§ Motion made, and Question proposed, "That this House do now adjourn."—(Captain Margesson.)
§ Mr. Silkin (Peckham)
I desire to raise the question of the Railways Agreement and of railway rates generally. In opening, may I take the opportunity of con- 1738 gratulating the right hon. and gallant Gentleman on his appointment to the important position of Minister of Transport, with which every Member of the House was pleased? The appointment has given all of us great pleasure, hope and expectation, because we know that the right hon. and gallant Gentleman has in a marked degree the qualities of courage and imagination and, above all, of independence. I therefore make my case with some confidence that he will give it unbiased consideration. On 1st September, 1939, the Government assumed control of the four main line railways and the London Passenger Transport undertaking. The ownership of these undertakings remains with the various concerns. I believe that the Government made a profound mistake and missed a great opportunity at that time in not taking over and acquiring, on behalf of the nation, the whole of the transport system of the country, including not only the railways, but road undertakings, canals and even coastwise shipping. Transport in time of peace, but even more so in time of war, is the lifeblood of a nation. Mobility of goods and of personnel is a prime necessity. Efficiency in our war effort and the securing of the maximum output of war materials and foods depend on the speed with which goods can be transported from one place to another.
To secure this, I submit, it is essential for the Government to have complete control and to he able to call upon all forms of transport according to what is most appropriate in any given circumstances. This involves a drastic reorganisation and co-ordination of the transport system. To bring this about, the profit motive, which, in its nature, inevitably looks primarily for private gain rather than for the national interest, must be eliminated. The use of the transport system to the best advantage can, therefore, be achieved only by national ownership. I regard this as a policy which would have presented no difficulties at the beginning of the war and which can be carried out even to-day. Provided compensation could be reasonable and not extravagant, it would be to the financial advantage of the nation. Overlapping would be avoided and economies could be effected, which, under present conditions, it is not necessary for the private undertakings to secure.
This policy is perfectly feasible and practicable. After all, the Government have requisitioned hotels and large busi- 1739 ness undertakings at practically a moment's notice without discussing the question of compensation. They have told the hotels, for instance that they must be evacuated at once and must surrender their premises to the Government, and the Government have said, "We will talk about compensation after the war." If the Government can do that as regards hotels and other business undertaking and also as regards vehicles, I see no reason why they should not have been able to acquire the ownership of the railways on the same sort of basis. Indeed, the Government did assume control of the railways with practically no notice, and it was not until seven or eight months later that they made any financial arrangement under which they assumed control. Although the Government took control in September, the White Paper setting out the financial arrangements was not published until February. I see no difference in principle between the acquisition of land, buildings and vehicles and the taking over of the ownership of the whole transport system of the country. It would be no more difficult to settle terms of acquisition than it has been to settle the terms under which the Government should control the railways.
Therefore, in the national interest, I ask the Minister to consider this question seriously. I am sure that he will not let political considerations and his own political past stand in the way of the national interest. I believe that if he were really convinced that it would be in the national interest to acquire the ownership of the railway system, he would do his best to bring it about. These are not days when any of us should stand on our past political principles merely as matters of principle. These are days when we have to look at the national interest and regard things much more from the point of view of expediency. Although in the past I might have argued, as a matter of political principle, for the nationalisation of the railway system, I put it forward to-day entirely as a matter of expediency. However, the Government decided, in September, 1939, to assume control of the railways and of London Transport, and it was not until February, 1940, that they issued the White Paper which they euphemistically described as an "Outline of the Financial Arrangements." In fact, it merely sets out a number of headings and 1740 some of the terms under which the Government have taken control, but otherwise it gives very little information.
Even now, although it is over fourteen months since the Government assumed control, the House does not know the full terms of the Agreement. In fact, I issue a challenge to the right hon. and gallant Gentleman and doubt whether he knows the full terms himself,. Only a week or so ago I was told by the right hon. and gallant Gentleman's predecessor that the terms had not been completely drafted. I do not want to make a judgment on the persons responsible for the drafting of the Agreement, but it seems to me that there can be no possible excuse after fourteen months for not having the Agreement in draft to submit to the railway companies. It is certain that, whether the Agreement is in draft or not, it has not yet been agreed with the railway companies. It is unfair to the House and to the public, and, indeed, to the railway companies, that after fourteen months the Government should be controlling the railway system without having agreed the terms upon which they should do so. Even as far back as last April, when the matter was debated in the House, we were told that it was hoped that the Agreement would be made available very shortly. Seven months have elapsed and we are still in the same position. Therefore, I can deal only with such of the terms as have been made public.
First, the financial statement gives the undertakings a guarantee by the Government of a minimum annual revenue of £40,000,000. This figure is based on the average net revenue for the three years 1935, 1936 and 1937. It so happens that the revenue for 1938 was just over £34,000,000, very much less than the average of the three preceding years. Why have the Government chosen the three arbitrary years 1935 to 1937 and omitted 1938? If they had taken 1938 alone, that would have been reasonable, if they had taken the average of the last three years it would have been reasonable, but why 1938 was omitted altogether just passes my comprehension. On only four occasions in the last 10 years has the net revenue of the companies exceeded £40,000,000, which is the minimum guaranteed. The average of the last 10 years is well below that figure.
Moreover, the substitution of a State-guaranteed income for a highly specula- 1741 tive one converts railway stock into a gilt-edged security, and so makes it more valuable. That fact in itself would have justified a lower guaranteed net revenue, if a guarantee had to be given at all. A guaranteed net revenue gives the railway companies an advantage in wartime over other public utility undertakings, which have suffered badly as a result of the war and have no guaranteed income. It is difficult for the ordinary person to understand why the railway companies should have been singled out to be guaranteed a minimum income which is substantially in excess of what they might have expected to earn in the ordinary way. I submit that the figure of £40,000,000 is far too generous, and that if a guarantee had to be given, a guarantee of £34,000,000, the amount of the 1938 revenue, would have been adequate. I want to stress that this figure is not necessarily the earnings of the undertakings, but the figure which the Government are guaranteeing, and there is every reason why that figure should be on the low side and not a maximum figure.
This guarantee is for a minimum income, but the financial arrangements provide that if the total revenue of the undertakings reaches £68,500,000 the undertakings are to receive £56,000,000 and the remainder is to go to the Exchequer as additional indirect taxation. This figure of £56,000,000 is one which the companies have never reached, certainly since 1921, and I doubt whether they have ever reached it in their history. At any rate they have never reached a figure of £56,000,000 as a net revenue since the amalgamation of the companies in 1921. Again I fail to see the justification for giving the railway companies an opportunity of earning a revenue which they could never have earned under ordinary circumstances and have never earned in the past.
A large part of the revenue is attributable directly to the carriage of war materials and the conveyance of members of His Majesty's Forces on behalf of the Government, and if out of the total net revenue it is possible to provide for the undertakings as much as £56,000,000, that is entirely because they have been given a monopoly owing to the circumstances of the war and the restrictions imposed upon road traffic. If it were not 1742 for the fact that road traffic has been severely restricted in the matter of petrol supplies, and severely limited in all sorts of other ways, the railway companies would not have this volume of traffic. It is a present to them. It is unfair that in time of war the railway companies alone should be allowed to make these large profits at the expense of the public. Why should they be allowed to profit out of our war needs? It seems to me to be a clear case of profiteering, and it is not even certain that they will be liable for Excess Profits Tax; indeed, I gathered from a statement made by the former Chancellor of the Exchequer that the railway companies would not be liable for Excess Profits Tax. Here, again, they have a tremendous advantage over every other commercial undertaking. It would be equitable to fix the maximum revenue in the same way as the standard income is fixed for Excess Profits Tax, so that the railway companies could not make additional profits out of the war. In that case the maximum revenue which the companies would be allowed to earn would not exceed £40,000,000.
Under Clause 9 of the "Outline of the Financial Arrangements," provision is made for permitting the undertakings to charge the cost of restoring war damage up to a maximum of £10,000,000 in any one year. Here, again, preferential treatment is being given to the railway companies over private concerns. I believe the right hon. and gallant Gentleman has that point in mind, but I am dealing with the Agreement as it was made. Other concerns have to make good their war damage out of their own revenue. If they are lucky, they will get some part of the damage made good to them at the end of the war—if our financial resources permit. It is only the railway companies which are having their war damage made up to them now. Again I fail to see why the railway companies should be put in this exceptionally favourable position.
