work which is scheduled in this White Paper is necessary for maintaining and increasing that efficiency. I also want to submit on behalf of my hon. Friends here that the national necessity for that service will never be fully met until there is real national ownership. We do not, therefore, deny the need for any of the work in the Schedule, but we think it is a miscellaneous collection of schemes—


indicated assent.


I would like the House to note that the Chancellor agrees. It is a miscellaneous collection of schemes which appears to be related to no comprehensive plan within any of the companies' systems, with the possible exception of what is obviously a big instalment of electrification by the Southern Railway Company. I would describe them more as hand-to-mouth schemes, for which the Government are providing cheap money, but about which they seem to have little, if any, voice in calling the tune. From that point of view we can express regret.

The scheme before the House falls short of even beginning to meet the real national necessity, and I am going to submit that it falls short from three points of view. Even if the Government, against all sound argument, adhere to the doctrine of the maintenance of private control of this great and necessary national service, this scheme before the House falls short through lack of co-ordination. The scheme is four-sided; four companies are to be allowed to come separately for finance for their different schemes. Each one of the four sides in the scheme is incomplete and lacks cohesion. It was not a Socialist Government, but another Coalition, which I think at times called itself National, which in 1921 put 120 railway companies into four units. Now that the Government are once more in this strong Parliamentary position, why do they not take the opportunity of speeding up real co-ordination in the industry? Why give guarantees to four separate companies and perpetuate four different managements following, as appears from the Schedule, four different policies? I admit that in the case of the Southern Railway Company there is a certain amount of boldness in their programme. In the programme of the London Midland and Scottish Company there is no mention of any progress in that direction, although we admit that they have a certain amount of electrification already. The Great Western Railway Company seem to have very little urgent necessity for electrification. I shall be interested to hear later in the debate what their view is about that. I may describe the proposals of the London and North Eastern Railway Company as timid, although I admit that they have on occasion fought a heavy fight in the face of a particularly difficult financial situation. I do not want to be critical without stating that there other factors are operating.

The Government, with the complete power that they have, even if they do not give us, as we demand, the principle of public ownership, can at this moment move an enormous step forward towards a co-ordination on a national basis. If this were done, see how it would improve the service, particularly if there were a plan of electrification. We have one pretty widespread system in the area of the Southern Railway. I am glad to see, as a Member for Sheffield, that the London and North Eastern Railway are proposing to electrify a portion of the line from Sheffield to Manchester. As one who travels through the tunnel on the other side of Penistone, I shall be very glad to be rid of some of the smoke and grime. What is being done in order to co-ordinate this development Will the Government lay down a policy by which the companies will adopt the same uniform method of electrical operation of track and of controls? Are they thinking of the ultimate unification of the whole system and an easy change-over of through services of an electrical character throughout the country? If we are to have separate controls and policies, it will add to difficulties which might have been swept away altogether.

In the second place, the scheme fails to apprehend either the need or the opportunities for real advance at this time in the project of electrifying our railway services. I am not going to take the time of the House to describe the benefits of electrification, for I assume that all members know the substance of the Weir Committee's Report published, I think, in 1931. If I may repeat that phrase so often used about idle men and idle money, I want to say that there is no better time than the present for us to attack the real problem of the electrification of railway services in this country. The Weir Committee told us that the cost of such a project would be about £261,000,000—I am speaking from memory—and that it would show, if it were carried out, a yield of about 6 or 7 per cent. I understand that at that time certain of the companies' representatives were luke-warm towards it because they were looking for a figure of 10 per cent., if they were to be able to meet their general commitments. It would be a very great pity if at this time, when the Chancellor talks about the availability of wide and cheap credits, there were not a bigger constructive mind applied to this problem than he has indicated to us to-day.


What would be the position of the miners?


If you are going to co-ordinate the fuel, power and transport systems of the country, the miners will not be injured in the long run. There are in other aspects of economic and industrial life instances where compensation seems to be paid when required. It may be argued that we cannot have this large project. If that be suggested, hon. Members ought to read the speech delivered in the House last Friday by the Minister Without Portfolio, who argued strongly that we were well able to afford the new expenditure proposed on armaments which some quarters regard as amounting to £200,000,000. If the country can afford that expenditure on armaments, which are unproductive, the Government ought surely be able to pay some attention to this aspect of railway development.

The third point which, from our point of view, indicates that the scheme fails in the light of how a majority Government such as this Government ought to tackle the situation, is that it does not begin to deal with either national ownership or national co-ordination of all transport. I will take the question of national co-ordination first. There ought to be, in the light of modern necessities, a real co-ordination of all forms of transport—rail, road, air and water. The railway companies themselves have recognised that to a certain degree. They already have control of the rail and some air, they have control of the rail and some road transport, they have control of the rail and a good deal of inland water transport; but if this problem is to be tackled from the really national point of view things will have to be developed to a very great extent indeed.

I suggest that when we are voting this public credit it is an appropriate occasion for hon. Members on this side of the House who think with me to say that the urgent need of the country is a national transport board, able to deal with the whole of the transport services on a modern and scientific and effective basis. I shall leave it to my hon. Friends behind me to put detailed arguments on the principles of national ownership and the elimination of private profit. From the very moment the Railways Act of 1921 was passed the case for national ownership of this great transport service was practically given to the country, and in the light of the present proposals I submit that the country at large ought to recognise that there can be no finality or improvement in the policy in regard to this question until we have a national board of a public character which will direct a co-ordinating policy and will not be under the suspicion that it works for private profit, so that whatever is put into the common stock of the transport industry will inure to the public interest and not to private interests.

There are one or two small points to which I would refer before sitting down. When we are dealing with railway legislation the opportunity is usually taken of referring to grievances. In dealing with this Government Bill it may not be possible to press some of those private grievances, but in view of the fact that the procedure indicated by the Chancellor of the Exchequer means that each company must come forward with its own Bill I am bound to say that, in so far as particular grievances exist among the employés of the railways, the representatives of the railway companies must expect us to support whatever pressure is brought, when those Bills are introduced, to get the grievances of the workers remedied. I think the same argument may apply to other grievances that may be found. Further, I am sure that my hon. Friends in the London area will agree that the railway companies ought to be pressed to remember—I know they have the point in mind—the terrible overcrowding in the London area. The relief of the present state of affairs will depend not merely upon the provision of more rolling stock but on much wider plans for rebuilding and enlarging, especially increasing the length of platforms at suburban stations. I hope that point will be kept in mind.

In conclusion, I would say that if we do not vote against this Bill to-day it is because we recognise that, in the present Parliamentary situation, it would be foolish for us to hold up work which is useful and serviceable to the public—in the meantime. But it must not be taken that we accept the general view of the Government about the transport industry, and we shall not cease to press at all times that the only real solution of the problem will be a national board to control the whole of the transport systems, and for that to be on the basis of national ownership, with the elimination of private profit.

12.11 p.m.


I had not originally intended to take any part in the debates on this railway question, but my name has been so frequently and so prominently brought before the House that I am emboldened to say something on the Second reading of this Bill. I confess that I always feel somewhat diffident about addressing the House on a matter in which I may have a personal or official interest, but I do not see why I should feel unduly shy, because I have listened to many speeches in this House by officials of trade unions urging the case for their unions with which their fate and fortunes are bound up. The House always welcomes these interventions by people who know what they are talking about and who express the honest convictions which inhabit their breasts, and I hope that I may be entitled to equal fairness from the House if I speak on a matter with which I am personally and intimately acquainted.

I thank the right hon. Gentleman for Hillsborough (Mr. Alexander) for the expressions to which he gave vent with regard to the railway companies and the railway system as a whole in this country as compared with other countries. I am glad to have that commendation from him, and it encourages me to say what I have to say on other points in the Debate. But I do not intend to divagate to the great topic which he raised in his speech when he started to argue whether the railways ought to be nationalised. It is quite obvious that a four hours' debate would not be adequate to deal with that question. Nor do I wish to say anything about the extent to which the system which is adumbrated in this Bill should be extended to other industries. These questions will of necessity come up in the future, and each of those industries will be considered on its own merits if the proposal is put forward. Again, I do not intend to say anything about the co-ordination of the railway companies further than this, that I myself, speaking from the experience I have had, think it would be impossible to amalgamate the whole railway system under one management. I believe that we have reduced the units of management to as low a number as is possible if we are to provide efficiency, but I give the assurance that in every case where it is possible for the various railway companies to achieve co-operation, it is being done. A large amount of unnecessary competition has in recent times been eliminated. We are constantly going forward on the same lines, and I hope that in process of time we shall attain to the fullest possible co-operation while still maintaining the efficient management of the units which we command.

In regard to what the right hon. Member for Hillsborough said about electricity, it is assumed—I do not wish to say it in any critical spirit, but it is ignorantly assumed—that electricity in every case suits all forms of traffic. The real fact is that electrical traction is only economical for certain forms of traffic, and the case of the Southern Railway is a very prominent example. The case for the economy effected by electrical traction occurs where there is a regular load of traffic; in circumstances where traffic is spasmodic you cannot carry your passengers or goods by any more expensive system than by electricity. It is the case with the Great Western, as I am sure, with every other railway company, that the possibilities of electricity have been examined with the utmost sympathy in every case where it was thought this form of traction could be introduced. We have, I think reluctantly, been compelled to admit that with regard to great portions of our systems electricity would be a more expensive method of traction than is the present steam engine. I am sure that people who are associated with the railway industry appreciate that very well. Do not let us imagine that electrical traction is the only method of traction for the future. There is traction by the oil engine and by the steam engine. Under the electrical system you are tied to one particular form of traction, tied to a string as it were, in the operation of traffic. There is the independent coach propelled by fuel oil, the train propelled independently by means of a steam engine, and there is electrical traction. All of these methods are suitable in appropriate conditions, but do not let the House conclude that anyone is backward because he does not adopt electrical traction everywhere on his system.

Addressing myself to the immediate problem of this Bill I would like for a moment to present to the House the case in its essential elements without any extraneous features. Unemployment is the greatest curse in this country or in any other country. I am sure that everyone in this House is anxious that employment should be given wherever possible. Everyone has been seeking methods by which employment might be afforded. The railway companies are always advancing. They have schemes which for the present are awaiting better times. But in those better times employment will be better, and it is now that the problem of unemployment is pressing. Therefore, it is obvious that you must try to get such big undertakings as the railway companies to expedite their schemes and, if necessary, give some help so that employment can be afforded. The railway companies have not got the resources that they used to have. They can only introduce their schemes and put them into operation according to the circumstances of the time and the resources which are available. This state of things occurs at a time money is cheaper than it has ever been. The Government is in a position to borrow at a cheaper rate than we have known in our lifetime.

With regard to the comment of the right hon. Member for Hillsborough, to the effect that it is not the confidence created in this country by the Government that is responsible in any measure for cheap money, let me illustrate the real situation from the experience of our immediate neighbours. There is a glut of money in France just as here, but the rate of interest in France is enormously higher than that existing here. That is because of the confidence that there is in this country. So much is that so that even French financiers, who should be attracted by their own high rate of interest in France, send a very large amount of their money here where it will earn only a low rate of interest. Not only the people here but in every part of the world have confidence in the Government of this country and its financial stability. The Government is thus in a position to borrow cheaply and it seems a very obvious method of helping employment in the present situation for the Government to put its credit behind the railway companies so that they too can borrow at that cheap rate. It is compensating the railway companies for the fact that they have to anticipate expenditure which would only come on some years hence. It seems to me that no sensible person who is eager for increased employment could possibly take objection to such a method of creating it.


Are the railways taking steps to create more employment? The right hon. Gentleman says that great schemes of development are ahead. Will he say what the railway companies are doing to ensure that these schemes of development are not going to throw men out of work or de-grade them?


It is quite obvious, if the schemes are examined, that they will increase the amount of work available on the railways. For example one of the schemes is to build a new line in Cornwall. That is going to increase work. First of all there will be the laying down of a line. That will give work for making rails in South Wales. There will be signal boxes and stations to be built. There will be people looking after the permanent way continuously during the operation of the traffic, and undoubtedly permanent work will be created for railway men by a scheme of that kind.

It is only when we get the smear of politics applied to these projects that there are any difficulties at all. The right hon. Member for South Hackney (Mr. H. Morrison) introduced many elements of controversy when dealing with this matter the other night. He first of all described the railway companies as standing in a queue begging for money from the Government. Then he went on to say that it was because of the bankruptcy of private enterprise that the project was being accepted. Then he gave us a series of smug doctrinaire maxims torn from some tattered Socialist copybook, such as "No public assistance without public control." But something has happened to the right hon. Gentleman. We are all very glad to see him back in the House. We all know that he is destined for a distinguished career in this country. But, as I say, he has forgotten something. I am told that people occasionally meet with accidents which end in loss of memory. The accident which happened to the right hon. Gentleman in 1931 may be responsible for what he has forgotten. In fact he does not seem to remember that the policy of this Bill was not initiated by this Government, nor by the last Government, but was initiated by the Socialist Government of 1929. Let me remind the House of the facts!


Was it not initiated by the Trade Facilities Act?


The right hon. Member for South Hackney made quite clearly a distinction between a statutory body such as a railway company and an independent firm or company. This policy was initiated by the Socialist Government that took office in 1929. They initiated it because of pledges that they had too optimistically given in the Election that they would solve unemployment, and as soon as they were returned to office they at once began to see how unemployment was to be mitigated.

What did they do? The very first thing they did was to summon the railway companies in order to ask twin whether they could help. The first meeting of the companies with representatives of the Cabinet, which included the right hon. Gentleman who has just spoken and the right hon. Gentleman the Member for South Hackney, who was Minister of Transport and was in intimate touch with the railway companies, was held on 20th June, 1929, within a month of the Government taking office. Immediately the railway companies were asked, "How can you help us?" That was the circumstance which initiated the policy, not the railway companies going begging to the Government for money at all. It was initiated by the Government that was seeking the aid of private enterprise.


I cannot allow the statement to pass unchallenged that that was what initiated this policy. Surely the right hon. Gentleman will recall that the very last Bill passed by the Conservative Government prior to the election in May, 1929, was connected with a similar process between the Government and the London and North Eastern Railway Company for the building of new works at Grimsby. In the circumstances, how can the right hon. Gentleman say that the initiation of this policy is attributable to the Labour Government?


