TRANSPORT.

HC Deb 13 February 1940 vol 357 cc621-730

3.55 p.m.

Mr. Herbert Morrison

I beg to move, That, having considered the financial arrangements with respect to Government control of the railways as set forth in Command Paper No. 6168, this House is of opinion that the interests of the country would be better served, and the many problems created by the present lack of unification solved, by the establishment of a permanent national transport authority to own and control all forms of inland and coastwise transport. This Motion goes straight to the heart of the fundamental difference between the Opposition and the Government as to the organisation and control of transport in this country. It declares that the proper way in which transport should be handled is not upon the basis of the agreement which the Government have approved, and presumably to which they are committed, but that the opportunity should be taken to bring together the various forms of inland and coastwise transport so that it could be conducted as a properly consolidated public service in the interests of the nation as a whole. Before I come to the positive part of the Motion, I wish to make some observations on the terms of the agreement which the Government have made. It must not be taken that we concur in the terms of that agreement. So I wish, first of all, to make an examination of the agreement, and then to indicate some of the points on which I think it is wrong, from the point of view of the public interest, and to make some criticisms of it.

As I understand the settlement, it has, in the case of the four amalgamated mainline companies, taken the net revenue of the undertakings for the three years 1935, 1936, and 1937. The year 1938 has been left out of the computation. I do not say that that would necessarily have been wrong had the agreement gone no further than to take those three years as a basis of compensation to the companies, but having regard to the additional benefits that may come to the companies, I think one is entitled also to make observations about the omission of the year 1938. Therefore, it should be noted by the House that in 1938 the net revenue of the four amalgamated companies was £7,300,000 less than the £40,000,000, plus the additional £1,000,000 which officially does not come into the calculation—for reasons which I understand—so that in the 3'ear 1938, the net revenue was £7,300,000 less than £41,000,000. That year has been left out. Moreover, if the companies get the additional £3,500,000 which it is contemplated they should get, if it is earned, then the difference between the sum which the Government propose to award and the net revenue of 1938 would be nearly £11,000,000. The Government have taken the years 1935, 1936 and 1937, and the less profitable year 1938 has been deliberately left out of the computation.

The profits of the three standard years of the companies and the single year of the London Passenger Transport Board, estimated to be roughly £40,000,000, are to be guaranteed, and therefore, to that extent, the pockets of the taxpayers will be behind the railway undertakings and the London Passenger Transport Board. There is then to be a permissive supplementary payment, if it is earned, of £3,500,000, which makes £43,500,000; and if the net revenue of the undertakings exceeds £43,500,000, the Government and the companies are to go fifty-fifty on the surplus until the net revenue reaches £68,500,000. That is to say, the profits of the companies can reach £56,000,000, because the balance between that and the £68,500,000 would go into the Exchequer, and after a net revenue of £68,500,000 is earned, beyond that point the entire surplus goes into the Exchequer. I think the Minister of Transport will agree that that is a fair summary of the main points of the agreement between the undertakings and the Government. There are some "frills," with which I need not be concerned, but there are one or two other points to which I will refer in due course.

It is to be noted that the Government, although they have guaranteed this £40,000,000, will actually pay for the Government traffic that goes on the railways, whether the traffic be men or materials. The Government are not necessarily to pay the ordinary charges. They will no doubt put the argument to the companies that if there is heavy traffic, some of it may be extraordinary traffic, but if it is fairly regular traffic, the Government will be entitled to special terms. But the traffic will be paid for, notwithstanding the fact that the Government are already guaranteeing a minimum, and that may be a material factor in the net revenue of the companies as time goes on. Perhaps the right hon. and gallant Gentleman will be good enough to inform the House, when he comes to reply, what is the proposed basis of payment to the companies for the carrying of traffic on behalf of His Majesty's Government.

Moreover, there is one other point to which I want to refer in this description rather than argument of this point, and that is that provision is made, in paragraph 10 of the agreement, for the adjustment of rates, fares, and charges, and particularly if there is an increased cost owing to war-time conditions. I understand from that that the Railways Act of 1921 is fairly generally suspended as regards the operation of the Railway Rates Tribunal. The adjustment of fares, rates, and charges will presumably be a matter for decision by the Railway Executive with the concurrence of His Majesty's Government, and presumably the user of the railway, whether passenger, trader, merchant, or what not, will not have his customary remedy of going before the Railway Rates Tribunal and arguing his case before the railway companies get permission to make an increased charge.

I now come to the critical points of the analysis of the agreement. In the first place, I think that when all these things are added together, His Majesty's Government are clearly contemplating the possibility, and maybe the probability, that the railway companies are to be put in a definitely better position than that in which they were at the outbreak of hostilities, and, so far as that is so, it seems to me that the Government have taken a grave responsibility. They have laid it down that the railway companies, great statutory undertakings, have a right to earn higher profits and dividends as a result of the war. That is what it seems to me to admit. If it is disputed that the companies are likely to be better off—and I see from the bases of the agreement that it is not a matter of certainty, though it seems to me to be a very greatprobability—if the railway directors in this House, speaking, of course, on behalf of their constituencies and not on behalf of the companies, should argue that it is highly speculative and indeed doubtful whether they will get such increased profits, then I am bound to answer that the Stock Exchange, which, I freely admit, is often wrong about things, but which hon. Members opposite regard as a hard-headed place, does not take that view. For what has happened? The fact is that ever since it was known that the agreement was coming—it looks as if some people knew something about it a few days before this House suddenly knew about it, on a statement without a Question put that was made by the right hon. and gallant Gentleman last week—railway stocks started moving upwards, and I will give some figures about them.

I am advised that the rise in the market value of railway stocks is very considerable and that it must amount to at least £100,000,000 in total increased capital value of all home rail stocks. If that be so, and if the Stock Exchange know what they are doing in this matter—and it is they who are buying the stocks, and they ought to know what they are doing—it looks as if the Government have presented a capital value of not less than £100,000,000 to the railway companies as a result of this agreement. Will the House be good enough to follow with me what has happened to railway stocks? I am informed that on 15th January—the first figures that I give are all of 15th January—Great Western ordinary were 37 points, and they are now 48, an increase of 11 points, or round about 30 per cent.; Great Western 4¼ per cent. debentures were 100 and are now 106½, an increase of 6½ points; London and North Eastern 5 per cent. preferred stood at 4 and now stand at 7½, or nearly double; London and North Eastern 1st preference were 38½ and are now 58½, 20 points up, or over 50 per cent. increase; London and North Eastern 5 per cent. 1955 preference were 54½, and are now 76; L.M.S. ordinary, 13½, now 21; L.M.S. 4 per cent. 1923 preference were 43 and are now 60; Southern preferred ordinary were 65 and are now 77½ Southern deferred ordinary were 13¼ and are now 20; and Southern 5 per cent. guaranteed preference were 109 and are now 116. There can be no doubt about it that the agreement has, in the judgment of the Stock Exchange, materially increased the value of railway stocks, and the City of London capital value of these undertakings has been very substantially increased as a result of the action.

There are some other figures which I think should be given. It is easy to see the degree of favour which the agreement confers on the stockholders if we compare the level of profits, or net revenue, allowed to the railways as a minimum and maximum by the agreement with the profits actually earned in recent years. The most notable fact is that the Government are guaranteeing, with qualifications only for hypothetical excess maintenance and war damage, a minimum level of profits well above that of any but the most favourable of recent years. This is done, as far as I can see, by deliberately choosing the best years as an average. I give to the House figures of net revenue for the four amalgamated companies and the London Passenger Transport Board. In 1932 they were £32,151,000; in 1936 they were £40,937,000; in 1937 they were £43,114,000; but in 1938 they dropped by nearly £10,000,000 to £33,699,000. The Government have in effect guaranteed £40,000,000, which, with the other £1,000,000, makes £41,000,000, but that guarantee, plus the minimum of £3,500,000, including that £1,000,000,brings the figure up to £44,600,000, while the maximum which the companies can receive is as much as £57,200,000, and it will be seen from the figures I have given, going from 1932 onwards, that the figures which the Government contemplate as being possible for the companies to get are very materially in excess of any dividend that they have earned since the amalgamations tinder the Act of 1921.

The Government may answer that there was contemplated by Parliament, when the Railways Act of 1921was passed, a permissible level of profits or standard net revenue. I know about it, and I have reason to do so, because I appeared as an amateur counsel at the Railway Rates Tribunal when the first determination of standard net revenue took place. It is true that Parliament, in making this great amalgamation, set out in the Statute items that should be chargeable, and permitted the Railway Rates Tribunal to determine the level of standard net revenue, and the tribunal did. Therefore, one may say that Parliament and the Railway Rates Tribunal between them indicated what would be, so to speak, the permissible moral level for the profits of these great semi-monopolies to earn, but we really must be clear that when Parliament indicates what the moral permissible profits for a great monopoly to earn should be, Parliament is not thereby guaranteeing that those companies will earn them. It would be dangerous to the State if Parliament were to do any such thing.

We had the same thing with the London Passenger Transport Act that was introduced by myself and passed finally in 1933. There were certain permissible dividends, the figure of which does not matter, because they really had relationship to the capital basis of valuation on which the transfer took place. Again Parliament said that it should be permissible for A stock to earn this, B stock to earn something else, C stock to earn something else again, and to go up in certain circumstances. I know—I remember it very well—but Parliament at the same time said, and I as Minister of Transport, in bringing in the Bill, said, "This is what we think it is permissible that the companies should earn, but it is not contemplated at any time that these great undertakings shall be a burden upon either the taxpayers of the nation or the ratepayers of London, and if the transport does not earn it. Parliament cannot accept responsibility for making up the difference." By this agreement that the Government have made the Government have in fact contemplated, first of all, a State subsidy or guarantee up to a certain amount and then permissible profits above that, and the arrangement wipes out, as far as I can see, the rights of the users of the undertakings.

Therefore, the Government have guaranteed practically all shareholders a dividend which is, so far as I can see, probably well above that which has been recently paid. A table given in the "Economist" this week suggests that the ordinary and preference stock ought to stand at anything up to twice the present level. If the companies are not to be liable to Excess Profits Tax, what are the Government doing in allowing companies to increase their profits arising out of an emergency in which competitors are knocked out, for road transport is not in a condition, as a result of Government action, to be an effective competitor to railway transport at the present time? Already the railway companies appear to have benefited because the road companies are hit by the war, and they are strengthening their monopoly. Will the Minister tell us whether the increased profits of the companies are to be subjected to Excess Profits Tax? We really have a right to know. If the profits are not to be taxed the railway companies are to be put in a peculiarly advantageous position.

If it be argued that dividends on capital will still be modest and it is reasonable the railways should not pay Excess Pro fits Tax, I am bound to answer that the profits any undertaking makes may involve what has happened up to 100 years ago, and many investors in stocks and shares have bought them in the last 15 years. It must not be assumed they have paid par value for the stocks they have bought. It is to be assumed that they paid much less than par, and the dividends are comparatively higher than those apparently paid by the companies themselves. I think the profits should be subjected to Excess Profits Tax. Parliament really must not get into the habit of assisting an undertaking because the undertaking is on bad times and because it is carrying more capital than is healthy for it. The results are bad for users of the undertaking and sometimes bad for the workpeople, and the companies ought to have had capital reconstruction, bringing them more into line with concrete realities, years ago. That is not any reason why the Government should come along and say, "Here is a poor body of investors; they are only getting par dividends on stocks and shares. We must try and buck them up and give them a little encouragement." Ever since private undertakings were assisted by the State to encourage them in years of depression a large number of capitalist undertakings have got into a public-assistance frame of mind. That is really very bad. There is no virtue in capital ism—I do not think there is much any way—but if capitalism becomes a public-assistance thing and has to be provided for by State assistance from time to time, I think still less of it. The only justification for capitalism is that it can stand on its own feet and healthily conform to the principles advocated by the hon. Member for South Bradford (Mr. Holdsworth). I do not ignore the fact that the hon. Member has moved his principles to such an extent as to move to another part of the House.

That, I think, deals partly with the facts of the agreement. The profits are, therefore, guaranteed at materially higher levels than in 1938. The possibility of higher rates and charges are contemplated in order to meet higher war costs, which is almost an indication to the companies to incur higher war costs. Secondly, higher rates and changes contemplated are to bring the net revenue up to the guarantee? If the net revenue is not up to £40,000,000, the Government may take steps to increase the rates and charges in order to prevent the charge on the Exchequer. If that is not so, the Chancellor of the Exchequer ought to tell the House. The public ought to know, and manufacturers and traders ought to know. In regard to the possibility of the standard net revenue of the companies that has never been earned and was never likely to be earned. As to the dividend of London Transport Board C stock which has never been declared, the Chancellor has some responsibility for that, because the steadily rising Petrol tax has made an entirely different financial picture for the London Transport Board ever since.

Government traffics are to be paid for, thus increasing gross and net revenue. The Government will have an interest in the railways. They are also in the position, so far as I can see, that they have handed over the right of the users of the railways to share in the possible development of the railways if a satisfactory net revenue is achieved. In the first place, for the purpose of the agreement, the standard net revenue will not be £56,000,000as determined by the Railway Rates Tribunal; it will be £68,500,000. We are not told if the user has a claim to come before the Railway Rates Tribunal or whether he will not be able to do so until the standard rate rises to £68,500,000 instead of £56,000,000. This is an extremely important change to every business man, manufacturer, and trader in the country. They are wondering whether that right to go before the Railway Rates Tribunal is finished. Section 59 of the Railways Act, 1921, provides for the periodical review of standard charges and exceptional rates by the Railway Rates Tribunal, and Sub-section (3) of the same Section provides as follows: If on any such review the rates tribunal find that the net revenue or the average annual net revenue obtained or which could, with efficient and and economic management, have been obtained, by the company during the period on the experience of which the review is based is substantially in excess of the standard revenue of the company, with such allowance (if any) as appears to the tribunal necessary to remunerate adequately any additional capital which may have been raised or provided in respect of expenditure on capital account incurred since the date upon which the standard charges were fixed in the first instance, the tribunal shall, unless they are of opinion that owing to a change in circumstances the excess is not likely to continue, modify all or any of the standard charges and make a corresponding general modification of the exceptional charges of the company so as to effect a reduction of the net revenue of the company in subsequent years to an extent equivalent to 80 per cent. of such excess. Therefore, the user has a right to four-fifths of the excess which the companies might earn. I want to know what has become of this right?

I have asked the right hon. and gallant Gentleman whether Excess Profits Tax is to be paid; if not, that will be another specific concession to the companies. We have heard a lot about a square deal. I hardly regard this as a square deal. The public feel, and I feel, that the Government have done wrong about it. Let us look at the consequences of what is going to happen at the end of the war. Has the Minister thought about what is going to happen at the end of the war? I think I can contemplate what will happen. The transport of Government war materials and other traffic will finish, and after demobilisation there may be a great fall in the railway net revenue. There may be an industrial slump. The position might well be not only as bad as the three years picked out, but worse than in those three years. They have the Government guarantee of £40,000,000. They might have been earning much more than £40,000,000 under the agreement, and suddenly you get a collapse. What is going to happen? The companies are going to have more publicity about a square deal, more claims for State assistance, and they might seek wage reductions which would, quite rightly, be resisted by the Trades Unions, What is going to happen? The companies will come to the Government and say they are going to be smashed unless the Government keep up their profits to the level at which they were when the war was on. I am sorry for the Govern- ment of that day. They will be up against a difficult problem. I ask the Minister what he thinks they would do about it. I know what we would do about it. We would say, "Gentlemen, you are in a bad way. The outlook is very black and miserable, and in the light of it we will take you over under terms of compensation."

Mr. Holdsworth

Would the right hon. Gentleman mind repeating the end of the last sentence? We cannot hear it, owing to the cheers.

Mr. Morrison

I said that we would say to the companies, "Your outlook is very black and very miserable. To take you over out of that blackness and misery, we will compensate you." There is nothing wrong about that. I am sure if Socialisation comes, if it is to be done, it will be good Manchester School Economics. I do not know what the Government are going to say, and I do not believe they know themselves, or have probably thought about this situation.

What will happen if we do get to the point of Socialisation after the war—and we may? I still have a little hope of the First Lord of the Admiralty. At the end of the last war he announced in Dundee—he went a long way off to do it—that the Government of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was going to nationalise the railways. It did not happen then, but one never knows. He may make the same promise again and this time it may happen. But if there is to be nationalisation, or Socialisation, whether right hon. Gentlemen opposite do it or we do it, do you know what the railway companies will argue? They will argue that the basis of compensation should be, not the £33,000,000 of 1938 or any such year but the profits bolstered up by His Majesty's Government during the war period. If you accept that basis of argument, then you are going to have a permanent burden on the transport undertakings, and on the users of railway undertakings in the country. As far as the claim to continued subsidy on the basis of this agreement is concerned, and as far as compensation in the event of Socialisation on the basis of this agreement is concerned, I say for myself, and I feel sure that I can speak for my party in this, that we must refuse in advance to be committed to those consequences of the Government's method of dealing with the transport situation during the war.

I have stated my criticism of the agreement, and I wish now to indicate to the House what we think would have been the better way, the more constructive and the more sensible way of dealing with this admittedly serious and important matter. In our view, during war-time, the case is strengthened and not weakened for the State taking over the effective direction of all forms of inland and coastwise transport. In war-time, especially in view of the possibility of internal aerial bombardment, it is more important than ever that there should be unity of command in the British transport system; that each form of transport should be used according to which can best do the specific job which has to be done, and, that moreover, if the physical properties of transport are upset and damaged by aerial bombardment, there should be somebody in executive authority over all forms of transport and in a position to decide, without any question of financial agreement or compensation arising, which other form of transport should come in and take the place of the damaged form of transport. In short, we want the Government and the management to have elbow-room and a free hand in time of war, in the use of the transport system. The system should be used as a unified whole. That is sheer common sense. We believe that doctrine to be sound in time of peace, and we believe that it is strengthened under the conditions of war in which we are at present.

It is still the case that there is friction between competing forms of transport. There is still friction between road and rail, and between rail and coastwise shipping. That ought not to be. That is contrary to the effectiveness of the national effort in war and it must mean waste. Moreover, under the conditions of emergency which arise in war it is better that the whole thing should be under one supreme direction. This policy of national ownership, national consultation, and have a national transport authority would accomplish one thing which needs to be accomplished in the world of transport. It would get rid of the suspicions which exist between various forms of transport and the suspicion, sometimes well-based and sometimes not well-based, that the Government in its own policy is favoring a particular form of transport. Those suspicions will be aroused as this agreement operates.

I think it was my hon. Friend the Member for South Shields (Mr. Dee) who last week put a semi-humorous question about Lord Stamp. A lot of people will be walking about wondering whether Lord Stamp has had anything to do with this agreement. For myself, from what I know of him I do not think for a moment that he would have had anything to do with it, or would have touched these negotiations at all. But hon. Members will see where the Government put themselves when they bring in a man who has one foot in the capitalist world and put him into the public service to advise them on economic policy. That puts him under suspicion. It was a most unwise thing to have done. People say, "Well, after all, he is helping them a lot and in this they are bound to think of him and be a little friendly towards his problems and make allowances." I do not believe it, but people say those things, and the Government should not, in their administration, place a man in a position which will bring both him and the Government under suspicion. If the Government want economic advice let them get it in the proper way. Let them have a proper Minister for the purpose. But I do not propose to go into that argument on this occasion.

It is the case, however, that the Government now have a direct interest in rail as against road traffics which Socialisation would have avoided. All transport clearly must depend on the good will of the Government, but under this agreement, in regard to this particular form of transport, the Government by their good will will be able to make vital changes in the capital values of stocks and shares on the market. An important chance has been lost to pool all these various forms of competing transport and it could have been done on reasonable terms. It could have been done, I believe, with the good will and assent of this House, as being necessary for the successful prosecution of the war. The Government had not the courage to do it. They preferred to tinker with the problem and to make this agreement with one class of undertaking, involving the Exchequer in risks of considerable charges and making away 'with the rights of the ordinary citizen to seek redress under the law of the land. We have this hotch-potch instead of the tidy clean-up of the whole transport situation, which could have been achieved, and we have left a very grave problem which will worry the Government of the day at the end of the war. This was really a conflict between public and private interests. It was a case in which it was the duty of the Government to have been moved solely by considerations of the public good and the public interest. I am afraid that the Government have been, I will not say solely, but too much moved by considerations of private interest in this matter.

4.39 p.m.

The Minister of Transport (Captain Wallace)

When, shortly before I made an announcement in the House last week in regard to this railway agreement, I happened to peruse some of the columns of the "Daily Herald," I anticipated that the announcement of the agreement would be followed, not only by a full-blooded denunciation in that organ, but also by something in the nature of a Vote of Censure on the Government from the benches opposite.. But when I saw on the Order Paper last Friday morning the Motion which we are now discussing, I came to the conclusion, and I think it was generally noted in the Press, that the party opposite did not think the railway agreement such a bad one after all. Having listened with great interest to the right hon. Gentleman this afternoon—and it is always a pleasure to listen to him, particularly when he is dealing with a subject which is very near his heart—I am rather uncertain whether he meant to give us a full-blooded denunciation of the agreement, or whether he and his friends are using it only as a peg upon which to hang a Debate on a much wider subject.

No doubt the Debate during the rest of the day may cover an even wider range than that on which the right hon. Gentleman has already touched. Certainly, we on this side look forward with considerable interest to getting from hon. Members opposite some further elucidation of the proposal that now, in time of war, we should set up a permanent trans- port authority to own and control all forms of transport. We shall particularly look, and I am sure we shall not look in vain, to the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick Lawrence), who has been Financial Secretary to the Treasury, and who is, I understand, to wind up this Debate, to give us the views of the party opposite on the financial implications of such a gigantic operation. But however far subsequent speakers may go, I imagine it is my first duty to the House to give some account of the railway agreement and such explanations as could not be given in reply to a question or even in the White Paper. I hope that, as I go along, I shall succeed in answering all the right hon. Gentleman's criticisms. If I fail I hope he will remind me at the end. I imagine that no one will dispute the need for the control of railway transport undertakings in time of war. The Government must be in a position to direct that the railway system as a whole should be used to the best advantage in the national cause, irrespective of the private interests of the various undertakings. The Government must be able in these times to direct that essential traffics should have priority and that the traffic should be carried in the manner which is most advantageous for the prosecution of the war.

The financial arrangements are all based on the general principle that the receipts of the controlled undertakings should be pooled. That, again, is a principle with which I do not think there will be any quarrel. The pooling of finance is obviously essential to unified operation. It was also clearly necessary that the London Passenger Transport Board should be included in the pool. The traffic receipts of Greater London, which amount to some £40,000,000 a year, form an appreciable fraction of the total receipts of the controlled undertakings, which altogether amount to some £200,000,000. Furthermore, London traffic receipts are inextricably mixed up with the receipts of the main line railway companies in normal times through the London Traffic Pool, set up under the London Passenger Transport Act of 1933 of which the right hon. Gentleman opposite may claim to be the father. Two classes of investments held by the main line railway companies are of set purpose excluded from the pool—first, holdings in Irish railways, because we do not control the operation of the railways either in Northern Ireland or in Eire, and, second, investments in road transport, because it would clearly have created difficulties and anomalies to have guaranteed the investments of the main tine railway companies in road transport when we were not guaranteeing other people's investments in that industry.