I come to Clause 10 of the Agreement, which is, perhaps, the most indefensible of all. It provides that the railway companies may charge increased rates and fares as working costs increase, but there is no provision for taking into account any increased revenue which they receive. Whether increased income is regarded as spreading the overheads over a wider field, or whether it is regarded as addi- 1743 tional profit for extra work done—as the right hon. and gallant Gentleman's predecessor said on one occasion—to ignore it entirely as a factor in deciding upon increases in railway charges cannot possibly be fair or be justified. I could understand an argument that only some of the increased revenue should be taken into account—though I should not agree with it—but to ignore the whole of it seems quite unjustifiable.
Then the Minister has provided machinery for dealing with applications by the Railway Executive Committee for increased fares and rates, following upon any increase in working expense. Under a regulation issued by his predecessor the Minister may refer the matter to a committee which is called the Charges (Railway Control) Consultative Committee—a rather difficult name for a body with rather difficult functions. On the other hand, as in the case of the first increase of 10 per cent. on 1st May, the Minister may decide in his own absolute discretion not to hold an investigation at all, but to allow the increased fares without further discussion. Where he does refer the matter to this Consultative Committee for inquiry I have no hesitation at all, having attended the last inquiry, in describing the inquiry as an absolute farce. The reference to the committee is limited and restricted. They are told the amount of money which has to be found; that is settled by the Minister, and they cannot argue about it or investigate it. They have no power to satisfy themselves that that figure is right. They are given the figure of the amount which it is required to raise by increased fares and railway charges, and the only question before them is how those charges are to be increased. Usually it is a matter of simple arithmetic. If the Consultative Committee are good at mathematics, they can settle the matter without any evidence at all. In fact, all the evidence which I heard at the last inquiry, which somehow was allowed to extend over eight days, was entirely unnecessary and irrelevant. The work of the committee could have been done in half an hour—by doing an ordinary sum in arithmetic. To speak of such an inquiry as a farce is, I think, appropriate.
Moreover, the Minister, in considering an application from the companies, or in settling the amount to be raised in respect 1744 of increased costs of working, is an interested party. I do not say that he is personally interested; it is not suggested that any of the money goes into his own pocket; but he is an interested party, because an increase in the revenue of the railway companies increases the total profits out of which the Exchequer take a share. After a certain amount of profit has been provided for the railway companies £43,500,000—the right hon. and gallant Gentleman goes fifty-fifty with the railway companies in their profits. Therefore, it is not in the public interest, it certainly does not appear to be justice, for the right hon. and gallant Gentleman to have in his own hands the power to increase these charges at his own discretion without necessarily taking the matter to a committee. I submit that that is giving him the power of imposing indirect taxation upon railway users, a power which I am sure he himself would not welcome. Therefore, it is all the more necessary that the public should have an opportunity of checking the figures put forward as justifying an increase in railway rates, which they certainly have not under the Agreement, and at the last inquiry any attempt by any of the parties appearing there to challenge the figure submitted by the right hon. and gallant Member as the amount to be made up was promptly, and quite properly having regard to the terms of reference, ruled out of order.
It is interesting, by the way, to note the increases in net revenue of the railway undertakings in war time. In the first six months of 1939 the total net revenue of the railway undertakings was £14,900,000. In the first six months of 1940 the total net revenue was £20,800,000, an increase of nearly £6,000,000, or about 40 per cent. Of this increase of £6,000,000, only £3,250,000 came from the 10 per cent. increase in charges operating in May and June. So even if there had been no increase of charges in the first six months of 1940 the railway companies would still have had a profit higher by £2,679,000 than in the corresponding period of 1939. Under the Agreement the right hon. and gallant Gentleman is not allowed to take that fact into consideration. Even though the railway companies were making higher profits he would still have to increase railway charges. I submit that it is an impossible Agreement to operate. The increase of 10 per cent., 1745 at any rate, looking at the first six months of the war, was quite unnecessary, and was taken from the pockets of the travelling public.
So much for what the White Paper contains. I should like now to say a word or two about some of its omissions, which are equally striking. First of all, there is no statement in the financial arrangements as to the financial terms on which the railway companies are to carry goods and members of the Forces holding free tickets or cheap vouchers. I do not know on what terms they carry this passenger traffic and all the goods, but a great deal depends on the terms which the Government pay for these things. As a large part of the traffic of the railway companies to-day consists of Government traffic of that sort, this is a weighty matter going to the root of the financial arrangements.
There is nothing to suggest that the public, who are, after all, a very big factor in this matter, have any interest in the arrangements at all. They have no right or opportunity to check up on any increase in cost. They have no right to suggest that railway costs may be extravagant in any direction and that economies may be effected. They have no opportunity of suggesting any particular line of economy. Indeed, there is very little incentive on the part of the railway companies to introduce economies, seeing that they can recover from the travelling public the whole of any increase in cost. There is nothing in the Agreement to require the companies to exercise economy. In fact, under the terms of the financial arrangements, the companies are automatically entitled to take any increase in their costs from the pockets of the travelling public.
There is no statement as to what Government control really means or how it operates. What control have the Government really over the railway companies? For instance, can they decide which particular trains shall run or whether services are or are not inadequate? They may or may not be able to do so, but, at any rate, the public does not know and this House does not know what the control really means. I submit that this House should be told what is, in fact, the nature of the control. These omissions are of the greatest importance, but the public is left in ignorance of them and of the other 1746 provisions of the Agreement, which has not been published. I suggest that if there are any secret clauses in this arrangement they should be brought to the light of public knowledge.
I do not see how any Minister who was concerned at all with the public interest could possibly have approved of the financial arrangements which have been published. The Press was practically unanimous in condemning them as contrary to the public interest. At various dates, the "Times," the "Daily Telegraph," the "Financial News," the "Daily Herald," the "News Chronicle," the "Financial Times," the "Economist," the "Statist," the "Daily Express," the "Evening News" and the "Liverpool Post," a pretty wide selection, and many others, have condemned this Agreement. Perhaps a conclusive indication of the great boon which the financial terms have been to the railway companies, in the eyes of the investing public at any rate, is the way in which railway stocks rose after the terms of the Agreement became known, as compared with their pre-war prices. Let me quote a few examples. L.M.S. ordinary stock, which on 22nd August, 1939, stood at 12, was 21¼ in February, 1940, an increase of 77.1 per cent. L.N.E.R. 5 per cent. preferred ordinaries were 3⅞, in August and 7¾ when the agreement became known, an increase of 100 per cent. L.N.E.R. 4 per cent. first preference was 28, and rose to 58, an increase of 107.1 per cent. Southern deferred ordinaries were 12, and rose to 20, an increase of 66.7 per cent. The average increase all round was substantially over 66 per cent. If any further indication were needed of the way in which finance regarded the Agreement, I submit that it is here.
The Agreement has been described by a person in a very responsible position in this House asa fraud on the community … a robbery of the railway user … a scandal … foolish and wicked.Also, there were various other epithets to which I do not feel I can add. It may interest the House to know that the author of those epithets is the present Home Secretary and Minister of Home Security. I am sure that the words will carry very great weight with the right hon. and gal- 1747 lant Gentleman. The Minister will have an opportunity very shortly of revising the Agreement, under Clause 12. I am sure he will have the House with him if he announces to-day, if he finds himself able to do so, that he intends to revise it on the lines I have suggested. Of course, if the right hon. and gallant Gentleman in his wisdom, should feel impressed by the case that I made earlier in my speech for national ownership, I hope that he will carry that measure into effect rather than revise the Agreement; but if he feels that he cannot, at any rate at this stage, accept national ownership, I hope that he will find himself in agreement on this part of my case.
Having disposed of the financial arrangements, I hope conclusively, may I very shortly refer to some of the unfortunate consequences of the Agreement which have already taken place and which will be accelerated if the Agreement is allowed to continue? First of all, and perhaps most important, is the inflationary effect of an increase in railway rates. Such an increase means not only an increase in fares but an increase in the carriage of all forms of goods which are consumed by the general public and which are required for our war effort. All these increases affect prices and, in due course, justify demands for increased wages on account of the higher cost of living. While I do not want to encourage employés of railway companies to make an application for increased wages, I feel that the Government are providing them straight away with some sort of a case for making such an application. So the vicious spiral, which everyone is most anxious to avoid. is being begun and encouraged by this Agreement.
Of the £44,500,000 increase in railway costs estimated to take place by September, 1941, over one-third is made up of increases in cost of coal and steel used by the railway companies themselves. The inevitable result of an increase of 16 per cent. in railway charges will be that the cost of coal and steel will go up. This in itself will afford a justification for an application by the Railway Executive Committee for a further increase in charges, owing to further increases in cost. There is no end to this process. It can go on indefinitely. Every time there is an increase in charges there 1748 is an increase in the cost of raw materials for the railway companies, which justifies an application for a further increase. If that is not inflation gone mad, I do not know what is. The Government are most anxious to avoid inflation. In answer to a Question to-day the Parliamentary Secretary to the Board of Trade stated that the Government were spending £80,000,000 a year in subsidising foods of various sorts in order to avoid inflation.