I say without question that this Bill follows strictly upon the Bill of the Labour Government. The situation was totally different with the individual instance of the London and North Eastern Railway Company. The initiation of this policy was with the Socialist Government, which took office in 1929. When it was proposed to the railway companies they naturally said that they were not prepared to borrow money at high rates and it was up to the Government of the day to do something in the way of relieving the rate of interest. The Government said that they might, in certain instances, pay the whole interest if the railways would take up a loan for the purpose of carrying out some of these works. I would beg the attention of the House to the Act which was passed in 1929 by the Socialist Government. This is what it says: The Treasury, with the concurrence of the appropriate Government Department, and after consultation with the said Committee"— that was a technical committee put up to supervise the scheme— may, on such terms and conditions as they think fit, and subject to the provisions of the section, make out of moneys to be provided by Parliament grants for the purpose of assisting persons carrying on any public utility undertaking in Great Britain in defraying, in whole or in part, during a period not exceeding 15 years from the raising of the loan, the interest payable on any loan to be raised for such purpose as is mentioned in subsection (1) of section 1 of this Act. It further states: The expression 'public utility undertaking' means an undertaking carried on … by any body of persons for providing means of transport or communication, gas, electricity, water, or power. There was no attempt on the part of the Government to stipulate that the railway companies should be reorganised on a basis of the London Passenger Transport Board, as the right hon. Gentleman the Member for South Hackney seemed to indicate the other night. The Act provided further: The Treasury, in considering whether a grant shall be made under this section, shall have regard to the extent to which the capital expenditure in question is calculated to promote employment in the United Kingdom and to the probability or not of the expenditure in question not being incurred in the near future if a grant in connection therewith is not made under this section. Those are precisely the same principles as are laid down in the present Bill, but there is this essential difference. Under the present Bill all that the Government do is to put their credit behind the railway companies and, as the right hon. Gentleman the Member for South Hackney admits they are not likely to tie called upon to pay a penny. From his intimate knowledge of the railway companies he knows that unless the whole country collapses the railway companies are not going to fall down upon the payment of interest upon a loan. What is taking place under the present measure is simply that the Government are putting their credit behind the railway companies to enable them to borrow more cheaply.

I do not think I can give to my right hon. Friend any computation of the full amount by which the railway companies will benefit, because the moneys will be borrowed at different times and no man can say in advance the extent of the savings; but suppose that there were a difference amounting to a margin of three quarters per cent or even of one per cent. That would not amount to very much over a period of 15 years on the amount to be guaranteed. The scheme of the Bill is to put the credit of the Government behind the railway companies, who are thus enabled to expedite work which they would not ordinarily be doing at present, in order that employment may be afforded when it is most necessary to do so. The Measure of the Socialist Government was something totally different. They gave up hard cash to the railway companies in order to enable the latter to meet the interest on the loan.


The railway companies were less friendly to us than they were to these people.


We were not less friendly and we have not shown ourselves less friendly. We worked in with the Socialist Government at that time. We were collaborators with them in order to enable them to fulfil the pledges which they had made at the general election.


The railway companies could not see their way to undertake the work without the Labour Government's offer. It was more difficult for you, for the Exchequer and for everybody at that time.


It is quite true, as the hon. Member says, that there were difficulties at that time, but nobody on that side of the House got up to recriminate the Socialist Government for what they were proposing to do in co-operation with the railway companies. Nobody said that the railway companies were people seeking eleemosynary aid. Nobody described them as people who were on the dole, as an hon. Member did the other day, or suggested that the means test ought to be applied to them. Private enterprise was invoked to help the State which was content to do so.

Let us see what the right bon. Gentleman the Member for South Hackney said about it. He took great credit in the House for the scheme which had been initiated. He never for a moment said that there ought to be Government control, or said that private enterprise had come begging to the Government, showing the bankruptcy of our capitalist system. On the contrary, he was delighted to have the help of the railway companies, and, in a speech that he made on the 4th November, 1930, he said proudly: Schemes of over £10,000,000 have been sanctioned in connection with the reconditioning of the main line railways. We have said to the railway companies, 'If you make proposals for really accelerating expenditure which will improve the efficiency of the undertakings and their usefulness to the public, we shall be pleased to assist you towards the interest which will be involved on that borrowed capital.' He took pride in that. Afterwards he said: I think it likely at the end of the year between 200,000 and 250,000 men may be directly and indirectly employed on schemes resulting from the policy of the present Government. That included, of course, electrical, gas and water schemes, and in none of these cases was it ever proposed by the Socialist Government that a Government representative should be imposed upon them. Later on he said: I invite the House to compare this record of achievement with the record of the last Government. It is a record with which we are not going to stop. The work will go on. As Lord Beaverbrook would say, we go marching on.' We have not finished; we go on with the good work."—[OFFICIAL REPORT, 4th November, 1930; cols. 729–733, Vol. 244.] Never have we had such a lyrical outburst since Moses sang his great song on the banks of the Red Sea. If I might parody the song to suit the modern Moses, I would do so thus: I sing the praise of the railway companies, and likewise of the gas and of the electric companies. Their song is in my heart, for they have proved my salvation. Now, however, the right hon. Gentleman, when the Government are proposing a scheme much less extreme than anything that the Socialist Government proposed, comes down with his diatribes about private enterprise and its failure, and about railway companies standing in a queue to receive eleemosynary aid. It seems to me that in these statements inconsistency could not go any further. The picture that he painted to the House could only come from a very distorted imagination, or at least from complete forgetfulness of the facts for which he was himself partly responsible.

I wish now to say a word on the suggestion that there was some collaboration between the Government and the railway companies in order to get up propaganda for the General Election. It is a most fantastic suggestion. So early as 28th February last, I addressed the annual meeting of the Great Western Railway Company, and, in reference to the schemes which the Socialist Government had initiated, I said this: In my view the carrying out of such works is one of the best ways by which unemployment can be relieved, and has fully justified the encouragement given by the Government to the railway companies to undertake them. They are strictly controlled and efficiently supervised; there is no wasteful expenditure; and the contribution by the Government of a portion of the interest on the capital expended is of meagre amount compared with the saving on unemployment benefit or public assistance. I do not know whether those words reached further than the audience I was addressing, but at any rate not long afterwards the project was mooted by the Government for adopting a plan with regard to the London passenger transport system of a similar character to that which we have before us to-day, and in the course of a speech by the Chancellor of the Exchequer in the month of June on the scheme which had been put forward with regard to the London Passenger Transport Board he said specifically that there were other projects of a similar character which the Government had in mind and which would be not less valuable to the country. That was the adumbration of an extension of the same principle to the main line railway companies.

In the month of July the Chancellor of the Exchequer summoned the representatives of the railway companies, and at that time we agreed upon the policy. But there was a vast amount of detail work to be carried out. The Chancellor of the Exchequer laid down very strict principles for application. He said that the operations in respect of which any measure of assistance could be given to the railway companies must be taken up quickly, and that they must relate to work that the railway companies would not ordinarily be putting in hand at the time, but which naturally and ordinarily would be deferred to a later period, and he said that it must be certain that they would be valuable to the country. He also said that each railway must incur a definite obligation, and he put the minimum of the amount in the case of each company at £5,000,000. Of course, plans had to be prepared, every detail had to be gone into, and the various schemes had to be submitted to officers of the Treasury. That went on steadily during the summer and autumn, and was completed, as it happened, at the time when the General Election took place.

Now the right hon. Gentleman the Member for South Hackney says that I ought, after the announcement of the General Election, to have stopped the whole of that work. There were two reasons why I should not have done that. In the first place, even if I had the power in one case, I was not responsible for the other railway companies; and, in the second place, the Bills which had to be brought in had to be lodged at a particular time if the whole winter Session was not to be lost, and, if the time had gone over the General Election, undoubtedly we should have lost several months. On the other hand, the object aimed at, of providing employment, was one of immediate moment. In the next place I should like to say that in my business relations I should never think of allowing the work I was carrying out for a company of which I was the head to be interrupted because of my own political position or that of any of my friends. It is this muddle that some people have in their minds with regard to the mixture of business and politics that is responsible for a great deal of the false notions that we have in the country. So far as I am concerned, I would never lend myself to anything of that kind.


Would it have interfered seriously with the work if the announcement of the project—and that is what is complained of—had been allowed to take place after the election instead of before?


Yes; when the matter had been brought to its fruition it was quite proper that the Chancellor of the Exchequer should inform the country of it.


May I say that the responsibility for the announcement was mine, and that I did not consult the chairmen of the railway companies before I made that announcement?


I think I have said enough to make it plain that this Bill has nothing in it that is outside the ordinary principles which have guided us in Parliament, and I have, as I was entitled to do, founded myself upon the precedent created by the Socialist Government in circumstances when they gave a much greater measure of assistance than is given in this Bill. I should like to say, finally, that this is no question of bankruptcy of private enterprise. It would be truer to say that private enterprise has come to the support of the State in a matter of national importance than to say that the State has come to the assistance of private enterprise. But let me put it not in either extreme form. Let me put it thus, that private enterprise and the State are engaging themselves in an operation that is mutually beneficial. The State gets the advantage of increasing employment, the railway companies get the advantage of borrowing at a cheap rate and the prosperity of the country is increased. It is one of those bargains which are the best of all where both people get advantages. If I may quote from Shakespeare, he describes the quality of mercy as being something which blesses him that gives and him that takes.

12.45 p.m.


The announcement of this project by the Government at the time of the Election appears to have touched the minds and hearts of the Labour party very deeply. It is considered by them that it has been of some political advantage to the Government and it appears to me that, if that is so, the Government are doing something which has the approval of the country, because if the country had not been told of this scheme it could not be said that it had been submitted to the country. Now it appears that the Labour party do not intend to oppose the Bill, and, of course, they are right in not opposing it, because they realise, it having been announced in detail by the Government, that it had the approval of the country at the election. I am sure the House will, in one sense, sympathise with the right hon. Gentleman who has just spoken, because one can quite understand the delicacy of his position. I think on the whole the House would welcome intervention in Debate by anyone who can give expert advice and guidance on questions such as this. After all, the general body of Members have very little knowledge of the administration and conduct of the business of the great railway companies. I only observe that, while it is very desirable that Members who are familiar with certain questions should address the House in order to give it guidance, it is a question whether those who are interested in a particular contract which is being discussed should exercise their vote one way or the other. That is a matter on which I myself should have considerable doubt, but it is not within my province to discuss it.

The right hon. Gentleman has, with his usual readiness of wit, given us a very enjoyable speech, and has scored many points against the right hon. Gentleman and the Labour party, but I should have liked him, had it been possible, to give us more of his expert knowledge in dealing with the business side of the Bill, the real principles underlying it and the details of it for the guidance of those, like myself, who frankly do not know very much about it. I was rather surprised at his wholesale condemnation of any proposal to electrify—


That was no wholesale condemnation of it. I only said that the exuberant enthusiasm of other people with regard to electrification requires checking.


I understood the right hon. Gentleman to say that railway electrification was somewhat of a lost cause.


I must have expressed myself very badly. I said there were traffics which were evidently suitable for electrification.


The right hon. Gentleman did not express himself badly, but I understood him badly. After all, we have had a Committee, with Lord Weir as chairman, and it cannot be said that Lord Weir is not an extremely competent man, possessing very sound judgment, who has been a trusted adviser to successive Governments, and is welcomed even by hon. Members above the Gangway when they are in power. We have had a very distinguished railway administrator and also a very distinguished accountant who could be trusted to examine the results of electrification to the stockholders and the public. I fear that, in so far as the railway stockholders have a voice in the matter, they will always be against electrification. The chairman of the company is there by virtue of being appointed and kept there by the railway stockholders. There are vested interests in the matter which will always stand in the way of electrification. We have had experience of other countries and a comparison has been made by the right hon. Gentleman of the efficiency, comfort and safety of our railway system as compared with that of other countries. Generally, I am in sympathy with what the right hon. Gentleman has said, but I think those who have travelled on the Continent and in America must have come to the conclusion that we are not as far ahead of other countries as we were in our railway administration and efficiency of transport and so on. I am very familiar with the railway system of which the right hon. Gentleman is the Chairman. It connects the West of England and South Wales with the greatest City in the Empire. I doubt very much whether anyone can honestly and sincerely say that real improvement and progress have been carried out in recent years on that system. There are many things which we can but deplore, and I should have liked the right hon. Gentleman to give us the benefit of his expert guidance on what is the programme of his own company. After all it only involves an expenditure of £1,000,000 or £1,500,000 per annum or thereabouts, which for an enormous organisation like the railways is a very small amount. I am connected with much smaller organisations and this programme of £1,000,000 or £1,500,000 expenditure in one year we should not consider a very big programme. We would have liked to see something greater instead of this short-sighted, narrow policy, which is not a long-view policy when attached to a great organisation like the railways. We would have liked to have more than this sum of £26,500,000 which, I submit, is much too small to spend on improving facilities for rail transport.

The right hon. Gentleman must know that in South Wales, particularly on branch lines, with the free competition between the railway and the road, there is no hope for the railways, because they have not improved their facilities. They have the same rolling-stock and the same time-table arrangements, and have introduced no time saving on branch railways as compared with 20, 30 or more years ago. While I commend what the Government are doing here, I would like to see a much greater sum involved, and I suspect the reason why there is not a greater sum is again the vested interest in the matter. The Government cannot tell the railway companies, "We will guarantee you credit not for £26,500,000 but to the extent of £200,000,000 for the next five years" because the directors of the railway companies would say, "We cannot accept that, because we could not spend it, and we dare not spend it, because we could not repay it." An expenditure of that kind, according to experts outside the railway companies, would be justified in bringing our railway transport up to date. They would have to repay it but they would say, "We cannot do so". Why? One reason is that they have already enormous charges which they have to meet. There, I suggest, is the vested interest involved which is always a stop to progress. That is the reason why this sum is as small as it is.