I hope the House will allow me to take them back for a moment to the railway agreement which was made in the last war, because it seems to be very germane to what we are trying to do on this occasion. In 1914–18 the Government guaranteed the railway companies their net revenue of the year 1913, which happened to be a bumper year. Inconsequence the railway companies were paid by the Government £48,000,000 a year for seven years under the guarantee, and at the end of the control period the Government of the day had to pay, under the Railway Companies Act of 1921, a further sum of £60,000,000 for deferred liabilities. During the last war, as the right hon. Member for South Hackney (Mr. H. Morrison) has told the House, Government traffic was conveyed under warrant and nobody knew how much it cost. A situation of that kind is obviously open to the possibility of serious abuse, and, perhaps more important still, there is no incentive whatever to railway management to be economical or efficient.

The whole foundation of the present plan is that the railway system operates under the Railway Executive Committee upon an economic basis. I should like to emphasise the words "upon an economic basis." In the first place, it has the advantage of reality; we can keep our feet on the ground, so to speak. We pay for the use of the railways as we use them and there is no postponement of liabilities which have to be met by our successors. Secondly, through the principle of profit sharing, which the right hon. Gentleman the Member for South Hackney has already described, we do our utmost to encourage the management to combine economy with efficiency. I hope the House will forgive me if I just run through the four stages of this agreement, not because I quarrel with the description which the right hon. Gentleman the Member for South Hackney gave, but because I think it is as well that it should be put on record.

There are four stages in this partnership. First of all, there is a minimum net revenue guaranteed by the Government; secondly, a further amount which the controlled undertakings may retain in excess of that minimum; thirdly, a stage of profit-sharing upon a 50–50 basis which extends to the point where each of the controlled undertakings would reach its standard revenue as defined by Act of Parliament; and fourthly, above this, all additional net earnings accrue to the Exchequer. The right hon. Member for South Hackney has already referred to the guaranteed minimum, and I do not for one moment resent his criticism. I would, however, like to explain how the guaranteed minimum was arrived at. It was fixed in the case of the four main line railways at the average net revenue, for the three years 1935, 1936 and 1937. It is certainly appreciably above the revenue for the year 1938, but that was a year in which railway revenues were abnormally depressed owing to various causes, including of course, the serious international situation. In 1939—and I think this should be noted in fairness—there was a marked upward trend in railway receipts, and, for the last six months which preceded the declaration of war, railway traffic showed an improvement of over £4,000,000, or 5 per cent.

Mr. Benjamin Smith

If you know that you ought to be able to give us the figure for 1939.

Captain Wallace

I am afraid I cannot. I cannot go further than the last six months before the war.

Mr. H. Morrison

Is that gross receipts?

Captain Wallace

It is the net revenue for the last six months before the war. I think that reinforces the point I have already made, that 1938 was not simply a bad year in a steadily declining position, but an exceptionally bad year, and the curve had already started to go the other way. Generally speaking, I think, and I have read papers of all shades of opinion, there is not very much serious criticism of what I may call the datum line.

In the case of the London Passenger Transport Board we were not faced with these particular difficulties. Therefore, we simply took the last complete accounting year before the war, that is the year ending 30th June, 1939, when the net revenue of the undertaking was £4,500,000. If we had taken for the London Passenger Transport Board the same base period as for the railways, that would have given a return of 4 per cent. on the London Passenger Transport Board "Cassock. A return of this kind, on the realistic basis on which we have made this agreement, would in our view have been too generous; for while the railway companies may reasonably expect to earn more in war-time owing to the greatly increased use of their system, the London Passenger Transport Board on the other hand is likely to suffer owing to evacuation from London and restriction of petrol supplies limiting the use of their buses.

As regards the second stage—if it be generally conceded as a principle that extra work gives claim to extra pay—I do not think hon. Members will quarrel with the proposal that at any rate some part of the earnings in excess of the guaranteed minimum should accrue to the undertakings. The figure of £3,500,000—that is the first jump from the minimum to what we may call stage two—is some recognition of extra work falling upon the railways and at the same time a consideration for the inclusion in the control account of the London Passenger Transport Board which, as I have already pointed out, is likely to be, vis-a-vis the four main line railway companies, rather a liability than an asset; and finally, for the inclusion in the account of the receipts and expenses of the requisitioning of privately, owned railway wagons.

The third stage is when the net revenue earnings of the undertakings exceed £43,400,000, if they do reach that figure, up to the point where each of the undertakings obtains its standard revenue. During this period the Government and the undertakings go halves in any excess in the pool. As the financial position of the different companies varies, it is clear that some will reach their standard revenue before others. It is, therefore, provided that so soon as each one of the controlled undertakings reaches its standard revenue any additional earnings are to be divided amongst the others until they in their turn reach their standard revenue. Finally, as the right hon. Gentleman the Member for South Hackney has told the House, if we reach a figure which gives to the controlled undertakings their standard revenue, and which would at that time be contributing £12,500,000 to the Exchequer, then my right hon. Friend the Chancellor of the Exchequer steps in and takes anything that is earned after that.

This question of net earnings is, of course, bound up with the Excess Profits Tax about which the right hon. Gentleman the Member for South Hackney has already asked me a question. The agreement gives to the railways and the London Passenger Transport Board no statutory exemption from the Excess Profits Tax. The agreement, therefore, in no way affects the liability of the companies or the Board in respect of Excess Profits Tax, in so far as their profits, including their shares of net revenue from the pool, are concerned. If I am asked, as I think the right hon. Member for South Hackney has asked me, whether in fact these undertakings will be called upon to pay Excess Profits Tax, I can only refer the right hon. Gentleman to the provisions of the Second Finance Act of last year, which was the genesis of the Excess Profits Tax. In that Act the taxpayer is given various alternatives as to the choice of his standard. The question of liability of the railways must, therefore, depend upon the basis which it is ultimately decided, within the machinery of that Act, is appropriate in their case. I want to make it perfectly clear that this agreement gives them no privileges or exemptions which do not apply to anybody else.

Another very important point of this agreement is that which deals with maintenance. When the railways were controlled in the last war repair expenditure was not specifically limited. The companies were allowed to make provision for renewals and to make claims for arrears of repairs. It happened, therefore, that, when owing to shortage of materials assets were kept in being after their normal renewal date by means of expensive repairs, the cost of these repairs was borne by the Government while the companies continued to receive the normal renewal provisions which, being unable to use them for renewals, they carried to their own funds. In many cases the standard of maintenance of permanent way and buildings was reduced as a wartime measure, thus creating arrears of maintenance for which heavy claims were made on the Exchequer. On the other hand, the maintenance expenditure on rolling stock was "in excess" and the whole of this expenditure was charged to Government account. I think the House will agree that from every point of view that was an unsatisfactory situation. It is intended in the present agreement that all these defects shall be removed by the agreed "standard maintenance allowance," and this standard maintenance allowance will limit the charges for repairs and renewals of all descriptions to the corresponding charges in the base period, except in so far as the cost of labour and material can be shown to have increased, or the quantity of assets to be maintained has varied. If they create more assets which they will have to maintain they will get more allowance, but if certain assets are written off they will not get anything to maintain them. The amount allowed for maintenance ought to be perfectly adequate, because it is based on a series of pre-war years, 1935, 1936, and 1937, when circumstances were normal, and the technical advisers of the companies reported that the assets were being maintained in good working condition and repair.

The allowance on this basis is to be adjusted in respect of any variation of the quantities of assets maintained and of any expenditure on making good abnormal wear and tear which can be established to the satisfaction of the Minister of Transport. Closely bound up with the question of maintenance is that of war damage. It will be seen from paragraph 9 (b) of the White Paper that the cost of restoring war damage up to a maximum of £10,000,000 in any full year, and pro rata if the control period extends into a broken year, is to be charged to revenue expenditure when the damage occurs.

Mr. Walkden

Does that mean traffic wear and tear or damage by bombs?

Captain Wallace

War damage means damage by bombs and things of that kind—damage by enemy action. The cost of the damage in excess of this figure—and I hope this is a situation which will remain, as it is now, entirely hypothetical—will fall to be dealt with at the end of the war in the same way as war damage sustained by other property-owners in general and public utility undertakings in particular. Each year is to stand alone and there will not be any carry over. If the railways suffer £5,000,000 war damage in one year they cannot be allowed to charge more than £10,000,000 next year to revenue. I now come naturally to the question to which the right hon. Gentleman devoted the greater part of his speech.

Mr. Pethick-Lawrence

If the right hon. Gentleman has finished giving us the facts, would he reply to a question which he has not answered so far? He told us that the Government will pay for their user of the railways; the phrase "appropriate charge" was used by the Chancellor of the Exchequer or somebody else; and we want to know on what basis the Government will pay for their user as a consumer of the railways. Is it to be the normal basis on which other people pay, or will there be a substantial reduction?

Captain Wallace

I was just coming to that. I am grateful to the right hon. Gentleman for giving me the chance of sitting down a moment and of being told that I have made an error, for which I apologise. When I referred to the increase in the receipts of the railway companies during the six months preceding the war, I said they were net receipts. They are, in fact, gross receipts.

I turn to the major question of charges which is of paramount importance to the consuming public. I should like to say categorically that the right hon. Gentleman is wrong in suggesting that the Government intend to use their control of the railways to extract what he called monopoly profits out of an industry whose competitors, as he rightly said., have been handicapped by circumstances over which none of us has any control. We intend, so far as charges are concerned, that the controlled undertakings shall operate upon an economic basis. This means the adjustment of charges to variations in working costs, including wage rates, prices of material and other circumstances arising directly out of the war, such as the cost of making good war damage or, in the case of the Transport Board, the cost of making good the loss of earnings. It is not possible under the stress of war conditions to retain the jurisdiction of the Railway Rates Tribunal over the general level of charges. Although it is not possible, because of the necessity for quicker decisions than can be obtained by the machinery of the tribunal, to retain its jurisdiction exactly as it is in peace-time, we do not intend that the safeguards should be abandoned. It is proposed that the Minister of Transport shall by Order under the Defence Regulations adjust the rates, fares and charges in operation at the outbreak of the war to meet variations in working costs and other conditions. The machinery for effecting this adjustment will be as follows. The Railway Executive Committee will estimate periodically the effect of these variations and other war conditions and submit a statement to the Minister. This statement will be examined carefully by my advisers. For some months past I have been setting up a special Department at the Ministry of Transport, headed by a distinguished ex-civil servant—Sir Arthur Eborall—to deal with the question of rates. If it appears that an adjustment of charges is justified the Minister will, unless he considers it in the circumstances unnecessary or undesirable, seek the advice of the permanent members of the Railway Rates Tribunal acting in an advisory capacity. This means that I and my officers will have the advice of the same people who com posed the tribunal. Any representations by a representative body of users as to the level of charges will be considered by the Minister, and, if necessary, referred to the consultative committee for advice. It is an integral part of the agreement that all Government traffics will be paid for by the Department concerned

Mr. H. Morrison

Will the Orders of the Minister to modify the rates and charges be laid on the Table of the House, or submitted to the House for approval so that we can have a real opportunity of challenging them?

Captain Wallace

I cannot say that offhand but I will let the right hon. Gentleman know before the end of the Debate. We are already in negotiation with the companies with regard to fixing charges for Government traffic. It is agreed that the charges will be fixed broadly on the same considerations as would apply to large commercial concerns. The volume and regularity of the traffic will be taken into account in fixing the charges, but we do not propose to go further than the terms which the companies would normally give to a consumer of transport who was offering the amount and regularity of traffic which we shall offer. Any dispute as to the charges to be paid cannot in a case like this be settled by the ipse dixit of the Minister of Transport, so it is proposed to refer it to the chairman of the Railway Rates Tribunal as arbitrator, with the other two members as assessors.

Mr. Holdsworth

The right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) put an important point which I would like the Minister to answer. At the present time a private trader can apply for special rates and privileges. Are those to be taken away?

Captain Wallace

That is another question of which I have a note, and it will be answered before the end of the Debate. Before he came on to the wider question the right hon. Gentleman asked what would happen to the railway charges after the war. A great many things will happen after the war which we cannot foresee now, but this is not a problem which seems to me to be particularly obscure. The railway charges after the war will find their economic level, as they will do during the war in accordance with this agreement. There is no intention of increasing charges during the war simply in order to increase profits. In other words, if increased profits are obtained they will be obtained for the most legitimate reason, that is, because extra work by the railways has entitled them to extra remuneration. The charges will not be artificially bolstered up, and to say that they will is a complete distortion of the agreement. They will only rise as a rise is found necessary to meet an increased level of wages, increased prices of material or working conditions due to the war. It will have been noted that the day after the agreement was signed the railway trade unions obtained an advance in wages to compensate for the extra work they are doing.

Mr. Woodburn

In connection with other agreements which the Government have made for armament construction regard is had to the increased turnover and, therefore, the reduced overhead charges. Will that consideration be taken into account in regard to the extra railway charges?

Captain Wallace

All I can say is that all proper considerations will be taken into account. I would say to the hon. Gentleman that if we had not made this agreement and if the railway companies had been left, having had many lean years, to operate by themselves during the war, they would have made more money than they will make out of the agreement.

The right hon. Gentleman touched on another point with regard to the agreement when he said that he saw in the Press that the railway companies were taking advantage of the present situation to buy up road transport concerns at knock-out prices in order that they could have a stranglehold on the industry after the war. My officials have made the most careful inquiry and they cannot find any case of the kind. I hope, therefore, either that the right hon. Gentleman will substantiate that accusation, in which case I shall be glad to apologise or that he will apoogise for making it.

Mr. H. Morrison

I have not made the accusation. I said what I did say with a note of interrogation. The information having come to me, I asked a question and the right hon. Gentleman has partly earned his salary by answering it.

Captain Wallace

The right hon. Gentleman knows all the tricks of the trade. With regard to that part of the right hon. Gentleman's speech which dealt with excess profits and with large rises in shares, does it not seem to hon. Members, as it seems to me, that, when we talk about the so-called spectacular rises in some of the shares during the recent weeks, it points to the lamentably low levels to which they have fallen in recent years and to the very poor return which investors who helped to build our railways have had on their capital? I might also say that the mere fact that the Stock Exchange takes a particular view of the agreement does not necessarily mean that it is either a bad one in principle or that it will prove too generous in practice.

Mr. Woodburn

The right hon. Gentleman said that the excess profits were being granted as a kind of profit sharing arrangement. I am not clear about this. Profit sharing arrangements are usually grants to workmen and others who can contribute to approved efficiency. Will he tell us how the shareholders are going to improve the efficiency of the railways?

Captain Wallace

If it had not been for the shareholders, the railways would not have been built at all.

Now I should like to say a few words on the wider question raised in the Motion. It suggests, if I read it aright, that we should, in the middle of this war, make a great change in our transport organisation as a permanent measure. What I should really like to know, and what I hope we shall be told later, is what is the object of this proposal. Is it to secure increased efficiency in operation or is it designed to achieve economies in the financial sphere? On the right hon. Gentleman's own argument, if it is designed simply to achieve economies in the financial sphere, and if he is right that the companies are going to be in a bad position after the war compared with what they are now, he and his friends will be able to put the screw on much more then than they could at present. I imagine, however, that he would not be as Machiavellian as that, and that the object of this proposal is with the idea of securing increased efficiency in operation. As far as the railways and the London Passenger Transport Board are concerned, the Government already exercises a measure of control, which retains for the Government the ultimate authority on policy and at the same time leaves the day to day operation of all these controlled undertakings and their vast ramifications in the hands of the professionals. The same men are operating the railways and the same men are driving the London buses now as before they were controlled. I cannot believe that the mere acquisition by the Government of the capital in these concerns, no matter what price they were going to give, would result, at any rate during the war, in any change whatever in the management of the controlled undertakings.

The road transport industry presents, from the operational point of view, an entirely different problem from that of the railways and the Passenger Transport Board because, instead of five large, integrated undertakings, we are concerned with half a million vehicles owned by 200,000 separate individuals. I know it has been suggested that we ought to have taken the whole lot over, lock, stock and barrel, at the outbreak of war. I honestly believe that if we had tried to do so, we should have frozen stiff the whole fleet of vehicles for weeks or even months. Our method of dealing with the transport industry is to take the advice of the people who have practical knowledge of running it and, more than two years ago, we consulted the Roads (Defence) Advisory Committee, which is made up of men in the transport business and in organised transport labour. With their co-operation we evolved the emergency scheme which is working to-day. Under it units operating in the same locality are grouped under their own organisers and sub-district managers, men in the transport industry chosen by their fellows who are doing yeoman service in circumstances in which they get a very much bigger ration of kicks than they do of halfpence. It seems to me that by this characteristically British mixture of voluntary effort and State action we have developed an organisation which is extremely resilient and which every day becomes more efficient and more ready to deal with the type of emergency that we may yet have to face.

The right hon. Gentleman put an interesting point about the Government being able to call upon transport in an emergency. His idea was, I think, that if the railways broke down in any particular district we should be able to call on road transport. As it is, the Regional Transport Commissioners have complete powers, if necessary, to requisition all the road transport that there is. I can assure the right hon. Gentleman that, from the operational point of view, we are doing just as well under my scheme as we should under his. I know that there are some difficulties and complaints. It was inevitable in a situation where the road transport industry was faced on the one hand with additional traffic offering and, on the other, with the necessity of cutting down its ration of petrol to something like 75 per cent. of the pre-war figure. Here again I do not believe, even if it were possible during the war to discover some equitable basis upon which the Government could buy out the holders of A and B licences—I quite agree with the hon. Member for Rotherhithe (Mr. Benjamin Smith) that you would not have to touch all the C licences—the method of operating road transport could or would with advantage be substantially altered, at any rate during the war.

I do not want to suggest for a moment that the detailed workings of the scheme are not capable of improvement. I sincerely hope they are. I can assure hon. Members on all sides of the House, to whom I frequently write long letters of explanation about the petrol ration, that we at the Ministry of Transport are only too ready to listen to advice and to receive with gratitude helpful suggestions. We have to receive complaints whether we like them or not. A few days before the Motion appeared on the Order Paper I had already invited the Transport Advisory Council to consider, by means of an ad hoc committee, whether the operators of all kinds of transport, including representatives of labour, held the view that by some substantial rearrangement of methods of working in time of war a more efficient and economic transport service could be offered to the public than that at present available. I hope they will be able to consider that question and to give us the benefit of their expert views. The day after to-morrow I intend to receive an influential deputation dealing particularly with the road haulage industry.

It is always a very dangerous thing to swop horses in the middle of a stream, particularly in the middle of a stream which is so turbulent and so liable to flood as the one we are crossing. Moreover it would not be easy to do the thing in a few days or weeks or even months. The right hon. Gentleman knows as well as I do that, although the London Passenger Transport Act received the Royal Assent on 13th April, 1933, a good three years before that he had been on the job, I believe he, at any rate, would be prepared to concede that it would probably take three years to create another new Transport Board which would cover not merely Great London, but the whole of the country. Incidentally, I do not think he will object to my saying that, even when the London Passenger Transport Board was created, it was some time before its customers began to feel the benefit.

I should like to say a word on the subject of canals. It may be asked why the Government does not control the canals in the same way as the railways. It is very easy to draw a fallacious analogy between the two. You can run a railway truck through from Penzance to Wick on the same gauge. But while you can have a craft seventeen feet six inches wide and seven feet six draught on the Aire and Calder canal, on the Oxford Canal you could only have a boat seven feet wide and three feet six draught. The railway companies have not only all their own equipment but the vast majority of their own rolling stock. In fact, now that we have requisitioned privately-owned wagons, you may say they have the whole. Even more than that, the people who use the canals are a numerous body. I picked up this morning a little handbook on inland waterways which the Canals Joint Committee have just published. When I opened it at the first entry, Aire and Calder Canal, I found a list of no fewer than 80 names of the "principal carriers of traffic on the Navigation." The canals are a formidable problem because of what I may call their diversity of gauge, and the multiplicity of people whose barges ply upon them.

Mr. Walkden

In the last war the Government found it very expedient to take control.

Captain Wallace

I am aware of that, but a good deal of the burden of my remarks to-day has been devoted to the thesis that a number of things which the Government did in the last war in control of these transport undertakings turned out not to be very sound. But I do not want to bandy words with the hon. Member about it. He will be glad to hear that I am awaiting definite proposals, in response to my invitation, from the canal interests as to the action which they think should be taken to secure the greater use of canal transport in time of war.

The last thing dealt with in the Motion is the question of coastwise shipping. It is by no means easy to determine precisely what comes within that description, because the term "coasting tramp" covers ships engaged both in the coasting and near-Continental trade. [An Hon. Member: "13 per cent."] That is an appreciable percentage. So that any plan for Government ownership and control of coastwise shipping is far more complicated than that of the canals. In peace-time—and the Motion deals with peace-time—State control certainly would not resolve the difficulty of foreign tonnage operating on the coast. To exclude that tonnage would raise wide issues of general shipping policy, and provide an inducement for other nations to take retaliatory action. So far as the present war is concerned what matters most to the House this afternoon is that, for coastwise shipping, which, in common with all other British shipping, is controlled by my right hon. Friend the Minister of Shipping, there is a licensing system devised to secure the most economical use of all available tonnage. I cannot for the life of me see how transference to State ownership could add to the effectiveness of that control, which appears to be 100 per cent. at the present moment.

I regret that I have trespassed so long upon the time of the House, but, in conclusion, I would like to make one comment. The Motion on the Paper, if one reads it dispassionately, seems to suggest that it was only when hon. Gentlemen opposite read Command Paper 6168 that they came down in favour of a national transport authority. If that be really the case—and perhaps they will forgive me for being somewhat sceptical on the point—I can only hope that my remarks, to which the House has listened with such exemplary patience, will convince the Labour party that the Railway Agreement is really a good one and that, having retreated from full-blooded denunciation to a position of mild censure, hon. Gentlemen will retreat one step further and withdraw the whole Motion.

5.32 p.m.

Mr. Graham White

I do not want to enter into the argument between the Minister of Transport and the right hon. Member for South Hackney (Mr. H. Morrison) as to how far the terms of the Motion depended upon Command Paper 6168, but I think that the right hon. Member has rendered a service in giving us the opportunity of discussing transport matters. It is vitally important that the country should be aware of many aspects of the transport problems at the present time and of the direction in which we are moving. The right hon. Member was speaking with the authority of a former Minister of Transport. He was responsible for the great experiment in the consolidation of traffic in this country, and there are a number of arguments to his credit which are a powerful contribution to this discussion; I do not know whether the right hon. Member thinks that he has had a satisfactory reply to them or not, but they are an important contribution, and they will need the attention of all those who have been called upon to give their minds to these problems.