One of the first acts of the Government in September, 1939, was to pass a Measure to prevent increases in rents. That was a Measure devised to prevent inflation. After this enormous expenditure of £80,000,000 a year of public money, I submit that any inflationary effect of the Railways Agreement should be strongly condemned and prevented. Where persons are unable to recoup themselves by increased wages for increased costs, travelling costs and prices, there is a definite and serious hardship on a large proportion of such persons, particularly workers.
The right hon. and gallant Gentleman is no doubt aware that in London no less than £15 per annum per family is spent in railway fares as an average. The proportion of the income of working-class families is something like 8 per cent., a very substantial figure. The same holds true to a less extent as regards workers in all the large cities in this country. There has been a tendency, as is well known, for working-class dwellings to be moved further from the centre of the towns and cities. In every large city there are large housing estates on the outskirts, and there is a heavy burden on the workers to pay their fares for getting into the centre where their work lies. In the last few years that tendency has been very much increasing, and I must confess that, in another capacity, I was responsible, as chairman of the Housing Committee of the London County Council, for a good deal of it. The right hon. and gallant Gentleman must take this factor into consideration. The working-class public cannot afford to pay any more in fares and extra charges for goods.
I want to say a word about members of the Forces who are on leave and who are hard hit by the increases. There is a tendency—and I do not know whether it is deliberate—to send men as far as possible from their homes. I have two 1749 sons. One has been sent to Belfast. I do not think he could have been sent any further. The other has been sent to Cardiff. When they come home on leave—not the free leave but the so-called half rate—they have to pay the fare out of their own pockets, and it is a very heavy burden. I was very surprised the other day when the right hon. and gallant Gentleman, answering a Question, said that members of the Forces would have to bear the extra percentage in their fares. While I am referring to this matter, may I make it clear that the so-called half rate is really a misnomer? It is half the single rate, but, seeing that the ordinary return fare is one and a third times the single rate, a member of the Forces pays double the single rate in a return journey. Therefore, what he really gets is a three-quarter rate and not a half rate. The sooner that illusion is exploded, the better. If we intend to give members of the Forces a half rate, let us really do so and not give them a three-quarter rate.
Then there are all sorts of devices for extracting additional fares from people who travel which are, I submit, unjustified. For instance, the other day, a constituent of mine was visiting his family, which had been officially evacuated to Bideford. As he had five days' leave—he is working in the Post Office—he tried to get a cheap ticket. If he had been able to get a cheap ticket, it would have cost 20s. 8d. He was told that if he wanted to go to Bideford for two days, he could take advantage of this cheap rate, but as he wanted to go for five days he had to pay the full fare, which was 38s. 3d. If the right hon. and gallant Gentleman could show me that there is any sense in that, I would be greatly obliged. This man does not go by a special train; he goes by any train and comes back by any train. What on earth does it matter to the railway company or to the right hon. and gallant Gentleman whether this man stays away two days or five days? There are all sorts of devices of that sort to extract extra money from the pockets of the public. Let me give another example. Some weeks ago, if you wanted to go from Waterloo to Woking, you were told that you could not go direct but that you would have to go to Wimbledon and pay the ordinary fare to Wimbledon. When you got to Wimbledon you could take a ticket to 1750 Woking, the fare for which was the same as that from Woking to Waterloo, so that the railway company were in pocket to the extent of the single fare from Waterloo to Wimbledon. Can the right hon. and gallant Gentleman explain that?
§ Mr. Silkin
It is a fact. If you want to go from London to Barnet, I am not sure about the exact fare, but it is about 2s.; from Barnet to London you pay Is. On the other hand, on exactly the same line, if you want to go from London to Morden, you pay 1s., and if you want to go from Morden to London, you pay 1s. All these things exasperate the public. They see no justification for them, and they regard them as just another means of getting additional money out of their pockets.
There is another way by which people are made to pay more, and that is by being compelled to break a journey. If I want to go to my office, I cannot go by an ordinary bus because the buses are all full up. I have tried it; I have waited as long as half-an-hour to get on to a direct bus to my office; in the end I got on a bus to Charing Cross and tried my luck there. But in breaking the journey it cost me an additional penny. I do not make any complaint about that, but for some people an extra penny every day is an important factor. There is no reason why these pennies should be extracted from people's pockets. Moreover, under present conditions travelling is necessarily difficult and inconvenient. Normal means of travelling are not often available. People have to put up with all sorts of hardships, and I submit that a time when the ordinary facilities are not available and when people are putting up with so much hardship is not the time when extra money should be taken from their pockets.
I know that since the right hon. and gallant Gentleman has been in office he has made an attempt to improve travelling conditions in London by orthodox and even unorthodox means, as one would expect, but I must tell him that on many days in London at any rate—I am not able to speak for other towns—travelling has completely broken down. People are not able to get to their work or to get home. If one's staff say they are an hour 1751 late because they have not been able to get to the office beforehand, one has to accept that explanation, because one knows that one may be in the same position on another day. That is not good enough. At the beginning of the war services were reduced. It was desired, I believe, to prevent unnecessary travelling. My experience is that the person who will travel unnecessarily will travel anyway, and a reduction in travelling facilities will not deter him. But people have been prevented from getting to and from their work. The effect of this reduction of travelling facilities has been a very decided drop in the war effort. It means as much as an hour or an hour-and-a-half a day in many cases, and I hope that the right hon. and gallant Gentleman will recognise the vital importance of this matter and, if necessary, not only increase travelling facilities but increase them above prewar level. It is more important to-day that no time should be wasted than it was even before the war.
I want to summarise my remarks. I have put them to the Minister in the course of my speech, and I think it would be convenient if I now put them concisely. First of all, I submit that the transport system as a whole should be unified and reorganised to secure the greatest efficiency in the national interest under public ownership and control. I hope the Government may accept this, at any rate in principle, but if it is not accepted at the present time, then I would ask for a revision at the end of this year of the financial arrangements between the Gvernment and the railway companies, to provide first for a guarantee to the companies, if at all, of not more than £34,000,000 a year net revenue, and a maximum revenue of £40,000,000; secondly, for increases in gross revenue to be set off against increases in working costs. Further, a proper and reasonable economy should be effected, and increases in working costs should not be recognised if proper economies have not been made. Then all agreements and details of account should be made public, with full opportunities for the public to investigate and criticise. Then the public interest should be a factor in considering any application for increased charges, and no increases which are contrary to the public interest should be permitted. All applica- 1752 tions should be considered in public by a tribunal such as the Railway Rates Tribunal, with unlimited and unrestricted terms of reference. Air-raid damage should not be a charge against working costs.
I also ask the Minister to consider assuming control of all road transport, to consider the removal of all outstanding fare anomalies such as I have mentioned by way of example, and also to improve and revolutionise travelling facilities. For some time prior to the war the hoardings were plastered with appeals for a "square deal" for the railway companies. They have had their square deal. The tables have turned. It is now the public which appeals to the Minister of Transport for a square deal, and I am confident that the Minister, with his courage and independence, will not let the public down.
§ Sir Ralph Glyn (Abingdon)
I am sure that the House has listened to the hon. Member for Peckham (Mr. Slkin) with great interest. I know the considerable part he played recently in the examination with regard to increased rates. I want to preface my remarks by saying that I am speaking entirely as an individual, although, as the House knows, I have been associated with railways, and I always feel very diffident, because I think that anybody connected with a great industry ought to disclose the fact whenever he speaks in the House. Perhaps because of the frequency with which I have talked about railways during the years that I have been a Member there may be some who realise that I have that association. The hon. Gentleman who has just resumed his seat believes that public ownership is the right method. I do not think this is the occasion to be drawn into a discussion on the rights of private or public ownership. All I can say is that I still believe in private ownership. I still believe that there is something to be said for competition, and I still believe that the railway shareholders have made a great contribution to the industries of the country by investing money at a very low rate of return. Throughout the hon. Gentleman's speech he never said a word to show that the people with the choice of investing think it better from a national point of view to invest in a railway company than to invest, say, in dog racing. Anyone who has invested in railways has done something to help.