I have a considerable amount of sympathy with the discussion on the question of control. I would not for one moment go into a discussion on public ownership of railway companies, but, speaking for myself, and as a Liberal, I see no objection in principle to public ownership of railway transport or any other kind of transport. It is not inconsistent with any principle I have ever held. If I were satisfied that there would be more satisfactory administration by public ownership, I would gladly support it, but it is not a question that we could possibly decide to-day. I am in sympathy with what the right hon. Gentleman said about representation and control of the expenditure of this money which is to be obtained, with the guarantee of the Government, at a cheap rate. I raised this question on the debate the other night, and the Financial Secretary to the Treasury did not reply to the point I made.

What security is there that this money is to be spent to the best advantage? I know the Minister of Transport has a voice in the matter, and, in another clause in the Agreement, the Treasury. We get certain information. But I submit to the House, and I hope the Financial Secretary will note this point, that there should be in connection with this project an advisory board to see that the railway companies are spending the money to the best advantage. While it is not my suggestion at all that the railway companies should have representatives of the Government on the Board, I do venture to say that there should be something more than the Ministers' contacts, and that people who are familiar with work of this character should see to it that the money is well spent. We on these Benches are glad that the Government are showing some evidence that they are supporting schemes of national development, and the only complaint I have personally is that this scheme should be a much bigger scheme; but, notwithstanding that, I support it.

1.1 p.m.

Commander BOWER

This is only the second occasion on which I have had the pleasure of listening to the right hon. Member for Hillsborough (Mr. Alexander). When I heard his remarks about public ownership, private enterprise, and private profits I could not help wondering what his attitude will be when the great day comes when the party opposite get into power, and the choice has to be made between the particular form of State capitalism which they advocate and the co-operative commonwealth to which he has devoted his professional career. He suggested that by reason of this aid which is coming to the railway companies, the Government should be represented on the boards of the companies. I look at this from the point of view of the railway stockholders who have not been very much mentioned, and who, after all, are still the owners of the railways. I prefer to call them the rail owners. The average stockholder does not want a Government representative on the Board. We are delighted to have the right hon. Gentleman the Member for Hilihead (Sir R. Home) and the other unspecified Treasury official or Civil servant who was mentioned by the right hon. Gentleman opposite. People of that description on the boards of the railway companies are very welcome. When they give up their Government occupations and go into another sphere it shows that they have probably a capacity in excess of what one generally finds in Government Departments, and we can hardly blame them for going into more remunerative employment. Although the stockholders generally, especially the ordinary shareholders who have had so little return for their investments, object to capital expenditure, I cannot see how they can object to these proposals. They can only eventually be to their own benefit. We believe in private enterprise, and can see no reason why if the railway employés get their wages, the shareholder should not get his reward as well.

Let me take one point with regard to what the right hon. Gentleman said concerning cheap money and the credit which the Government are taking for that. The right hon. Gentleman the Member for Hillhead has dealt with that, but I hope somebody on the other side of the House will get up and say in what other countries money can be borrowed so cheaply. With regard to the capitalisation of the railways, the right hon. Gentleman mentioned the sum of £1,250,000. The actual figure is very close to that. The expenditure standing on their capital accounts is £1,778,000. A lower figure than that, £1,616,000, represents the capital receipts. If you go into the question of whether railways are overcapitalised or not, you must have regard to the fact that, at any rate, the tangible assets are considerably in excess of either of those two figures. The question of the capitalisation of these great statutory undertakings is a very complicated one, and I do not propose to go into it here, except to say that we cannot for a moment accept the view that the railways are necessarily over-capitalised and that the shareholders, particularly the ordinary shareholders, have to accept a drastic writing down, or, indeed, that the present level of the profits going to the shareholders should be pegged down at the present or any other level. When railway shares were at a premium the opposite view was taken by hon. Members opposite, and I feel it a duty to the shareholders in the railways to point that out.

Undoubtedly heavy expenses were incurred in the promotion of the early railways, but only a proportion of that now exists in the capital accounts, and this must really be accounted as the price paid by the railways for their charters. Against that you can set the fact that a great deal of expenditure on additions and improvements to the railways has been paid out of revenue and profits, and has not been capitalized, as it very well might have been. We have been told often enough, by those whom I may describe as the opponents of the rail owners, that Stock Exchange values reflect public opinion, and that we must write down to to-day's prices. We cannot agree with that. We do not think that the Stock Exchange values reflect the real or potential value of the assets of the companies.

I turn for a moment to one other point. In clause 16 of the agreement which is included in this Bill there occur these words: All plant machinery and materials required in connection with the said works shall so far as practicable be of United Kingdom origin and all manufactured articles shall (unless the Treasury shall otherwise agree in writing) be wholly manufactured in the United Kingdom (preference being given other things being equal to firms in the Special Areas as defined in the First Schedule to the Special Areas (Development and Improvement) Act, 1934). Representing as I do a Teeside constituency, experience has already shown that, in connection with the North London Development Scheme, that particular clause will operate, as we see it, very unfairly because you have firms—there is one particular one of which I am thinking which have for years supplied a very high percentage, indeed, I believe 100 per cent., of the track rails of the London Underground system—now being told that in respect of these new developments their future contracts will be in danger. They do not know where they are. Teeside, for some peculiar reason—I do not know why—is not included in the North Eastern Special Area. I believe that it is the view of all Teeside Members that it should be so included. Despite the great advantages which have come to the iron and steel industry, there is still widespread unemployment in Middlesbrough and district.

I am sorry the hon. Lady the Member for Jarrow (Miss Wilkinson) is not here to-day, because I have no doubt that we shall have Jarrow brought to the fore very much by her. I, personally, think that there has been a good deal too much Jarrow. I know Jarrow very well. I spent many months of my life in that place, and I know how hard hit it is, but there are very many other places which are not in scheduled distressed areas which are as hard, and harder, hit than Jarrow, and there are some in my constituency. Jarrow at least is a well laid-out town with certain amenities. There, at least, is the possibility of development of new industries, but you cannot take the "Olympic" and break her up in an iron-stone mining village on the edge of the Yorkshire moors where there is absolutely no chance of employment nor of bringing other industries there. Many of us on the North East Coast feel that Jarrow is becoming a sort of pet, and that it is getting more than its fair share of the attention which ought to be devoted to all the desolated areas.

I also wish to mention the question of a national transport board. I am convinced that within the next few years that will come—I am absolutely certain of it—and I shall welcome it, provided always that all in the railway industry, the management—

Mr. DEPUTY-SPEAKER (Captain Bourne)

I hardly think that that arises on the Second Reading of this Bill.

Commander BOWER

I will not pursue the matter. I was referring to observations which had been made by the hon. Member for Cardigan (Mr. D. Evans) and by another hon. Member opposite. Every Member of this House should welcome this Bill, and I think that the rather thin arguments and the faint praise from the other side show that really these proposals will receive the general support of everybody in the country, and that all—and when I say "all" I mean everybody, including the shareholders—will derive considerable benefit.

1.12 p.m.


As an hon. Member privileged to address this House for the first time, I have no doubt that I shall be afforded the traditional courtesy and indulgence in that respect, and if I do not pay the hon. and gallant Gentleman who preceded me the compliment due to him, I hope that he will not take it that any personal discourtesy is intended. I am pleased that the right hon. Gentleman the Chancellor of the Exchequer has rather cleared the atmosphere with regard to the date and the circumstances when these proposals were made known. My personal opinion is that it savours too much of political jobbery when we recognise that these discussions with the railway companies had been going on for some time. The right hon. Gentleman the Member for Hillhead (Sir R. Home) is reported to have said in a speech which he delivered at Plymouth in January of this year that he had great faith that the Government would support the railway companies in schemes of this character. It is doing the democratic institutions of this country a considerable dis-service to have projects of this description thrust upon the electorate in the throes of a General Election. It plays into the hands of the detractors of our democratic institutions, and, on the other hand, rather disheartens people who are very jealous of the preservation of their liberties.

The hon. and gallant Gentleman the Member for Cleveland (Commander Bower) spoke as a railway stockholder or for the railway stockholders, and I want to make some comments on behalf of the men who operate the railway services of this country. It has been inferred, if not stated, that these projects were responsible for many of the railway employés supporting the National Government in the last Election. I reject that imputation knowing the railway personnel as I do, and in view of my experience in active association with them. That puts their integrity at an extremely low level. The railwaymen and their families by a tremendous majority support the philosophy and policy advanced by representatives of the Labour party. In demonstration of that, may I say that the Union of which I am a member, the National Union of Railwaymen, has 1,200 of its members who are either councillors or aldermen of local authorities. In addition, they can claim, many chairmen of parish councils. Last year nine of our members were mayors of various municipalities. All these humble working men at the end of their period of office had added lustre to the well-founded local government system of this country. It would be ungracious on my part not to pay a tribute to the railway companies for having afforded to these men facilities for attending to their duties in connection with local government. I would, however, make the point that railway employés, in the main, are an influential and integral part of the Labour movement of this country, and they deeply resent the insinuations that have been made that, more or less, they were bribed by this £30,000,000 development scheme being dangled before their eyes during the Election.

The present occasion is a sad commentary upon the existing capitalist system, when we look at the extensive ramifications of the four railway companies. They own many thousands of miles of railway track, and are reputed—and I believe it to be correct—to be the largest owners of docks in this country. They are also the largest owners of restaurants and hotels in the world and they own practically the canal system of the country. They have money invested in airways and £10,000,000 of capital locked up in road transport. In view of these ramifications, when monopolistic authorities such as the railway companies cannot provide the necessary public services, they must be in a very parlous state. It is an outward and visible sign of the decay of the present system, whatever may be said by hon. Members opposite. If proof were needed, it is here provided that the time is propitious when transport should be organised and publicly controlled in this country.

The right hon. and learned Member for Hillhead said that the work contemplated would mean increased prosperity for the operatives of the railway services. Whoever replies for the Government I should like him to give me some assurance that these schemes, the efficacy of which I am not going to criticise, will not be to the detriment of the railway employés. Automatic signalling has in our experience been responsible for many hundreds of signal boxes and signalmen becoming redundant and displaced. More powerful locomotives envisage heavier and longer trains to be handled, and in the sum total it means fewer and fewer train crews. Incidentally, it means a heavier physical and mental strain on the men who will have to handle the trains. The electrification of the railway from Manchester to Sheffield, a distance of 41 miles, is mentioned, and that will diminish the personnel so far as that length of line is concerned. I hope that the Government will bring pressure to bear upon the companies so that men who are displaced as a result of the developments arising from these loans will be treated in a considerate manner and that their status will be adequately safeguarded.

I welcome the tribute that has been paid to the diligence, capacity and fairness with which the railwaymen of this country labour. I am speaking for the men who earn the dividends and who will have to earn the interest on these loans. It is not done without a great deal of human sacrifice. The casualty figures for last year are not generally known to the public. The toll of life and limb in the railway service is great. Last year 241 men were fatally injured and 14,484 were injured. The occupation of the railway employé is very onerous. I was rather intrigued by the argument adduced by one hon. Member in regard to speed. In this mechanised age the craze for speed is insatiable, but comfort and safety are essential and in providing it the railway employés have to face the rigours of the weather. While hon. Members and the general public are ensconced in their blankets at night the railway yards are busy and the great trains are thundering along the railway tracks. The tribute which has been paid this morning to the efficiency with which the railway system is worked will be appreciated by the men who operate the railways.

The right hon. Member for Hillsborough (Mr. Alexander) expressed the hope that the link between the companies and their employés would be strengthened rather than weakened as a result of the loans. It gives me no pleasure to say what I am about to say, and I hope that I shall not be misunderstood when I say that we have had a little domestic trouble with one of the companies concerned, the London Midland and Scottish, with whom normally we are on good terms. In a particular case the company have used their disciplinary machinery, but we are satisfied on the facts that an inquiry ought to take place in regard to the whole matter. That inquiry has been refused. I hope that commonsense and good will will prevail and the inquiry be granted, but if the officials concerned still adhere to their inflexible attitude and refuse the inquiry, then when the company come along under the provisions of this Bill for certain powers we shall be compelled to ask hon. Members on these Benches to support us in our opposition. I represent the railway operatives in what I have said and I hope my remarks will not be misunderstood but that they will act as an incentive to the railway officials to grant the inquiry and have the whole matter cleared up. I trust that the interrogations in my speech will elicit an answer from the Minister who replies for the Government. The answer, which will be awaited by the public and even more keenly by the men concerned, will, I hope, be satisfactory. I thank the House for having listened to me so patiently, and I hope that I have not unduly delayed the proceedings.

1.25 p.m.


It affords me great pleasure to congratulate the last speaker on his maiden speech. I can assure him that the House does not consider that he has been too long, and I am certain that I am voicing the general opinion when I say that we hope to have the pleasure of listening to him on future occasions. It is a great advantage to have representatives of different organisations and bodies in the House and I am sure that not only as a private Member but as a representative of the National Union of Railwaymen his interventions in our Debates will be welcomed. He has set himself a good example in the time he allowed himself, and I hope that I shall not exceed it on my part. I welcome the Bill heartily, because it is just the sort of thing which many of us have wanted to see done. It has been said that there is some inconsistency in the attitude of the Chancellor of the Exchequer having regard to what he has said about public works and the fact that he is now introducing this Bill. The test of all these matters is, does the scheme which is being put forward do something which will be of permanent and lasting value to the country? If it does, then let us go on and do it. No one can deny that the scheme which is supported by this Bill will be of a permanent and lasting value not only to the railway companies but to the country as a whole, and on those grounds I give it my most hearty support.

Indeed, I wish it had gone a little further. The hon. Member for Gorbals (Mr. Buchanan) yesterday raised the question that it does not do very much for us in Scotland. I could wish that more had been done north of the Border. Owing to physical conditions and the original poverty of the railways in Scotland, our system is not as efficient or as well planned as the railway systems in England. I should like to see more money spent north of the Border in straightening our tracks, and particularly in improving some of our stations. There are many railway stations in Scotland where the platforms are too short for modern requirements. Extreme inconvenience and annoyance are caused when long passenger trains have to be brought forward and stopped again in order to allow passengers to alight on the platform, and I should like to see some provision in the Schedule to deal with many of the railway stations north of the Border. The straightening out of the track is extremely expensive and not always possible, but there is no doubt that many of the curves on our railways need improvement in this respect. The Great Western Railway and the Southern Railway have already taken steps to deal with this. When you have a curve at the bottom of a steep bank it will be a great advantage to the railway company and the public to straighten it out, because the faster you can start against the bank the less coal you burn. If you have to slow up at the bottom of a steep bank you are going to burn a great deal more coal in getting up it. I should like to see some provision for this included in the Bill.

