HC Deb 07 February 1940 vol 357 cc221-5
Captain Wallace

With your permission, Mr. Speaker, and that of the House, I would like to make a full statement on the negotiations between the Government and the railway companies.

I am glad to say that agreement has now been reached with the four main line railway companies and the London Passenger Transport Board as to the financial arrangements for the period during which these undertakings are under Government control.

The general principle is that the undertakings shall be operated under unified control on an economic basis and that appropriate charges shall be made for Government traffic. The main provisions of the agreement are as follow: The receipts and expenses of the controlled undertakings will be pooled and out of the pool they will be paid annual sums equivalent, in the case of the railway companies, to the average of their net revenues for the years 1935, 1936 and 1937 and, in the case of the London Passenger Transport Board, to its net revenue for the year ended 30th June, 1939. The payment of these sums, amounting approximately to £40,000,000, will be guaranteed by the Government.

If the amount in the pool exceeds these guaranteed net revenues, the undertakings will be allowed to retain in full the first £3,500,000 of excess, but beyond that point the Exchequer will take one-half of the net revenue until the undertakings reach their standard revenues after which the whole of the balance in the pool will be taken by the Exchequer.

There are special provisions to deal with the case of the London Passenger Transport Board during the early months of the war, when its undertaking suffered severe dislocation owing to the need for taking special precautions against air raids.

The agreement will provide for standardizing charges for maintenance, for dealing with the problem of war damage and for bringing the receipts and expenses arising from the requisitioning of privately-owned wagons within the pool. There will also be provisions dealing with the adjustment of rates, fares and charges to meet variations in working costs and war conditions.

I am circulating a White Paper dealing with this agreement which will be available in the Vote Office after Questions to-day.

Mr. Herbert Morrison

Can the right hon. and gallant Gentleman say whether he thinks it is reasonable, as the Government are guaranteeing the profits of the companies as in the years preceding the war, that the Government should contemplate profits going up to the standard revenue which in fact has not been earned, as far as I can remember, since the passage of the Railways Act, 1921? In these circumstances, does not he think the Government have been unduly generous to the companies, and ought he not to keep the profits at the level at which they were during the three years immediately preceding the war, and not contemplate any higher profits?

Mr. Holdsworth

Does that apply to wages too?

Captain Wallace

I think that it would perhaps be better if the right hon. Gentleman would be good enough to read the White Paper. I should like to say in general terms that, in my view, this settlement represents a coherent, logical and reasonable scheme. It is the fact that, after the guaranteed minimum, there is a further period during which the undertakings can retain the whole of their additional earnings, but, after £43,500,000, the Exchequer takes a half share. I hope that hon. Gentlemen in all parts of the House will read the White Paper before they make any criticisms.

Mr. H. Morrison

Will the right hon. and gallant Gentleman meet the point? The Government are actually guaranteeing the pre-war profits of the last three years, and does he think that, in view of that guarantee, which is of great value to the shareholders, the Government ought to contemplate that their profits during the war period may go substantially beyond the guaranteed profits of the average of the last three years; and, secondly, will the right hon. and gallant Gentleman or the Prime Minister give some indication whether facilities will be given for a discussion of this agreement by the House of Commons?

Captain Wallace

I think that the right hon. Gentleman really has only looked at one side of the picture. It is not a question, as he seems to put it, of supplying the railways with public money out of the Exchequer. As far as it is possible to forecast at present, it seems that the railways will not only reach their minimum, and therefore not involve the Government in any subvention whatever, but that the taxpayers may be able to have a share in the profits. I may remind the right hon. Gentleman, when he talks about pre-war earnings, that, as everybody knows, the Government and the nation intend to make very much more use of the railways during the war than in peace-time. As regards the question of a Debate, the right hon. Gentleman will see from what the Prime Minister said last Thursday that my right hon. Friend dealt precisely with that question.

Mr. Attlee

Has not the right hon. and gallant Gentleman just indicated that it is within the power of the Government to say what traffic shall be on the railways and to control alternative forms of traffic, and that therefore it is really in the power of the Government, if they choose, to enable the railways to get a much higher rate of profit than they have been able to earn under pre-war conditions?

Captain Wallace

If the right hon. Gentleman had my job he would realise that we want all the transport we can get during the war.

Mr. Maxton

Will the Minister tell us the difficulties with which he met in arriving at an agreement which was so obviously advantageous to the railway shareholders; and can he explain why there was any difficulty at all in coming to that solution, as I understand that there have been very protracted negotiations?

Captain Wallace

There are, of course, a large number of detailed questions to be dealt with in the settlement, and I was most anxious—and I am sure the House has been most anxious—that we should have a watertight agreement. As regards the rest of the hon. Gentleman's remarks, he seems to be begging a fairly big question.

Mr. Maxton

I think you are

Mr. Ridley

May I ask the right hon. and gallant Gentleman whether, since the prospective profit figure agreed to has apparently to be related to the capital structure, any attempt was made on the part of the Minister to secure a reconstruction of the overburdened capital structure of the holding companies; and whether, also, any attempt was made to secure a modification of the standard revenue fixed as a result of the 1921 Act and related to the realistic circumstances of 1940?

Captain Wallace

I think that, under the arrangement that has been made with the railways, it will be a long time before the figure of standard revenue is reached, so we cannot expect the standard revenue figure of 1921 to be regarded as a likely target. I do not think, either, that it would be a very wise policy to try to undertake, by Government compulsion, the capital reconstruction of the railway system at the beginning of war.

Mr. Ede

Can the right hon. and gallant Gentleman say, on the economic side of this arrangement, which side was advised by Lord Stamp?