1753 It is also unfortunate that so far no single word has been said about the men. There is an opportunity for making some declaration about the wonderful work which the men have done. I do not think the public have been properly informed, and that is one of the misfortunes which arise from the present system under which the railways are controlled. The public should be made aware of the daily risks which are run by the men without any demands for what is called "danger pay" or any nonsense of that sort. There have been cases where damage has been done to junctions, when the permanent-way men have come out of their houses where they have gone to rest after a hard day's work, have worked because they have an esprit de corps feeling about the railway, and have restored the line so that the public can get to their work again. The railways have a very bad Press now. I do not know why, but we seem to he hated by everybody for no just cause. Because newspapers have not been delivered, the blame has been put on the railway companies. I know one popular paper which has a good deal of push and go and whose editorials have been crammed with abuse of the railways. Actually I know of a case where a newspaper train was kept waiting, with the driver and fireman exposed, because of a plaintive request from a newspaper office to hold up the train because they were a hit late by reason of the air raids, and they wanted to get their copies on the train. The only thanks the railway company got was abuse because the paper was late, and they said the railway was not ready to take it. Let us have fair play; let us recognise what the men have really done.
The position of the railway companies has not been mentioned. It is totally different from that of any ordinary company, because it does not come under the Companies Acts. Each railway company operates under an Act of Parliament. Not one word was mentioned by the hon. Gentleman, when he implored my right hon. and gallant Friend to take over the railways, as to whether there was to be any compensation. Was it to be a case of snatch and grab?
§ Sir R. Glyn
I missed that part. I think it is true to say that for the capital 1754 invested, the shareholders in the railways with moderate and small means are probably larger in number than the investors in anything else, and those who have the interests of the railways at heart, from the point of view of the stockholders, must feel that it is necessary that those people who have invested savings in railway stock should at any rate have some slight recognition. Another curious feature is this, if I may make a personal reference. My own forebear, my grandfather, who was the Member for Kendal and sat for many years in this House, was the first chairman of the London and Birmingham Railway, and was a great friend of the Stephenson brothers. He had a great discussion with Mr. Gladstone, who, 96 years ago this year, introduced into the House of Commons a Bill which gave the Government power to nationalise or purchase for the State any railway, with certain small provisions. I think it had to be in existence before 1840, and there were also a few other minor provisions. In fact, however, it was never done. Therefore, for 96 years there have been in this House and outside people who have been urging the nationalisation of the railways but who have never been able to analyse. Even the right hon. Gentleman the Prime Minister after the last war said something about nationalisation, but he never had the opportunity of going into the details of how he proposed to do it.
I suppose I am the oldest railway company director in this House—the oldest, not in age, but in service in a railway company—and I was a member of the Committee which, in 1921, sat for weeks and weeks on the amalgamation of the constituent companies. That enabled me to have a view of what were the circumstances of Government control during the war between 1914 and 1918. The House will probably remember that control then was totally different from what it is now, and was, I think, infinitely better than it is now. That is a personal view and must not be taken as representing the view of any of my colleagues on the board of a railway. When the railways were previously controlled they were taken over under what I think was called the Defence Forces Act and the Regulation of the Forces Act, 1871. The great difference was that the Railway Executive Committee did not consist of people who 1755 had been interested in the railways, as is the case to-day, when it includes a retired ex-general manager and, as secretary, a gentleman who was associated with another railway company. It was the President of the Board of Trade who protected the public interest by himself being the chairman and the president of the council which controlled the railways. The railways then were far greater in number than they are to-day, but the general managers, officers and supervisory staff of each railway functioned as they had always functioned, but under the general direction of the Railway Executive Committee presided over by the President of the Board of Trade.
When the war ended it was, I think, in 1919 that the Ministry of Transport was created, and from that date the Minister of Transport took over the duties from the President of the Board of Trade and himself assumed control. I believe that that worked very well. An even more interesting thing—and I very much agree with the hon. Gentleman opposite in his arguments about inflation—was that during the last war period of control no rates or charges were increased throughout, except for passengers, when in 1917 fares were deliberately raised in order to check an increased amount of travel which was not considered necessary. Otherwise, there was no increase in rates or charges at all, and, speaking personally, I regret that they were increased the other day. That was my personal view; I thought it was a foolish step which ought not to have been taken, and I said so. However, the railways themselves are not in control of their own affairs; there is instead a bureaucratic control over which there is no control by anybody. We all recognise, of course, that my right hon. Friend the Minister of Transport has only just assumed office, and we also recognise that he is faced with a most terrible problem. I am perfectly sure that there is nobody in this House who is more likely to solve it with success than is the present Minister, and we are all delighted to see him there. That must not be taken as the view of anybody interested in railways. The House knows that he takes a perfectly fair and even view.
Another point which I should like to mention in passing is the position that 1756 we shall be faced with in regard to the enormous amount of motorised traffic. Why are these difficulties confronting the railways? Why is it that we are not getting coal South of the Thames? Why is it that the hon. Gentleman finds it difficult to get from London to Dorking, or wherever it was? The reason is partly enemy action, and the public are not informed by the Ministry of Information—very properly, perhaps—of the damage done to railway lines. In the morning you go to the station assuming that you are going to get your train and reach your destination without being late for the office. You may propose to do that, but Hitler is disposed to do something else, and there may have been incidents that have made it impossible. The miracle that has occurred is, not that you have been late for the office, but that, thanks to the railwaymen, you have been able to get there at all. I wish somebody would say that more often.
In a time of national emergency I believe, with the hon. Gentleman, that railways are the lifeblood of the country. I do not believe that there are any bloated capitalists lurking behind to spring out on anybody and try to drive a hard bargain. I believe we all want to put all we can into the national effort, and I believe it would be far better if the principles in force during the last war had been adopted. There ought to be some real thinking going on as to what is going to happen after the war, in regard for instance to road mechanised traffic. How many hon. Members realise that when the railways were asking for a square deal they were doing so simply and solely because traffic which, from the point of view of national economy, should never have left a steel rail, was going along the roads, to the destruction of the roads and the detriment of the ratepayers. The whole question at issue was that of traffic leaving the privately-owned permanent way, not maintained out of the rates and taxes but kept up by the much despised shareholders, and being transferred to the public roads, which are maintained by the public by taxes and rates.
We all realise that a very grave situation has arisen at the present time. The burden on the railways is tremendous, partly owing to the requisitioning of motor vehicles by the Army, partly owing to the fact that there are no spare parts avail- 1757 able for lorries, and a great many are being laid up, while those that are running are not running in such a smooth way as to be very good for the roads on which they are working. I feel, therefore, that we are faced in the immediate future with a still further increase of traffic on the railways. Our coastwise trade used to be conveyed in coasting vessels and distributed through the smaller ports, and one of the most remarkable changes that have lately taken place because of internal combustion and Diesel engines has been the number of small collier craft that have been able to get up small rivers and resuscitate a great many towns that had gone to sleep but which, in the old days of sail, used to be flourishing little ports. These vessels have mostly been taken over by the Admiralty for minesweeping and the like, and the result has been that the flow of traffic has been cast on the railways at a time when they are most congested.
The right hon. Gentleman who is now Minister of Labour is, in private life, head of one of the best-managed trade unions in the country. A great many members of railway staffs belong to his trade unions, but at the expense of another great and important union, the N.U.R. I have watched with considerable interest the dexterity with which the various leaders of these two great unions have put their goods in the shop window for the notice of those who might be candidates for membership of one or the other. The right hon. Gentleman the Minister of Labour has always been in favour of what the hon. Gentleman mentioned just now, namely, that if you must take a bite at all, open your mouth wide enough and swallow down the whole of the forms of transport. If you are to have public ownership, do not restrict it only to the railways. Take the whole cherry—or two cherries—in one big bite. If this is going to be done, it is high time the House began to think of what is to happen when the war is over. I believe that all of us should put aside what used to be our party political bias. I do not think any of us expect the old order to continue. I think we all believe that a new order is coming, but I should be terribly sorry to think that the country does not and will not recognise that so much has been done by the principles—virtues, if you like—of private enterprise and by the initiative, that comes from the knowledge that you 1758 can get on, rather than by some sort of duffer's standard of bureaucratic control.
I think it must be recognised that if the transport of this country is really to be built up, the kind of error mentioned by the hon. Gentleman just now must for ever be prevented. If great housing estates are to be built, the railways must be consulted. At Dagenham, which was built by the county council, strangely enough the railways were never consulted as to what the travelling facilities would be before the site was acquired. It would have been very much better if they had been, because it would then have been possible for stations to be built and planned along with the housing scheme. The same should apply in regard to bus traffic. I remember very well what used to be said by the then general manager when I was associated with the old Underground railways: he said that so long as the workers lived on the perimeter of the town, and not in the centre from which they ought to radiate, problems of rates and traffic would always exist. While a lot of ridiculous rates were quoted—and I quite agree there were some foolish ones—the thing that matters is that the workmen's fare has really done a tremendous lot to help the mobility of labour, and we have to recognise that the mobility of labour is a very important thing. It must also be remembered that the elongated terminus is the only terminus that really counts, and it may be that the bombing of London will give us an opportunity of thinking afresh about these matters. But not, I hope, in the way of narrow party political prejudice. If it can be done cheaply, by somehow or another transforming the existing shareholders into a new form of public utility, with a larger amount of public control and with the assistance of organised labour, the concurrence of the investing public and the confidence of the country, then I think something worth while will be achieved.