One word on electrification, It has been said that Lord Weir's Committee in their Report of 1931 recommended an extensive electrification of railways, and that has been brought forward to-day as a reason for carrying it out now. In the last four years there has been considerable development in other forms of traction besides electricity, and I do not want to see the railway companies rushed into any big schemes of electrification at the present moment. Once you have electrified your railway system it is permanent, you cannot go back, and just now we are seeing developments in Diesel engine traction and also in steam traction not only in this country but in other countries of the world. Some interesting experiments are being carried out in Diesel engine traction in the United States, and also some interesting experiments in steam locomotion in France. This is not the appropriate moment to go in for large, wholesale schemes of main line electrification. Let us electrify our railway systems where it will be an advantage, as in the case of suburban traffic, but not try to force upon railway companies any wholesale schemes of electrification until these other means of traction have been tried out.

There is one provision in the Schedule which I welcome, and that is the fact that the London Midland and Scottish Railway Company are at last going to rebuild Euston Station. I wish I had seen in the Schedule a statement that the North Eastern Railway were going to rebuild King's Cross. There is not a railway station in the world that is as bad as King's Cross, relatively speaking. The London and North Eastern Railway set a good example in so many cases, its trains are good, its locomotives are good, its track is good, and it is extremely punctual, and it seems a pity that it cannot do better in the matter of the railway station at King's Cross. I realise that it is a matter of cost, and I realise that also this Bill is not final. I hope, therefore, that we may see King's Cross Station dealt with on the same comprehensive basis as Euston. I hope that when the London Midland and Scottish Railway Company do rebuild Euston they will take the opportunity of putting up a railway station which will not only be a fine station, but one which will be worthy of the capital city which it will serve. We have far too few examples of railway stations with any architectural features about them; and this is a chance which will not recur. The only other station except Euston which is likely to be rebuilt is King's Cross, and, therefore, this is a golden opportunity to do something which will be a credit to the railway company and to the city of London. I should like to see something done which will compare with stations in America, because it is only in this respect that British railways fall behind their contemporaries in other parts of the world. I do not admit that there has been no progress in the railway systems of this country. They have undoubtedly opened up very much during the last three or four years after a long sleep, and I hope that one of the signs of increasing vitality on the part of our railways will be the erection of a station at Euston which will be really worthy of London.

1.33 p.m.


I have listened to the Debate with great interest and some enjoyment. I should like to thank the Chancellor of the Exchequer for clarifying the position with regard to the rate of interest and adjustments which will be made between the Treasury and the railway companies during the years in which the companies will have the benefit of the provisions of this Bill. The hon. and gallant Member for Cleveland (Commander Bower) wanted to know in what other countries money could be obtained so cheaply as in England, and tried to take credit to the Government for that state of affairs. May I inform the hon. and gallant Member that there are three other countries in which the national credit stands as good as it does in this country—Denmark, Norway, and Sweden. Their credit is very sound, and public works can be financed satisfactorily, and it so happens that a Socialist Government is in power. The Chancellor of the Exchequer informed us that this was a sort of instalment of planning for the future which the Government intended to develop. That being so, I think we are entitled to review the whole position on as wide a scale as possible. A policy involving millions of public money or public credit is a matter which the House should watch with the greatest care, and the right hon. Gentleman said there would be more proposals of this kind to follow—presumably proposals based on the same policy as that which is contained in this Bill.

I was interested in what the right hon. Gentleman the Member for Hillhead (Sir R. Horne) said, but I was rather amazed at one of his statements. He suggested that the unification of the railways of this country was impracticable, or that it could not be carried out with efficiency, and he seemed to flinch from the very idea of attempting it. This is not a very big country; it is well supplied with railways, and the task of unifying them into one concern is one of which no British subject should be afraid. I had the advantage of visiting Germany long before the War, and I found there, in 1912, that a much bigger railway system than ours had been unified and brought under public ownership and control and was working with extraordinary efficiency. It is amazing to find an eminent member of the Scottish race so reticent about the possibilities of his own achievement.

The first Minister of Transport, Sir Eric Geddes, although he worked on the principle of "little by little", in harmony with his name, was prepared to do big things. He designed and organised the Ministry of Transport so that it is quite ready to take over the railways, unify them and make them a great public service. I hope that what the right hon. Gentleman the Member for Hillhead has said, even though coming from an experienced railway administrator, will not be accepted as the last word in this respect. We do not want to take up too much time in discussing this aspect of the matter, but we on these Benches must say at once that we consider the project perfectly practicable. There is no scarcity of good men in this country who could carry it out. We had the privilege of hearing from the Prime Minister a very fine oration on the life and work of the late Lord Jellicoe who was described as having been the heart and soul, and brain of all our fleets scattered over the seven seas of the world. If one Admiral, as the supreme head of the Fleet, could control a mighty organisation of that character, it would be a relatively simple matter for an experienced railway administrator to control the railways of this country. Of course, he would be supported by an adequate board to advise him and help him to reach decisions on policy, but there is certainly no scarcity of men in this country who could undertake the day-to-day administration control and direction of the railways, most efficiently and satisfactorily.

In regard to this Bill, one has to consider the larger implications involved in what the Chancellor said. How is it that these great companies which have always been looked upon as reliable concerns for the investment of trustee or other moneys, are now being brought into the position of accepting public assistance. I am not going into the question of who asked first, or of how the approaches were made and how these arrangements were concluded. I do not think that matters at all. The fact is that whereas in the old bygone times and even in more recent times, since the grouping of the companies under the present arrangement, there are companies which have paid dividends of 6, 7, 7½ and 8 per cent. per annum on their ordinary stock. That is the record of the great company over which the right hon. Gentleman the Member for Hillhead presides. It must be surprising to those who follow these matters that nowadays the companies can no longer raise moneys on their own credit, but have to accept the help of this House to carry on their business. Without suggesting anything in the nature of a breakdown of the basis on which they are organised and conducted, we must assert that what is proposed in the Bill is a very valuable measure of assistance to them.

The former Labour Government to a certain extent give them assistance, and the question has been asked why the Labour Government did not do something different in 1929 to 1931. You, Mr. Speaker, will be fully aware of the fact that the Labour party at that time had not adequate power to carry out their own view of railway organisation. All they could do was to pass an interim measure so as to keep the industry going. They had no desire to see it diminished in efficiency, and it was found desirable to assist in the matter of relieving unemployment. That, as I say, was purely a temporary measure. We would have regarded this Bill as being on a similar plane, but for the statement of the Chancellor of the Exchequer that the Government have other measures of the same kind in contemplation, indicating that it is to be the general line of the Government's policy to assist private enterprise where it is in difficulties, as the railway companies certainly are in difficulties at the present moment. The proof of the value of this State aid was shown very clearly by the president of the London Midland and Scottish Railway, the largest of all the railways concerned, the other day. He said: I should like to deny in toto that any pressure was brought to bear upon us by the Government. I quite accept that statement. I am sure the companies did not need any pressure and that they will be very glad to take the money. He also said The conditions under which the money is proposed to be raised will certainly be much more favourable than the railways could secure on their present credit unaided. To that extent all the schemes financed out of this loan are made more profitable than they would otherwise have been. That is definite and shows the value of the gift which the State proposes to make to the railway companies. I submit that it is the duty of the House to see whether it is doing right in following this course of policy. If that view were taken we should have to say that this is merely a small piece of patchwork. It will not put the railways right. The suggestion that the railways could refund this money at 4 per cent., or perhaps on different terms as years go on, caused rather a shudder to those of us who represent organised railway labour because the provision of a 4 per cent. rate of interest nowadays is a very serious matter. We are being pressed to suspend or withhold claims for improvements that are overdue, because of the difficulty of providing interest for existing stock. If the capital is to be added to substantially and everything else left just as it is, with no reform of the railways at all, then those of us who represent labour will be faced with more difficulties in the future and there will be the risk of a breakdown very much more serious than any which have taken place in the past.

I, therefore, ask the Government to look at the matter seriously, and if the House accepts this Bill as a temporary and interim Measure, I implore them to give serious consideration to the whole question of railway policy. In our view a much bolder policy is necessary. A thorough reconstruction is required having regard to all modern factors—not one thing alone, not electrification alone, not the Diesel engine alone, not road transport alone. Everything has to be brought under review and considered in the light of modern needs and modern possibilities in transport. In our view, before the present companies are assisted, either with public credit or public money, they ought to put their own houses in order by cutting out all the unremunerative capital which they are trying to carry at present. The hon. and gallant Member for Cleveland pleaded for the shareholders. I am sorry he is not in his place now, because I would like to point out to him that the railway companies are to-day carrying capital from which no shareholder could reasonably expect any remuneration, because that capital has become unremunerative. Yet the railway workers are expected to earn, produce and carry on work sufficient to pay interest on capital that is obviously lying dead.

Since the invention of the internal combustion engine, the railways have been devalued. It has had a most revolutionary effect. That is how things go on under capitalism, one thing being put against another, the invention of some new thing replacing workers in an older concern; and that is what we object to. Here is a fine opportunity for the Government to take that state of affairs in hand and bring it under the control of this House in a way that will put it on a proper footing for the future. The business of the railway companies has declined tremendously, and their capital should be reduced in proportion to the decline in their business, because there is no chance whatever, as far as the railway workers in the industry can see, of this revenue coming back again, for it is impossible to pay interest on capital that is unremunerative.

In the last four or five years the total receipts of the companies, including their ancillary undertakings, their hotels, their steamships, their printing and engineering works, and so on, in addition to their carrying business, have diminished from £196,507,518 in 1930 to £171,989,712 in 1934, a diminution of £24,518,806 a year in gross revenue; and the number of employés has been similarly reduced. Necessarily; there has not been the work for them to do, so how can interest be paid in the face of a state of affairs like that? It is a case for a surgical operation. The number of employés has been reduced from 689,264 as recently as 1926, three years after these companies were formed, to 580,766 at the present time, a reduction of 108,498 employés. That is a tremendous diminution, pretty well 20 per cent., yet the remaining staffs are expected by the shareholders' associations and bodies of that kind somehow or other to produce enough earnings out of all this loss of business to provide interest on all this dead capital.

It simply cannot be done, and it is the duty of this House to see that that position is rectified before any new money is put up. That really ought to be done first, because that is fundamental. The capital they are at present carrying is enormous. Figures have been quoted, and they vary very slightly. I am taking mine from a Government publication of railway returns, which show that for these four companies the capital issued is £1,102,158,467, and this week's quotations on the Stock Exchange—and all these stocks and shares have gone through the market more or less continuously—show that the present value, this week, is only £834,460,280, a difference in the actual value of the business and the capital with which it is loaded, or overloaded, of 2267,698,187. When we are negotiating, trying to get cuts removed, rectification of anomalies and of differences in superannuation arrangements and things like that, we are told continually by the companies' officers, "We cannot do anything because we have about £300,000,000 of capital that gets no remuneration whatever." If that position is to stand, we can never turn a wheel, we cannot make a spot of improvement anywhere if we are to wait until that capital can earn interest.

This sort of thing is not in any way uncommon. Changes take place in other industries, and reconstruction of the business and rearrangement of the capital are provided for and are followed usually by very good results. It has been done in the railway world in the neighbouring country of Ireland. The Irish Free State took steps to reduce their capital in the railways, which were unified into one concern. I know it is a smaller country, with less money and labour involved, but they cut their capital down, capital which had diminished in value, for the same reasons as in this country, from £25,701,788 to £11,827,321, which meant £13,874,467 of capital that could not be used.


What dividend were they paying?


The improvement since that operation took place is such that they are now on the trustee list again. Since that rearrangement of capital, the feeling is much better, the revised stocks stand much better on the Exchange, the prospects have improved enormously and the stocks are as I say now back on the trustee list. In the case of the British companies, they have their capital arranged in a very queer way. The bulk of it is in fixed-charge capital, namely, debentures, guaranteed stock at guaranteed fixed rates of interest, or preference stock, which must have its interest before the ordinary shareholders come in at all. I gave the huge figure of £1,100,000,000 as total capital, out of which £275,000,000 is in ordinary shares, and it is they who have to go without dividends. The workers cannot help that. The way in which this capital is arranged ensures that the debenture and preference and guaranteed stock people get away with anything from three to five per cent., and the ordinary shareholder has nothing left for him, but that is not our fault. Surely it is the task of the railway companies to revise that arrangement themselves, but they cannot do it, because they cannot get agreement among themselves to do that sort of thing. It can only be done through action by this House, just as was done in the case of Ireland.

Incidentally, I may say that out of the money which is put up for services rendered—and they are certainly very efficient and satisfactory—3s. 4d. in the £ goes to the shareholders of various kinds. Out of every £1 paid for the purchase of tickets or the payment of carriage and other services which you are taking from the railway companies, 3s. 4d. goes to the stockholders, and surely it is a matter of successful arrangement to see it less unfairly distributed, and with such a yield as that the business ought not to be in the state described so often—always, when we meet the companies on labour questions—a statement that has brought the companies to this House to accept what is practically public assistance. The policy of the Government should certainly go very much further than interim, temporary measures of this kind and giving assistance of this character to enable the railway companies to carry out their urgent work. It certainly is the case that the work is urgent. They would do a great deal more if they had the money with which to do it, but they cannot raise the money on their own credit to carry out those works.

It is true that a large number of railway stations need rebuilding. Euston is the only one mentioned, but my mind turns at once to London Bridge. I very nearly lived in Kent once, but when I found that I should have to come to London Bridge every morning, to that appallingly dismal place, I changed my mind and sought a better place. I found Waterloo, which would take me into Surrey, with a tolerable station to arrive at in the morning, so that I could feel fairly cheerful when I went to work every day. London Bridge would depress the greatest optimist in the world. Then there is Liverpool Street Station. Millions of our working people have to go into Liverpool Street every morning—a ghastly place to go into. At night, if you are much pushed for time and have to find your train in some far corner of that station, it is a terrible struggle. The place is altogether out of date and ought to be rebuilt. Most of our terminal stations are such that train services are delayed through no fault of the companies. Now that the services have increased, the bottle-neck entrances mean that incoming trains have to wait until outgoing trains leave. I am delayed in that way in almost every journey I take. We cannot hope for these improvements to come from the companies in their present position, and reforms in the system are a matter for the House to take into consideration.