I hope that the discussion of this Motion will not take the turn that there has been a hard bargain between the companies and the State and I hope that that attitude will not prevail with regard to any consequences which may flow from this agreement either during the war or afterwards. The right hon. and gallant Gentleman put to the House a moment ago the question: What would be the practical advantage if all the capital of the railway companies were transferred to the State? The answer is, "Exactly nothing," and if that were the only object in view I do not think that anybody would worry very much about it. It would be merely a question of what was a fair value to pay for the stock upon taking it over. I take it that no one suggests that the railways should be taken over without the payment of any compensation to the present owners; I have not heard that suggestion made and I do not gather that it is made. Whenever it is decided to take over the railways it will be essential that a fair deal be arranged with the existing owners.

In the few remarks which I wish to address to the House I am fully aware that these are not times in which we can afford to be generous; but we have to try to be just. If the transfer of railway capital to the State will, in itself, carry no consequences whatever in relation to efficiency, technique and control of the transport system of this country, what is it that those who are interested in this problem have in their minds in respect of the present arrangement? I will endeavour to state in my own language what I think it is. The right hon. and gallant Gentleman knows well, and nobody knows better, that the railway companies and the transport system of this country are grappling with very serious problems at the present time. Some of those problems were with us before the war; and he must be aware of the immense daily losses which are incurred by industry of one kind or another because of the delays which take place in many directions. I do not want to go into detail on this matter, but we know that at the present moment he and those who are working with him from the Ministry of Shipping are grappling with the difficult problem of congestion at the ports. He must be envisaging the possibility of a still wider organization, and its consequences.

We know the sort of thing which those who have to give their minds to this problem must have in hand. Until recently we have lived in an island, and we have a habit of regarding all our transactions, whether political or industrial, as purely domestic concerns, affecting us alone. We have paid no, or very little, attention to foreign impact. All that position has now gone. It has gone with the wind, gone with the war. The right hon. and gallant Gentleman is quite right when he poses the question whether this is the moment in which it will be possible to carry out a large and comprehensive reorganisation of all the traffic and transport services of this country; but that only begs the question. In every transaction into which we enter in this House, whether it is political or economic, we have to remember that it is overridden now by impacts from abroad; and we shall be a long time before we, in this island, can regard any of our transactions as purely domestic.

In future, all our transactions are likely to be influenced by foreign impact. It is precisely for that reason that many of us are in doubt whether there is efficient control and co-ordination and smooth cooperation between all the elements of transport in this country. If the right hon. and gallant Gentleman has not sufficient power in his hands to see that there is this proper, smooth working and co-operation between all the forms of transport, including coastwise shipping, and that there is completely satisfactory co-ordination between the railways and coastwise shipping at the present time, I hope he will not hesitate to come to the House of Commons and ask for them. What we nee disunity of control over all the elements of transport.

Reference was made a moment ago to the fact that in 1916 the railway executives appealed to the Government to divert traffic to the canals. I do not know whether the right hon. and gallant Gentle- man would say for certain that there is no possibility now of that situation arising again. It would be a great advantage if he were fully responsible for the canals. At this moment they are losing traffic, and there seems to be every prospect that they will be squeezed out of existence altogether. It may well arise before the end of the war, with the present dislocation of traffic and the necessity of diverting traffic from one direction to another, that the canals will have to play an important part in the transport affairs of our country.

The point that we on these benches wish should be borne in mind is that there should be an efficient war-time effort in regard to the transport of this country. We cannot feel satisfied that there is such an effort at this moment. We should welcome some sort of unified control. In passing I would point out that, since 1921, there has been a great volume of practical experience and of industrial practice which has brought that problem very much nearer to the realm of actuality. The right hon. Member must have felt, when he was speaking to-day, that he was not taking part in a sham fight, or that fight was less sham than some of the Debates which we have had in this House upon nationalisation. There has naturally been an evolution since 1921, and sooner or later this House will have to state what form of organisation, technique and control it wishes, in the interests of the nation, to be in control of our national transport system.

If I may leave those aspects of the question for a moment, I would say one or two words about the present agreement. I was not very much impressed—I never am—about the solid nature of arguments founded upon the fluctuations of Stock Exchange quotations. After all, somebody buys, and I suppose, hopes to win, and then perhaps risks being regarded as a rogue; and somebody sells, but we do not waste compassion upon him. People say, "Poor chap."This is a very shifting sand on which to build a substantial argument. The value of railway stock must always be the capitalised value of what it can earn. That being the case, it must always be the best indication of the position. I have heard railway companies addressed with every form of malediction and abuse, except that I have never heard applied to a railway company the term "profiteer." [An Hon. Member: "There is no profit."] The hon. Member confirms what I say. Railway companies have never been called profiteers, and I ask myself whether, if the maximum profits and net revenue which the companies expect—I do not think they get anywhere near it—reached 4.6 per cent. of the ordinary stock, anybody would call the companies profiteers because they had reached that dizzy height of profit.

Railway companies are not, any more than anybody else, entitled to improve their position merely because the country is at war. I was glad that the right hon. and gallant Gentleman cleared up the situation, partially at all events, with regard to the Excess Profits Tax. Railway companies are like everybody else. I am not quite clear about what their position will be, and I wish the right hon. and gallant Gentleman could have given us a little more guidance. If he had told us that they would be treated on the basis of the three years 1935–6–7 we should have known where we were, and perhaps some of those gentlemen or ladies, or whoever they are, who have bought railway securities in the hope of a permanent rise, would not be quite so optimistic.

Captain Wallace

I do not think that I would have any authority at all to decide the standard to be adopted under the second Finance Act of last year.

Mr. White

I agree, and I am obliged to the right hon. and gallant Gentleman. If the basis is to be the three years, which is chosen for the purposes of the agreement, or, on the other hand, if it is to be based upon 6 per cent. on the capital, the results will be very different, according to which level is chosen. If it should happen to be the lower level, I think the position of the railway shareholder will be one of the general atmosphere of mortification in which he must regard his position. It would appear that the most probable outcome of this agreement is that the railway companies will get a return of something like 3½ per cent. That perhaps is as good a case as any other that can be made, but, on the terms of the agreement itself, it is right that the traffic should be pooled in order that no company should get any advantage out of the special war traffic. I think myself that it is right that these three years should be chosen. The right hon. Gentleman rather criticised the year 1938. I believe it was common ground that the year 1938 was one in which the conditions which prevailed were unfair to the railway companies, and it has been attempted to put that unfairness right by the agreement made in 1939. The companies ought to have some advantage from trying to maintain the economic and efficient working of their machine, which, I think, is given to them under this agreement.

I do not know, and I would like to ask, why the extra sum of £3,500,000 should have been added to the income before the taxpayer begins to put his hand into the pool. If you look at the agreement from the point of view of the taxpayer, if he does not take guidance from the headline in the newspapers, which was that the taxpayer has to guarantee the payment of £40,000,000 to the railways, if he is apprehensive on that point, I do not think that anybody is likely to suggest that the taxpayer is likely ever to be called upon for a penny of the original guarantee. He may hope to benefit as the net increase rises, but whether he will in fact benefit at all is still a matter of speculation. He might get in the aggregate a sum of £12,500,000, enhanced by a certain sum for Income Tax and for Excess Profits Tax. Roughly, it would not appear that an injustice is being done by this agreement. There is, however, one aspect of it which calls for some further consideration, and for more explanation than has been given to it, and that is the arrangement whereby the railway companies are put into a totally different position from anyone else in the country. They are immune, as far as any charges on their income is concerned, from any liability through rising costs and so forth. They are to be permitted relaxed conditions to increase their charges. This raises a very wide matter of public policy. Is this an isolated act by the Ministry of Transport, or is it part and parcel of the full economic policy of the country as a whole in war-time? It is quite obvious that an increase in railway charges might have the effect of causing a reaction on the cost of living and on the whole course of transacting business.

Captain Wallace

The speech of the hon. Gentleman has been very helpful so far, but I would like to make it clear that any increases of charges will require the authority of the Minister of Transport. Therefore, the action of the Minister of Transport can be called into question in this House, which I suggest is the best safeguard that anyone could have.

Mr. Benjamin Smith

Is it the intention of the Minister to lay Papers in this House?

Captain Wallace

No, Sir. The Minister will consult, unless he thinks that the increases are so abundantly justified that he is prepared to sanction them without the advice of the consultative committee and take the responsibility himself. He is not very likely to do that, except in the case where it is clear that he knows that he carries the House with him. Otherwise, he will consult the committee, and then having taken the advice of the committee or not, he has to justify his action. I do not think he will lay Papers, but the action of the Minister of Transport is very definitely before this House.

Mr. Smith

In so far as the Department will have the final word on this, will the Minister consider the question of laying Papers in this House, so that all hon. Members, not by means of question and answer, or by asking for a day for discussion, might have some means of discussing these changes?

Mr. White

I do not wish to continue that point. It is an important consideration, that in a matter of that kind the action of the Minister can be challenged in this House, and it is not departing wholesale from the control of Parliament. What I had in mind—and it is obviously an important matter—was whether this is being considered departmentally. We want to get away, in the conduct of this war, from administrative action being carried on in isolation. I would ask further whether this matter has been considered by Lord Stamp and his colleagues, who are the authority, we understand, for co-ordinating the whole of the economic policy of the Government? We have seen in this war—and it is vital that it should be changed—that there is far too much departmental isolation, and we do not want to see it repeated in our transport affairs. It is a sort of policy of hit or miss, advance or retreat, of which we have seen an excellent example in the Ministry of Food and the Ministry of Agriculture. Behind every Member in this House, whether hon. Members intend to vote for this Motion or not, there must be the feeling that, in connection with transport, be it the Mercantile Marine, the railways, the canals and coastwise shipping, or road transport, it is essential, if we are to make our maximum effort, that there must be a unified policy and a unified control. I think that I am speaking for my friends here when I say that.

No doubt, sooner or later, we shall be called upon to consider these matters in greater detail. We may be called upon to consider the financial aspects, and I want to make the position quite clear. The right hon. Gentleman said that the Agreement has been made with a view to nationalisation; it was in fact a stage towards nationalisation. It is said to be the half-way house. But it is far more than the half-way house. From the moment there is conceded to the equity shareholder a guarantee, his function becomes as innocuous as a stockholder or shareholder in the Bank of England. I ask myself, supposing a scheme were put forward to-day, who besides the hon. Member for South Bradford (Mr. Holdsworth) would oppose it? Certainly no stockholders in the railway companies would oppose it. Why should they after their mortifying and disastrous experience in the past? A guarantee, however small, would be the security which they would willingly exchange for the perils and uncertainties of the post-war period. We are guided in this matter by the practical desire to see the maximum possible war effort got out of the railways and out of the whole transport forces of the country.

5.57 p.m.

Mr. Benjamin Smith

A good deal of attention has been paid to the statement of the Minister. The major part of his speech was merely a crossing of the i's and dotting of the it's of the Command Paper as it affects the railway interests. As to the larger question of co-ordination, ownership and control, my colleagues on these benches and I yield to no men in our demand that ultimately the ownership and control of all forms of transport shall be in the hands of the country. I am going to carry the Debate right away from the financial side of the terms of the Motion, except to say that the whole of the Press thinks that the shareholders of the railways have had a square deal. The Minister thinks it is a good agreement, and if everybody opposite thinks that it is a good agreement it is a warrantable assumption on this side of the House to say that it must be a bad one for the country. The Minister told us that, whatever they had done in this agreement, it had been done in order to rectify the possibility of a repetition of the raw deal in the last war. That is what he said in so many words.

I raise this issue in no ideological sense to-day. I raise the issue of the co-ordination of all forms of transport as a war measure, and I propose, before I sit down, to help the Minister not only with advice from these benches, but with advice from almost every committee that has been set up by the Government in the last 10 years, to do what we ask him to do in this connection to-day. The Minister contends that the Government cannot take over the road transport section on anything like the same terms as the taking over of the railways. If it is an essential part of the policy of the Government for the successful conduct of the war to take over one element of transport, is it not reasonably right to take over all forms of transport, since they will and must inevitably contribute to the success of the war? The Minister shakes his head. This is a square deal all right for the railway. Is there to be a square deal for the road transport industry?

Whatever one says about the management of the railways and their attitude in the past to road haulage, this at least can be said now. They have joined, and will continue to join, with the road transport operators—and I will seek to prove that before I sit down—to ask that a measure of co-ordination shall be brought into being; and the railways, in anticipation of that, have played the game with the road transport operators up and down the country. That cannot be said for the Government. The Government, by virtue of their control over the railways to-day, are in fact a competitor with other forms of transport. There is no question about that. How are they using their powers?

I have here a document relating to a deputation which was received by a Mr. H. W. Steele, a district transport officer. He stated to the deputation that he could make no commitment with regard to petrol rationing or supplemental rations for more than 14 days ahead. There would be cuts in the next fortnight; and these cuts would not be influenced by the creation of unemployment, by the increasing of conveyance costs, or even by people being put out of business. The traffic was to be pushed on to rail and canal to the absolute limit of their capacity; and only when this point was reached would a halt be called. Long distance haulage would be diverted to railhead and canal base distribution. The fact that Government construction work was going on in the district, for which operators were getting full fuel supplies did not influence the issue to other operators in the district. Petrol vehicle operators must look for other forms of fuel, namely, gas and steam. The Government are using their power to force out road haulage, to the benefit of the railways. The Minister cannot shake his head to that.

Captain Wallace

I should be better able to deal with this if the hon. Member had let me know beforehand who Mr. Steele is, and what document he is referring to.

Mr. Smith

He is a district transport officer, and the document is from a deputation that waited on him. That is one case. In another case, there is a document issued, which says: With reference to the issue of supplementary fuel rations the following points must be taken into consideration when the Z/F/5 forms are examined: (1) Supplementary issues of petrol can only be allowed in respect of long distance hauls if the railways are known to be unable to deal with the traffic. In this connection a statement of the operator"— that is, the road operator— concerned that no rail facilities exist, must be verified from the railway company.

1. (2) With regard to traffic stated to be 'for the Government' or 'Government Contract,' here again the railway company should be consulted as to whether they are in a position to accept the contract. In certain instances regarding urgent contracts a supplementary issue may be made as a temporary measure, provided that the goods are loaded concurrently to road and rail until the railway company are in a position to maintain an even now of material to the destination"—

This is also from the Ministry—

1. (3) The argument that some road operators use, that road transport is cheaper 658 or more convenient cannot be accepted if the railway company are in a position to deal with the traffic in question.
2. (4) Consideration must be given to the use to which the basic issue"—

that is, of fuel— is put, as any basic ration which is used on work of a nature that is not in accordance with the scheme would, of a necessity, prejudice supplementary issue. In all circumstances sub-district managers should be in close contact with the local goods agent and this official should be made to realise that by co-operation with the sub-district manager"— that is, of the railways— it is within his province to materially assist in saving fuel. [HON. MEMBERS: "Hear, hear."] Certainly. But I am going to say that the Minister has been in a position, for six weeks anyway, to receive advice from the people to whom this ration applies, and who wish to submit a scheme to him which they believe would save more fuel than his own policy. These people have received only a postcard from the Minister in reply to their suggestions.

Captain Wallace

A deputation is coming to see me the day after to-morrow to discuss that document.

Mr. Smith

The day after to-morrow. I dare say. But ever since 4th January that document has been in the possession of the Minister. If the Minister challenges me, I will read the whole document to the House.

Mr. De la Bère

Does not the hon. Member realise that in all matters of policy the Government are entirely guided by Lord Stamp? The hon. Member really ought to address his remarks to him.

Mr. Smith

I do not propose to enter into a dissertation on the virtues or vices of Lord Stamp. He holds a high position in the London Midland and Scottish Railway. I believe he is chairman of the Railways Executive. He is also adviser to the Government. I imagine it would be difficult for him to shift from one responsibility to another without remembering that in the final analysis his pockets are concerned—by that, I mean the pockets of the railway industry; not, of course, his own personal pockets. Here is a document issued from the Hexham sub-office, which states: Please note I am unable to issue any Supplementary Fuel Rations for vehicles en- gaged on long-distance transport. Vehicles engaged in trips over 35 miles radius will not be allowed additional fuel rations. Journeys therefore to Doncaster, Glasgow, etc., should be discontinued. That is signed, "G. Higham, Traffic Officer." I venture to say that the Government's attitude is one of directly assisting one form of transport to the detriment of another. These documents, I suggest, very clearly show that. I will go further, and say that in the last hold-up as a result of inclement weather, road transport authorities in the North were ordered by the local traffic officers to drop their own work, not to bother about the carriage of the goods they had in hand, but to assist the railways to clear their goods; and they were told, "If you do not do this, there will be no supplementary rations for you in the future." That cannot be denied. I will bring the evidence to the right hon. and gallant Gentleman if he needs it. If the statements I am making are true—and I challenge refutation—are the Government, through their control of the railways, using their position to destroy another industry which is existing in competition with the railways? If so, the Government are not playing the game by the road transport people, the community, or any element affected by the transport of the country. The Minister rides away with the statement—I believe these were his words—that the Government were not contemplating adopting the terms of this Motion in time of war.

By the way, I would like to say that one is interested to see on practically all the railway stations to-day evidence of a huge expenditure by the railway companies, to ask the public not to be unkind to the poor railways. One that I remember seeing was to this effect: The railways are running perhaps 300 additional trains a day; war material and food supplies are essential to the country. Then there is the query, "Do you mind waiting?" I, as a potential passenger, say that I do mind waiting when other forms of transport are being pushed out of existence for the railways to be overloaded, so that they cannot give me the service that they exist to give. I have had a note handed to me to say that the deputation which the Minister is receiving does not relate to the Road-Rail Joint Memorandum. [Interruption.] I hope we shall; I hope that the Minister will see more clearly before this Debate is finished. [Interruption.] I am not angry; but if I see iniquitous conduct by anybody, I shall be as forceful as the occasion deserves. Merely standing here and giving the Government a lot of platitudinous humbug, is good for neither them nor the country. For the last 10 years almost every committee that has sat has advised the Government that coordination is a good thing in principle. In a foreword to a document that was issued by the Traffic Advisory Council, that council said: The urgency of this problem"— that is, co-ordination— has, indeed, become a matter not of controversy but of general agreement. On every ground of national economy and efficiency it is clear that co-ordination has become essential. The grave emergency in which Britain finds herself to-day only serves to emphasise the vital importance of a transport system which avoid overlapping and waste. It is of the highest importance to the nation that the whole of its resources, every penny of its capital, and the work of every one of its citizens should be directed towards securing the maximum of efficient production. So long as the Transport System remains in a disordered condition, millions of pounds and the work of thousands of men are not being used to the best advantage of the State. It is vital that there should be in such times a thoroughly efficient and thoroughly co-ordinated system ready to meet whatever demands which may be made on it.

Mr. Holdsworth

Would the hon. Member make it clear that when the word "co-ordination" is used in that, it does not mean the same thing as "unification" in the Motion?

Mr. Smith

Perhaps the hon. Member did not hear me say that on this occasion I was not making a case from any ideological standpoint, but from a practical standpoint, and that I was seeking to prove that almost all the people who sat on committees for a number of years have taken the same view as I am taking. In 1933 the right hon. Gentleman who is now the Minister for War said this on the Road and Rail Traffic Bill: I believe it is far better that this kind of co-operation which has got to come should come through voluntary effort and voluntary agreement with the transport interests concerned. I hope that the Bill will not only make a start on the work of that problem but will be of some assistance to them in bringing it to a successful conclusion. I am certain that, if these interests are unable or unwilling to reach co-ordination by their own efforts, this House, sooner or later, whatever their political opinions, will be forced to take by Act of Parliament powers beside which the powers of this Bill will seem pale and ineffective. That is another authority from a man who had then the job which the right hon. and gallant Gentleman holds to-day. Then the Government of the right hon. and gallant Gentleman set up a Royal Commission on transport in 1928. That Commission sat for two years and its terms of reference included the following: To consider and report what measures, if any, should be adopted for the better regulation and control of the available means of transport (including coastwise traffic) and, so far as is desirable in the public interest, to promote their co-ordinated working and development. That Commission recommended the appointment of a permanent advisory council on transport whose particular duty should be to study transport problems and advise the Minister as to the action which he might usefully take to promote co-ordination, improvement and the development of transport generally. That is another authority which has reported more or less on the lines of the terms of the Motion before the House today. Arising out of this Commission there was set up the Transport Advisory Council. Their reports on rates were published in 1937 and the council concurred in the general trend of the recommendations of the Baillie Committee on the subject of wages in the road haulage industry and said: A settlement of this question will be a great help forward indeed, no real co-ordination as between rail and road would be possible without it. The Minister of Labour brought in a Bill arising out of the Baillie Committee's Report. It was called the "Road Haulage Wages Bill" and it is now an Act of Parliament. That was implemented to bring the road transport industry to the position that it could ultimately be coordinated with its natural ally—the railways. Thus the Royal Commission, the Transport Advisory Council and the Baillie Committee accepted the view of the Royal Commission on Transport—that the organisation of the road haulage industry was an essential precedent to general co-operation. Again a memorandum was submitted, not by Socialist tub-thumpers nor by people who are following the mere line of development of a thesis which cannot, according to the Minister, be operated during the war, but by the British Roads Federation itself. This memorandum submitted to the Council by the Road Federation contained proposals for co-operation which had been prepared from the standpoint of normal peacetime conditions. The Federation emphasised the importance of efficient alternative systems of transport being available in the event of war. The right hon. and gallant Gentleman said that war is not the time but the Committee set up by his own Government said that although it was good in peace-time it was more than ever essential in war-time.

In the memorandum dated 7th September, 1936, the four main line railway companies expressed their full sympathy with the object of co-ordination and said they were anxious to promote co-ordination and a friendly spirit of co-operation with all transport which was for the best service of the public. The right hon. and gallant Gentleman asked whether we were pushing this Motion as a mere question of nationalising transport or did we want efficiency? I speak for this side of the House when I say that until you do something of the sort which is recommended in this Motion, or accept the advice offered to you by every committee you have constituted during the last eight or 10 years, you will never get real efficiency in road transport, or any other element of transport, in this country. The right hon. and gallant Gentleman dealt with canals. It says here that canal carriers were divided on the subject of whether steps towards co-ordination were necessary, but on 29th September, 1936, they expressed the view that any tendency to create monopolies or restriction on traffic routes would tend to reduce the efficiency of the services provided and force traders to provide their own transport. Coastwise shipping followed on the same lines. The Council said that all forms of transport should where practicable be rate controlled with publication and non-discrimination.

One can go on quoting statements, all of which assert that if you are to get an efficient form of transport in this country, under which all may live, the Government should adopt some such scheme of control as will bring all these elements into a co-ordinated whole. But the Minister tells us with regard to canals that they do not need this, that there are a number of users, yet he knows Mr. Bunn who represents the Ministry of Transport on the Canals Advisory Committee. When the question of co-ordination was discussed Mr. Bunn said that control of canals was a matter of general Government policy and was outside the terms of reference of the Advisory Committee. What did the Minister set it up for if it is not to advise him on these things? Since 4thJanuary the Minister has had in his possession a document which he assures me he is going to discuss to-morrow with the interests concerned.