In conclusion, I bitterly regret that the present Railway Executive Committee is not formed on the same basis as that which existed in the last war, and that increased rates and charges are being levied at a time when all of us desire to see inflation avoided and when there is no excuse for one demand after another. I feel, however, that the right hon. and gallant Gentleman who has this problem to, solve will solve it, I am certain, with 1759 greater success than any other Member of this House. It is our duty frankly to recognise that, in seeking this new order, we must take all the experience we can bring from the past and, without prejudice, throw everything we have into the rebuilding of England and making the transport of workers and all concerned in the reconstruction of the country the matter of prime importance which it really is. If we unite to do that, we shall win through after this war to the peace that we lost by muddling after the last war.
§ Mr. Clement Davies (Montgomery)
May I take this opportunity of congratulating the right hon. and gallant Gentleman on his first appearance at that Box as Minister of Transport, and also of congratulating the Government, and especially the Prime Minister, on having called him to that Front Bench. I have felt for a very long time that the right hon. and gallant Gentleman has sat for too many years in the shadows of the back benches. His office is one with very heavy duties, and one which might almost at the present time be called a key office, but it is one which gives the right hon. Gentleman very great opportunities. I am sure that we all wish him well; and, judging by his great record in the past, he will avail himself of his opportunities.
We have listened to two very remarkable speeches. I do not propose to follow the hon. Member for Peckham (Mr. Silkin) in the detailed criticism which he made in the first part of his speech. I am more attracted by the last part of his speech, and by the speech made by the hon. Member for Abingdon (Sir R. Glyn). Transport is essential to industry. It has been called the handmaiden of industry. But there may be occasions when, instead of helping industry, it hampers industry. One has to inquire into these things with very great care. I do not want to go into details with regard to costs, or to the remuneration which is being paid, or to what the shareholders will gain. The question that appeals to me is, what service are the community getting to-day? The purpose of the railways is to serve the community. Too often that purpose has been hidden by concentrating upon the earning capacity of the railways and upon the dividends that they can pay to their shareholders. All the costs of transport are additional costs to industry. 1760 Transport costs may be a burden not only on industry, but on the consumer. They add to the costs of the raw material and to the cost of the finished article. Every movement may increase those costs still further. Recently we have had considerable increase in costs. There was the increase of 1937 and there was the increase at the beginning of the war, and now there is the present proposal. We are getting to a stage at which the increase will have become, in the short space of three years, something in the neighbourhood of 25 per cent. Why should this great burden be thrown upon the community? Undoubtedly, in spite of the delightful reminiscences with which the hon. Member for Abingdon interested the House, there has been real lack of vision on the part of the railways in the past. They first relied upon their monopoly. When that broke down they came to Parliament and asked to have it, to a large extent, restored. If they had had any vision they would have been the first to seize upon the discovery of the internal combustion engine.
§ Mr. Davies
We all recognise that the railways are hampered by Acts of Parliament, but they have never lacked representatives in this House. Why did they not come to Parliament, to ask that those shackles should be removed?
§ Mr. Davies
At what stage? I should have thought that at the moment the internal combustion engine was discovered they would have said, "This is a matter which will revolutionise transport. We must take it up and develop it, and put all the force we can behind it." But they allowed it to be developed by other people, small people, going about from city to city to get the money for the purpose. If the railway companies had only had the vision, the modern motor car might have been developed 25 years ago. They woke up, however, only when the public had already realised the value of that means of transport. After the last war, when a great number of lorries were released and purchased and placed on the roads, only then did they come to this House. They say that an unfair privilege is given to the road vehicle as against the railway vehicle. 1761 Instead of suggesting that we should relieve the railways, they suggest that we should put another shackle upon the lorry, to make it less effective, less useful to the consumer and to the producer and to the manufacturer. Transport is the handmaiden of industry, and therefore it should be available to industry in the most efficient and most economical form. Otherwise, it hampers industry. Not only was there the motor car. The railways should have been the first again to see the value of the aeroplane. But that was left to be developed by an individual here, a small company there, and a syndicate somewhere else. There has been real lack of vision on the part of the railway companies.
§ Mr. Davies
And there is to-day. The hon. Member for Abingdon, very rightly, reminded the House that he is a director of a railway company. How many of those directors are full-time men? Apart from the managing director or manager himself, the directors of a company are al part-time, coming up once in a while to attend to matters of vital concern. The hon. Member adopted a phrase used by the hon. Member for Peckham—"It is the lifeblood of the nation." If so, it deserves the full time of the directors, and not merely an occasional five minutes, or one day in a month. It is time the railway companies put their house in order. To-day they have about 10,250 railway vehicles. They have horse carts to the number of 25,000 still in existence. Those are the figures for 1938. On the other hand, what has happened to the lorry industry? In Class A—public lorries—there are 83,000. In Class B—that is, lorries owned by partnerships, with X in one place and Y in another place—the partnerships own 55,000 lorries. In Class C—the private category—there are 365,000 lorries. That is a total of 503,000 lorries on the road to-day. All that is transport service, but it is not transport service working with the one common object of serving the community. A large part of it is fighting against another part, causing waste, which we cold ill afford at any time and which we certainly cannot afford in time of war. If the railway companies had done their duty, they would have had those lorries, right from the outset, feed- 1762 ing the railways, carrying loads, both ways. Then, there would have been less use of petrol, more economy of tyres and roads.
I suppose each of these private owners carries his own goods in the quickest way, and therefore he regards that system as the most efficient. That is why there are so many C licences. But the C licence is the most expensive from the point of view of the owners, the consumers, the producers and the general community, because such a lorry generally carries a load only one way, and returns empty. But, as a general rule, all these vehicles make daily journeys. There is an effort to keep them going constantly. What about the railways? How many journeys do the 10,000 railway trucks make, loaded, in a year? I am sure the House will be surprised to know that the average, at the most, is 56 journeys in a year—I have seen it put as low as 30 journeys in a year. Is that efficient working? This is largely due to the system of delivery at the small intermediate stations. The hon. Member does right to remind the House that the railway companies are the creatures of Act of Parliament, but why do not they come and explain the position to the House, and say, "Will you not change it, and give us greater freedom?" They do not wake up until 50 years after the event. It was right to have these little intermediate stations when the limit of a journey was the strength and endurance of the horse, but the motor car has been in existence for 40 years, and the limit has been tremendously extended. That does not seem to have been appreciated yet.
The position to-day is as follows—and I think it is due to the fact that the railways still have these little intermediate stations. Trucks, as a general rule, can carry 10 or 12 tons; but what is the average load of general merchandise carried by those trucks? Before I give that figure, let me give the figure with regard to coal trucks. An average load for them, year after year, is a fraction over nine tons of coal. But the average load of general merchandise, year after year, is only 2.8 tons—it has varied from 2.83 to 2.81, and sometimes it has been as low as 2.79 tons. Something under one-third of the capacity of the truck is carried. The railway engines are capable of drawing about 1763 500 tons—some are capable even of drawing 1,000 tons—but the average weight drawn to-day is 124 tons. Look at the waste of effort. The average speed is only 9.1 miles per hour, against a capacity of about 30 miles per hour. Why is that? It is because you have these frequent stoppages and shuntings at one place or another. Suppose I want to send half a ton of goods to some little railway station on the line known as the Old Cambrian railway. What happens? There is the trouble of marshalling the trucks. The truck containing the goods is taken from junction to junction, until it reaches the main junction, at which it has again to be marshalled. At last the truck starts in a train going down the main line. But on the old Cambrian railway it stops at each station, it is shunted back and back again, a truck is taken off here and there, and that is the time taken for the delivery of half a ton of goods.