The great necessity is the unification of the four companies. They are in a state of chaos. It is all very well for the right hon. Gentleman the Member for Hillhead to talk about co-operation. They are trying to co-operate, but they cannot get it going. The difficulties of separate railway companies trying to unify themselves and do their business unitedly are insuperable. They had all their difficulties when the House gave them the power to amalgamate. That was in 1923, but ten years afterwards they secured from the Minister of Transport powers to go a step further and to try the pooling of their resources and business as between point and point where traffic was competitive. Although they have been working on that for three years, they cannot get it through. That is perhaps the sort of case that the right hon. Gentleman had in mind when he spoke of the difficulties of unifying, but the reason it is difficult is that it is not a thoroughgoing unification. The present is only halfhearted unification. Where you get all the difficulties of separate undertakings, jealous of one another, having different views of things, and unable to reach agreement on details, they cannot carry out their pooling scheme. We on the workers side suffer very seriously, because if a company wants to come out of a given town where it has been living in competition, in a town like Lincoln or Cambridge, which is not too big for the pooling to be tried, it means that the company which is in the ascendant takes over the whole of the business and the men employed by the other company have to be pulled up by the roots and pushed miles away to some other town to meet all the difficulties of the housing problem, and the other problems that the workers have.


Will the hon. Gentleman say how that would be avoided in the case of amalgamation?


Yes, certainly.


I have been thinking that the hon. Member was getting a little wide of the Bill, and I do not think he ought to pursue that point in further detail.


I hope that you will allow me to do so, Mr. Deputy-Speaker.


I think that it ought to be debated on some future date.


Before you arrived in the Chair, Mr. Speaker allowed us to survey all these points. It is a little unfortunate if you are going to restrict us. Unification is necessary, but it is not enough. Railway business must be co-ordinated with that of road and water transport. Aerial transport is already, to some extent, in the hands of the railway companies. The worst factor in railway business is with regard to the railway freight rates book. This has been built up through 100 years of most careful calculation and adjustment on principles laid down in this House and carried through by the Railway and Canal Commission, and more recently by the Railway Rates Tribunal. The rates, which are carefully fixed on the fairest possible basis, are being ripped up by the new road transport, which is uncontrolled and ruination to the freight side of the railway business.

The railways, by their additional enterprise, are getting more passenger traffic, but they are not getting the freight traffic, which was the real backbone of the business in the past. We have this ruinous competition on the roads, and it can only be described as competitive anarchy. We want sensible control of these things. We do not want the public to be deprived of motor traction; that would be a stupid view to take. Every new invention should be utilised to the full benefit of the community, but unless we have a single control over the railways, the road hauliers, inland navigation companies and the coastal steamboat companies, who, since the ruin of overseas traffic, have competed very acutely for railway traffic, often at terribly ruinous rates, there will be general ruination.

What is being done for the companies in this Bill will not cure anything at all. If our own policy were adopted—and I am submitting it as an alternative to any further measures of this kind—a trader, say, in Birmingham would be able to have a little pocket-book which would have in it extracted rates for all the principal places in which he did business, showing what the rate would be for any given commodity by rail, road or water, and for such portions as were suitable to go by air. The trader would know where he was and could make a quotation in an hour. Under present conditions, he does not know at what rate he can get his goods carried. There is the railway rate, but it can be pulled down. He gets into contact with the road hauliers and one haulier quotes one rate and one another; then he returns to the railway companies, and in the process they cut one another's rates and get them down to an uneconomic basis. That is what is happening now and that is why the railway business has gone down, why their property is de-valuating, and why the workers cannot earn what they demand. We are not alone in the views we hold in this matter. There are Members of the Government whose minds, presumably, are unchanged—at least, they assure us they are—whose minds run in the direction of the view I have been advocating. The Secretary of State for the Colonies wrote a book in 1920 in which he said: Transport must, of course, be nationally controlled. It is as obvious as that private enterprise should not run the roads of the country. The community and not private companies ought to own the canals and the railways and the shipping upon which this country depends so largely. The Government would then have its hand upon all freights and the public would gain enormously in cheaper commodities of all kinds. Private commercial undertakings would benefit in the same ratio. Following that, the right hon. Gentleman wrote another book entitled, "The Red Light on the Railways." The book was dedicated To that gallant band of railway pen of all grades to whose confidence and help I owe all"— a generous tribute to those who gave the right hon. Gentleman his foundation in public life. In that book he wrote: I, of course, believe that the railways should be put in the entire charge of the State, that the people, the members of the State, should own them, that they should not be run alone for the building up of profits, that they should not necessarily, indeed, be run for profit at all, but that they should be run for the convenience of the community. In another chapter he puts it more tersely when he says, I am an advocate of nationalisation. I consider it is the best method of managing the railways both for the benefit of the public and of the workers. I suggest that the right hon. Gentleman was never more sound in his mind than when he wrote those words. He tried to give effect to them by introducing a Bill on 22nd March, 1921, in which full provision was made for carrying out a scheme of unification under national ownership and control. I am sorry the right hon. Member for Epping (Mr. Churchill) is not here to-day. In one great General Election, in 1918, he secured a good many votes by making this announcement at Dundee: The Government's policy"— that was the Coalition Government's— is the nationalisation of the railways. That great step it has at last been decided to take. We have not decided on the nationalisation of shipping, because that is a complex question more open to dispute. That shows that the minds of many people in eminent realms of legislation have run in the same channels as our own, and I think some of them now deplore that they never gave effect to their views. The right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) was associated with the right hon. Member for Epping, I think, in that declaration. The terribly-attenuated state of the Liberal party to-day arises from the fact that they never did anything at that time. They lived, and are dying, on laissez faire. They never tried to reconstruct anything. I hope that the present Government, who claim to have more constructive and more open minds, and to be anxious to advance the progress of the country, will not be negative about this matter, but will be bold in the intervening period before they introduce another Bill. I would commend to their consideration the phenomenal success of the Measure which they completed, but which the Labour Government initiated, which set up the London Passenger Transport Board. That Board has reorganised London transport so as to bring the whole of the traffic services, previously in the hands of 92 companies into one concern, under the control of seven competent men, specially chosen. They have dispensed with pretty well 1,000 directors associated with those 92 undertakings, but the business is being run quite efficiently by the manager, in company with the Chairman, Lord Ashfield, and others who assist on that Board.


Do you travel?


I was born in London and live in London, and I use the services.


Terrible services.


The services are substantially better than they were before the amalgamations took place, and my hon. Friend will be glad to know that not one individual has been discharged as the result of the amalgamation. On the contrary, more people are employed. No vehicles have been broken up and scrapped because they were found to be redundant on any given route, but have been transferred to other routes, giving the public a better service where it was needed. As a resident in London, and one who uses the services every day, I say the services have improved very appreciably. On the labour side, we get on very much better with the Transport Board than we are able to do with the railway companies—I do not want to blame them unduly, because I know their difficulties. The Transport Board were able to restore the whole of the cuts in the pay of their employés in the railway branch of the undertaking as from 1st June last year, whereas the main line railway companies are still keeping cuts in operation, and we are in negotiation with them at the present time, faced with the difficulties I have described.

From the labour point of view everything is appreciably better. Many of the smaller omnibus undertakings were treating their people just as Capitalism does when it can get young persons available for sweating treatment. They had young people from 16 to 18 years of age acting as omnibus conductors. When they reached the age of 20 or so they were discharged and replaced by some more younger ones. Since the undertakings have come under public ownership and control all that has stopped; mature people are retained in the service and there is nine of this "blind alley" treatment of young folks. Where the rates of pay were below the standard of the London County Council trams and the London General Omnibus road vehicles they are being levelled up to an equality, so that all the employés of the Transport Board feel that they are being treated alike. From the point of view of labour that is an immeasurable improvement. Hon. Members opposite will appreciate, too, that the interests of investors are very much more safely covered by the Transport Board. We make no complaint about people being concerned to see that the interests of persons, say, in the position of trustees should not be treated cavalierly or lightly. Many of us here are trustees for big organisations. People in that position must know that they cannot do better, if they want something absolutely safe, than to get hold of some of the London Passenger Transport stock. If they buy the lowest line of that stock, the junior stock, the "C" stock—


The hon. Member is quite entitled to refer to the London Passenger Transport Board in contrast with that of the railways, but he really cannot go into a panegyric of their different stocks.


I was using that by way of illustration to show how well public ownership works for the employés, the public and investors. Finally, I have something to say for hon. Members opposite to take to heart. They are very much concerned about the national defence. It is proposed to spend tremendous sums on strengthening the national defences. I suggest that if ever our country were in danger of invasion, or if we were ever engaged in war again, it would be a tremendous advantage to the State to have under its own hand and control the whole of the transport facilities of the country. That was recognised as far back as 1871, immediately after the Franco-Prussian war, when a Bill was passed to give the State the right to take over the railways. But to take over the railways would not be enough now, we should want the other means of transport too.


We really must keep to the Bill.


I was only endeavouring to get the House to appreciate the value of thinking along these lines, and showing how much more satisfactory it would be to work on those lines in future than to follow the hotch-potch, patchwork policy represented by Bills of this character.

2.13 p.m.


The right hon. Member for Hillsborough (Mr. A. V. Alexander) criticised this Bill on the ground that it was providing for four different schemes when it might have dealt with one only, and from that he evolved a theory of what he called "co-ordination of control," which was developed in far greater detail by the hon. Member for Bristol South (Mr. Walkden). I think that both those hon. Members—and possibly, also, the Secretary of State for the Colonies and the right hon. Member for Epping (Mr. Churchill), who were quoted, before they had received the benefits of advice from the Tory benches, or had "seen the light", so to speak—are somewhat mixed in their minds as to the difference between control and administration. Many of us on these benches believe in a greater measure of co-ordination in administration, that is to say, as far as Government Departments are concerned, administration of the laws passed by legislation. We believe that a Ministry of Communications and Transport, dealing with the roads, air, coastal shipping, sea transport, canals and railways, would be much more efficient than is the administration, as conducted at the present moment, in a sort of haphazard manner, by a number of different concerns; but when we come to the question of control it is a very different matter. Surely the hon. Member for Bristol South would not for a moment imagine that any Minister of the Crown, any Government Department would be so powerful or omnipotent as to be able to control the railways, the roads, including all road transport companies, the canals, coastal shipping and the whole of the internal airways from one office?


I must again ask hon. Members to keep to the Bill.


I was only trying to show that the reason why the railways are in need of further funds is that they are themselves appreciative of the difficulty of administration among themselves. But I will not go into that at greater length. The right hon. Member for Hillsborough suggested also that the Chancellor of the Exchequer had in a moment seen this blinding flash, that the scales had fallen from his eyes, perhaps at some time during the General Election, and that the Chancellor realised that the salvation of the Government depended not only upon faith and hope but also on good works. But the right hon. Member for Hillhead made a statement and I must say that it did not astonish me, for it would have been amazing to me if any Government Department or railway company could have moved so quickly as to produce a scheme within the three weeks between the General Election and the present time. The right hon. Member for Hillhead showed quite clearly that this matter has been under discussion since 1929, and an hon. Member opposite claimed, with regard to the North Eastern Railway Company, that it was under discussion in 1928. The truth of the matter would appear to be that it is not the railways who have come to the Government for assistance but the Government who have gone to the railways and asked them to find employment.


I suppose that explains why the Chancellor of the Exchequer said this morning that he had nothing else in his mind at the moment?


Nothing else but this particular scheme—no. But the Chancellor of the Exchequer was thinking of the future, and I am talking of the past, when a Labour Government, and, as an hon. Member suggested, the Conservative Government before that, went to the railway companies and asked them if they could provide schemes of development which would alleviate unemployment. That appears to be the case. It looks as though the Government went to the railways and asked each railway to formulate a scheme. Thank Heaven they did not call it a five-years plan. But the railways did formulate a scheme and here are the particulars of it. I confess that in common with other hon. Members I am not enormously impressed by the scheme. It looks to me as though the railways had gone to their administrations and had asked them what could be done in order to meet the Government's requirements, and at the same time to take advantage of cheap credit, and that the administrations had gone into the matter, and some of them considered that by moving forward these enormous development plans, by pushing them on, they could provide a scheme on which money could be spent. I agree with other hon. Members who have spoken I would like to see something a little bit more spectacular.

But this question affects the whole argument for co-ordination raised by the hon. Member for Cardigan (Mr. D. Evans). That hon. Member came to the House with a speech obviously intended to urge the necessity for electrification, particularly in the valleys of South Wales. But the right hon. Member for Hillhead made his speech and took the wind out of the hon. Member's argument by showing that electrification could pay only under certain conditions. The hon. Member for Cardigan went on with his speech nevertheless. Electrification pays only where there is a rapid and dense passage of traffic. In the valleys of South Wales the main part of the traffic is in minerals, coal and so forth. There is not a sufficient volume of passenger traffic, compared with the mineral traffic, to make electricity pay. That is the difficulty. All these different forms of transport have come upon us in the last few years. How could one genius in this House, superintending and controlling the whole transport arrangements, be asked to decide which form of transport, involving enormous capital outlay, would be the best to adopt?


That person would be detached from this House. He would not be a Member of this House. His would be a full-time job at the head of a Board.


But the hon. Member suggested that control should be in the hands of this House, that the public should have control of their own services. That could be done, not through a dictator outside this House, but through a dictator in this House, the Minister of Transport here.


The supreme control would be here, but the day-to-day operations would be managed away from here, as in the case of the British Broadcasting Corporation.


I see the point of the hon. Member, but I think it would be most dangerous to ask even the best man inside or outside this House to make decisions of that kind. Indeed, I go further and say that the actual running of the railways has been prejudiced, in the conditions in which they find themselves to-day, largely because Parliament stepped in and forced them to amalgamate into four large units before the time was really ripe. One of them, represented by the right hon. Member for Hillhead, had less difficulty because it absorbed only a number of small units, but three of them are still suffering from indigestion and have not yet assimilated the other units. That is righting itself gradually, but actually the railway companies were pushed too far and too quickly. Had the amalgamated units been smaller there would not have been the great upset caused by recapitalisation schemes, or the turning out of hundreds of men and the replacing of thousands with a different type of mechanic. Had the units been smaller we should have seen excellent examples of the Diesel engine, the Diesel electric engine and the steam turbine engine, as well as electrification, and we should already have had from that gradual development larger and larger amalgamations, which in time would have spread. That would have been a much safer and more normal method of development.