Captain Wallace

Not to-morrow.

Mr. Smith

Well the day after tomorrow. I was not trying to be inaccurate and, if I may say so, perhaps the Minister will try to be civil. Here is a document sent to the Minister by the Road and Rail Conference on cooperation between road and rail goods transport vehicles during the war. In a letter of 23rd November from the Permanent Secretary of the Ministry of Transport the Road and Rail Conference was asked to formulate a scheme which would provide co-operation on a voluntary basis between road and rail, so as to secure the most efficient use of available transport. It was pointed out that goods vehicles were still consuming liquid fuel in excess of their allowance of 75 per cent. That is a statement which I would challenge at once because the 75 per cent. is being issued to bulk operators and not to individual operators. In reply to the letter from the Permanent Secretary it was stated that one of the best reasons for the conference would be to ensure the fullest and most economical use of the nation's internal transport and conserve liquid fuel. That is what the Government wants to do I presume.

Other reasons given were "to utilise railway wagons and goods road vehicles to the best advantage, and to alleviate the hardship of hauliers and their employés due to fuel rationing." This has been before the Ministry since 4th January and no action has been taken unless this is the kind of action that the Minister proposes to take. The Minister, I understand, has decided to restore the Transport Advisory Council although he so glibly states to-day that it is quite unnecessary to have any form of coordination during the war. Here are the terms of reference to be handed to the Council: To consider whether those whose business it is to provide the different forms of public transport of goods in this country can, by some substantial re-arrangement of their methods of working in time of war, or as a result of agreement among themselves or of Governmental direction, including the allocation of the direction of traffic, offer to the public more efficient and more economical services than those which are at present available. Would the right hon. and gallant Gentleman say that, when this Debate is finished, the whole thing will fall out of the ken of things again or is he serious in issuing those terms of reference to the Advisory Council? If he is serious, where does his statement—that it is not the time to co-ordinate all forms of transport—land him?

Captain Wallace indicated dissent.

Mr. Smith

I am sorry if I am wrong but I did not continue to pass innuendoes and remarks while the right hon. and gallant Gentleman was speaking.

Mr. Deputy-Speaker

I think that the hon. Gentleman and the right hon. and gallant Gentleman should remember that they are addressing the Chair and that the remarks made to each other should be made to me.

Mr. Smith

I feel at all times that I am addressing this House through you, Mr. Deputy-Speaker, but I would ask you to call the Minister to order. Nothing is more disconcerting than having a continual set of sentences uttered in undertones with reference to what a Member has been saying.

Captain Wallace

I am very sorry if I have in any way disconcerted the hon. Member, and I am sure he knows me sufficiently well to understand that I would not do that intentionally. If I have done so, I sincerely apologise, and I will not interrupt him any more.

Mr. Smith

I have endeavoured to put before the House the attitude of the Government and the Ministry to road operators. The Labour party have consistently urged the need for a co-ordinated system of transport. I have cited many authorities which have been called together for the purpose of advising the Ministry, and have shown that there is a perfect chorus in advising the Minister that some sort of co-ordination should be brought into effect if we are to have an efficient transport service. The Government have just appointed as President of the Board of Trade a very eminent person connected with what is called the production side of business. How is he going to achieve the production and the exports which this country needs unless there is some efficient system of transport for the delivery of these goods? The trade unions have, of course, always been with the Labour party on this question.

What interest is standing in the way? Is it really the Government policy or the lack of any policy that is standing in the way of some measure of unity being brought into this industry? Surely it cannot be the railway people, who are with the road operators in expressing their desire for co-ordination. We have a Ministry of Shipping, a Port and Transit Committee, a Railway Executive Committee, and a Canal Advisory Council, but when it comes to road transport there is nothing for them. They are just mere servants of the Government and of the railways, if the policy of the Government is to continue. Since I came into this House in 1923 I have seen 12 Ministers of Transport, and not one, except the shining example of the right hon. Member for South Hackney (Mr. H. Morrison), has shown any real achievement. The Ministry of Transport has been nothing but a passing-through Department for promotion to some other Department. We have had 12 Ministers of Transport, but in no case have we had a Transport Minister, someone who understands transport and who would give his attention to efficiency in the industry.

I ask the Minister to reconsider his statement and undertake to set up within the Ministry a representative body, equally and fairly representative of all the interests which go to make up transport in this country, to advise him how best to bring about co-ordination in transport during the war. Has the Minister visualized what might happen if a well-placed bomb hit the Severn Tunnel? The whole of the West Country would be out of commission immediately. If our East Coast ports are out of action who is going to be responsible for our transport system then? If the Government are really serious in bringing this war to a successful conclusion transport is going to be one of the greatest factors in achieving that, and to have discontent among the elements which make up the transport undertakings and discontent among working people, who are being put out of employment by the action of the Minister, is not the way to achieve the success we all desire in this war. I ask the Government, therefore, seriously to consider the Motion before the House in a more favorable light in order to have a better and more efficient system of transport.

6.39 p.m.

Mr. Holds worth

The House always listens to the hon. Member for Rotherhithe (Mr. Benjamin Smith) with great attention when he applies himself to questions of road transport. I agree with a good deal of what he has said, but I want to draw his attention to a statement made by the right hon. Member for South Hackney (Mr. H. Morrison), who moved the Motion this afternoon. The hon. Member has used one word, I should say, at least 100 times during the course of his speech—the word "co-ordination." As he used it the word has no relation to the word "unification" used in the Motion. Let me read to him what his right hon. Friend the Member for South Hackney thinks about the word "co-ordination." On 1st February, 1940, he said this: If there is one word in the English language in the administration of public affairs with which I am utterly sickened and disgusted it is the word 'co-ordination'." [OFFICIAL REPORT, 1st February, 1940, Col. 1319, Vol. 356.] I suggest that the hon. Member for Rotherhithe, rather than address his remarks to the Minister of Transport, should spend half an hour discussing with his right hon. Friend the Member for South Hackney what is the policy of the Labour party—co-ordination or unification.

The Motion divides itself into two parts. In the first part it expresses disagreement with the financial arrangements arrived at between the representatives of the Government and the railway companies. I was very amused to hear the adjective used by the right hon. Member for South Hackney in describing the second part of the Motion. I have described it on my notes in one word—political. The right hon. Member described it with a word beginning with the same letter—positive. My view is that my description of it is the better and truer description. I look upon this Motion as taking advantage of a certain agreement arrived at between the Government and the railway companies to tag on a political argument, which would not have had an opportunity of being debated except the opportunity which is given by this particular agreement.

I was struck by the very little that was said about the second part of the Motion by the right hon. Member for South Hackney. We were not told how this unification was going to work. We were not told what would be the basis of compensation, if any, except that we were threatened that if the Labour party had to do it it would be on the lowest basis possible. [An hon. Member: "Hear, hear."] That is a demonstration for which I am grateful. We were given no particulars at all. Instead we had platitude after platitude of what unification would do for the country, how transport would not be chaotic, but everything would be in perfect order, provided the Government ran it. If it is not possible for men who have their own money at stake, and for managers and directors who have been concerned with this problem for years, to run it efficiently, I cannot see how there is going to be greater efficiency simply because you transfer the undertaking from private ownership to Government ownership.

I want to address a few remarks to the Minister of Transport. In answering the right hon. Member for South Hackney on the question of unification he was not half definite enough. He said, "Can we do this in war-time; how long would it take to make these agreements?" I am not in favour of it either in war-time or in peace-time, and I hope that we cannot draw the inference from the half-hearted denunciation of the Minister of Transport that in peace-time there will be any real and serious consideration of a suggestion to nationalise the railways. What we have to consider to-day is whether this arrangement made by the Government is equitable as between the railway companies and the nation as a whole. The right hon. Member for South Hackney in a Supplementary Question last Wednesday expressed the opinion that profits should not exceed the profits of the three years immediately preceding the war. I want to ask the right hon. Member—he has informed me that he is not able to be present at the moment, but perhaps some other hon. Member opposite will be able to answer—whether he thinks those profits were reasonable, whether he thinks they were an adequate return on capital, a fair return for the capital invested in the railway companies of the country? Did they give an adequate return on capital or wages? I have no interest in railways; I do not own a single share; but I know constituents of mine who, for the last few years, have told me that they have not had one penny return on their investments in railways, and it is also true that most of them have suffered tremendous and severe capital depreciation. I do not think it is good enough to take a certain figure and say that that is enough or that is too much. What we have to decide is whether this is a fair bargain as between one whose money is invested in the railways and the nation.

Mr. Ammon

Would the hon. Member also advocate this consideration where the money is not actually being put into the investment?

Mr. Holdsworth

That is far too big a question now, but there are two points to that particular question. It maybe that there is too much money invested, but it does not affect the present shareholders. What I want to ask is why should not railway companies be paid extra remuneration if they have to render extra services during the war? It is a new doctrine to me that you should say to any particular form of industry, "For three years we know that trading was bad, that you were not able to earn a sufficient remuneration. We are now going to call upon you to fulfil extra services, to put every energy you possess into this work for the nation, but on no account shall you be paid an extra penny for these services." That is a new doctrine. [An HON. MEMBER: "Hear, hear!"] An hon. Member opposite says, "Hear, hear," but I suggest to him that he does not follow such a doctrine in his own life; if he renders an extra service, he expects extra payment—and if he does not, he is very foolish. Like all other industries, this particular industry is subjected to the Excess Profits Tax. Why, in the name of common sense, if the railways render extra services, should they be deprived of extra remuneration? The right hon. Member for South Hackney made a very unfair remark about industries being on the dole. I would remind the House that the railway companies have not asked for this control. They have not been free agents in the matter. The Government took control because, as the Minister of Transport said this afternoon, it was essential that in war-time the railways should be controlled. But that is due neither to the faults nor the virtues of the directors or the shareholders of the railway companies. I speak as a layman in these affairs, but I think I am right in saying that the railways would have been very grateful if the Government had said to them, "Conduct your business as any other businesses in the country are conducted; pay Excess Profits Tax if you make excess profits, but also take the extra remuneration and profits for the extra services which you render during the war." It is an unfair thing to suggest to the people of this country that the railways are asking for a guaranteed profit, for some kind of public assistance, as the right hon. Member for South Hackney described it. They are asking for nothing of the kind. I am certain they would be very grateful if they were placed in the same position as any other industry and allowed to carry on in their own particular business the transactions accruing to them during the war. I agree that there may be some reasons why the Government must take control of the railways during war. We have had quoted to us the prices of the railway shares. I do not know what they have to do with the £40,000,000. I neither praise nor defend gambling on the Stock Exchange, but it does not seem to me that it affects the merits of this agreement, or that it will cost the public one penny more. It is simply a question of Box and Cox—Box wins and Cox loses.

The question I want to examine is what these financial arrangements give to the shareholders. What does all this remarkable generosity, as it has been described, mean in terms of dividends? It means that the main line railway companies are guaranteed a minimum of 3.3 per cent. and a maximum of 4.7 per cent. Will any hon. Member stand up and say that a man getting that return, subject to Income Tax, is getting unfair remuneration on his capital investments? There are not many people in the House, let alone outside, who would plead guilty to profiteering if they were getting that rate of interest. I do not believe that any comparison can be made between money that is invested in an industry or commercial undertaking and money that is invested in gilt-edged securities. The shareholders in the railway companies will still have to take the risk, when the war is ended, of capital depreciation, and indeed, they were warned by the right hon. Member for South Hackney that capital depreciation would occur. Surely, after all the lean years which these people have had—and with the right hon. Gentleman's definite assertion that they also have lean years in front of them—nobody can with truth say that they are being paid too high a dividend. Only political prejudice would cause anybody to make a statement of that description.

Let us look at the matter from another point of view. When the net revenue reaches £46,000,000, the Government will take 2 per cent.; when it reaches £60,000,000, the Government will take 13 per cent.; and when it reaches £70,000,000, the Government will take 18 per cent. I do not think that is a bad bargain for the State, and in any case, it is a much better bargain than was made during the last war. We have not heard a word about that from any hon. Member opposite. I think the Minister of Transport made quite clear the advantages of this agreement as compared with that of the last war. There are a great many hon. Members opposite who owe allegiance to the railway trade unions. I do not say that in any disparaging way. I have heard them make a great many speeches in the House with reference to the square deal for the railways; they have not referred specifically to the square deal, but they have asked for a better time for the railways.

Mr. Watkins

May I point out to the hon. Member that hon. Members on this side who are connected with the railway trade unions have studiously avoided entering into debate on that subject? The hon. Member must not charge us with doing something we have never done.

Mr. Holdsworth

Hon. Members opposite may have avoided studiously those particular words, but the inference to be drawn from their remarks has always been obvious to anybody with a clear mind. I do not think the hon. Member for Central Hackney (Mr. Watkins) will deny that they have been in favour of a better deal for the railways. Is that denied? I think they are in favour of it. Here we are giving a square deal to the railways.

Mr. Walkden

We have asked for fair play for the railways as against undue preference for road transport, which runs free on the King's highway, whereas the railways have to pay for their permanent way.

Mr. Holdsworth

Perhaps if the hon. Member speaks in the Debate he will explain whether he thinks that under this agreement the railways are getting anything more than fair play. I should like to refer to one point that was raised by the right hon. Gentleman the Leader of the Opposition when a statement on this matter was made from the Government Front Bench last week. Like the hon. Member for Rotherhithe, I have never believed that road transport has had a square deal. I suggest that there is in this agreement the very serious danger that there may be a temptation to the Ministry of Transport to divert traffic from the roads to the railways in order that the State should in no way be called upon to fulfil any of this guarantee. I do not suggest that will happen, but I should like to have a clear statement from the Minister who is to reply that road transport will be given a square deal equally with the railways. There is a danger in Government partnership in any industry. I took a great deal of trouble in examining the railways system in Hungary, and I had the privilege of an interview with the Minister and some of his officials. They have in Hungary a most astonishing arrangement. Road transport is limited to carrying goods only over a certain mileage, to carrying certain classes of goods and goods of a certain weight, and these goods have to be deposited at railheads. For what purpose? Not to make transport more effective, but to ensure that the State railways of Hungary shall have a certain revenue. Even when all that has been done, like any other State railways throughout the world, they show losses. I am somewhat suspicious whenever the Government are in partnership with any industry.

I should like also to ask the Parliamentary Secretary whether the Minister has had any suggestions from the road haulage industry offering their services in making the best use of their transport. I believe that negotiations in this connection have been going on since last September. What has been done with regard to the joint scheme that was put forward by road and rail interests? The information that has been given to me—I want to be quite fair to the railway companies—is that the railway companies have met the road interests quite fairly. Is anything being done to bring into operation the arrangements and agreements that were reached between the two parties? I believe that something has been referred back to the Transport Advisory Council. I suggest to the Minister that there is no need for such a reference back. What is now needed is action, and not reference back to any committee.

I want now to examine the second part of the Motion. I do not know whether the word "unification" is used in the Motion so as not to offend the susceptibilities of the right hon. Member for South Hackney, but it is a word which does not please me very much. If the word "co-ordination" sickens the right hon. Member for South Hackney, then I must confess that the word "unification" nauseates me. I do not believe there is the slightest argument which can be based on fact to show that the mere unification of transport would make it any more effective. On reading the Motion, I wondered whether we were living in peace-time. What a marvelous country! We are at war, and yet we can spend a whole day of Parliamentary time in discussing a mere academic question. There is not a single hon. Member opposite who thinks that the nationalisation of the whole of the transport industry—the Motion refers not merely to railways but to every form of transport, to the man with one lorry, I suppose to the man with a horse and cart, and indeed, the only thing on wheels which is excepted by the Motion seems to be a perambulator—could be brought about while we are at war. Why, if it were fairly done the inquiries alone would last far longer than I hope the war will last. Are we to call upon the Chancellor of the Exchequer, in the midst of a war, to work out all the financial implications of the proposal contained in the Motion? Are we to take up the time of the House with the huge mass of legislation that would be entailed if the Motion were carried into effect? Are we to say, "Let the war pause, let us get on with this important thing; it is highly important that the predilections and prejudices of the Labour party should be carried out rather than that we should get on with the prosecution of the war?"

Quite honestly I believe that the people outside this House will think we are wasting time discussing an academic question of this kind. It makes quite clear to me that there is no such thing as a political truce. It confirms the suspicion I have had in my mind. One hon. Gentleman representing a constituency only three miles away from me, when making a speech on Sunday, made that quite clear. He said, "There is no political truce; there is merely an election truce." What I say in answer to that is that there is something going on in the world that is far more important than whether the State or private enterprise should conduct the transport of this country. I want to make an appeal that we should apply ourselves to the one object of winning the war instead of wasting time on what is purely academic and nonsensical at this time. I cannot understand why this particular industry should have been chosen. If this is good for transport, why not for everything, for shipping and everything else? I agree that even in a time of war fair and honest criticism is necessary. I believe it is essential to democratic government. But I repeat that it is simply wasting the time and energies of Ministers that they should have to sit here to answer a Motion of this kind when every Member sitting on the Benches opposite knows that it is put down as a pure political stunt and nothing else.

I do not believe the. country will thank the Members of the Labour party for having put down a Motion of this description. If I thought that we could take over the railways and all forms of transport by a stroke of the pen, and that that action would ensure winning this war one minute sooner than otherwise, I would subscribe to it. But has the experience we have had of co-ordination and control proved it to be efficient? Are we proud of all that has been going on during these past five or six months? Is there any- thing in the action of all this Government control that encourages us to say to the Government, "Take some more power"? Is there one illustration that any hon. Member can give to me that would suggest that by handing over power to some unknown entity you would get on better with the prosecution of the war? All our experience proves the exact opposite. I would like to have as my contribution to the war the job of taking away many of the powers the Government has already got. I do not believe you can win wars, or that you can add to the efficiency with which we are fighting this war, by giving more power to the Government. You have set up in one Department after another a crowd of Hitlers and Stalins. I thought we were fighting this war to do away with the Hitlers and Stalins. I am not in favour of setting up a huge bureaucracy. I believe this war is being fought for freedom and I have never been able to see how the logical consequence of Socialism can be freedom. My final word is this. We are not fighting this war to make the world safe for Socialism, and I hope that the House will show by its vote to-night that it repudiates the nauseous doctrine contained in this Motion.

7.7 p.m.

Mr. Walkden

I hope the very early nineteenth century mind of the hon. Member for South Bradford (Mr. Holdsworth) is now relieved after the protracted deliverance that he has inflicted on the House. His mind is very strange and interesting; he knows so little of what he talks about. He was a long time talking about State control or ownership of the railways, and he said it would be a happy state of things, or words to that effect, for the Government to leave the railways alone "like other commercial undertakings." I would like to remind him and the House that there are strong reasons why the railways cannot be left alone like other commercial undertakings. No one on this side of the House, I think, wants to take over all undertakings, but railways are peculiar. The legal right of the State to take control of them in war time is founded on the experience of the year 1871, immediately following the Franco-Prussian war. That revealed what perhaps the hon. Member does not understand, that railways are of vital importance to the State when it is at war. They cannot be left alone like the wool trade in Bradford, or any other private business.

Mr. Holdsworth

Unfortunately, they have not left that alone.

Mr. Walkden

The railways cannot be left alone, because they are vital to the winning of the war. Bismarck realised that so well in Germany—and he was some authority on warfare—that he took steps after the Franco-Prussian war to nationalise the railways of his country. Incidentally, that turned out to be of tremendous benefit to the people of Germany. Here at home the position was appreciated by the Government at that time, and they carried an Act of Parliament to give the State power to take over the railways immediately war broke out. That was done in 1914. The ultimatum to Germany expired at 11 o'clock and the railways were under control at 12 o'clock. I think it was done more expeditiously on this occasion. We have only tabled our Motion because in our view it would have been more satisfactory to the State if the Government had taken over the railways and completely relieved the companies of the obligation of being concerned in their management. We think that the railways should be part of an all-in State service, along with other necessary means of transport, and in our view the circumstances surrounding this agreement completely justify our case.

In the first place, it has taken five months to make this agreement. In spite of great pressure at Question time, from both sides of the House, there has been extraordinary delay in reaching terms of agreement. I suggest that that time was far too long. It is deplorable that the time and attention of the Ministry of Transport should have been absorbed for five months in this way, at a time when many other vital matters demand their constant and continuous attention. For instance, the number of deaths from, road accidents has been doubled. There is a slaughter in progress on our roads which is worse than that on the Western Front. Yet the Minister, who ought to have been concerned with that grave matter, has had to give his time for five solid months to dealing with the terms of this agreement.

No such time would have been lost had our transport services been owned and controlled by the State, and if we had had the "Royal Rails" just as we have the Royal Mails. I do not suppose that even the hon. Member for South Bradford objects to the Royal Mails. I do not suppose that he objects to the Royal Navy or the Royal Air Force. Incidentally, it is unfortunate that the First Lord of the Admiralty cannot be here to-night. No doubt, with his marvellous military acumen, he appreciated in 1918 what a great advantage it would be to the State, in time of war and also in time of peace, to have the railways. It is deplorable that the promise or pledge given by the Coalition Government in the Election of November, 1918, was never carried out. It was frustrated by the party which is, I notice, absent at the moment. That party sterilised itself by refusing to carry out its programme of reconstruction and going in for one of de-construction.

Mr. MacLaren

That is the party of the hon. Member for South Bradford (Mr. Holdsworth).

Mr. Holdsworth

And was your's.

Mr. Walkden

The hon. Member for South Bradford certainly represents that sterile attitude of mind. Politically, he is merely a museum specimen, but he amuses us by his presentations of his extraordinary antediluvian, or at least ante-twentieth-century, doctrines.

There are other points about this agreement which we think are very faulty. The fact that there has been a successful run of gambling for some months is proof that the Government have been generous. Why has this gambling been going on? Has there been any leakage? The House was very much concerned about a leakage some time ago. Is there to be any inquiry about this leakage? Some people have been making great profits in the aggregate by dealing in railway shares on information that has been floating about.

There is another point about this agreement which we criticise. In our view it was a great mistake to revive "standard revenue" as has been done in the terms of the agreement. There is no justification for bringing "standard revenue" out of the stable once more. Standard revenue could not be maintained for the very reason that the development of a new industry through the invention of the internal combustion engine, reduced railway business beyond all hope of recovery. Railway capital ought to have been reduced to fit in with the changed circumstances of the present time and make accommodation necessary to meet the new conditions. Standard revenue postulates that the old-time capital, which diminished in value from about £1,200,000,000 to about £800,000,000, should again be restored under this agreement if the circumstances are sufficiently fortuitous. As railway workers we think it most unfortunate that "standard revenue" should have been brought out again. It has been put up against us continually in negotiations as a reason why railway wages must be reduced. We have been told that this must be done because the companies cannot earn the standard revenue.