What I suggest as the remedy has been suggested time after time, and I do not know why it has not been adopted. It is that you should have main distributing stations at a distance of 25 or 30 miles. Let me give two examples—Swindon and Didcot. The distance between these two places is, I think, about 24 miles. Between these two places there are five stations, and you have the main line train going along there stopping at these five small stations, if necessary. All this could be done away with by having distributing or receiving stations, and having Swindon or Didcot as the main distributors. You would then have your lorries coming to this station, and in some instances you might over-carry and in others you might under-carry. That would be a very simple matter. I understand—and I will give the details which have been worked out by people interested in this matter, to the Minister of Transport—that the saving in money alone would amount to £17,000,000. There would be no necessity to put on the 6 and the 10 per cents. or to put the burden upon industry to-day, if the railways would adopt a system which any commercial concern would adopt to-day. The big industrial concerns in this country establish depots. They do not put a depot in every street or village, but they have one big distributing 1764 depot, and from there they radiate out. I am told that what is true of the trans, port of goods is equally true of the transport of passengers, and that in the same way, instead of having these small intermediate stoppages, you would have your buses running between the main line stations. You would get a better service for the public and the saving, I understand, would amount to another £13,000,000. Therefore, there is a present of £13,000,000 in the better and more economical working than takes place to-day, and I really do not know why that system is not adopted.
There does not seem to be the coordination in transport that there ought to be. I would welcome the co-ordination of rail, road and water traffic. That ought to be. If you are to serve the community, you must give the community that mode of transport and service which serves them best and be the most economical, and you should work those systems together towards that common end. That is necessary at any time, and it will really be necessary during this war, and also when the new order comes which has been visualised. I would like my right hon. and gallant Friend the Minister of Transport to take more control. I want him to have under him an organisation of experts who would have a complete plan of what is required in the country—of the country itself, the needs of transport, the services to be rendered and the goods to be carried—and then to decide how they shall be worked. The attitude of the railways in the past has been that they have bent their heads over the rate books year after year until they can see nothing beyond the rate books. Whatever you ask you have to be referred back to the rate book to see what is the cost. I hope that we shall now see the end of the rate books and that they will be burnt.
There is another matter. It may be that we shall come to a position here when we shall have to have a flat rate to cover the whole country. May I give my right hon. and gallant Friend the instance of coal? An appeal was made to the country at large to order coal during the summer. After France had collapsed and Italy had entered the war the exports of coal therefore went down. The appeal that there should be early orders given for coal was intensified, but, unfortunately, though those orders were given, they have not been fulfilled, and to-day 1765 the position is curiously this. If you order coal which, ordinarily, you would get from a nearby colliery and you cannot get it there, you will be told by the Ministry of Mines that you can get it from a further distance on condition that you pay for the longer haul. Why should there be that differentiation today? Why should there not be one price throughout? Time and time again, we are told that we are all in this war, but why is there this differentiation made in this way? We require more and more production. The people whose services are necessary for production will have to be carried to and from their work and homes. I sympathise very deeply with the statement made by the hon. Member in calling attention to the additional fares; even the extra penny amounting to Is. a week makes a difference to the workers. It may be found, before we go very much further, that, in order to obtain greater production and efficiency, we shall not only have to carry at lower rates, but I can see the time coming when we shall have to carry at no rates at all. Therefore, this is a matter for the Minister of Transport and nobody else. The truth is that at the present time the sacrifices are not equal and the community are not treated as a whole. There will have to be greater mobility both in respect of the carriage of people and of goods, but in all these matters I conclude by wishing the new Minister well in tackling this great subject.
§ The Minister of Transport (Lieut.-Colonel Moore-Brabazon)
It is with some trepidation that I approach this Box after so many years and in charge of a subject upon which, had I been a back bencher, I think I could have knocked the Minister about very severely. I do indeed thank my three hon. Friends for the kindness with which they referred to me personally and also for the mildness of the speeches which they have delivered. The first part of the speech of my hon. Friend the Member for Peckham (Mr. Silkin) dealt with broad issues; the second one from a director of a railway company was, I think, probably one of the most extraordinary speeches we have heard in this House for many years; and the third one came from a Member of the House who obviously ought to have been a railway director for many years. I am sure that the House listened with interest to the many suggestions that he put forward. I always 1766 think that the whole question of railways is looked upon in this country as if railways were a natural feature of the country, like the Thames or the mountains in South Wales. It was very well exemplified once in "Punch," where there was a girl on a station platform with her governess and she saw an aeroplane fly over, and she said, "That is the way I should like to travel." Whereupon her governess said "Certainly not. You travel by rail, as nature meant you to."
One has to remember that the railway was born in this country and that it was a great commercial adventure and gamble. Sometimes I think we do not pay enough respect to our great-grandfathers with their tall hats and their side whiskers They were prepared to gamble in an astonishing way in all sorts of things, including transport in this country, and they put railways there and built them here; in fact many railway directors would probably say that there are one-third more railways in this country than are really wanted. It was a legitimate private enterprise and speculation. I feel sometimes that to-day we are cast in a pigmy mould, because we cannot build railways anywhere, whereas our ancestors put up railways all over England. We ought to pay a tribute to the inventive genius of England. We have to remember that the four feet eight and a half inch gauge is adopted throughout the world—a remarkable tribute—and in France you will see trains passing each other on the left when they ordinarily pass on the right. The whole conception of this great form of transport started here, and, although in a country where the development of the land has to be dependent upon where the railway runs, there may be every reason for nationalising the railways, that is not how the system was built up in this country. We have to take the facts as we find them.
I very much regret that the suggestion which Mr. Gladstone made some 80 years ago, to which my hon. Friend the Member for Abingdon (Sir R. Glyn) called attention, was not adopted then, because it would have alleviated my trouble at this Box to-day. In this question of private enterprise at the beginning we have to-day an example of almost the same thing. I refer to aeroplane construction. No one would have asked the Government to put money into aeroplane construction 15 years ago. It was almost 1767 a bankrupt concern, but private people came along, and it is they who have saved us at the present moment. That is an example of that speculative private enterprise which is despised by many people to-day. When war comes along you have to harness every resource that you have in the country.
Just as private enterprise must not exploit us in times of great emergency, so, it is also right to say that we must not exploit it. We must give it as fair a deal as we can in all the circumstances. There are—I am not saying this in any criticism of any speech to-day—some people who think that it is the privilege of railway stockholders to keep their money invested in a concern of national importance but never to obtain a fair return on their capital. Some people look upon railway shareholders almost as enemies of the country.
I was not responsible for this Agreement. We have had a Debate already, when a very valuable contribution came from the present Home Secretary, all of whose words I have read and some of which I have committed to heart. I know his point of view, and I know that the Government's attitude to all these things is more realistic and less partisan than it was before. I would say this about the Agreement: it is true that the more I look at it the less I like it, but, on the other hand, the more I look at it the more difficult it is for me to find something better, short of the very drastic advocation of my hon. Friend opposite—that is, nationalisation. It is true to say that when war broke out a situation arose under which the railways were at last going to be able to show their worth to the State. I suppose it might be put in another way by saying that at last they were going to become a prosperous business. Many people say that they should have been denied this and that the railways should have been pinned so that they could not make any more money than they had done in their very worst years, especially the distressing year of 1938. It is true to say that from the shareholders' point of view the clammy hand of the State—and I am the clammy hand—has come down upon the railways. I am in complete control.
1768 I think we ought to remember what happened during the last war. There we did actually pin the guarantee which my hon. Friend has been advocating. It was pinned at £48,000,000, and it is true to say that we did not have to increase charges. We had vouchers by which we could go everywhere for nothing, and so forth, but what happened afterwards? The Government had to pay £150,000,000, of which £60,000,000 was compensation for deferred upkeep, and the remaining £90,000,000 was to make up to the balance of £48,000,000 including payment for services rendered. In addition the charges of the railways went up over 100 per cent.
That is a very serious comparison with what we have to-day. First of all, there can be no claim by the railway companies against the Government after the war. We have cut down the guarantee to £40,000,000, and we have complete Government control. When we come to this question of the flat guarantee I would draw the attention of the House to this: If you are going to advocate a flat guarantee then with charges increased against you there is no other way of meeting that except by Government subsidy. You can have whichever you like. I have listened to the Debate with great interest to hear the opinions of some Members. I know myself that once you start subsidising the railways there is just no end to it, and I should have thought that if my hon. Friends opposite in future get complete control of the railways they would much rather take them over as a going concern than something which is bleeding the taxpayer by subsidy. If they ever got that, what sort of Government policy would it be, immediately you took over, to increase charges? But if you did not do that you would be increasing the contribution of the Exchequer day after day.
The Agreement is not, of course, a peace-time document; it is a war-time document, and I want it to be clearly understood that I am in complete charge. You can shoot at me for anything, from a late train to a matter of general policy. My charge operates through my Executive Committee, which is composed of general managers, with an ex-general manager at the top. It does not vary much from the one in the last war, of which Sir Herbert Walker, a railway manager, actually was chairman. You might think that the relationship between 1769 myself and the railway companies is one in which there is difficulty. I would like to tell you straight away that that is not so. The Agreement makes the relationship between the actual companies and myself a somewhat difficult one, but I should like to pay my tribute to the chairmen of the railway companies, who carry on their job undisturbed by me unless I have to disturb them. I have met the chairmen of the railway companies, and although on the difficult question of functions there could be a theoretical dispute—not a practical dispute—I have found that they are only interested in the national effort which the railways can make for this country, and nothing else. I cannot say more for the chairmen than that, and I should like it reported as the position, because sometimes people say that that is not so.