There is one other question I must raise. Nowhere in this scheme do I see any suggestion for the construction of aerodromes on railways or the construction of stations on aerodromes. The railways have at last seen the wisdom of interesting themselves in aircraft. Indeed, most thinking members of railway boards and many outside are convinced that a great future for transport in this country lies in the co-operation of railways and aircraft. The roads are becoming more congested every day. Thousands of new motor-cars and lorries are being produced every month and the road congestion will get worse as time goes on. On the other hand aircraft when allied to railway transport have a very distinct use for conveyance of passengers and goods if aerodromes are on the railways and are in the centre of the towns. In the wisdom of the old days in nearly all cases the railway stations were built somewhere near the centres of the towns or where they could be easily reached. I see nothing in this scheme mentioning anything of that kind. On my way to London the other day I saw a new aerodrome by the main line of the Great Western Railway near Maidenhead, and I thought: "At last one railway has seen fit to take up air transport and run goods straight into London along the main line." I made enquiries, and I found that a certain firm had built the aerodrome with the assistance of a Government subsidy for the training of pilots, and that it had nothing to do with civilian transport. Nobody anywhere is moving in the matter. The railways have already embarked on air transport, and persuasion should be brought to bear upon them by some Government Department, if the Air Ministry refuses to act, to induce them to cater for this all-important service, which has affected their shareholders and was one of the main hopes of their shareholders when they saw that the railways were interesting themselves in air transport.

2.26 p.m.


My colleagues on this Bench have already divided on this subject, and the more I have heard as I have listened to the arguments that have been presented in regard to this scheme, the more convinced I have become that we were Tight in challenging the scheme by a Division. We do not propose to divide on the Second Reading to-day because we recognise that our numbers do not entitle us repeatedly to divide. If the Labour Opposition go into the Lobby, however, we shall certainly welcome the opportunity of recording our protest against the scheme.

Two very sound arguments, which would justify a Division, have been presented by representatives of railway workers this afternoon, and the logical conclusion from those speeches is definite opposition in the Lobby to the Government's proposal. I was impressed by the point which was made that the expenditure of the money would result in many railway employés becoming redundant, and that there was no provision in the scheme for making sure that those employés would be compensated. Schemes have been previously before the House embodying the principle of compensation. When the Central Electricity Board was set up, compensation was provided for any workers who would be displaced because of the electricity scheme. Millions of pounds are now to be spent in carrying through what is, in fact, a certain amount of rationalisation on the railways, and one of the inevitable results will be unemployment among railway workers after the schemes are in operation. Those workers should have protection.

I am interested in the finance of this proposal. We have heard much about the efficiency of our railway companies and of our railway systems being the best in the world. It is so wonderful—and all the rest of it. This railway system, which is the marvel of the world, has nevertheless to come to the House of Commons to get the advantage of the Government's backing in order to get cheaper credit to carry through these operations. I cannot see how hon. Members are able to resolve the contradiction which is inherent in that position.

May be I am of a suspicious nature, but I think that when the railway companies are called on afterwards to repay their loan, they will find very many reasons why they should not do so. They came asking bluntly for £26,500,000, and they were told that there would be a public outcry about it. The thing is now being done in this roundabout way, which is on all fours with the subsidy policy of this Government. Subsidies have been handed out in one direction after another. The one set of people whom the Government seem to be unwilling to assist is the unemployed. There is a means test for the unemployed. It is a terrible thing for an unemployed man to get too much money, but railway companies, shipping companies, farmers and other sections of the community receive subsidies. If our numbers were larger we should go into the Lobby again to protest against this robbery of public funds by the Government on behalf of private enterprise.

2.33 p.m.


I should like to begin by congratulating the Chancellor of the Exchequer on making it possible for the Bill to be introduced. I do not know who thought of the ideas contained in the Agreement; I do not know who first approached whom about Government help, but I know that without the willing and active co-operation of the present Chancellor of the Exchequer the Bill could not be before us this afternoon.

We have not had the advantage of the presence of the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) in the Debate to-day, and I believe all quarters of the House feel it is unfortunate that he is not here. He was present during the Committee stage of the Financial Resolution and he started a hare on that occasion which has since been hunted with great energy and varying success by many of his friends. It was that the Bill shows that the system of Capitalism is breaking down, so far as the railways are concerned, and that to get out of our troubles we need a dose of Socialism. I will not pursue that now. I would only observe that Socialism is a very varying term. If we listen to theoretical expositions by Labour Members in this House, Socialism often sounds exceedingly attractive, but when we listen to Labour Members expounding it at street corners in the constituencies, the idealism seems somehow to have gone out of it and all that is left is an agglomeration of envy, hatred and all uncharitableness.

I am not interested this afternoon in the academic question of what particular sphere of politics this Bill best fits in with; I am concerned with its practical application, with what it is going to do, and how it comes about that the Bill can be introduced at all. With regard to what it is going to do, I do not think anyone can deny that the Bill will have four useful effects. It will increase the efficiency of the railway systems; it will add to the comfort and convenience of the travelling public; it will provide work in industries that need it; and it will find employment for men who are at present seeking it in vain. These four practical benefits must arise from the application of the Bill. As to what makes the scheme possible, it seems to me that it ultimately depends upon the co-operation of two forces which are acting together, and which it is not altogether easy to disentangle. One is the abundance of capital awaiting investment, and the other is the credit standing of the British Treasury. I think there is a certain amount of confusion as between these two forces in the minds of some hon. Members of this House.

Take the first—the abundant supply of capital awaiting investment. That is a convenient thing in many ways, but, as a symptom in the body politic, I personally do not regard it as a very good thing. It arises largely because more capital is not needed in trade and industry, and because of the virtual cessation of foreign lending, and I do not think that a close study of these questions will lead many of us to agree that either of these cause, is in itself a good thing. At the same time, as regards the proposal that is before us this afternoon, obviously the Government are wise in taking advantage of the fact that this abundance of capital exists. With regard to the other force, the credit of the British Treasury, that is in some cases a more subtle and perhaps less understood question. I do not think the right hon. Member for Hillsborough (Mr. Alexander), in his speech this afternoon, quite appreciated the forces that go to increase or diminish the credit of a country at a given moment. British credit to-day stands exceedingly high, and one of the principal reasons why it stands so high is the utter and complete defeat of the Labour party at the last election. Hon. Members opposite have this comforting reflection with which they can console themselves, that every one of them who won a seat in this House to that extent diminished and damaged the credit of this country, and every one of their candidates who failed to win a seat to that extent increased and strengthened the credit of this country. That may not be a very comforting reflection in some ways—


Vote for the Tories and low rates of interest.


—but it happens to be not merely true but so obviously true that hon. Members opposite must realise it for themselves. The Chancellor of the Exchequer said he felt that the possible field for schemes of the kind outlined in this Bill was very restricted. I think he said that he had not at the moment another similar scheme in his mind at all. But he did not altogether close the door. He said that he would be willing to consider any schemes which he regarded as being on all fours with this, and I think he gave the impression to those of us who heard him that he would be willing to give favourable and sympathetic consideration to any such proposal. I would conclude by saying that I regard this Bill as so useful a contribution to the relief of our present troubles that I, for one, hope very much that it will be found possible to lay before the Chancellor of the Exchequer other similar schemes which can be treated in a similar manner.

2.41. p.m.


The number and nature of the speeches in this Debate denote the great interest that is taken in the Bill, and I want to join with Members on this side of the House in endeavouring to put a few points of criticism, and to say that it is only the hope of being able to introduce something in the nature of an Amendment later on that prevents some of us, at least, from dividing the House this afternoon.

I am one of those who believe that the State has no right, either by direct subsidy or by guarantee of interest or loan, to make any contribution to any competitive capitalistic system, and, in spite of what has been said, this Bill when it becomes an Act will give a subsidy to the railway companies of something like £10,000,000 in 20 years. After listening to the arguments and speeches to-day, I am wondering what is really the reason why the Bill has been introduced. The Chancellor of the Exchequer gave us some details to-day with regard to the raising of the money and how it is going to be allocated or spent, but it seems to me to be a peculiar thing.

The representative of the railway companies, speaking in the House to-day, said, "We did not go to the Government; the Government came to us." Are we to understand that the Government are forcing this money on the railway companies, and, if so, why? Is it that, because of the deterioration in the rolling-stock and the general service to the country in transport, the Government are afraid of the growing demand for the nationalisation of the railway and transport systems of this country; and are they compelling the railway companies to bring the railways, in regard to rolling-stock and transport generally, up to something like modern conditions? I should be glad if whoever answers for the Government could give us some more information on that point.

We have also heard to-day that this proposal in all probability will make for more employment on the railways. I rather question that statement. My experience on the railways, covering a good number of years, has been that the introduction of new scientific methods, new machinery and new ideas on the railways, has meant, not more, but less employment for men. Since 1920 there has been a reduction, in the staffs of the railways of this country, of round about 130,000 employés. Owing to the introduction of new methods and owing, as has been already pointed out to-day, to the introduction of larger and more powerful locomotives drawing greater loafs, the locomotive staffs have been reduced, and the introduction of automatic signalling has reduced the signalling staff. The introduction of piecework systems into the goods department has reduced the staff in the goods warehouses and, in the construction department, the introduction of machinery, new ideas and new piecework methods has resulted again in the reduction of the staff by many thousands, until we find that, comparing the staff with 1920, there is a reduction of something like 130,000. The Financial Secretary estimated that the Bill would mean increased employment to the extent of 120,000 man years. I do not know whether he meant that there was going to be a job for one man for 120,000 years or for 120,000 men for one year, but, spreading it over five years, it might mean that there might be a chance of 120,000 men getting a job for about two months a year.

There has been a good deal of misrepresentation on the matter. I believe it was indeed a real electioneering job. I am not blaming the Government for doing that. The only way they can retain their power is by hoodwinking the people at elections. It came out on a really good day. It was on 5th November that I read in the "Times" the new scheme of the Government to give an impetus to the railways. In the period in which there has been this reduction in staff the railwaymen have made contributions to the welfare of the railways by reductions in wages and by alteration of conditions of employment to the extent of many millions of pounds. I should have thought that in making this agreement with the railway companies there would have been some mention of a restoration of the cuts. One would have thought that, with a project like this before us, the Government would have issued a White Paper telling us how much money is invested in the railways, how long it has been invested, what its value was when it was invested and what it is now and how much rent, interest and profit has been paid on it. These are things that we have a right to know and ought to be told before we are asked to vote for the guaranteeing of Government credit for the railway companies or for any other great concern.

I notice in the Schedule a reference to the Fair Wages Clause. Probably hon. Members are not aware that even to-day the railroad worker has not much freedom, and we intend to move Amendments to the Bill dealing with this. Among the first two or three rules that railwaymen have to accept is that they must live within a certain little area which the company prescribes. They are on call for 24 hours a day for seven days a week. That rule is made by the company. By agreement with the union men are rostered for certain turns of duty, and when they are not rostered they are free to spend their time as they like. We are finding a growing tendency, in spite of our agreement, on the part of at least one railroad company which, if not checked, may easily become the policy of the whole of them. I hope to live long enough to see the time when there will be only one railroad in the country and that will be the Government itself, and it will not be this Government that will do it. I hope to live long enough to be a supporter of the Government that nationalises the railways, because I believe that is the only effective way of dealing with the present situation.

There are two or three things that the companies ought to do. The railways are the arteries through which the life-blood of the nation flows in the shape of trade and commerce. The first duties of the railway companies are to give efficient service to the nation and decent conditions of life and labour to the people they employ. Following up the conditions in regard to the Fair Wages Clause and the reference I have made to the prescribed area in which railwaymen shall live, and the degree of freedom they might have, in view of the fact that we have agreements with the railway companies which give men on rostered terms of duty certain times of liberty, we find one of the companies encroaching pretty much upon that, in spite of evidence given by the railway companies' representatives. This makes us come to a position that we cannot accept the word even of those people who represent the railway company.

This is the only place in which we can ventilate the matter. The railway companies have met us and discussed the situation, but in regard to arriving at settlements under certain conditions, certain sections of the railroad companies are not keeping to the agreements made. We have agreements with regard to men on rostered terms of duty, but we have instances of a company sending to a man not at his home, but meeting him in the street and ordering him to come to outside during his rostered term of duty during time which was at his own disposal. We have met and discussed it with the companies, and we have found the case put by them so diametrically opposed to the case put by the union that for the purpose of getting any understanding we asked the company to agree to a committee of inquiry whereby the facts could be understood and known. That is an elementary kind of justice to which the organised workers of this country ought to be entitled. Up to last night the company had deliberately refused to agree to this committee of inquiry.


This is hardly the time to deal with these grievances.


I tender my apologies for contravening the rules of the House, but inasmuch as we have a Fair Wages Clause in the Schedule, I was under the impression that this would be an opportunity for stating a case about which the organisation to which I belong feels so strongly, and about which the men themselves feel so strongly that there might easily be a big upheaval on the railroads system in the very near future—although I do not want to say that in the nature of a threat. I wanted to air this grievance which the railwaymen have.

Speaking on the Fair Wages Clause, I would like to say that it took the railwaymen many years of trial, struggle and suffering to get it brought into existence. Prior to 1910 there were over 100,000 men earning less than £1 a week with which to keep body and soul together and the family alive. It was a tremendous struggle to emerge from that slavery. We will do everything we possibly can on the lines of properly conducted controversy to retain our position as it is at the moment, and it is only because of the intense feeling among the men I represent that I feel bound to express an opinion and air this grievance on their behalf to-day. It is with great reluctance they many of us are accepting the position to-day without dividing the House, and it is only in the hope that we shall be able to do something in the nature of amending the Bill at a later stage that we are allowing the Bill to go through to-day without dividing the House.

3.0 p.m.