They cannot earn the standard revenue because the country is not giving them the traffic. There was a time when they had over 700,000 workers in their service. That number has been brought down to less than 600,000. I suppose the hon. Member for South Bradford would sympathise with the argument that because their business has gone down and they are only employing 600,000 instead of 700,000 they ought to have the same measure of profit as they had in their hey-day before road transport appeared. It is a preposterous assumption. From a commercial point of view, the capital ought to have been reduced in order to make the adjustment necessary to meet the altered situation. There is no provision for that in the agreement. It ought to be generally accepted, as a matter of public policy, that while the agreement seeks to improve the position of the shareholders, labour's current needs should be met progressively as time goes on; that if traffic increases, more men should be employed; that if the work intensifies and extra time has to be worked, it should be adequately remunerated; that if the cost of living increases further, then further improvement should be made in the rates of pay, before dividends are increased. I hope that principle is accepted. I have no doubt that it is by the more responsible railway magnates, as distinct from some uninformed shareholders.

A more important point is this. There is no provision in this agreement for the building-up of reserves out of increased profits. I would plead with the Ministry to watch that point and to use their influence and, if necessary, to come to this House for powers to require the companies to set up reserves. In the last war they accumulated, I think, about £70,000,000—under one heading or another, chiefly arrears of maintenance—of reserves inside their revenues. A further £60,000,000 was granted by this House. There is no provision that any such reserves should be made available when the war is over, but it is vital that provision should be made to meet post-war difficulties. My right hon. Friend the Member for South Hackney (Mr. H. Morrison) made clear the possibility that we may be faced with terrible trouble when the war is over. I am afraid his forecast is only too true.

In the 1914–18 period stupendous profits were made. The Government took Excess Profit's Duty, heavy Income Tax was paid, and all sorts of imposts had to be met, and yet profits were heaped up, millionaires were created and newly rich people sprang up from nothing. Firms making greatly increased profits, entirely from war circumstances—under the law of increasing returns—dissipated those profits and paid them all out to shareholders and then, when the time of trouble came, they said, "We must reduce wages; we must discharge people; we must lower the workers' standard." In all cases where great profits are made, or, indeed, any margin of spare profit is made, these should be set to reserve to meet post-war troubles. That is surely one of the lessons of the years from 1918 onwards which will be borne in mind by the Government and by all responsible people who have control of business. Profits must not all go—or any appreciable portion of them—in bigger dividends for those shareholder speculators who have been making money for several months past.

Reserves will be needed not merely to maintain the standard of life of the workers but to pay for renewals and reconstruction. Unemployment, which may be far more acute than anything we have had for some time, could be relieved, for instance, by the rebuilding of all our unhappy old railway stations. Other adjectives could be applied to many of our railway stations. Some people call them wretched, miserable, dark, dismal places, but to me they are very unhappy. London Bridge and Euston, for example, are cheerless places. I think Waterloo and Victoria are the only two stations in London in which one can feel at all cheerful, and when one goes to the country to places, like Preston for instance, the stations are simply appalling. I was in Stoke-on-Trent station on Thursday last and I felt as though I were in "The City of Dreadful Night." It carried one right away back to the circumstances of which that poem was written. These reserves should be conserved in order to provide for reconstruction work of that kind and also to renew and recondition rolling-stock or even to give us entirely new modern rolling-stock.

I suggest, too, that there is a need for a better class of rolling-stock on our railways. On a great majority of the routes most of the rolling-stock belongs to the last century and is not worthy of the present day. Perhaps it is one of the reasons that the companies have lost so much of their business. There is no provision in this agreement that any profits made shall not be capitalised by inflating the stocks, as has been done in bygone days. In one of the great railway companies there is £50,000,000 of stock which has never been subscribed. Working people are expected to pay interest on the capital as they did long ago before the internal combustion engine was invented.

We are very concerned about the future, because we love our country, and it is because we do not want to see it in unnecessary trouble that we advocate this kind of measure. Unless some of these provisions are made in some supplementary enactments to prevent capitalisation when the country decides it will have its own transport services, the same as the social services, this question will become very important. I do not quarrel with the £40,000,000 basis adopted in the present case. One has to take an average and find a fair ground as a basis for an operation of this kind, and £40,000,000 capitalised at 20 years costs £800,000,000. That is not unfair, and we on this side of the House would not quarrel if the State had decided to take over the railways on those terms. But, if the figure increases to £50,000,000 and it is made a basis for any future transactions, it will mean £1,000,000,000 capitalisation to be undertaken. If the figure went up to £56,000,000 on standard revenue, it would be £1,120,000,000 of capital for which the State would have to take responsibility. It would be most unfair to the community. This point should be borne in mind, and provision should be made that the figure will not be capitalised as time goes on. Too much capitalisation took place in regard to industries in the last war. In the textile industry it doubled, trebled, and even quadrupled.

Sir Joseph Nall

Has the hon. Gentleman forgotten the writing-down that took place after the amalgamation in 1921?

Mr. Walkden

I have not forgotten that. It was very commendable, up to a point, and there was £200,000,000 written down to £50,000,000. Three of the great railway companies wrung their watered capital all out, and the Great Western, I think, never did have any, and that is why they were always stronger financially. There is another company which has at the present moment £50,000,000 which has never been subscribed. It represents bonus shares.

I submit that the Minister of Transport gave no valid argument against nationalisation. We advocate it because we believe it would be to the good of the public and in their interest. The only suggestion the Minister made was that it could not be done and that it was really too big a thing. It is most deplorable and unworthy of hon. Gentlemen opposite to give that kind of reason. The present Railway Executive Committee, a handful of able men, could do it if the Government commissioned them with the job. They could do it now, or their chairman, extraordinarily able, could do it if he was given the power. The co-ordination already carried through has cleared the way, and the task is by no means impossible. I would go even further and say that if any one capable man was given the task of unifying our railway transport system he would find it an easier job than running any one of the separate competing systems to-day. It has proved to be the case with the London Passenger Transport Board, which comprised 92 undertakings. I am perfectly sure that it has been found much easier, more fruitful and useful, and more valuable running the concern as one unit than was the case with about 1,000 directors associated with big and little concerns making a hotchpotch of the whole thing.

Nationalisation is not only practicable, but it is eminently desirable. It should be remembered that our railways are not merely railways, but are also great transport undertakings. They have more road transport in their possession than any other body, and they have acquired great firms like Pickford's and Carter Paterson's. In addition to their control of a huge proportion of the road transport of the country, they have ships sailing round the coasts of the country and across the Channel and to Ireland. They also own canals and docks and harbours and have acquired freedom to run aeroplane businesses, and I commend them for their far-sightedness. With all that experience the Railway Executive Committee could easily unify all the services without any of the difficulties which seem to occur to so many who do not quite understand the question. If that were done, the State, through the agency of the National Board, could utilise all forms of transport, not merely railways, but road transport and canals. They could have a simplified rate book which would fit into the waistcoat pocket, giving mileage and charges for the different means of transport.

The test of a policy is how it will affect posterity, and I suggest that our policy as embodied in the Motion would make the future very much better for this country. Everything depends on transport, mines, and banks, and that is why we take these three services and say that they should be publicly owned. We do not enter into small things such as were mentioned by the hon. Member for South Bradford. A national transport board could raise new capital on much easier terms than any of the railway companies, and they would be more able to undergo a policy of reconstruction. A public board associated with the State can raise money at difficult times. Periods of great depression are the worst times in which to raise money for the ordinary railway company or concern. A public concern could get new money when it wanted it and could have new work put into operation like new stations, extensions of line, and reconstruction when general employment was low. It could work in co-operation with the State to ease the unemployment question.

I am not unfair in pointing out that since 1918 scarcely any real improvement has taken place in our railway services. Improvement could have been undertaken if the measure that was intended by the Coalition Government in 1918 had been operative and they had taken the railways over. A Ministry of Transport was established in 1919 with the express intention of doing this job, but it was frustrated. The terribly unfair attacks made on the Ministry by the daily organ of the Liberal party were probably more responsible than anything else for the pulling down of that Ministry and preventing it carrying out the plan which the Coalition Government intended to do when the election took place in November, 1918. That policy should be undertaken now. We are in circumstances of war, but let us look ahead, for when the war is over we want this to be a happier and more progressive country giving everybody a better chance. This policy will then be imperative.

Perhaps the best testimony we have had in recent times came from a Conservative leader in the railway world who recently retired. He was chairman of one of the greatest railway companies and used to sit in the House as a Conservative Member. He was Mr. William Whitelaw, and he was so fond of railways that he devoted himself entirely to them and was probably one of the greatest experts of our day. After a long experience as chairman of one of the lesser companies before the amalgamation and of one of the greatest companies after it, he gave it as his considered opinion that since the companies had reached the point when they had to go to the Government for State assistance, and when they had come to the point where private enterprise was not really enterprising enough and could not do its job efficiently—and that has been the position of railways for 20 years—then the time had arrived when the State should take them over. Such a time has now come. It could be done now, and it would help us the better to get through the war and to win the peace, which is quite as important, after the war is over.

7.34 p.m.

Colonel Sir George Courthope

The hon. Member for South Bristol (Mr. Walkden) and I approach railway problems from rather different angles, but we generally find ourselves in friendly agreement on a good many points. I disagree with much that he has said, and I will take up one or two points which he made. I should tell the House, although it is possibly known already, that I have perhaps the misfortune to be one of those much criticised persons, a railway director; and lest I shock the right hon. Member for South Hackney (Mr. H. Morrison), whose speech I enjoyed as much as anybody, I would assure him that the capacity in which I am speaking is that of one who speaks on behalf of many thousands of my constituents who hold some of the £1,200,000,000 of railway capital and in many cases get little or no return upon their investments. Far too often one hears the railways spoken of as if they were a sort of greedy toad or octopus stifling commerce and industry, and it is forgotten that they represent vast investments by an enormous number of people. There are something over 800,000 separate holdings of railway stocks, and many of them represent a large number of individuals.

I am not disputing what the hon. Member for South Bristol said about the inclusion of some watered capital, but I want to make another point about that. Year by year since the railways were started certain sums have been set aside for the replacement of permanent way and rolling stock. These replacements have been based upon the estimated life of the permanent way and the rolling stock, and on that estimate a certain percentage of the total mileage of permanent way and of the total number of coaches and locomotives were replaced each year, and sufficient money was drawn from the gross revenue for that purpose. At the present time the amount of money required to be withdrawn for the replacement of a certain mileage of permanent way is more than double the original cost of that permanent way. If, as one is entitled to, one takes into account replacement values, we have actually an under-capitalised railway system, because the whole of its permanent way and rolling stock are standing on the books at a figure infinitely less—probably not more than half—than its replacement value at costs of to-day. I think we are entitled on behalf of the railway shareholders to set that point against the criticism that there is watered capital in the railway lists.

The hon. Gentleman deprecated the re-introduction or reconsideration of standard revenue, and suggested that in recent times it was unattainable. I cannot speak for all the four main line railways, but the Minister told us that they were all doing much better during the pre-war period of last year. He mentioned an increase of £4,000,000 in gross revenue. I can speak of one railway which was doing so well for the first eight months of 1939 that they were very hopeful that they would reach the standard revenue in that year; that is, if there had been no war.

Mr. G. Strauss

Can the right hon. and gallant Gentleman say how much of that improvement was due to Government orders and freight carried in preparation for the war?

Sir G. Courthope

I cannot say, but it was not very material. In the case of this company the improvement was largely due to the extension of the electrification in certain areas which was proving financially very sound. Whether or not we should have achieved the standard revenue, I cannot say, but at the end of the first half of last year we began to build up hopes that we would reach it—for the first time, I admit. That is only of importance to this extent, that the standard revenue was not such a hopelessly unattainable thing as the hon. Member indicated. [Interruption.] No, I do not think all the companies hoped for it. I particularly said I could only speak for one.

Practically every speech in this Debate has assumed that the railways companies have got a very good deal—some people think much too good a deal. I cannot allow that to pass without putting in a word for the other point of view. The representatives of the railway shareholders do not consider that we have got a fair deal. We tried hard to get what we considered a fair deal. We had to accept the best we could get but we dislike it intensely, for this reason. It is true that we have a guaranteed floor put in as well as a ceiling—a minimum. But what appears to us to be most unfair is that the London Passenger Transport Board, whose business is of a totally different kind from that of the main-line railways, whose receipts were very seriously affected by the evacuation scheme and whose position rendered them particularly vulnerable in the event of air attacks, should be brought into the pool with the main-line railways, and we fear—it was argued out by those better qualified to speak on behalf of the railways than anyone else—that the mere fact that the London Passenger Transport Board's profits and losses have to come into the pool will prevent the figures rising appreciably above the guaranteed minimum, or what I have called the floor. While we think it would have been much more reasonable, in view of the improvement that was coming before the war and of the immense extra work that the railways are doing in and for the war, that we should be allowed to take a substantial share of the profits up to at least the standard revenue level, we think now that the inclusion of the Passenger Transport Board will keep us down near the floor and prevent us ever rising toward the ceiling.

The standard revenue has been mentioned as if it was a definite ceiling in present circumstances under the 1921 Act. It was not. The railways got everything up to the standard revenue, and, after that, they retained 20 per cent. of the profits and applied the other 80 per cent. to reduction of fares and freights on the goods that they carried, and that indirectly would have brought them profit again. So it is not right to suggest that the railway companies are limited under the present Statute Law to their standard revenue, because that is not so. From both these points of view the representatives of the railway stockholders consider that the Government agreement, which, it is true, we have accepted failing to get anything better, is not really a generous agreement for them, but is rather on the mean side.

A great deal has been said about, and there has been a certain amount of confusion between, co-ordination and unification. We are really only concerned to-day with unification, which is the Motion before the House. The hon. Member said just now that the five very able general managers who form the Executive Committee, or even their chairman, who is outstanding, are perfectly able to devise a scheme of unification. Of course they are. I dare say there are a dozen men in the House who are, but that would not make it more efficient, and my belief is that if you had a private talk with those five men, or with the one outstanding chairman, they would say the railways are too big already for maximum efficiency. I am only a director, but for 15 years I have kept a pretty close watch on railway affairs, and I think they would be more efficient if they were not quite so big. I am certain that to make them bigger by unification, the four great main line railways and the Passenger Transport Board, would put a tremendous strain upon management, and I do not believe they would be anything like so efficient as they are to-day.

Mr. Walkden

It was done quite successfully in Germany. The gross revenue is about equal to ours and the net profits are the same.

Sir G. Courthope

I cannot speak with much personal knowledge of Germany, as it is some years since I was there, but I should be sorry to exchange our system of management for the German system, and so, I think, would hon. Members opposite. I did not want the Debate to come to an end without it being stated that the railway interest is not perfectly satisfied with the deal that the Government have made.

7.47 p.m.

Mr. Dobbie

I listened with a good deal of interest to the Debate, and my attention was particularly arrested by the speech of the Minister of Transport, which I thought was a very good sporting reply to the unanswerable case presented by my right hon. Friend the Member for South Hackney (Mr. H. Morrison). This war, like the last, is demonstrating, not only in regard to railway working and transport generally, but in regard to every large-scale industry in the country, that it is not possible for industry to be carried on by individuals in their own particular methods. The needs of the nation have compelled the Government to take over in one way or another, either by subsidy or by direct control, various industries essential to the immediate, direct, and successful prosecution of the war. It may be that the same ideals are not actuating every one of us in this struggle, but at the moment we are standing with the avowed intention of winning the war in the interests of democracy, and in the struggle efficiency and co-ordination on the home front are just as needful for success as efficiency is on the battle ground. The question one asks one's self in this: Does the move made by the Government to-day in regard to the control of the railways bring us this coordination in transport which is so essential, not only in time of peace, but in time of war? I do not believe it does. I believe that as the result of the experience that will be gained during the war and the effect in the hour of the nation's need we shall be agreed that we cannot trust private control to give the service needed. It will compel whatever Government are in power when the war is over to take over the whole of our transport in its entirety, as outlined in the proposal now before the House.

It is too much to expect this Government to waken and take that complete national control at the moment, but it would be a good thing if they would take the Whips off to-night and let us have a free vote of the House on this question. We heard a well-reasoned case stated on behalf of the Opposition. Unless the Government have some scheme of co-ordinated transport ready to put into operation, one trembles to think what will happen if an air raid should damage our docks, harbours, and railway termini on the East coast. I wonder whether the Government have a scheme whereby shipping will be directed to the West, and a co-ordinated scheme of road and inland transport which could effectively deal with transport from the West to the East. If they have, they should tell the House about it and explain it to us. They should put it into operation and take the control which is needful to operate it. The Government are making a deal with the railway companies and giving a guarantee. I must always stress that the interests of only the railroad owners and shareholders are considered in this deal. I should have thought that the Government would have given some consideration to securing efficient transport, but they have not told us much about that. I hope that whoever replies for the Government will tell us whether there will be co-ordination of inland transport of the kind which I have visualised, in the event of an air raid.

I shall not talk a great deal about money and figures in relation to this matter. I have heard enough of figures to-night to make one feel in a maze about figures. Millions have been talked about as though they were coppers, making one lose one's idea of money values.

Mr. MacLaren

It makes your teeth water.

Mr. Dobbie

I have not many of them to water. One would have thought that the human factor would have come into consideration, but the interests of the railroad workers have not been mentioned. When we talk about co-ordination of the railways we are thinking only in terms of the railroad owners and of railway dividends. It would have been better if the Government had given at least some consideration to the human factor, and had made it a condition that any financial guarantee had to be accompanied by reasonable wage conditions to lift the railway workers out of poverty. We heard the Minister say that, as a result of the announcement of the agreement, railwaymen had received some advance; but the basic rate of wages of railwaymen is such that the advance that they have received, or are to receive, does not at all compensate for the increased cost of living, and it leaves many thousands of railroad workers right upon the poverty level. It might be news to the Minister of Transport that more than 100,000 railroad shop-workers are not covered by the deal at all in regard to the cost-of-living basis. Therefore, I had hoped, when the Government were making arrangements with the railway companies, that the human factor would be taken into consideration.

I said that I should not say much about, or use many, figures, but it seems peculiar that the guarantee which the Government have given to the railway companies is one of £43,000,000, and that in certain conditions the companies will be allowed to halve it with the Government until they come to their standard dividend of £56,000,000. It means that the Government are under the impression that at some time in the near future the revenue of the railway companies in respect of dividends will be in the region of £70,000,000. The necessary amount of dividend which every company will have to earn before it gets its £56,000,000 will be £68,500,000, because of the way in which some of the money is to be split with the Government. The Government are evidently under the impression that railway companies are in for a pretty good time, but the companies can be in for that good time only at the expense of the nation and because of the desperate situation in which the nation finds itself at the moment. This will undoubtedly raise the value of railway concerns when the moment comes for their nationalisation. That moment has already arrived, but the Government have not yet arrived at the point of doing it. I hope that a Government with vision, foresight, and feeling for the welfare of the nation will take power in the near future. After all, the railways are the arteries through which the life-blood of the nation flows in the shape of trade and commerce. I hope that a Government will arise with the courage to nationalise not only the railways but the whole of our transport.

I have said also that I would not take up a great deal of time, but I hope that whoever replies on behalf of the Government will tell us something about the standard dividend of £56,000,000. Tell us how that comes into operation, when it operates, the railway companies that made it, when they paid it, and for how long they paid it. I would then ask the Government to justify to the companies the sums that are to be paid to the companies without the safeguards to which I have referred. In my humble opinion this proposal will have the effect only of increasing the value of the railways when the moment comes for nationalisation. The proposal before us outlines a piece of work that needs to be done, and if the Government have the desire to do it I believe they have the men who can do it. I never accuse the Government of lack of capacity; I accuse them of lack of desire to do the things which are needful for the social service of the nation. The proposal outlines a good piece of work for the nation. It can be done well and should be done quickly, and I ask the Government to do it now.

8.0 p.m.

Mr. Lewis Jones

Much of the discussion which has taken place on this Motion has naturally dealt with socialisation, but I was very delighted that the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) devoted the greater part of his speech to dealing with the agreement which is in the White Paper. I am not going to enter a political discussion as to socialisation or anything of the sort, but merely intend to draw the attention of the House to some of the implications of this agreement so far as the railway users are concerned. The agreement itself seems to be mainly concerned with two parties, namely, the Government and the railways. It has left out of all account a third very important party representing the railway users. They are the people who, after all, provide the railway companies of this country with a lot of their revenue, and I have no hesitation in suggesting that this White Paper has worsened the position of the railway users. The right hon. Gentleman who opened the Debate made a similar suggestion. I am perfectly satisfied that the position of the railway users is really worsened by the agreement set out in the White Paper.

Reference has already been made to the Railways Act of 1921. Under that Act, the railway companies were limited to their standard revenue as a maximum, and when the net annual revenue exceeded the standard revenue the traders were entitled to a share in such excess by way of reduced railway charges. If at any time the railway companies of this country received a net revenue in excess of the standard revenue set up as a result of the 1921 Act, the excess was shared as between the railway companies and the traders. The position of traders is not considered in this agreement. The Government now come in for the first time for a portion of any excess profits. When I use the words "excess profits" I do not use them in the sense of excess profits as used by the Chancellor of the Exchequer. It is the excess revenue over and above the standard revenue referred to in the 1921 Act. Clause 4 of this agreement definitely lays it down that If the net revenue in the pool exceeds the sum of the amounts payable to the controlled undertakings under paragraphs 2 and 3 (£43½ millions) then, until the sum paid to them reaches £56 millions, being the estimated sum required to bring the net revenues of the controlled undertakings up to their standard revenues, one-half of the excess over £43½ millions will be paid to the Exchequer and the other half will be paid to the controlled undertakings in proportion to their respective guaranteed net revenues. The effect of this Clause is that the railway companies, in order to earn the same standard revenue, which is £56,000,000, subject to some minor additions as described in the White Paper, will have to earn a net revenue of 22 per cent. in excess of the standard revenue. The right hon. Gentleman who opened the Debate called attention to this very aspect of the question. The standard revenue of the railway companies referred to in the White Paper is £56,000,000. The difference between £43,500,000 and £56,000,000 is £12,500,000, in order that the railway companies shall receive the standard revenue of £56,000,000, their net revenue must reach a figure of £68,500,000 to provide for the Government share of £12,500,000.