I have been asked to publish the monthly returns of the railway companies. I do not want to do that, for these reasons. They would be entirely false, because the people who are considering these returns are trying to get, through them, a general outlook of the prosperity and conditions of the country. I do not want to do it, also, because I believe it would give a certain amount of information to the enemy as to the general position of our railways. The pool system of receipts makes it difficult to show each railway company's earnings. Also, there is the fact that we have pooled the 600,000 wagons which were privately owned before, in order to reduce the freight complications from the point of view of accountancy. Then there is this point; if you were to try to derive anything from these monthly returns, you might draw false conclusions owing to some action I had had to take with regard to the railways. Although things may go along on a steady basis, I might have to come along, for national reasons, and say, "No more passenger traffic for three days." That sort of thing would upset any conclusions drawn from the monthly returns, and I am sure the House will be convinced that it is best for me to keep these figures back and deal with them only on a six months' basis.
I have said before in this House, and I cannot help telling my hon. Friends again, how very careful one has to be in speaking about railway matters in the House of Commons, because before the words are out of one's mouth somebody 1770 on the Stock Exchange takes an optimistic view and up go the shares, or takes a depressing view and down go the shares. Really, it is difficult to say anything without being misnterpreted. I noticed the other day that when I answered a Question in the House by saying that we must keep the railways in a healthy state that seemed to have a "bull" effect on the market, but that when they looked at my reply again and saw that I said the Agreement was in the melting-pot they thought rather better of it and the shares returned to their normal state—
§ Lieut.-Colonel Moore-Brabazon
I am not worrying at all. I think we must consider this thing apart from Stock Exchange considerations. Whatever the vicissitudes of the war, and the changes which peace may bring, it is the aim of the Government to have an active and progressive transport system, not a heap of junk to be bought up. The Agreement contained from the beginning machinery for increasing charges if costs increased owing to the war. I know quite well that that has to be wrapped up with the question of inflation. Let us look and see what these charges were. Quite a lot, I admit—£46,000,000 extra charges—but I cannot help pointing out that of this no less than £20,000,000 is for increased wages and that a great part of the balance is for increased cost of raw materials. I do not think one can say that when wages are being increased and the cost of everything is going up you can have one particular industry along that spiral in which there is a gap. If you are not going to allow the railways to deal with extra expenses due to wartime operation you have to meet that situation by another means, and that is by Government subsidy.
§ Mr. Silkin
Would the right hon. and gallant Gentleman consider setting off against increased costs extra revenue? That is the real point.
§ Lieut.-Colonel Moore-Brabazon
That is not part of the Agreement. Under the arrangements the first £3,500,000 after the £40,000,000 goes to the companies. Subsequent profits up to a gross figure of £68,500,000 are split between the two parties—the State and the railways. I hope my hon. Friend does not think that I and the Financial Secretary 1771 to the Treasury, in a hypothetical case where you may get up to £56,000,000, and consequently will be able to divide something with the railways, will want increased fares. That is a preposterous idea. I can imagine nothing more objectionable than asking for more fares; I have done it once, and I sincerely hope I shall not have to do it again. It has been asked why, if other industries have to pay for their own damage, should the railways be allowed to increase their charges to pay for their damage? I think the first reason is that any ordinary business can wait, but the railways cannot wait. They have to do repairs immediately and keep communications going. It is because of that that the £10,000,000 arrangement was made, limiting the amount which would be offset by increased charges. It seems to me a curious figure to state. I cannot tell you whether the railways' war damage is likely to be more or less than £10,000,000 per year, but that was the guarantee—that no more than this sum should be borne by increased charges. I may say that if it had got up to £10,000,000 it could have automatically meant another 5 per cent. on fares.
That is the reason why I have not been able to publish the Agreement in full. It is in draft, and there is no difference between the railway companies and ourselves. It would have been printed by now if it had not been for the contributory insurance scheme, which spreads the risk over the whole country. It affects one of the main parts of the Agreement, and until we have fuller details and know from the Treasury how it works into the general idea, I cannot complete the Agreement. In part it is true to say that it is in the melting-pot, but I do not think one can look upon it as an entirely new Agreement orientated from another point of view than is contemplated at the present moment. I am sorry not to oblige hon. Members on that score.
§ Mr. G. Strauss
Is it the case that the only change contemplated in the present agreement is a change arising from that war damage Clause, and that otherwise the main principles of the agreement will stand?
§ Lieut.-Colonel Moore-Brabazon
That is the present intention. I do not think 1772 I can be accused of having in the past looked at transport from a party point of view, or through spectacles coloured with one particular ideal or another. I remember that when the London Passenger Transport Board was set up. I had a great quarrel with my old chief, who was at one time Minister of Transport, and he wrote very stinging letters to me on the matter. But the scheme went through and I do not regret it, because I am certain that the establishment of the London Passenger Transport Board was a thoroughly desirable form of organisation. It does not go the whole hog, as hon. Members opposite might like, but it is between the extreme on the one side and the extreme on the other, which is the genius of our race. As Minister of Transport, I am also allowed to dream and think about transport, and in our desire to see everything working together, one naturally says to oneself, "London Transport—why not a Birmingham Transport board, a Manchester transport board, a Liverpool transport board? Why not a railways transport board to join up all these various transport boards?" That would be quite ridiculous unless one brought in the canals, and then the whole proposition would be self-defeating if one did not bring in the roads. In connection with the roads, the "A" and "B" licences are fairly easy to understand, but I have had difficulty in understanding exactly what would happen in the cases of "C" licences; whether one is allowed to carry eggs to market on one's own bicycle, I do not quite know.
§ Mr. Lathan
Is the right hon. and gallant Gentleman overlooking the mutually beneficial arrangements in regard to road transport that have been come to between the road transport authorities and the railways? Does he not think they could be extended?
§ Lieut.-Colonel Moore-Brabazon
I am sure they could. We are getting on very well on those lines. I am trying to paint a picture of what goes on in our minds. If the roads were linked up with the railways in various transport boards, then the ports would have to be included, because they are wrapped up with the railways; we should have to get the coastal services in, and from that we should have to go on to the cross-channel routes, and 1773 eventually shipping. One starts with a picture and in the end one finds oneself painting a fresco of immense size. That is what really alarms me at the present time, although I do not think that, from the point of view of post-war consideration of these problems, we should be frightened by their magnitude. What I am frightened about is the question of personnel. When these things become bigger and bigger, where are you going to get personnel? They will be the same people. The problems will be extremely difficult to overcome; it will be difficult even to settle, for instance, the rates to be charged by such an organisation. It seems to me that somehow we shall have to start breeding a sort of super-Stamp, a sort of big postal order. Already the problem of management is becoming almost a superhuman one. But I do not intend to say to-day whether or not I enthusiastically advocate a thing of that sort. I have studied these things—
§ Lieut.-Colonel Moore-Brabazon
Yes—but when one comes down to brass tacks, the only thing that really matters is whether the 1.30 train arrives to time and runs safely, and whether the engine driver's wages are as good as they were before. Apart from the theoretical side, that is all that matters. I agree that there are a great many economies which could be brought about by making things work together and by saving money in various directions. That is all I wish to say at present. I have not been at this Ministry long; indeed, when anybody addresses me as a right hon. Gentleman, I do not think I am being spoken to; I am still in that stage, and with my day-to-day troubles it is quite out of the question seriously to consider an immense piece of constructive legislation on that subject. I implore hon. Members, therefore, that for the present we may debate these questions of national ownership and other things with regard to transport purely academically. I feel that I have not satisfied the hon. Member who opened the Debate, but that is all I shall say on that subject to-day.
There are one or two questions I would like to answer. With regard to the Excess Profits Tax, my right hon. and gallant Friend the Financial Secretary has said 1774 that the railways are subject to the tax. The spreading of overheads is a very technical accounting point. It is true that if one's business increases, one carries things cheaper per head by virtue of the spreading of overheads. This was not put into the Agreement, and the benefit was given to the railways. If we were to allow the spread of overheads to count as an offset against increased profits, we should have to admit claims by the railway companies for increases in charges where diminution of traffic affected overheads in the contrary direction. Consequently, it was thought better to leave this. The Government charges will be published. They are not of very great interest; they are only bulk usage charges. As to the Stock Exchange point, that is always made against this Agreement, I think the point is not really a true one. At the time I believe that all stocks were at knock-out prices, and that if anybody had made a speech in the House saying that he anticipated fine weather for three weeks, the situation might have reacted. I do not think people are going to get very rich as a result of this particular Agreement.