So many experts have spoken in this Debate that I, as a layman, hesitate to intervene. I do so more for the sake of getting information rather than of imparting it to the House. I particularly want to know on what principles were the works drawn up which are included in the First Schedule to the Bill? I rather gather from what had been said earlier in the Debate that the Government went to the railway companies and said, "Will you put forward some schemes of work which are desirable and which you are prepared to carry out immediately?" The companies put in a list, presumably the list included in the First Schedule, and without criticism these lists were accepted and now appear as part of the Bill. Was every item gone through, and was it considered what type of work was going to be most useful in the national interest?

The object of the Bill, as stated, I think, by the Chancellor of the Exchequer, is a double one—to provide employment and also to increase the assets of the country. It strikes me in one respect, at any rate, that there is a serious omission from the. Schedule if that test had been fairly applied. I think that this list was drawn up by the railway companies because these particular works were those which were most likely to be remunerative to the companies, but I believe it should have been drawn up in consultation with the Government. The Government are granting national credit to the companies, and the sole test should have been which work is really of the most benefit to the country and not to the companies, and which work is most likely in the long run to give employment rather than to take employment away.

The omission to which I refer is this. Every authority who has had anything to do with the railway administration of the country or with the mines of the country has advocated for many years that one of the most urgent and necessary changes in our railway system should be the re-equipment of terminals so as to enable 20-ton wagons instead of 12-ton wagons to be used for the carrying of coal. The matter was gone into exhaustively by the Samuel Commission. They came to the conclusion that there would be a very considerable reduction in the price of coal if that change were carried out, and the result of their investigations was this: Assuming that the average cost of the transport of one ton of coal from the Midlands to London is 10s. it would appear that the universal use of the 20-ton wagon would allow of a reduction of an amount approaching 1s. per ton. So you get a saving of 1s. a ton between the Midlands and London if 20-ton wagons are used. There would be a similar reduction—may be not so much—between the collieries and the ports which would be of course of immense national advantage, because it would go a very considerable way to meeting the claims the miners are now putting forward. One shilling a ton extra on every ton of coal produced would be an extra shilling per shift for the miners. It would enable foreign markets to be recaptured. And yet it is not mentioned in Schedule I. The matter has been gone into very carefully by the Ministry of Transport through the Standing Committee on Mineral Transport known as the Duckham Commission. Probably the Parliamentary Secretary of the Ministry of Transport knows all about it. Their conclusions were: Under existing conditions at the terminals we agree that the 12-ton wagon is the most suitable for general use, and there is no doubt that drastic reconstruction at terminals is essential before any large extension of the use of 20-ton wagons can be regarded as a practicable and economical proposition. But we are strongly of opinion that a serious effort should be made to remove the existing difficulties and we recommend that where practicable, definite and immediate steps should be taken to reconstruct the principal loading and unloading terminals which cannot accommodate the 20-ton wagon at present. Then in another part of the report the estimated price is given, the total cost being something like £8,750,000, and the cost on the railways alone, that is, not including the sidings and the collieries, is £2,500,000. Why is not that re-equipment included in this Schedule? Whatever national test can be applied as to the work that is desirable, surely that should come first. It would improve, above everything else, the productive capacity of the country and would go some considerable way towards meeting the claims now put forward by the miners, the strength of which is agreed by all sections of the community throughout the country. It would enable some of the foreign coal markets which have been lost to be recovered. I should particularly like to put this point of view. Looking at it from the unemployment aspect, it would be a far more valuable piece of work than anything else which is suggested in the Schedule, because not only would it provide as much immediate employment for those who are out of work, but it would make permanent employment. Obviously, if coal can be delivered more cheaply to the markets at home or abroad it would stimulate the coal industry and enable not only railway workers, but miners who would otherwise be out of work to obtain, and to retain employment. It appears to me, therefore, that this is a very serious omission and that the list has been agreed to by the Government just as it was put forward by the railway companies and that the Government did not use the pressure which they were entitled to use, because they are giving national credit to the railway companies, to insert in the Schedule those items of re-equipment which are primarily in the National interest, even if they are not so much in the railway interest. We are entitled to an announcement on that point, and I very much hope that we shall get it from whoever closes the debate for the Government. A big opportunity has been missed here, for if the re-equipment in this direction had been included the Government would have done something really useful in increasing the wealth and the welfare of the country.

3.9 p.m.


I do not propose to offer any opposition to the Bill. I do not altogether agree with those who take the view that we should not help the statutory undertakings of this country to increase their efficiency merely because by doing so we are doing something to stabilise Capitalism. Sooner or later the private enterprise of this country, at any rate in so far as the basic industries are concerned, will be taken over by the State, and if we can take them over in a state of efficiency, so much the better for the community. I was very interested to hear what the right hon. Gentleman the Member for Hillhead (Sir R. Horne) had to say about the genesis of the works that are adumbrated in this Bill. I under stood him to say that in June, 1929, about a month after the Labour party came into office, the railway authorities were sent for and discussion took place as to possible schemes of work on the railways. It is to the credit of the late Labour Government that a month after they took over they sought to initiate a policy of public works on the railways. The same right hon. Gentleman indicated that it was not until June of last year that the present Government, or those members of the present Government who were responsible 18 months ago, sent for the authorities of the railway companies and inquired what they were prepared to do to initiate works for the relief of unemployment. There we have an admission from a supporter of the Government that nothing was done between October, 1931, and July of last last year by the Government. I hope that I do not misquote the right hon. Gentleman. I understood him to say that it was in July of last year that he and his colleagues were sent for by the Conservative Government. If that be so, it seems to me to indicate that from October, 1931, until July last nothing was done by the Government in this direction.


During that period schemes were in operation, and they are still in operation, which were initiated under the Socialist Government.


That is what I understood. The point that I was making was that nothing was done by the Conservative Government until they sent for the right hon. Gentleman and his colleagues last July. In other words, over three years had gone by, and during that period this country had an average of 2,000,000 unemployed. The Chancellor of the Exchequer stated that not a single penny of taxpayers' money will have to be paid under this Bill. I notice, however, and perhaps the Financial Secretary will explain it, that in Clause 1 (2) provision has been included to this effect: Any sums required by the Treasury for fulfilling any guarantee given under this Act shall be charged on and issued out of the Consolidated Fund of the United Kingdom. That rather indicates, does it not, that in the opinion of the Government it may well be that some payment will have to be paid out of the Consolidated Fund? Therefore, it is very difficult for any Minister to defend the Bill and to be too dogmatic on the question of whether or not any liability will fall on the taxpayers. The Chancellor of the Exchequer told the House the other night that it was necessary to form a Finance Company because at the present time we were enjoying low rates of interest and that it would take some considerable time in order to secure the necessary Parliamentary approval of the various schemes adumbrated in the Bill. May I remind the Financial Secretary to the Treasury that there is a way in which he could have avoided that particular situation? If it is desirable to take advantage of the low rates of interest which are prevailing at the present time, why was not advantage taken of the provisions of the Public Works Facilities Act, 1930? That would have enabled the Minister to approve a scheme and to bring in a Bill which would receive the consent of the House, jumping over the Committee stages to the Third Reading. The same procedure would then be taken in the other House.

The object of that provision was to cut out the delays which accompany the passing of a Bill introduced by a statutory undertaking under the present law. We are told that it is essential to take advantage of the prevailing rate of interest, but there is going to be a gap between the formation of the Finance Company and the raising of the necessary amount of money, £20,000,000 odd. There is going to be delay during which the machinery has to be put into operation in order to enable the statutory undertaking to receive the assent of this House. On the assumption that the 1930 Act can be operated the gap could have been much narrowed and the payment of interest for that interval of time—when nothing is being done as Parliament has not given its approval—could have been saved. The right hon. Member for Hillhead said that this was pressing work which was necessary in order to do something to deal with the unemployment situation. Here was an opportunity of expediting the decision, and I ask the Chancellor of the Exchequer whether there is any special reason why Section 1 of the Public Works Facilities Act, 1930, was not incorporated in this Bill in order to avoid this unnecessary delay?

3.16 p.m.


It may be convenient if at this stage I make some attempt to reply to the observations, critical and otherwise, which have fallen from hon. Members in the course of this valuable discussion. The right hon. Member for Hillsborough (Mr. Alexander) prefaced his remarks with a very fair tribute to the efficiency of the railway systems in this country, and he desired it to be taken as colouring all his subsequent observations. It is valuable to have had that statement from the right hon. Gentleman. He made a comparison between the railways of this country and the railways abroad to the advantage of those in this country, and it is somewhat significant that, with the exception of the railways in the United States, most of the foreign railways, which he admitted to be less well run than our own, are run by the State. So far from his comparison injuring the cause of private enterprise it seems to me that the only possible country which might excel us in railway management is the United States, and there you have private enterprise carried to a very high degree.

The right hon. Gentleman also referred to the observations I made during the Financial Resolution Debate on the question of directors. I indicated, or tried to indicate, the main causes which move the Government occasionally to appoint directors on boards of private companies, and I classified them as two. One was where the company, though a commercial undertaking, carried on works which of necessity influenced the policy of the country and where it was desirable on some occasions to appoint directors. I instanced as belonging to this class the Suez Canal Company, Imperial Airways and Cables and Wireless. These great organisations, besides carrying on their commercial activities, are bound to operate in a way which must make co-ordination with national policy very essential and necessary. But with railway companies there is no such necessity. They are transport undertakings, and they carry out their transport undertakings to the satisfaction of the great bulk of the people of this country, though I agree with the right hon. Gentleman that we should be wise to continue to grumble at them occasionally. The railway companies do not fall within that category.

The second category of cases in which the Government have occasionally appointed directors is that of companies assisted under the Trade Facilities Act. In those cases if the company was a new or experimental concern, or if the Government, with its responsibility for the handling of public money, felt that it was desirable in the public interest to strengthen the board by appointing some adviser or director, that course was taken. But in this case, we are not dealing with anything new or experimental. The railway companies have been in existence now for a long time and they have managed to attract to their service a great number of distinguished persons in many walks of life. They have, at the same time, the services of very skilled and competent staffs. They are by no means to be compared with those new or experimental undertakings to which the Government has seen fit occasionally to attach directors of its own. The Government in adopting the course of not appointing directors in this case, is merely following the admirable precedent set by right hon. Gentlemen opposite when they were in office and when they were so much more generous to these private undertakings than we propose to be under this Bill by handing over to the railway companies, as they did, a sum of between £8,000,000 and £9,000,000. They did not, on that occasion, appoint directors and now that we are not going as far as they went, we do not propose to appoint directors.

The right hon. Gentleman the Member for Hillsborough also made some remarks which I gathered to be critical of what my right hon. Friend said about the atmosphere of confidence prevailing in the country. I do not think that my right hon. Friend has at any time claimed to base his assertion of greater confidence upon any particular rules of economy or anything of that sort. He has appealed, as he can appeal, to the facts, and there is not the least doubt—whatever may be the cause of it—that he is entitled to say that the condition of confidence which prevails to-day is very different indeed from the condition which prevailed when right hon. Gentlemen opposite were in office. One has noticed that Lord Snowden has, at times, boasted that the machinery for the great conversion loan was engineered during his tenure of office but the significant fact is that, if it be true that that machinery was ready, it could never be used when right hon. Gentlemen opposite were in office. We had to wait until my right hon. Friend came into office and had held office for a year or two, before that machinery could be put into operation.

I pass to another criticism, as I understood it, made by the right hon. Gentleman the Member for Hillsborough. He said, in effect, that by conferring upon the railway companies this power to raise money more cheaply than they could raise it themselves, we are giving them a form of assistance which can be expressed as a capital sum of money. There is no doubt that one could make such a calculation, and, though my right hon. Friend the Member for Hillhead (Sir R. Horne) has indicated how many factors of uncertainty there would be in such a computation, perhaps one could arrive at a figure which would be more or less accurate. But when the right hon. Gentleman begins to talk about making a gift to them, I hope it is clear in his own mind, and I hope the House is clear, that even if we made this calculation and said, "This is a gift to the railway companies," it is a gift at nobody's expense. When the right hon. Gentleman and his friends were in office they made a gift to the railway companies of £8,000,000 or £9,000,000 of the taxpayers' money, and the taxpayer was the ultimate source of their generosity. In this case the assistance which the railway companies are being afforded in return for their acceleration of normal work does not cost the taxpayer sixpence. We are not giving the railway companies any money; we are not even lending them any money. As I said the other night, all we are lending them is credit, the use of credit for a period.


It must be something fairly substantial, because I notice that the stock markets the day after the Chancellor of the Exchequer's announcement went up from 1½ to 1¾.


I always notice that when my right hon. Friend makes any announcement about the nation's finances, the stock markets generally reflect the widespread confidence that is felt in his administration. The fact is—and the right hon. Gentleman cannot get away from it—that he is in no position to lecture my right hon. Friend and myself about what we are doing on this occasion for the railways. We are not giving or lending them money; we are merely lending them credit, and the right hon. Gentleman who was ready to give them money of the taxpayers, which the taxpayer had to find, is is no position to charge us with over generosity towards the railway companies. Indeed, it throws a somewhat interesting light upon all the denunciations of private enterprise which we have heard from right hon. Gentlemen opposite when they talk of great statutory undertakings as wicked profit-seeking private companies, but when they were in office themselves they showed none of this reluctance to touch the evil thing which they assume so self-righteously now that they are in Opposition. They know as well as I do, and agree that these great organisations are one of the strongest and most public-spirited sets of services that exist in the country, and that any Government that wishes to make use of their activities for helping the travelling public, and the persons employed as well, could not do better than go to these great statutory undertakings in order to assist them to carry out their policy.

The right hon. Gentleman seemed to get some satisfaction from describing the programme of works set out in the Schedule as "miscellaneous," and a little more satisfaction when my right hon. Friend assented to this description of them. I could not help harbouring a suspicion that the right hon. Gentleman used the term "miscellaneous" as a term of abuse, that his description was meant to denigrate them or lower them in the public estimation.


indicated dissent.