How does this affect the railway user? While the principle of the standard revenue is perpetuated by this agreement, we claim that the White Paper aggravates the evil. Before the trader can now share in any excess over and above the standard revenue by means of reduced rates, the railway companies have, as a result of this White Paper, to get a net revenue of £12,000,000 in excess of what they had to find prior to the publication of the agreement. I suggest that the railway companies, in order to make their contribution to the Government, have to increase their revenue by £12,000,000, which means that industry itself, and railway users generally, have at any rate got very much further away from getting rates reduced as a result of this agreement. Clauses 9 and 10 are very important again because of their operation and their effect upon railway users generally. They are very important not so much for what they contain as for what is omitted. The White Paper is referred to as an outline of the agreement and one feels that a considerable amount of information is necessary in order to understand fully what the agreement with the railway companies means. Clause 9 of the Agreement says that— Provision will be made (among other matters) for: (a) the standardisation of charges, etc. It is very unusual in a Parliamentary Paper that a Government Department should talk in general terms about provisions which will be made about other matters. I was rather hoping that the Minister would be able to tell the House what other matters there were for which he was making provision. The House is entitled, in accepting a White Paper of this kind, to have full information from the Minister as to what he means. It is vitally important that we should know exactly what is at the back of the mind of the Minister. In his speech to the House this afternoon the right hon. and gallant Gentleman dealt with the first portion, when he spoke about maintenance. He gave some explanation which we have not in the White Paper, but again, he was not clear enough as to the intention of this particular paragraph. He said that they wished to encourage the railway companies to maintain their rolling stock in as perfect a condition as possible, but he did not make it clear to the House whether it was his intention to limit the actual expenditure on maintenance to the level of the basic year, suitably adjusted because of the changed position as to the value of money, and of raw materials, or whether it was his intention simply to limit the railways to the basic amount when charging up their expenditure. If the companies are lo be limited to that, we know where we are; but if the railways can incur an excess of expenditure which they cannot charge to the pool, it makes it more difficult for the railways to meet the traders' desires for reduced rates.

The Minister talked about the new arrangements which he was making for the fixation and adjustment of railway rates. The machine which has operated over a very long period, and particularly since the 1921 Railways Act, is a very complicated one. I think the trading community have been rather jealous, or fearful, lest the Government were taking away their right of appealing to an independent body if they were dissatisfied with charges. Nothing is said in the White Paper as to the form that the tribunal will take, but this afternoon the Minister said he was setting up at the Ministry of Transport an executive committee to examine any proposals put forward to him from time to time for the variation of any of these railway rates. He said, "If I feel some doubt in my own mind as to whether rates should be approved of, I shall be able to consult members of the Railway Rates Tribunal." I think that industry generally will be rather doubtful as to this method. For the first time in the history of railways, the Government are coming in to share in the plunder as between £43,000,000 and any figure in excess of the standard revenue. If the Government are coming in for a minimum of, say, £12,500,000, industry is entitled to be a little fearful lest the Government might fail to be really impartial in dealing with any questions of a change of rates. So I do not think that the Minister's suggestion that the only change is in the arbitrator on questions relating to rates is a satisfactory one.

I would ask the Financial Secretary to the Treasury, when he replies, to deal with two points which are of vital importance to the organisation of transport in its relation to industry generally. Since the official audited returns will not be available during control, will the Minister undertake to make available to the House, at the end of each accounting period of the control, a statement showing the financial results of the new scheme? Secondly, can he tell the House whether the Railways Act, 1921, automatically becomes operative again at the termination of control? I think the question was put earlier on to-day by an hon. Member, who presumed that for some years after the termination of the war the railway companies would expect the Government to be a kind of public assistance committee, doling out public money. I would like to know whether the provision for adjusting charges, which is now to be abandoned, according to Clause 10 of the White Paper, is to be automatically restored?

8.15 p.m.

Mr. Watkins

I do not propose to follow the argument of the hon. Member for West Swansea (Mr. L. Jones), except to make two comments. First, with regard to his inability, under the new arrangement, to approach the Railway Rates Tribunal about questions of charging, I would point out that, at any rate, he will be able to question the Minister of Transport in this House. My second comment is: how often so many of us import unfairness into a discussion by the use of a wrong word. The hon. Member spoke about the profit of a railway company as "plunder."

Mr. L. Jones

I beg the hon. Member's pardon. I did not mean anything of the kind. I completely withdraw the word.

Mr. Watkins

Then I do not think I need pursue that any further. I want to say a word or two, as did my hon. Friend the Member for Rotherham (Mr. Dobbie), from the point of view of the railway workers. This settlement has been discussed from the point of view of the shareholders and from the point of view of the Government. There are 600,000 railway workers, who, with their wives and families, would, I suppose, make up a total of at least 2,000,000 people—quite a considerable proportion of our population. Forthem, this settlement is not an academic thing. It might easily affect the standard of life in their homes, either upwards or downwards; because, while this settlement guarantees dividends for the shareholders, there is no guarantee in it for the standard of life of the workers. The Financial Secretary to the Treasury may reply that the railway trade unions are able to look after that. The railway trade unions will do their best; but the Government, at any rate, are not giving any guarantee.

I am quite certain that the railway workers would gladly accept a national plan for all industry by means of which profits were restricted to the level of the restriction of profits in the case of the railway industry; but the railway workers will oppose any unfair discrimination against the railway industry in comparison with other industries. I am certain that if all industry yielded as small a profit as will be given to the railway industry under this agreement, the Chancellor of the Exchequer would have a far smaller sum to find in order to pay for the cost of the war. We talk so glibly about this £40,000,000, as if it is going to spring from the heavens. But it is not; it is going to be earned by the railway workers of the country. Above all, dividends are earned by the workers. I think the railway workers will not be particularly pleased at the three years which the Government have taken as the basic years: 1935, 1936 and 1937. In 32 out of those 36 months, the railway workers were having their rates of pay cut, and were subsidising the railway industry to the extent of this deduction from their rates of pay. So the Government have not taken particularly favourable years from the point of view of the railway workers.

Some people have criticised this £40,000,000 as being on the excessive side. I remember very well, in the year 1927, that the net revenue of the four companies was £45,750,000 as against the £36,500,000 provided by this agreement. The railway trade unions entered into voluntary agreement with the railway companies for a reduction in pay to help them in their financial difficulties, yet this settlement provides a smaller net revenue than was earned in 1927, and which led to that result. In 1930 the net revenue for the four group companies was £38,500,000 and in March, 1931, the National Wages Board for the industry made a cut of 2½ per cent. off everybody's salaries and wages, with an additional 2½ per cent. on all salaries and wages above £100 a year. In those years the railway workers helped to subsidise the railway industry.

The hon. Member for West Swansea was concerned about his freights. It seems to me that in those years he and others were not paying sufficiently high rates because the industry had to be subsidised by cuts in wages. The workers do not want that to happen again. These terms provide for a minimum of 3.3 per cent. on the total book capital and a maximum of 4.7 per cent. Are there any other industries in the country that are satisfied with such a small amount? If this is good for the railways why is not something similar applied to the aeroplane industry, the engineering industry generally and others who are making large profits now? Let us all come down with the rate of profit if this is going to be applied, as I think it should be applied. The "Times" on the 8th of this month, in commenting on this agreement, used these words: The moderate character of these returns should be borne in mind if the arrangements are to be viewed in the right perspective. As a railway worker I cannot see much to quarrel about with the opinion of the "Times" in regard to the settlement, but I want to make it clear that I want the alternative contained in our Motion.

The Minister of Transport chided the Opposition with bringing in the nationalisation of transport and, he said, using the railway agreement as a peg on which to hang a discussion on the nationalisation of transport. The hon. Member for South Bradford (Mr. Holdsworth) said we had tacked it on to the discussion about the agreement. That is not so. There are two ways of dealing with transport—one is the Government way and the other is our way, and it is not merely a question of playing at politics. I am convinced, as a railway worker, that we want our transport carried on with a maximum of efficiency. We do want it carried on efficiently, because transport may, before we have finished, be a deciding factor. We want a system of transport which is better than the higgledy-piggledy arrangement of the present time. I know jocular remarks have been made about co-ordination, and metaphysical discussions have been entered into about the difference between co-ordination and unification. What the railway workers want is central direction for all transport and the using of every part of transport to the maximum, not making one part compete with another, but making each part complementary to the other. There are hosts of quotations from people who know, and who are not theorists. My hon. Friend the Member for South Bristol (Mr. Walkden) quoted the Chairman of the London and North Eastern Railway Company, who said: Any political argument against State ownership is demolished by the facts of the situation. That is not from a theorist; it is from a practical man. There is on our side Mr. Ernest Bevin, whom I regard as a man with one of the finest transport minds in this country. He understands road transport with very great thoroughness. Lecturing to the Institute of Transport quite recently he said: I have very great doubts, notwithstanding the smallness of the country, as to whether or not our transport system would satisfactorily stand the strain. Later on he returned to the point by saying: I would repeat. I have grave doubts whether without the complete co-ordination of all the factors of transport in this country, it would be of a capacity to stand up to the strain in the event of a supreme demand being made. It is so easy for us airily to dismiss this and say everything will be all right, that we can let the railways go on, that we can starve the road industry and trust that nothing will happen. Something may happen. Severe dislocation in the industry and the lives of the people may take place owing to lack of proper co-ordinated transport in the country. Therefore it is not just a bit of political play- acting; we are convinced this is the right way to deal with this serious problem.

There are one or two minor points that I want to put to the Financial Secretary to the Treasury, if he will be good enough to answer me when he comes to reply. I notice that the basis of this scheme is that all railway receipts will be paid into a pool. The identity of the companies will be lost during the period of Government control, which means that there will be no division of receipts between the companies. It seems, therefore, that the work which the Railway Clearing House has been doing since 1842 will come to an end. In mentioning this I see on the other side the hon. Member for Abingdon(Sir R. Glyn), whose grandfather or great-grandfather instituted the Clearing House in 1842. What is going to happen to the Clearing House with its staff of 1,200 clerks and salaried officers, and 500 to 600 number-takers? I hope they will be provided with useful work. They can help very materially in transport office work and I have no doubt that the Railway Executive Committee have something in mind for them.

As a railway worker I think we deserve the most efficient form of transport. There have been a lot of questions and answers in this House about the railways during the cold and snowy weather we have had during the last month. Some of the railwaymen have had very arduous and unpleasant experiences. I was on a little country station on that worst of all Saturday nights recently, and out of the darkness came two platelayers, about half past nine. There were 22 degrees of frost. They had brushes and one or two tools, and started on their job of sweeping the frost from the points in order to make travel safe. Travelling on the railways in England is safe. They marched into the darkness. Many nice old gentlemen travelling in a first-class warmed compartment grumbled if the train was a few minutes late. They would learn a great deal if they could just change places with those platelayers for only one night. If the Government would only organise transport into a complete unit, making each section play its full part, it would be better for the community in time of peace and abundantly better for the community in time of war.

8.33 p.m.

Sir Ralph Glyn

The hon. Member for Central Hackney (Mr. Watkins) has described himself as a railway worker, and I hope he will allow one of those despised people, a railway director, to ask that he may also be so classified. Anyone who has been connected with railway work for any length of time feels that he is a member of one big industrial family. I have been connected with the railways for a good many years, and when it comes to attacking the railways I do not see any difference between shareholders and workpeople and boards of directors. I am very grateful to the Opposition for having spread their Motion beyond the definite settlement between the railways and the Government. Had they confined it to that, obviously some of us could not have voted in the Division Lobby, because we should have been affected, but as it is we shall be able to record our votes because we do not believe in the principle of nationalisation. Indeed, when we consider what is called nationalisation, one of my chief regrets is that it would mean the total elimination of the railway trade union, with whom I have had happy contact for so long. If the State controlled the railways, they would not allow any trade union to operate.

Mr. George Griffiths

What about the Post Office? Is there no trade union there?

Sir R. Glyn

The Post Office is totally different, for this reason: In the railways you have four main line companies which operate extremely well. I have always believed that the business of the State should be that of a mediator between opposing sides. If you remove the State and make it an employer, you have no appeal, and you will not have anything like such good terms or such happy relations as now exist.

Mr. G. Griffiths

That is not the answer.

Sir R. Glyn

I was a member of the committee which in 1921 brought about, after the last war, the present reorganisation. We sat for many days upstairs. I was even on the board of the old Caledonian Railway. When people talk about the enormous amount of water in the capital of the railways they sometimes forget the tremendous capital reorganisation which took place when 53 separate companies were reduced to four. And why should it always be considered almost a crime for people to invest their money in railways? To hear some speeches one would almost imagine that it was thought more in the national interest to ask people to subscribe their money to greyhound racing rather than to railways. People 100 years ago had the foresight to put their money into the railways for the benefit of the country, and why should their heirs and successors be treated with scorn because they have kept their money so invested? They have used their savings for the benefit of the labour of the country and the industry of the country, and I cannot see any better investment or one more in the public interest than this form of national service, which we all admit is essential in peace-time as it is in war-time.

On an occasion like this one must emphasise the fact, which the Minister of Transport emphasised in his reply to the right hon. Member for South Hackney (Mr. H. Morrison), that railways must be commercial undertakings in peace-time but in war-time they must be controlled by the Government. Upon that we all agree. The Opposition have inserted the principle of national ownership into their Motion. Nobody has told us on what terms the railways would be taken over. I do not suppose the Opposition are asking that we should approve of the confiscation of other people's property. Indeed, when I recollect the large sums which, happily, trade unions have invested in railway stock, I wonder what the position would be if they had anything to do with the Stock Exchange or were interested in gambling on the Stock Exchange. I could imagine no happier position than for them to suggest that a strike might take place and sell before the shares went down, knowing that a strike would not take place, and buying as the stocks were marked down. A great many trade unions might become multi-millionaires on that principle. But neither the trade unions nor the ordinary bulk of shareholders, certainly not the directors of railway companies, pay the slightest attention to the figure at which the Stock Exchange marks railway shares. I have oftened wondered why they mark shares down. I know of no reason, and there seems to be no reason for it, but it is rather hard on those who have their money locked up in railways and never buy a share that they should be classified with those people who indulge in football pools and who have been gambling on a statement about which few of us knew any details until a few weeks ago.

There is another matter which I must mention, and that is that the railways have always been, and rightly so, under the control of this House. Parliament, from the start, saw to it that there was no monopoly created, and no railway company, as far as I know, even in the early days, has been allowed a completely free run. They have always had to come to this House for powers. It will be within the recollection of hon. Members that in 1921 the railway companies had no powers to operate road vehicles. The right hon. Member for South Hackney said that he supposed none of us had been looking ahead, but to-day a great many of us are looking ahead. At the present time, there is an enormous number of motor trucks either in the possession of the Armed Forces, or about to enter into their possession, which, when the war ends, will be thrown on to the market. At the end of the last war, Parliament refused to allow the railways to operate road vehicles. When the Forces came back from France and the East, thousands upon thousands of lorries were sold for a song. Small companies were formed to operate a few vehicles. Those companies were not bound by any restrictive legislation, and they could, and did, scoop up the cream of the traffic. Who suffered? Not only the shareholders of the railways, but the railway workers. As one hon. Member has said, in 1927 it was a spontaneous action on the part of the workers when they came forward and said they would help the railways to get through that critical time. They did so, and we have never forgotten it. Therefore, I feel that, for every reason, there must be, under this Government control, which we all agree is necessary, somebody who is thinking ahead about what will happen when this enormous amount of motor traffic is brought back on to the roads.

There is one other matter in that connection which we must face. After the war, there will be a different mode of life. Those who to-day have possessions will have none, or their possessions will be very much reduced. The whole scale of payments of rates and taxes will be found to fall short of what it has been so far. It will be impossible, at any rate without very great difficulty, to pay for a high standard of maintenance or for extension of the roads, if the present rating system is to continue. In such circumstances, surely it is not asking too much to claim that such traffic as can be economically carried by rail, on their on road, should be so carried rather than go on roads which were not made to support such heavy weights. That being so, there must be co-ordination or unification—I care not what word is used—which will bring road and rail together. As has been mentioned in the Debate, for many months the railway companies have been carrying on negotiations with the road interests, and great progress has been made. There is not the slightest reason why the preliminary examination that was made of the facts, and indeed the preliminary schemes that were submitted to the higher authorities, should not be reconsidered during the war. There is not a railway company that is not anxious to help the road traffic industry. There is not a railway company, now at any rate, which is taking a vindictive course against road operators. But there must be a planned scheme, and it is that for which the party opposite are asking. There is no hon. Member on this side who quarrels with them over that idea; we quarrel with them over the idea of ownership and confiscation. We do not believe in confiscation; we believe that if a price is to be paid for any article, it should be a fair and proper price.

In spite of every difficulty, the managements have had to keep up the railways, which in time of war are essential. In spite of unlimited competition, at a time when the railways had their hands tied behind their backs and were not allowed to operate road vehicles, our railways have been kept in a higher state of maintenance and efficiency than the railways in any other country. Surely, it is only fair that, in such circumstances, there should not be an unjust or unfair return to the proprietors of those concerns, but an honest attempt to pay to them what is due to them for having maintained something which is essential for war purposes. None of these things could have been done without the foresight of men like Mr. Bevin. I think I have read as much as he has written about the co-ordination of road and rail. What puzzles me is the line of demarcation between the different unions. There are the Transport Workers' Union, the Locomotive Drivers' and Firemen's Union, the National Union of Railwaymen, and the Railway Clerks' Union. As far as I know, there is no union of railway shareholders. [Interruption.] In any case, they are not as well organised and they have never used their power as effectively as, perhaps, some of the other unions have. There must be a common interest between all those concerned. In time of war, surely it is obvious, as many hon. Members have said, that we cannot undertake a tremendous reconstruction and transfer of capital; but we can utilise the supervising control which exists in order to consider what useful scheme can be hammered out to meet the position that will arise when the war is ended.

Therefore, it is of the utmost importance that we should not waste time in abusing those whose capital is invested in the railways. That capital is only the accumulated savings of our ancestors. Without those investments, there would have been no railways and no railway workers. Let hon. Members also remember the penalty we have to pay for being pioneers—and yet, would any one wish it were otherwise? We can claim Stephenson and Brunei, who made the preliminary railways of our country. Yet, the fact of our having been pioneers in the matter of railways naturally carries with it certain shortcomings. Railways that were modelled on ours have better stations. The railways that came in the intermediate stage, as in Germany, were taken over for military purposes—and the military purposes were dear to Bismarck's heart. But there is no question of the efficiency both of the operation and management of our railways, and of the men concerned, the railway workers. British railways are far better than the railways of any other country. We should be proud of our railway system. We should recognise the men, the workers, engineers and the rest, who have made their contribution. If there is that feeling, I can see no reason why the scheme which we are discussing should not be considered as the basis of some re-organisation of the services in future.

There is, however, one thing I should like to say in connection with the London Passenger Transport Board. I am not one of those who regret the Board being brought into this scheme. I am not at all sure that the future may not bring an extension of that system. I believe it is likely that national transport will develop on the lines of an extension of the London Passenger Transport Board to places such as Liverpool, Manchester, Birmingham, Glasgow, and so on, which would mean that the local people would have a say in their local transport affairs. Such an extension would undoubtedly effect savings, and I do not think there is any reason for supposing that those responsible for the main-line railways and the general trade of the country would not collaborate so as to make the whole system firmly based and efficient.

I hope the House will forgive me if I say something of a personal nature. I have to-day heard innuendoes against a great friend of mine who was my chairman on the railways. I refer to Lord Stamp. I think I have more reason than perhaps any other hon. Member to know what Lord Stamp's action has been. No man is more able to keep quite clearly detached his various duties. I can assure hon. Members that it would be doing a disservice to a great personality, who has made his full contribution to the war effort, if there should be anything said in this Debate which would lead people to believe that one man has fallen below that high standard which all public servants in this country have. To go into any detail would be unnecessary and insulting to those concerned, but having been intimately connected with Lord Stamp and knowing how these negotiations were going, I want it put quite clearly that it is unfair and unjust to make any innuendo that his behaviour has been anything other than entirely exemplary.

8.51 p.m.

Mr. G. Strauss

I think that all Members of the House, certainly those sitting on this side, are interested in any contribution which the hon. Member for Abingdon (Sir R. Glyn) makes to a discussion on railways, because we know that he is very well informed. I was interested to note that he expressed agreement with one part of the Motion on the Paper—that is, that there should be some unified control of the transport of this country. Most hon. Members on that side of the House would not go even as far as that. We have heard from all quarters on that side hostility to the suggestion that there should be ownership as well as control. I want to use the short time during which I am going to speak for a criticism of the scheme which has been put forward by the Government for supporting the railways during the war. I have listened very carefully to the arguments put forward, including those of the Minister of Transport, and I must say that I am as strongly convinced as ever that the agreement is very definitely contrary to and harmful to the public interest.

The railway shareholders are to benefit in a degree to which they are not entitled, and they will benefit to the detriment of the public. What are the essential facts of the situation? I suggest that they are these: The railways are private undertakings, the efficient working of which is of great national importance. For a number of years their earning capacity has been declining, in the same way as the earning capacity of a large number of other industries. That has been caused by changed social circumstances and particularly by the growing popularity of road transport. The earning capacity of the railway industry has consequently fallen, and the capital value of investments in railways has declined in proportion. The question which the Government have to face and which Parliament has to settle is whether, the value of railway investments having fallen, not just in one year but over a series of years, as the value of investments in many other industries has fallen, and that fall in value being, as far as one can see, permanent, owing to various social changes, is this special industry to be given an enormous benefit because of the war and because of national necessities?

It appears to me quite wrong and contrary to the public interest that the Government should come along and say that because of the necessities due to the war they are going to enter into an agreement which is going to pay the railways some of the losses they have sustained in the past, which is going to put the value of railway shares very much higher and give railways shareholders a return which they could not possibly have earned had it not been for the war. That is the principle involved in this agreement. Is that a right thing or a wrong thing to do? My own view—it has been expressed by many speakers from these benches and from the Liberal benches—is that the Government should not deliberately in a war benefit the shareholders in any industry. Anyone who looks at this agreement must see that the Government, with public money, are giving an enormous benefit to the shareholders in this particular industry. I suggest that is a wrong principle, which cannot be justified on any moral ground whatsoever.

The people of the country are going to suffer in this war very severely. Not merely will some suffer death or wounds, but every section of the population is going to be taxed very considerably. We are always being told by the Chancellor of the Exchequer that it is not only the wealthy but the working people who are going to be taxed, that there must be a general sacrifice in the standard of living, and that money is to be extracted from the whole population. That is inevitable. But I object to money extracted from the whole population for the prosecution of the war being diverted by the Government into the pockets of a particular group of shareholders. That is in effect what the Government are doing. Big profits are going to be earned by the railways as the direct result of the war, as the result of the big freights that the Government are going to give to the railways and as the result of the virtual abolition of road transport. The railways will earn very much larger sums than they would otherwise have earned.

May I consider for a moment the various arguments put forward by hon. Members on the other side in justification of this principle which appears to me so wrong? The hon. Member for South Bradford (Mr. Holdsworth) said that during the war the owners of the railways are going to render extra services and asked whether they ought not to be remunerated for those extra services. With all respect, I suggest that the extra services are going to be rendered by the workmen employed on the railways and by the technical staffs, and that no extra services are to be rendered by the shareholders who will benefit so materially. I cannot see anything in that argument. The hon. Member who has just sat down said that the capital of the railways represents the savings and investments which some of our ancestors put into the railways by the exercise of foresight years ago, and asked why they should not have a fair deal. Are you going to extend that principle to every industry? Investments were made with the same foresight which the hon. Member talked about in other industries, in steel mills and cotton mills and all sorts of other industries, which were of material benefit in building up the financial strength of the country. But changing conditions have resulted in those plants being closed down. Is it suggested that the Government are to reward to-day, in time of war, the foresight and thrift of people who invested money in these industries years ago?

Sir R. Glyn

Other industries are not under Government control. The railways are under Government control, and, therefore, are not free agents in the same way as other industries.

Mr. Strauss

It is true that there has been Government control of the railways, but that control has been of considerable benefit to the railways and to railway shareholders in some respects, though in others it may have acted to their detriment. I think, generally speaking, it has been the case that the railways have asked for Government help in the past, rather than that the Government have imposed restrictions on the railways. Another argument in justification of this war-time subsidy to the railway shareholders was put forward by the Minister of Transport. He said that for some years past railway shareholders had had a very bad time and that now that things were better they ought to enjoy, to some extent, the benefit of that improvement. It is an extraordinary principle that because investors in a certain industry have been doing badly, they should be entitled, when war comes, to special consideration from the Government or that the Government should divert any public funds in that direction on that ground. I cannot agree with that principle.

I think the only other argument put forward in justification of this proposal was that the industry, if left to itself, without any agreement of this sort, would, naturally and automatically, have made considerable profits; that we should take that into account and leave some of the profits with the industry. That, also appears to be a very questionable proposition. When the Government take over an industry or a group of industries, as, perhaps they have done or will do in the course of the war, are they to pay in compensation to that industry a sum equivalent to the probable earnings of the industry if it were not taken over, but allowed to make what profits it could during the war? Surely the Government would not agree to that agreement. I cannot understand on what principle the Government can justify allowing this big bonus to go to railway shareholders during the war.

There is no doubt that when the agreement was announced, the City thought it was magnificent. It is no use saying that fluctuations of share prices on the Stock Exchange can be ignored and do not matter. As one who works in the City, I see a good deal of what goes on there. I know that Stock Exchange prices are apt to fluctuate, sometimes solely because of rumours, and they may take a long time to settle down. But, generally speaking, the prices of shares and particularly such shares as railway shares, which are subject to minute investigation and scrutiny by accountants and economists, represent, roughly, the true capital value of those shares at any particular moment. I think that will be agreed to as a general principle. When this announcement was made by the Government there was an increase in the values of these shares. The right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) gave a figure, but with his usual caution he gave a figure which was a gross understatement and must have been based on the rise in the prices of these shares about a week ago. The fact is that the value of these railway shares on the Stock Exchange rose by approximately £200,000,000 in the past three weeks. Those prices may go down a little, or may go up, but it is beyond doubt that the investing public considers that a generous bonus has been given to the railway stockholders by this agreement. May I quote a few sentences from the independent City Press about this agreement? The "Financial News" said' The scheme on the whole must be regarded as extremely satisfactory from the stockholders point of view. The "Economist" said: The railway agreement is a compromise which is unmistakably favourable to the companies and their shareholders. and again: It is impossible not to conclude that the railways have been treated too generously. That was the view of the "Economist," and they added: A delighted and surprised Stock Exchange to-day approved it. There can be no doubt that the agreement gave such a bonus to the shareholders of these companies, that it came as a great surprise, even to the wise men of the Stock Exchange. To show how the companies will benefit from the agreement I wish to compare the percentages paid on one or two shares by railway companies in 1937 with the amounts which they will earn on those shares, under the new agreement, assuming, as I think everybody does, that the companies will earn, beyond the guaranteed £40,000,000, at least the extra £3,500,000. Whereas in 1937 4 per cent. was paid on Great Western Ordinary Stock, under the new conditions, if only £43,500,000 is earned 4.6 per cent. will be payable. On Southern Deferred 1½ per cent. was paid in 1937. Under these conditions it will be 2.7 per cent. On L.M.S. Ordinary in 1937, 1½ per cent. was paid. Under these conditions that will be 2.3 per cent. Therefore, the increase in the value of shares on the register of the Stock Exchange is a true index in the sense that it represents an almost certain and very substantial addition to the amount of dividends which will be paid on the various shares.

I do not yet know why the year 1938 was not included in the calculations in arriving at the basis of the agreement. We have had no explanation beyond the statement by the Minister that owing to a number of reasons—he did not tell us what they were—1938 was a bad year. He mentioned the unsettlement in international affairs and he said that because 1938 was a bad year for railway receipts, it had been excluded from the calculations. I do not think that is a good enough reason. We should have been told of any special reasons—I doubt whether there are any—why 1938 was especially a bad year for the railways. As far as I am aware, other forms of transport did quite well that year. It appears to me that 1938 was excluded merely because it was a bad year and in order to give a better basis to the railway companies.

The point raised by one or two speakers who founded arguments on the standard basis agreed to in the 1921 agreement, is quite theoretical. The standard which was laid down in the 1921 agreement is of mere historical interest to-day. Such have been the changes brought about by various factors in the railway situation, that it has no relevance to present-day considerations in connection with the rail way position. Therefore, I feel that the agreement is wrong in principle, in that it definitely hands over to this section of investors a very considerable sum of public money which they would not have received had it not been for the war. Not only is it unfair—

Mr. Spens

The hon. Member in the first part of his speech has been complaining of the large amount of public money handed over to the shareholders, and the second part has been that the railways are going to earn, and more than earn, dividends, and he talked about the extra £3,000,000 in addition to the guaranteed sum. No public money is going to the shareholders—absolutely none. He cannot have it both ways. Either they are going to earn or they are not.

Mr. Strauss

I cannot understand that interruption. The money which is going to the railways will arise from the war situation and from the huge freights which the Government will give the railways. It will also arise from the fact that the road transport system is practically out of existence. As a result of these war necessities the amount of money which will go to the railway pool will be at least £43,500,000.

Mr. Spens

Does the hon. Gentleman suggest that the Government should use the railways for carriage of troops and do nothing for them?

Mr. Strauss

Not at all. I am suggesting and laying it down as a principle that the shareholders in this or any other industry should not have their position materially improved, or have materially higher dividends, as a result of the war. Of course, proper provision should be allowed for that and any other industry for replacement, etc., and for the appropriate remuneration of the railway employés, the technicians, and so on. But I put it down as a principle that the public money which is going to be raised with such difficulties and involving very considerable suffering during this war should not go to a particular section of the investing community. It seems to me moreover to be causing an unfairness between one particular section of the rentier class and another. Gilt-edged stockholders and municipal stockholders are going to have their incomes reduced as a result of Government action, and I wish the Government luck in the policy. But whereas investors in municipal stocks are going to have their incomes reduced, the investors in railway stocks will have theirs materially raised. I can see no justification for such action, which seems to be utterly inequitable.

I believe this agreement to be contrary to the public, interest. It is unfair and stands in great contrast to the action of the Government in connection with other sections of the population. Old age pensioners and others have demanded appropriate allowances to enable them to keep above starvation level, and this agreement is in marked contrast to the action the Government have taken in regard to those people. It appears to me bad as a purely commercial bargain. In the public interest it would be inexcusable in peacetime, but it is doubly inexcusable in wartime.

9.15 p.m.

Mr. Pethick-Lawrence

The Debate to-day has covered a wide range and I scarcely think it would serve any useful purpose if I attempted to go over all the subjects covered, and follow along all the trails that have been laid by the different speakers, interesting as their speeches have been. Equally, I have no wish to repeat the arguments and statistics which have been put forward at the beginning of the Debate by my right hon. Friend the Member for South Hackney (Mr. H. Morrison), who opened the case against the settlement proposed by the Government, in favour of our plan of national ownership and control. There are certain points of view I want to stress in winding up the Debate on this side of the House. In the first place I would like to point out that this scheme, as outlined in the White Paper, still leaves quite a number of things undecided. Of course, no one can possibly say, and I am not making any complaint about it, how much the Government traffic on the railways may be. No one can say whether it will be extended and increased compared with the present time, or whether it will tend in some way to diminish.

I am not altogether satisfied that we have quite clearly outlined the method by which the charging for such traffic as does take place will be effected. I quite understand what the right hon. and gallant Gentleman the Minister for Transport said with regard to the charges being based on the same principle as that of a large employer or manufacturer who is transporting some of his goods, but the fact is that the Government is so much bigger than the largest combine. The Government interests are so large, with traffic of all kinds, that I cannot imagine any normal, methods by which a trader would be charged as strictly applicable to the payment which the Government will be called upon to make. It does seem to me that that question of the principle of charging will be a vital one, ultimately deciding what sort of profits the railways are going to make. That, in its final basis, is still wrapped in a good deal of uncertainty.

Over and above that we have this Paragraph 10 of the White Paper, which leaves a very great deal to the Minister, because we are to have an entirely new basis on which the alterations of rates is going to be effected. We have had before this scheme came forward definite statutory considerations which operated, and traders in the ordinary way, if unsatisfied, had both alternative accommodations, which by competition they could use to keep down railway rates, or, failing that, actual statutory provision to enable them to come face to face with the railways. Of course, both these are swept away, and there is no competition. The pre-war machinery has gone by the board, and there is nothing left but the railways and the Government to decide what changes, if any, are justified in fares, rates, and charges. Under these circumstances we have in this scheme, which seemed at first fairly straightforward and definite, a very wide measure of uncertainty.

Finally, there is the question of the Excess Profits Tax. There I had hoped that we would have some enlightenment by the Minister when he began explaining the position, but I found that we were left in precisely the same fog as at the beginning. In answer to a remark from the hon. Gentleman the Member for East Birkenhead (Mr. White), he said it was outside his province and he was not in a position to give any answer. So that, in fact, there are four large question marks which should be written all over this scheme, and it is those question marks which make the actual profit which will be realised a very speculative affair.

Coming more directly to the division which lay between the two sides in this Debate, I will begin by stating something which, I think, cannot but be agreed more or less by all of us; that is, that war knocks the principle of private enterprise silly. The basic idea of private enterprise, as it was propagated to those of us who lived in the nineteenth century, was that a man, by careful, honest work, by good endeavour and deliberate saving, and by working up his business gradually, became a prince among men and made a fortune which he left to others; I do not know how far that idea was really true, even in the nineteenth century, but I am sure that in the twentieth century it got a very long way from the actual fact, even in times of peace. The first reason is that luck—by that I mean, not the private luck of the individual in one sense, but the luck of something outside his business altogether—played a much larger part than it had played before, such as some discovery in another part of the world, some new process, or some rival substance which acted for the same purpose as the substance he had been making. That had an enormous influence, destroyed the work of good men, and brought fortunes to others who did not deserve it.

The second reason is that the Government have intervened more and more in the affairs of private individuals. I remember the days when the trader and manufacturer said to the Government, "Keep your hands off; you leave us alone to trade in our own way; and the more you do that, the better we shall be pleased." There is scarcely an enterprise, industry, or a trade of which that has been true during the present century in time of peace. They have come one after another asking the Government to intervene in their favour in order to enable them to make a profit. In many cases they have gone beyond that and asked, and received, direct subsidies from the Government out of which their profits have largely been drawn. If that were true in peace-time, how immeasurably more true is it in war-time, because in time of war the Government intervene at every stage and on an enormous scale?

We are constantly having it driven into us that in time of war we have all to make sacrifices. That is true. Great sacrifices of all kinds are demanded of our people in order to prosecute the war with success. I do not think there is anyone who will attempt to deny that in time of great national emergency the vast bulk of the population are willing to make sacrifices. But they will only make them with equanimity, they will only bear the hardships which are put upon them with fortitude, if they feel that there is something like equality of sacrifice and that the sacrifices they are being called upon to make are shared alike and certainly not aggravated by the fortune of others.

Let us look at those who are being called upon to make sacrifices. First, there are the sacrifices of those who have to give up their work and possibly their health; and, if the experiences of the last war are any guide, their lives on a large scale. Many of our brave sailors have already perished in the waters in consequence of the war. Then there are their families. It may be that in some cases the wife and children left at home may be nearly as well off as when the bread-winner was with them, but we all know that there are vast numbers of cases where that is not the case. Whenever I go to my constituency—and I am sure my experience must be common to all Members—I am confronted by people who come to see me and point out how hard the war has hit them. Whereas the man who was the head of the family may have been in a good position, whether an artisan earning good money, or a black-coated worker earning a salary, or even a person in a better position than that, now many of them are in the ranks, and their wives and children have to meet the liabilities which are left behind on a soldier's pay and a small Government allowance, plus, in some cases, a tiny sum for special hardship. When we turn to civilians, we find in places like London, owners of large businesses or of many boarding houses, and, all over the country, garage pro- prietors, road hauliers, and others suffering almost the complete shipwreck of their whole lives and positions. It seems to these people extraordinarily hard if the war comes to enrich others and to lift them from a comfortable position to one of affluence and considerable wealth.

That is really the question which underlies this scheme: Shall the same war which forces sacrifices, not only physical sacrifice of life and health, but material and economic sacrifice of a devastating character for large numbers of people, be a reason for bringing considerable additional wealth to others? I had intended to develop that point at some length, but my hon. Friend the Member for North Lambeth (Mr. G. Strauss) has put the case so clearly and concisely that I do not feel there is a great deal to add to what he said. He pointed out that to say that because the railway companies are doing more work they are entitled to more pay is to envisage the problem in the wrong way. It is true that if I work four hours a day and earn a certain sum of money, I should get double pay if I worked eight hours. But the shareholders of the railways are not doing more work because there is more work being done on the railways. If more work is being done, it means that the railway servants work harder or that there are more of them. Whether the shareholders get an additional profit or not has nothing to do with doing more work. It may be that the fortune of war, so to speak, naturally brings greater profits, but the question the Government have to decide is whether that natural result shall be one which they will favour and safeguard or whether it is one which they will do their best to reduce and mitigate. My hon. Friend the Member for North Lambeth has shown the extent to which it happens in this case of the railway shareholders. There can be no question that it has brought enormous wealth already in the shape of capital increment to a number of these people.

Obviously no one can say whether these prices on the Stock Exchange are an exact reflection of the speculative probabilities of the Government scheme, but it is not a question of a rise in one day. The market in these railway shares had been rising for several days, I think weeks, before the Government scheme was announced, and, when it was announced, they rocketed up higher still. Therefore not only were previous anticipations realised, but they were over-realised, and there can be little doubt that the Government scheme means that, as the result of the additional traffic for which the war is responsible and for which public money is being paid—the hon. and learned Gentleman said that public money was not being paid, but he is quite incorrect. Public money is what is going to be the basis of the enhanced railway profits. It is true that, under the scheme as the Government put it forward, the public may get a little of that money back again, but the fact that the railway profits are going to arise in the first instance from public money and the public having to spend money on the war is indisputable.

Mr. Spens

Does the right hon. Gentleman suggest that it is wrong that the State should pay a proper sum for freight for sending its traffic over the railways?

Mr. Pethick-Lawrence

The whole question turns almost entirely on the word "proper." I quite agree that the system adopted during the last war, of warrants instead of payments, was basically wrong. It was a most unsuitable system, and it worked out exceedingly badly in that it led to waste and miscalculation. But my contention is twofold. My main contention, of course, is that this is entirely the wrong way of treating a public monopoly service. But, apart from that, I say that the proper charges that the railways are making should be kept down and that a reasonable or even a large proportion of the profits should be taken back by the Government. That is the case against the scheme as it stands, but I do not want to go further on that, because my hon. Friend has dealt with it exhaustively.

I should like to say one word with regard to the payment of 4 per cent. People ask: Is it unreasonable that capital should earn 4 per cent.? It entirely depends on what the position of the capital was before the war came along. If a company is earning 4 or 5 per cent. on genuine capital for which people paid over par in the last few years, 4 per cent. is by no means a large figure, but if you are dealing with capital which has been a great deal below par in the last few years and for which the stockholders have been paying something like half the par value, 4 per cent. is really eight. You cannot go back to the year 1, when the capital was originally invested in the business. You have to take the business at it has been for a reasonable time before.

Now I turn to a different aspect of the main question, that is, that the war in reality makes it impossible for private enterprise to function along the normal lines, for this reason, that the Government must override, in the interest of the public, the normal activities of all trade, commerce, and transport. The Government have to order the economic life of the country as a Whole, in the interests, not of individual people, but of the main object for which the Government are working and for which people support the activities of the Government at the present time—the prosecution of the war. Every other consideration has to give way to that object. For that reason, in our view, the whole question of transport has to be considered again. You cannot take out one part of our transport system and say, "We are dealing with that, and that will be paid for according to the actual services that it renders. Somebody else can look after another part of the transport problem." The whole of the transport system has to be considered together. If something ought to be done to one part of the system, it is improper for owners and proprietors of that part to object and to say, "That is our property," or, "Our position after the war will be so-and-so." That sort of thing ought to be ruled out. It ought to be for a public authority controlling the full transport system in all its branches to decide what should be the policy of the system, taken as a whole and in the national interest. In our belief that is not being done under the system which the Government are establishing in this connection.

That brings me to a question which I was told I would be expected to answer. I will do my best to answer it. It is said that there would be tremendous difficulty in establishing at the present time a permanent national transport authority having control in the public interest. That argument is a happy Parliamentary device. When it is difficult to oppose any principle, it is sometimes said, "The principle may be all right, and it may be, in other times, an excellent idea, but this is the wrong time for introducing it." It reminds me of the story of the Irish-man's house that had a leak in the roof. The rain was pouring into the room, and a stray visitor said to the Irishman, "Why don't you go up and mend that hole?" The Irishman replied, "I cannot go up and mend it, because I cannot get on to the roof when it is wet, for I should slip." Then the visitor said, "Why don't you mend it at some other time?" "Well," replied the Irishman, "the water isn't coming in then." It is the same with this question of national control and ownership of property. I do not know the time most appropriate for it, but I am sure that it is in the public interest that it should be done.

The Government ought to have got a scheme ready before the war began. It would be easier to put this system on a national basis to-day if the plans had all been made while we were in the interval between Munich and Poland. The Government were advised to get their schemes ready. I give the Government credit for the fact that some schemes were forthcoming and were ready from the word "Go" to be put into operation, but other schemes were not, including one scheme which they certainly should have prepared, relating to the valuation of capital, in order that they might have a capital tax during the war. These other schemes were left undone, and now they talk of difficulty. Transport control and unification is just one of those schemes. Rut there is no fundamental difficulty in carrying it through to-day. For in fact the Government have already done the really vital part of the transaction; and they have already achieved the one thing that might create any difficulty. They have decided to override the authority of all the separate railway companies and to be in control of the main direction of policy.

Under a completely unified system, and one which was owned and controlled in the interests of the community, no one has ever suggested that the Financial Secretary, or the President of the Board of Trade, or the Minister of Transport himself should supervise and control the minute day-to-day working of the institution. Of course not. All the minor details of everyday administration would be carried out by the same people who are carrying them out at the present time. We have heard the name of a noble peer mentioned several times in this House. Perhaps the only essential difference would be that he would migrate finally and permanently from his office in a private business to a Government or a public board, and that is really the main distinction of method, apparatus, and machinery that it would be necessary to make.

The difference between our scheme and that of the Government would be very great, because most of these petty problems of settlement would disappear, and there would be one authority controlling the main lines of the whole machinery, and, so far from the new system being more complicated, it would become less complicated than the old. I am not suggesting, of course, that the transition could be obtained without a great deal of thought, but there are experts on these matters and men who control this transport in its various branches at the present time, and the unification of their control would not present any vast and insuperable difficulty. You would have the great advantage that you would then use the different branches of transport solely for the public good and solely with the public interest in view, instead of it being a kind of diarchy, as it is at the present time, as is illustrated by the dual capacity of the same noble peer whom I have mentioned already.

Finally, I come to the financial problem. I can quite understand that the preparation of this scheme outlined in the White Paper represented a great deal of thought and a great deal of accountancy, bargaining, and sweet reasonableness, which we look for from the Minister of Transport, to bring it about. But the financial apparatus for purchasing a great enterprise, when that enterprise is entirely owned in the stock market, might be a matter of considerable thought and of some bargaining, but there really is not any fundamental difficulty. I do not suggest that it could be settled in five minutes by multiplying the prices, as they are at the particular moment, of all the different shares by the amount of shares in the market. That really would be a hit or miss method, as the hon. Gentleman the Member for East Birkenhead suggested, which in many ways is quite as sound an approach as any hit-or-miss method the Government have adopted. But I have no doubt that inside one week, one or two capable negotiators and lawyers, and possibly actuaries, sitting round a table, could certainly hammer out a scheme for a just price that would be based broadly upon Stock Exchange values, perhaps not of a single day but running for some little time, and it would present no fundamental difficulties.

Therefore, I do not think that I have really anything to answer with regard to this question of the difficulty of establishing this new machinery. I do not believe that it is any whit more complicated than a great deal of the new machinery that the Government have already had to set up, such as the Ministry of Shipping and the control of all shipbuilding by the Admiralty. Where an industry is already so far unified as the railway industry, and where there are functionaries controlling that machinery to the extent they are doing at the present time, and must be doing in any public enterprise of the magnitude of the railways, I do not believe that any great obstacle exists to carrying through such a scheme as we have in mind.

I have exhausted all the time I intended to occupy, and have shown that the scheme which the Government put forward is still full of uncertainties. It is, necessarily, highly complicated; it certainly gives great additional prosperity to a certain class of people during the war, at a time when others are being called upon to make great sacrifices; and I shall ask my hon. Friends to vote for the Motion that we have put on the Paper, claiming that for transport to be properly, efficiently, and economically run during the war, instead of the system which the Government propose, there ought to be a unification under public ownership and control.

9.47 p.m.

The Financial Secretary to the Treasury (Captain Crookshank

): I think I can claim that this has been a very odd Debate. Perhaps one of the oddities is that I should be replying to it. That is so because my right hon. Friend the Chancellor of the Exchequer is one of the most important parties to this agreement, and we thought, when planning this Debate, that it would be on rather different lines. Most of the points which have been put could have been better answered by my hon. Friend the Parliamentary Secretary to the Ministry of Transport, but I will try to answer the questions to which I have been asked to reply.

Not only has the Debate been rather odd, but, of course, the origin of the Debate was itself very odd. Last Wednesday my right hon. and gallant Friend the Minister of Transport made a statement with regard to this agreement, and the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) asked, Did he think it was a reasonable one? My right hon. and gallant Friend, who is always kindly and courteous, did not give him the retort that some would have given, "Of course, we think it is reasonable, or we should not have made this agreement." He said, "Perhaps the right hon. Gentleman will read it first, before he makes any comments." The right hon. Gentleman then said, "Can we have a debate?" and the Debate has taken place. In the meantime, the right hon. Gentleman and his friends have read the agreement. So we get this very odd Motion. Because the Motion is really one of the most peculiar, considering the setting, that we have had to discuss in this House. It is in the names of "the Big Four." This is a very important affair; it is in the names of the leader of the Labour party; the deputy-leader; the right hon. Gentleman—I do not know whether he is the Crown Prince; and the financial expert. So it is obviously one which they consider of paramount importance. What do they say?