I am glad to have the right hon. Gentleman's assurance that no such thought was in his mind. He meant by using the term, and understood my right hon. Friend to mean by his assent, that it was an accurate description of these works to say that they were of a miscellaneous character. I think that must be so, for if one reads the Schedule and realises the wide range of the works, ranging as they do from the building of hotels at one end to the providing of coloured light signalling at the other, it is clear that the programme is miscellaneous, but I should not like the Rouse in any way to imagine that because the programme has a miscellaneous appearance, there is any lack of cohesion in the scheme as a whole. Mere certainly is not. The railway companies themselves for a long time had their own organisation and ordered development. The fact is that the works in the Schedule are those which the railway companies and the Treasury have together agreed to be necessary in the sense that they fulfil the conditions laid down for this particular form of assistance. One company requires something which another does not, and for that reason there is diversity in the kind of works in the Schedule; they are miscellaneous in the true sense, but there is no lack of cohesion or order in them.

The right hon. Gentleman urged upon us a wholesale scheme of electrification. That is a matter which more concerns the transport side of the question than the merely financial, but it would be interesting to know whether the right hon. Gentleman was expressing the united view of himself and his friends. He is as well aware, as I am, of the contents of the Weir Report, and knows that the electrification of the railways would mean a reduction in the consumption of coal of some 8,000,000 tons annually, and a loss of employment to some 28,400 coal miners. The House will be interested to be reassured that the right hon. Gentleman, in urging upon us this wholesale policy of electrification, was speaking not only for himself and for the particular interest that he so admirably represents, but for the miners as well. At the same time, I would call his attention to the very interesting maiden speech to which we had the pleasure of listening to-day from the hon. Member for Ardwick (Mr. J. Henderson). I am sure that the House enjoyed his speech very much, and I hope that we shall have another taste of his quality. He did not complain of there being too little electrification, but he scolded my right hon. Friend and myself because in the Schedule of the proposed works there is a case of electrification, and he said, as I understood him, that that would mean less work upon the railway.


I think that the hon. and learned Gentleman is wrong: that is an erroneous impression. I said that there was to be electrification of the line from Manchester to Sheffield—41 miles—but I did not go into its efficacy. I made a statement that it meant in essence a diminished number of trained men, and asked what provision the Government were going to make for the men displaced.


That rather bears out my point. The hon. Gentleman is apprehensive that this piece of electrification will have the result of reducing the employment upon that piece of line. I would ask him, before we discuss this matter again, to consult with the right hon. Member for Hillsborough in order to see exactly where the party stand upon this question of electrification so that we may have not two voices speaking from the Benches opposite but one. A concentration of counsel on this matter will be of immense assistance to us on this side. There has been a good deal of talk during this Debate, some of which it has been very difficult to follow, but it seems to be felt as a grievance by hon. Members opposite that an announcement of this matter was made during the Election. When that accusation first appeared it took a more sinister form than that to which it is reduced to-day. One almost gathered that this announcement was something which had been hurriedly concocted for election purposes and had no basis in fact at all. Now that hon. Members have heard more from my right hon. Friend the Chancellor of the Exchequer and from the right hon. Member for Hill-head I am sure they will realise that this was a scheme which was in train months before the Election. I gather the only complaint now is that the matter was announced during the Election. That is a much more shadowy grievance.


It was not shadowy at Swindon and Crewe.


Where does the right hon. Gentleman stand in this matter. The right hon. Member for South Hackney (Mr. H. Morrison) was good enough to tell the House what he would have done if he had been at that time my right hon. Friend the Member for Hillhead. That is not what I would like to know. I should like to know what he would have done in similar circumstances if he had been my right hon Friend the Chancellor of the Exchequer. I think there is no doubt about what he would have done, and I ask hon. Members, before they complain of this matter, to consider the position. Here was my right hon. Friend, in the middle of the Election, being harshly scolded by partisans of various economic and political doctrines, being held up to public—I will not say odium; that is perhaps too strong a word—but public disapproval, as a hard-faced flinty-hearted man whose sole purpose was to check any attempt to use public credit for remunerative works which would create employment.

It was an issue in the Election. Hon. Members opposite were continually accusing us of a lack of appreciation of this method of assisting the public interest. Was not my right hon. Friend right in putting the facts before the electorate, telling them that, so far from its being a true picture of the Government's policy, it was a false picture, and that the proof was that this long-negotiated agreement was actually ripe for publication at that moment? If the right hon. Gentleman really makes a grievance of a matter of that kind, he must be very hard up for grievances. There is no doubt that the electorate were entitled to know whether the Gov-eminent believed in projects of this character or not. They were being told by hon. Members opposite that the Government would do nothing to assist employment by this means, and the Government were right to disprove that assertion by the single fact of this long prepared now ripe case.

The hon. Member for Cardigan (Mr. D. Evans) asked what guarantee there was that the money would be spent to the best advantage. At an earlier stage of these proceedings he had asked what check the Government would have to secure the observance of the Fair Wages Clause and other matters of that kind. It is right to be careful, and the hon. Member was doing no more than his duty in seeing that there are powers of check. But I would ask him, first, to notice that we do not make this agreement on the assumption that it is going to be broken. We make it on the assumption that it is going to be kept, and we feel that our assumption is more likely to be the correct one because of the previous history and present character of the railway companies in such matters. At the same time we have provided in the agree- ment a clause which enables the fullest information to be at the disposal of the Treasury, if they require it, of the actual works to be undertaken. The railway companies themselves would agree that the principle on which this agreement was negotiated was that of the closest scrutiny on the part of the Treasury and the Ministry of Transport of the works that appear in the Schedule.

One hon Member asked us whether or not this was merely the railway companies' list. That is not so. The matter was the subject of most anxious consideration and careful examination between the officials of the Treasury and the Ministry of Transport during the negotiations, and the works which now appear in the Schedule are to the best of our belief those works which fulfil these conditions: In the first place they are not undertakings which the railway companies would undertake now out of their own resources; in the second place they are works of real advantage to the railway companies, the travelling public and the community generally. That has been the principle which has guided the negotiations throughout, and that is the best guarantee that we can have that the works in the Schedule are the right works. I would like the House at least to have that true impression. It is by no means a list of works stuck in without examination. The whole matter has been carefully gone into with the object I have indicated.

We have had various other questions raised. The hon. Member for Ardwick, who made his maiden speech, asked as to the effect of these proposals on employment. We believe that the effect will be to increase employment among railwaymen. The construction of new lines means not only the temporary employment of the men engaged in the construction, but the employment of men as foremen and gangers to look after them. Very properly the hon. Member drew attention to the question of the safety of the employment. If the hon. Member looks through the list of works proposed he will find many things which will conduce to greater safety in the working of the railways, both for the public and for those who are employed by the railway companies.

I had the misfortune not to hear the speech of the hon. Member for South Bristol (Mr. Walkden), but I understand that his main point was this: He said that it was time for us to go in for more co-ordination of the whole question of transport, and he indicated as the chief object of his attack what he considered to be the state of freight road transport at the present time. He gave the House the impression that no attempt had been made to co-ordinate this important public activity. Of course that is not so. The late Government took power in the Road and Rail Traffic Act of 1933 to co-ordinate road traffic, and that co-ordination in its earlier stages is already an accomplished fact. No longer is it true to say that the road operator can operate without let or hindrance. He has now to go through the process of obtaining a licence—an "A" licence, which is a public carrier's licence; or a "B" licence, which is a limited carrier's licence; or a "C" licence, which gives permission to carry his own goods to and fro.

The system is not an old one, because it has been in existence only for a little over a year, but it is the beginning of co-ordination between road and rail, and we look forward, in the future working of this provision, to the co-ordination to which the hon. Member refers becoming a feature of the transport system of this country. The House will understand that both sides are naturally rather apt to complain, in the early stages, about this co-ordination, the railway companies claiming that too much is being done for the road—some railway critics say that—and some of the road people being apt to believe that all the assistance is going the railway way. There is thus a balance of interest to be borne in mind in order that co-ordination may be accomplished without injury to the transport system of this country. That is a feature of the Government's policy.

The hon. Member for Rotherham (Mr. Dobbie) made a speech of criticism of the proposals which seemed to me to be based upon an error of fact. He described this assistance, which is being given by the State to the railway companies and by the railway companies to the State, as in some sense a subsidy to the railway companies. That is an inaccurate description of what is taking place. His own Friends did, to some extent, give a subsidy in 1929 by granting £8,000,000 or £9,000,000 to the railway companies, but no money is passing here at all, only credit, and nothing has been done—


Will not that have the effect of saving money to the railway companies in the intervening period, and will not the saving of money have the same effect as a subsidy?


The hon. Member must get into his mind the fact that if it were not for the agreement between the Treasury and the railway companies the proposed works would not be done and the railway companies would not expend the money at all. They would be left only with the normal programme, which is unaffected by this programme and goes on just the same. This is not a case of the railway companies being assisted in what they would do in any case. They would not expend the money.


Is it not a fact that they would spend the £26,000,000, which otherwise they would not spend, and will there not be a saving in the interim period, which amounts to a subsidy?


The fact is that if it were not for the agreement the railway companies would not undertake the work and as they would not undertake the work they would not raise the money. Their position in that respect is not better. They are better off to this extent only, that if the railway companies had, of their own volition, determined to carry out these works, they would be getting assistance more cheaply to enable them to do so, but the fact is that they would not be carrying out these works unless they had the assistance. The Government are not forcing this money upon the railway companies. The Government are not forcing this money upon anybody. In pursuance of their policy the Government are trying to find works of a character which will help employment without injuring the public credit, and this agreement is the result.

I ask the House to give the Bill a Second Reading in order to enable the process which it inaugurates to become active as soon as possible. It is one of the efforts to create employment, to improve the comfort, convenience and safety of the travelling public without costing the taxpayers a penny, and I can heartily commend it to the House. It is true that it uses public credit, but it uses it in a way which runs no risk of affecting the public credit as a whole. It would clearly be a very wicked and foolish thing to attempt to assist by a scheme of this character a number of the population at the risk of endangering that system of credit and confidence in which the great majority of people in this country are at present employed and in which they subsist. This is not a scheme which attempts to help a few by endangering the prospects of the many, but it is a scheme of a bold and well thought out character which we believe will assist employment and improve the comfort, safety and convenience of the travelling public. At the same time, it is one which, on the financial side, we can commend with confidence to the House as not being in any way a matter which the public need view with apprehension. For these reasons I hope the House will now come to a decision to give the Bill a Second Reading.


I think the hon. and learned Gentleman indicated that he would give an answer to a question which I put to him, and which I think is of some importance.


With the leave of the House I would like to refer to the hon. Member's question. It is rather one of detail, but I should like to say a word about it if I may. He indicated to us, if I understood him aright, that there ought to be included in the scheduled works a proposal to carry out a scheme which he thinks would be of great benefit to the railways, namely, the equipment of their terminals for the use of 20-ton wagons. The Government have always viewed that with favour and been prepared to give assistance in its carrying out, but I think I am right in saying that the present terminals of the Great Western Railway Company, who own the Welsh docks and who use the coal hoists there for loading vessels, are already equipped to handle 20-ton wagons; while if one goes to the other great coal loading district, the North-East Coast, where the loading is done, not by means of hoists, but by means of staithes—long pier-like structures—it will be found that there also the London and North Eastern Railway is equipped to handle the 20-ton wagon, and I believe that on the North-East Coast the bulk of the traffic is being so handled. The resistance to the 20-ton wagon that exists is resistance by the owners of wagons. There is no difficulty at all from the Government's point of view, they welcome the 20-ton wagon; and I believe it is true to say—my right hon. Friend the Member for Hillhead will correct me if I am wrong—that the Great Western Railway Company give a rebate to coalowners who will use 20-ton as against 12-ton wagons. The hon. Member can rest assured that there is really not room, in a Bill of this character, for the proposal he put forward. The work is already being done as far as the railway companies are concerned, and, as I have said, the resistance lies in other directions. Therefore, there is no room in this Bill for the method that he proposed. I hope that he is satisfied with the answer I have given to his question.

3.54 p.m.


I am sure that the House will not object if I congratulate the Minister on the nice balance of conciliation and controversy with which he has conducted his speech, and, indeed, every other case that he has put before the House. It is, however, necessary to point out that, when he departs from the technical or explanatory side of the Bill into the larger questions of public controversy, he is not so happy in this latter position. For example, I was astonished to hear him say that the Government are not lending the railway companies anything, that they are not giving them anything, that this proposal is not going to cost the Government anything. I wonder how far the Minister is prepared to carry that principle. I know many Members who are badly in need of an overdraft. One day they will come to him and ask whether he will guarantee their overdraft at the bank, and will remind him of this occasion and say, "It is not going to cost you anything; I am only asking you to guarantee my overdraft." It is precisely the same principle. It is using up the credit of the State.

There is the further point about private enterprise, a question which is going to be in the very forefront of our future political controversies. When the Minister tries to exemplify the railways as a splendid example of private enterprise and calls in aid the arguments of the right hon. Gentleman the Member for Hillsborough (Mr. Alexander), he is going on to very dangerous ground. The railways are the very worst example that could be taken, not that they are not the most efficient of capitalist enterprises, but they are half nationalised already. The Minister appears to have completely forgotten the Railways Act, 1921, under which any trader can go to the tribunal and demand an improved service or a reduction of fares. The standard revenue is fixed by the Act. The railways are not entitled to earn more than a certain amount of profit. In practically every respect if the Minister would be prepared to concede us the same degree of nationalisation in other spheres as now exists with the railway system we should be very happy with that as a first instalment.

I should like to say a word on the question of directors. I fail to see what is the difference in principle between putting a Government director on the railways and putting a Government director on the Suez Canal, Imperial Airways or Cables and Wireless. The Minister says these are new and experimental services. The Suez Canal is not new, and Cables and Wireless is not new except partially as regards its wireless aspect. As to Imperial Airways, there is perhaps a better case there, but I cannot see why, on the analogy of previous nominations to boards given to the Government, we should not have Government directors on the railways. I have great respect for the right hon. Gentleman who graduated so successfully into the realms of big business from the Scottish Bar, but I believe no harm would be done if the Government put a little new blood on these railway boards of directors. I will not go into the invidious question of their average age but, in view of the average age and the notoriously dilatory policy that they carry out—


rose in his place, and claimed to move, "That the Question be now put," but Mr. SPEAKER withheld his assent, and declined then to put that Question.


It would be a splendid thing if the Government nominated even some of their Back Bench supporters to railway boards of directors.

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House, for Monday next.—[Captain Margesson.]