That, having considered the financial arrangements…..as set forth in Command Paper No. 6168, this House is of opinion"— Then follow a lot of other things which they themselves for many years past have been of opinion should be done, which have nothing to do with this arrangement at all. The mere fact of putting in the words "having considered the financial arrangements….as set forth in Command Paper 6168" is of just as much relevance as having considered the works of Plato, Shakespeare or the books of the Prophet Jeremiah. In his opening words the right hon. Gentleman the Member for South Hackney said it must not be taken that the Labour party concurs in the terms of the agreement. But they have not put such a Motion on the Paper, the common form of which would be: That this House disagrees with the financial arrangements. It is therefore, an odd Debate. We are not playing according to the usual rules and I am rather left wondering whether the Opposition do, as a whole, agree with this Motion or not. The hon. Member for Central Hackney (Mr. Watkins), who speaks from the railwayman's point of view, after saying of the agreement, "If this is good for the railways, and I am prepared to say it is"—went on to expatiate on the fact that he thought the kind of revenue which might come as a result of this co-ordination would be a good rate of profit for other industries. His line was that this is a modest return on capital and it would be a good thing if all other industries could be kept as low as this. Again I repeat, this is an odd Debate.

The right hon. Gentleman the Member for South Hackney said that the Government in a matter of this kind should be moved solely in the public interest. I do not know why he says that, because he knows perfectly well that really there is no other motive than the public interest behind this agreement. [Interruption.] The Motion does not say anything to the contrary. Hon. Members opposite do not disapprove of the terms of the agreement. My right hon. and gallant Friend, in his speech, did pose the question whether this Motion was meant to mean that there should be greater efficiency and control, because he said, speaking with all his authority as the responsible Minister, that from the operational point of view we had to-day all the control we needed. In an excellent speech from the Liberal benches the hon. Member for East Birkenhead (Mr. White), I think, posed the question very fairly. There has been some discussion about the reactions of the agreement on the road transport industry. The terms of the Motion demand the unification of all transport. If I might anticipate some of the remarks I want to make later on, the right hon. Gentleman the Member for East Edinburgh(Mr. Pethick-Lawrence) thought that we might get out very easily a rough-and-ready means of finding a figure for the purchase of transport undertakings. But I rather thought he overlooked the difficulty that there would be in bringing road transport into such a method of reckoning. He was dealing with it only from the railway aspect, which is quite a different thing from being able to get such an easy method of reckoning for the road transport industry.

There have been comments made by the hon. Member for Rotherhithe (Mr. Benjamin Smith), who read out various terms of reference to various bodies and who tried to prove that my right hon. and gallant Friend said that we cannot have co-ordination to-day. That was exactly the contrary to what the Minister of Transport did in fact say. My right hon. and gallant Friend said that from an operational point of view we had to-day admirable co-ordination and all the control we required. In fact the hon. Member made so much use of the word "co-ordination" that it was altogether too much for his right hon. Friend, who could not bear to hear it any more. But the hon. Member made some extraordinary observations. He tried to make out that the Government were directly assisting one form of transport against another. According to him, my right hon. and gallant Friend the Minister of Transport was doing all he could to assist the railways at the expense of the road transport industry. Some of the things he said almost seemed to imply that the petrol rationing had as one of its objects the driving of cars off the roads. I hardly think it is necessary for me to correct that statement, because it is so absolutely wide of the facts, which I should have thought were known to everybody.

Mr. S. O. Davies

This is a very odd speech.

Captain Crookshank

Yes, it is all very odd. The object which the Government have in mind is to make the best possible use in time of war of all kinds of transport. Of course there are difficulties about petrol supplies. There are difficulties about tankers coming to this country, about buying petrol, and of providing foreign exchange, all of which have their effect upon the problem of road transport. The hon. Member, however, asked whether sufficient attention was being paid to the interests of road transport. All I can say is that the Road Transport Advisory Committee, of which Mr. Bevin is a member, was consulted in regard to the whole of the road transport emergency scheme to which they gave their blessing. There has been consultation on the part of my right hon. and gallant Friend with those directly concerned. The hon. Member also asked about a memorandum from the Road and Rail Conference which was sent to my right hon. and gallant Friend as long ago as the beginning of January. The receipt of that document was acknowledged on 4th January, and since then it has been carefully examined by my right hon. and gallant Friend and his Department and will be considered by the Transport Advisory Committee under the terms of their new reference.

The hon. Member for South Bradford (Mr. Holdsworth) who spoke so vigorously, raised a question about traders and their rates. May I make clear the position? The Railway Rates Tribunal's jurisdiction in regard to its general duties comes to an end. That is a point to bear in mind in regard to the charges for Government traffic which will be discussed between my right hon. and gallant Friend through the different Departments with the railway companies. The right hon. Member opposite asked how far the charges were comparable with those made to large commercial concerns. It is a little difficult to give any definite answer because there is one difference which must be borne in mind, and that is that Government traffic in time of war is not only very much larger than that of any commercial concern but is also more regular and more apt to take a complete train. Therefore, factors are brought in which are not always present in other cases. If agreement could not be reached between the companies and my right hon. and gallant Friend, then the dispute would be sent to the President of the Railway Rates Tribunal, acting as arbitrator, with the other two members of the tribunal as assessors. The third question which the hon. Member asked was whether a trader would still be able to go to the Railway Rates Tribunal to ask for a reduction in the classification of merchandise, for a reduced rate between specific points, or for a determination of the reasonableness of particular charges. In all those types of case, the answer is "Yes." It is only with regard to the general level that the matter is taken out of the hands of the tribunal and dealt with in the manner described by my right hon. and gallant Friend.

Mr. Anderson

Am I to understand from the right hon. and gallant Gentleman that, in the case of a big gun, for instance, the company charging the rate would not be allowed to judge, in respect of the gun, according to the classification laid down, but that there would be some overriding method of charging apart from the general classification in operation?

Captain Crookshank

That is exactly the kind of case, I should imagine, which would be argued between my right hon. and gallant Friend and the companies, in the first instance, and which, if they could not come to an agreement, would go to arbitration, as has been described. The hon. Member also said that a fear has been expressed in certain quarters that the Minister might divert traffic from the roads to the railways in order to ensure that the Exchequer would not be called upon to implement its guarantee. He asked, in other words, whether a square deal would continue for road transport. The answer to that question is the same as the answer which I gave two or three minutes ago. There is no suggestion of preferring rail transport to road transport, or vice versa, on any other grounds than the necessities arising from our war effort. That is the paramount consideration in all these problems. The hon. Member for West Swansea (Mr. Lewis Jones), reverting to the question of traders' rates, said that it was perhaps unsatisfactory that they would not all be able to go to the Railway Rates Tribunal. I feel that there is some misapprehension on that matter. An hon. Member opposite gave my hon. Friend an answer when he said that it will always be possible to question the Minister about a great many of the effects of this agreement. The hon. Member for West Swansea also asked what will happen after the period of control ends. That, of course, is looking into the future. He asked whether the 1921 Act will automatically come into effect again. When the period of control finishes at the end of the emergency powers under which it is being carried out, unless Parliament otherwise determines there will be a return to the status quo ante, and whatever was the position before the control came into operation will be the position after the control ends. It would require legislation of a fresh kind to make any alteration. I think I have answered most of the questions that were asked, apart from those asked by the right hon. Member for East Edinburgh.

Mr. Watkins

Has the right hon. and gallant Gentleman overlooked the question that I put about the Railway Clearing House?

Captain Crookshank

I had not overlooked the point, but I was going to refer to it later. I have made some inquiries about the people employed in the Railway Clearing House, but I do not think it has been completely settled how their services are going to be used. It is rather interesting to note that when there is a question of nationalisation and it entails doing away with a little function performed by the Railway Clearing House, hon. Members opposite should at once want to know what is going to happen to the people who have been doing it and ask whether they cannot be retained, because it dates, I think, from 1842. That is a very good conservative argument for looking after their interests.

The right hon. Gentleman said that there were some questions which he still had in mind. There was the alteration of rates charged for Government traffic and the possibility of Excess Profits Tax, about which so much has been said, and he was left at the end thinking that their profits were very speculative. If that is so, it seems to me that it cuts right across all that we have heard from so many speakers on that side of the House about the rise in Stock Exchange values in the last few weeks. I hope those who gave a good run to that particular hare will note what the right hon. Gentleman said at the end of his speech.

As to Excess Profits Tax, the railway companies are, of course, liable like any other trade or business. There is nothing in the proposed agreement which alters in any way the application to the railway companies of the general provisions of the law relating either to the computation of, or the liability to, the Excess Profits Tax. The fact that the Government may in certain circumstances take a share of the receipts of the pool does not in any way affect the liability of the railway companies to Excess Profits Tax. It is what the companies receive from the pool and not the sum paid into the pool that constitutes the receipts of the railway companies for the purpose of taxation. Excess Profits Tax will, therefore, depend on the relation between the profits based on receipts from the pool, plus any other income from any other source, on the one hand, and the standard profits on the other hand. In short, the provisions with regard to it are the provisions in Section 13 of the Finance Act (No. 2) of last year.

I think the questions directed to me about the Railway Agreement have been answered, and so I come back to the main issue of this Motion. The main issue which is raised is surely whether it is the view of this House now that the interests of the country would be better served by nationalisation of the means of transport or whether they would not. It is not on the speeches which have been made to-day that we shall divide, but on the actual words of the Motion, and I would call the attention of the House to one or two strange facts about the Motion. While, apparently, disapproving of the agreement, the Socialist party do not say so in so many words. Apart from that, there is the even stronger circumstance that this proposition is brought before us without any relationship to, or even mention of, the fact that we are at war. This is a normal Motion which could be moved on any Wednesday in the spring. Indeed, when I saw it in the Parliamentary papers during the week-end, I rubbed my eyes to make sure that the date was 1940 and not 1939, because it was exactly the type of Motion which we were discussing in this House just 12 months ago. May I remind hon. Members opposite, in case they have forgotten, that during this fortnight last year we had Debates on inshore fishermen, workmen's compensation, the dissemination of news, and education for commerce.

A Debate of this type on the general issues for or against nationalisation would have been very interesting then, but today things are entirely different, and it seems to me, as it must seem to all those who reflect upon the matter, that one cannot look on this subject in the same academic and dispassionate way in which one might have looked upon it in time of peace. It seems to me that every proposal considered by the Government and every proposal put before the House by the Government nowadays must be related to our war effort, and to that alone. To put a Motion of this kind on the Paper without mentioning the war at all seems to me a most extraordinary procedure of the part of those responsible for it.

It may be that during war-time a great many preconceived notions are abandoned. I dare say that 12 months ago we would have had a great many hon. Members telling us how we ought to follow the example of Soviet Russia in this and other matters. But this is a note which has not been struck to-day. Here we are asked in the interests of the country to unify all these means of transport and to take them under Government ownership and control. My right hon. and gallant Friend the Minister of Transport has already pointed out that, in practice, at present, Government control is completely watertight as far as it is necessary for the operation of transport in this country. Therefore from the practical point of view, the difference between this Motion and what is actually happening is that hon. and right hon. Gentlemen opposite want us, presumably, now, forthwith, to go into ownership of the means of transport. Ownership means purchase. The right hon. Gentleman opposite himself has said so; and one hon. Gentleman in the course of the Debate did hazard a figure of about £800,000,000. Even if such figures as that do not count for very much, it would be undertaking an enormously large financial commitment at this period of the war, one which the Government certainly are not prepared to-day to invite the House to accept. My right hon.

and gallant Friend has already made it clear that, by the co-ordinating methods which are at present being employed, the best possible use is being made of our transport facilities to-day.

In conclusion, I would make this observation. The party opposite have no executive or administrative responsibility for carrying on the war. They are with us in their desire that we should prosecute the war with all vigour and bring it to a victorious conclusion but they have dissociated themselves from any responsibility for the actual conduct of the war. That being so, I think they must leave it to us to decide whether this particular action on our part would be conducive to good or bad. We recommend the House not to accept this Motion but to take the assurance of my right hon. and gallant Friend, that he has put into practice all the operation of control that is necessary for the carrying on of all these forms of transport.

Question put,

"That, having considered the financial arrangements with respect to Government control of the railways as set forth in Command Paper No. 6168, this House is of opinion that the interests of the country would be better served, and the many problems created by the present lack of unification solved, by the establishment of a permanent national transport authority to own and control all forms of inland and coastwise transport."

The House divided: Ayes, 119; Noes, 186.

Division No. 14.]	AYES.	[10.15 p.m.
Adams, D. (Consett)	Gallacher, W.	Macdonald, G. (Inca)
Adams, D. M. (Poplar, S.)	Gardner, B. W.	McEntee, V. La T.
Adamson, Jennie L. (Dart ford)	Graham, D. M. (Hamilton)	McGhee, H. G.
Adamson, W. M.	Green, W. H. (Deptford)	McGovern, J.
Alexander, Rt. Hon. A. V. (H'lsbr.)	Greenwood, Rt. Hon. A.	Maclean, N.
Ammon, C. G.	Griffiths, G. A. (Hemsworth)	Marshall, F.
Anderson, F. (Whitehaven)	Guest, Dr. L. H. (Islington, N.)	Maxton, J.
Banfield, J. W.	Hall, G. H. (Aberdare)	Messer, F.
Barnes, A. J.	Hall, J. H. (Whitechapel)	Montague, F.
Barr, J.	Hall, W. G. (Colne Valley)	Morgan, J. (York, W.R., Doncaster)
Bartlett, C. V. O.	Hardie, Agnes	Morrison, Rt. Hon. H. (Hackney, S.)
Batey, J.	Harvey, T. E. (Eng. Univ's.)	Mort, D. L.
Beaumont, H. (Batley)	Henderson, J. (Ardwick)	Nathan, Colonel H. L.
Benn, Rt. Hon. W. W.	Hicks, E. G.	Naylor, T. E.
Benson, G.	Hills, A. (Pontefract)	Noel-Bakar, P. J.
Buchanan, G.	Hollins, A.	Oliver, G. H.
Burke, W. A.	Hopkin, D.	Paling, W.
Charleton, H. C.	Isaacs, G. A.	Parker, J.
Chater, D.	Jackson, W. F.	Pearson, A.
Cluse, W. S.	Jagger, J.	Pethick-Lawrence, Rt. Hon. F. W.
Collindridge, F.	Jenkins, A. (Pontypool)	Price, M. P.
Daggar, G.	Jenkins, Sir W. (Neath)	Pritt, D. N.
Dalton, H.	John, W.	Ridley, G.
Davidson, J. J. (Maryhill)	Jones, A. C. (Shipley)	Riley, B.
Davies, S. O. (Merthyr)	Jowitt, Rt. Hon. Sir W. A.	Ritson, J.
Dobbie, W.	Kennedy, Rt. Hon. T.	Robinson, W. A. (St. Helens)
Ede, J. C.	Kirkwood, D.	Sexton, T. M.
Edwards, A. (Middlesbrough E.)	Lawson, J. J.	Shinwell, E.
Edwards, Sir C. (Bedwellty)	Leach, W.	Silverman, S. S.
Edwards, N. (Caerphilly)	Leslie, J. R.	Sloan, A.
Fletcher, Lt.-Comdr. R. T. H.	Logan, D. G.	Smith, Ben (Rotherhithe)
Frankel, D.	Lunn, W.	Smith, E. (Stoke)
Smith, Rt. Hon. H. B. Lees (K'ly)	Tinker. J. J.	Williams, E. J. (Ogmore)
Smith, T. (Normanton)	Tomlinson, G.	Williams, T. (Don Valley)
Sorensen, R. W.	Viant, S. P.	Wilmot, John
Stephen, C.	Walkden, A. G.	Windsor, W. (Hull, C.)
Stewart, W. J. (H'ght'n-le-Sp'ng)	Watkins, F. C.	Woodburn, A.
Strauss, Q. R. (Lambeth, N.)	Westwood, J.	Weeds, G. S. (Finsbury)
Summerskill, Dr. Edith	Whiteley, W. (Blaydon)
Thurtle, E.	Wilkinson, Ellen	TELLERS FOR THE AYES.—
		Mr. Mathers and Mr. R. J. Taylor
NOES.
Acland-Troyte, Lt.-Col. G. J.	Gluckstein, L. H.	Peake, O.
Adams, S. V. T. (Leeds, W.)	Glyn, Major Sir R. G. C.	Peters, Dr. S. J.
Albery, Sir Irving	Goldie, N. B.	Pickthorn, K. W. M.
Amery, Rt. Hon. L. C. M. S.	Gower, Sir R. V.	Ponsonby, Col. C. E.
Aske, Sir R. W.	Graham, Captain A. C. (Wirral)	Pownall, Lt.-Col. Sir Assheton
Assheton, R.	Gridley, Sir A. B.	Pym, L. R.
Baldwin-Webb, Col. J.	Grimston, R. V.	Radford, E. A.
Balfour, G. (Hampstead)	Guest, Lieut.-Colonel H. (Drake)	Ramsbotham, Rt. Hon. H.
Burnish, Rear-Admiral T. P. H.	Guest, Maj.Hon.O. (C'mb'rw'll, N.W.)	Reed, A. C. (Exeter)
Beauchamp, Sir B. C.	Hambro, A. V.	Reed, Sir H. S. (Aylesbury)
Bernays, R. H.	Hammersley, S. S.	Reid, J. S. C. (Hillhead)
Bird, Sir R. B.	Hannah, I. C.	Reid, W. Allan (Derby)
Blair, Sir R.	Hannon, Sir P. J. H.	Rickards, G. W. (Skipton)
Boles, Lt.-Col. D. C.	Harland, H. P.	Robinson, J. R. (Blackpool)
Boulton, W. W.	Haslam, Henry (Horncastle)	Ross Taylor, W. (Woodbridge)
Boyce, H. Leslie	Haslam, Sir J. (Bolton)	Rowlands, G.
Bracken, B.	Holy-Hutchinson, M. R.	Royds, Admiral Sir P. M. R.
Braithwaite, Major A. N. (Buckrose)	Heneage, Lieut.-Colonel A. P.	Ruggles-Brise, Colonel Sir E. A.
Briscoe, Capt. R. G.	Hepburn, P. G. T. Buchan-	Russell, Sir Alexander
Broadbridge, Sir G. T.	Holdsworth, H.	Russell, R. J. (Eddisbury)
Brocklebank, Sir Edmund	Holmes, J. S.	Salt, E. W.
Brooke, H. (Lewisham, W.)	Horsbrugh, Florence	Salter, Sir J. Arthur (Oxford U.)
Brown, Brig.-Gen. H. C. (Newbury)	Howitt, Dr. A. B.	Sandeman, Sir N. S.
Butcher, H. W.	Hudson, Capt. A. U. M. (Hack., N.)	Sanderson, Sir F. B.
Campbell, Sir E. T.	Hume, Sir G. H.	Schuster, Sir G. E.
Carver, Major W. H.	Hunter, T.	Selley, H. R.
Cazalet, Thelma (Islington, E.)	Jarvis, Sir J. J.	Shaw, Major P. S. (Wavertree)
Channon, H.	Jennings, R.	Shaw, Captain W. T. (Forfar)
Chapman, A. (Rutherglen)	Joel, D. J. B.	Shepperson, Sir E. W.
Chapman, Sir S. (Edinburgh, S.)	Jones, Sir G. W. H. (S'k N'w'gt'n)	Smith, Brasswell (Dulwich)
Colfox, Major Sir W. P.	Jones, L. (Swansea W.)	Smithers, Sir W.
Colman, N. C. D.	Kerr, Sir John Graham (Sco'sh Univs.)	Snadden, W. McN.
Colville, Rt. Hon. John	King-Hall, Commander W. S. R.	Somerset, T.
Cooke, J. D. (Hammersmith, S.)	Lamb, Sir J. Q.	Somervell, Rt. Hon. Sir Donald
Cooper, Rt. Hn. T. M. (E'nburgh, W.)	Leighton, Major B. E. P.	Spens, W. P.
Courtauld, Major J. S.	Levy, T.	Storey, S.
Courthope, Col. Rt. Hon. Sir G. L.	Lindsay, K. M.	Strauss, H. G. (Norwich)
Croft, Brig.-Gen. Sir H. Page	Lipson, D. L.	Taylor, Vice-Adm. E. A. (Padd., S.)
Crookshank, Capt. Rt. Hon. H. F. C.	Little, Dr. J. (Down)	Thomas, J. P. L.
Culverwell, C. T.	Loftus, P. C.	Thomson, Sir J. D. W.
Davidson, Viscountess	Lucas, Major Sir J. M.	Tryon, Major Rt. Hon. G. C.
Davies, Major Sir G. F. (Yeovil)	Lyons, A. M.	Tufnell, Lieut.-Commander R. L.
De la Bère, R.	M'Connell, Sir J.	Wakefield, W. W.
Denman, Hon. R. D.	McCorquodale, M. S.	Walker-Smith, Sir J.
Denville, Alfred	MacDonald, Rt. Hon. M. (Ross)	Wallace, Capt. Rt. Hon. Euan
Dodd, J. S.	MacDonald, Sir Murdoch (Inverness)	Ward, Lieut.-Col. Sir A. L. (Hull)
Dunglass, Lord	McKie, J. H.	Wardlaw-Milne, Sir J. S.
Edmondson, Major Sir J.	Magnay, T.	Waterhouse, Captain C.
Elliot, Rt. Hon. W. E.	Makins, Brigadier-General Sir Ernest	Wayland, Sir W. A.
Ellis, Sir G.	Manningham-Buller, Sir M.	Webbe, Sir W. Harold
Elliston, Capt. G. S.	Margesson, Capt. Rt. Hon. H. D. R.	Wells, Sir Sydney
Emrys-Evans, P. V.	Mason, Lt.-Col. Hon. G. K. M.	White, Sir R. D. (Fareham)
Entwistle, Sir C. F.	Mayhew, Lt.-Col. J.	Wickham, Lt.-Col. E. T. R.
Erskine-Hill, A. G.	Mills, Major J. D. (New Forest)	Williams, C. (Torquay)
Etherton, Ralph	Mitchell, Col. H. (Brentf'd amp Chisw'k)	Williams, Sir H. G. (Croydon, S.)
Everard, Sir William Lindsay	Morgan, R. H. (Worcester, Stourbridge)	Windsor-Clive, Lieut.-Colonel G.
Fildes, Sir H.	Morrison, G. A. (Scottish Univ's.)	Winterton, Rt. Hon. Earl
Fox, Sir G. W. G.	Munro, P.	Womersley, Sir W. J.
Fremantle, Sir F. E.	Nall, Sir J.	Wragg, H.
Fyfe, D. P. M.	Neven-Spence, Major B. H. H.	Young, A. S. L. (Partick)
Gibson, Sir C. G. (Pudsey and Otley)	O'Connor, Sir Terence J.
Gilmour, Lt.-Col. Rt. Hon. Sir J.	O'Neill, Rt. Hon. Sir Hugh	TELLERS FOR THE NOES.—
Gledhill, G.	Palmer, G. E. H.	Mr. James Stuart and Lieut.-Colonel Kerr.

Resolution agreed to.