I should like now to say a few words about operational difficulties, which are tremendous. There is, first of all, the movement of troops. There is the great supply organisation of industry, demanding a tremendous amount of goods upon the railways, all flowing in the wrong way, with the ports on the West Coast delivering things to the East, which is unnatural, and cuts against all the natural routes of the railways. The movement of goods traffic is, of course, playing havoc with ordinary passenger services. The goods trains take preference to-day over most things. That explains why passenger trains have suffered. One thing from which I suffer as Minister is that although everybody is subject to ghastly travelling troubles, I am never allowed to tell them what is the matter. That is the case in London more than anywhere else. The Prime Minister has told us that one in 700 people in London is killed. We know what a number of bombs it takes to kill one person. One can imagine what damage is done to the London transport system as a whole when one considers that a railway viewed from the air is a relatively easy target. It has been a tremendous and wonderful fight, and if we 1775 get three or four days without trouble, then we lick our wounds and get going again—only to get another chance hit upon some critical point, with the result that many thousands of our fellow citizens are put to the greatest inconvenience and trouble in getting to work. I feel that situation very much every night as I listen to these wretched bombardments.
With regard to goods traffic, one of the difficulties of the railway position is congestion, and one of the reasons for that is the wagon position. The wagons are not being sent back as they ought to be; there is no shortage of wagons, but they are not being emptied as they ought to be When there is talk about a shortage of coal in London, a position in which six trucks are waiting for every one that is discharged per day is not good enough. More will have to be discharged in all the yards in London, and the same is true with regard to supplies. If people will not empty their trucks and turn them back, we shall get, as we are getting, congestion in the ports. I must ask people to remember that a wagon is not sent to them as a store but exists to transport goods, and if it is kept as a store it definitely delays the war effort. All we can do today is to make an appeal and ask everybody whose function and duty it is to unload, to do so, and to free the wagon. We have appealed before, and if they will not do this, then some very drastic action by the Government will be necessary to compel it, for it strikes at the lifeblood of our war effort.
§ Mr. Bernays (Bristol, North)
Can my right hon. and gallant Friend tell us whether the demurrage charges are being enforced?
§ Lieut.-Colonel Moore-Brabazon
The demurrage charges have not been enforced as much as they could have been, and in many cases relating to Government supplies it is only a matter of transferring the money from one book to another. But I contemplate introducing something drastic of that kind in a very short time, and most people are going to pay up.
I wonder whether at a later date, when the House is a little less busy with Government business, a Motion could be put down which would enable us to have a Debate in secret. There are many 1776 things I would like to tell the House. I know that information would not go any further and would not help the lot of the travelling public, but I would like my fellow Members of Parliament to know some of the troubles and some of the things that have happened in London, the reason this or that has been closed, the dangers we are running and are prepared to risk. I would like one day to tell that story, but I cannot do so in Public Session. It is a curious thing, after having been for many years a private Member of a tough type and being able, when I felt energetic, to get up and criticise the Government as well as I could, to be asked one afternoon to see the Prime Minister, and next day to find myself a Privy Councillor and in charge of the Ministry of Transport. Well, that sounds all right, but it is quite evident to me after a month in office that this is a job where there is nothing which occurs, which anyone in London does not entirely count as my own fault. To get over these difficulties you must either be a conjurer or supernatural. Conjuring I must leave to my hon. Friend, and as for me, certainly I am not supernatural.
§ Mr. Ammon (Camberwell, North)
I think everyone of us will feel that we have every reason to congratulate the right hon. and gallant Gentleman on his appointment, and we may certainly look for something less than conventional treatment in regard to the problems he has been called upon to consider. He paid tribute to our Victorian ancestors with side whiskers, top hats, enterprise and resource. He possesses them all, except, perhaps, the side whiskers, and he has given us some indication that he is likely to continue showing enterprise and resource in his work. It is very difficult, knowing that he has only just gone to the Ministry, to blame him too heavily for some of the faults which have occurred. On the question of nationalisation he has, at least, admitted that it must be either all or none. I do not know whether before he finishes he may not find himself introducing a Bill for the nationalisation of the railways.
There are one or two things I wish to bring before him, not so much by way of criticism, but rather to ask him to bear them in mind. I wonder he did not refer to our old friends the widows and orphans, without whom a Debate in this 1777 House on railways is never complete. I am glad to know, however, that the hon. Member for Abingdon (Sir R. Glyn) did not forget them, although the orphans must be grown up by now, and the widows must have married long ago. For at least 50 years that argument has always been brought in.
If no mention was made of the men and their work, it is not because the House is unmindful of them. Everyone of us must have wondered and marvelled at the courage and tenacity of our railwaymen who are running the railways in spite of all the difficulties and dangers of the present time. They do it splendidly, and, as has been said, the dangers are very real. But the right hon. and gallant Member did not meet my hon. Friend's point in regard to revenue. He simply said it was not in the Agreement, but that is no reason why he should not consider whether revenue should be taken into account. There is an offset to some extent to what he said in regard to the prices we had to pay after the last war for the use of the railways. The railway companies are assured of a very fair minimum based on something which is not altogether borne out by the trade they have been doing. Although the extra fares sound small, 1d. here or 2d. there, they represent a considerable increase in the cost of living of the ordinary person. It has been pointed out that on the average it will mean about £15 a year on the expenses of the workers who go in and out of London, and about £8 8s. for those in other towns. That sort of thing is bound to lead to a measure of inflation. Such measures are simply pursuing that vicious spiral of prices and lead us nowhere in improving conditions. It is no good pursuing the argument and criticisms which have been levelled against the railways, because this Debate was supposed to be concerned with the Railway Rates Agreement. Certainly that matter has not been made clear to the public and we may expect the right hon. and gallant Gentleman to give us a fuller discussion at a later date when he has been in office a little longer.
In regard to the running of the railways, it seems to have been singularly imprudent to bring in an alteration of time-tables in the way it has been done, causing a tremendous amount of work for the railway clerks and long queues at the railway 1778 stations. Time-tables have been entirely altered, there are long queues of exasperated people held up at the stations, and the railway clerks who are shorthanded are now faced with this burden. It does seem a rather short-sighted action. The right hon. and gallant Gentleman must have heard something of the criticisms which have been made in regard to the delivery of coal, a problem with which my hon. Friend the Minister for Mines is being troubled. I only say this, because it seems that the buck is being passed from one Department to another. It is stated that the Ministry of Transport is responsible for it. Manchester, in particular, is in a poor way in regard to reserves of coal. I have raised complaints about the position in London until I have become sick and tired of it and have given it up. On the other hand we are told it is not the fault of the railway companies, but all the same I ask the right hon. and gallant Gentleman to look into it. There is something in what he has already said about the holding-up of trucks. I have seen trucks held up for weeks in railway sidings in London. They are full of coal and therefore are preventing coal being brought down. I can tell the right hon. and gallant Gentleman where they are, and perhaps he will look into the problem and see whether anything can be done. We have thousands of miners out of work partly because we are unable to move the coal which has already been won.
The right hon. and gallant Member has said that they would sooner take over the railways as a going concern, but he must bear in mind that directly that is done there will be economies in administration, in the directorate and other things. Having said that, I congratulate the right hon. and gallant Gentleman on the fact that he has early learnt the attributes of a Minister—he has evaded the criticisms which my hon. Friend made in opening the Debate. He has shown himself an apt pupil in that way, and I hope that when he has been a little longer in office we shall have an opportunity of hearing his breezy defence of his Department. We wish him the best of luck in his endeavours.
§ Mr. G. Strauss (Lambeth, North)
I should like to make two brief comments on the interesting and lively speech we have heard from the right hon. and gallant Gentleman. He speaks always in 1779 such a disarming way that he can get away with almost anything, but I feel that one part of his speech will give rise to considerable and widespread disappointment. It is the statement he made that the present Railways Agreement is not to be fundamentally revised, and that only such part may be altered as concerns the provision of compensation for war damage. It had been generally hoped among, I think, most Members, and in many quarters outside, that the Agreement had proved itself fundamentally so bad and so unfair, and subject to so much criticism from so many quarters, that when the Government came to revise that particular part which deals with war compensation, they were going to take the opportunity of revising the remainder. Now we are told that is not going to take place. Therefore we are going to have with us this appalling Agreement, which, not only Members who take a Socialist point of view but the financial Press also, regard as grossly unfair to the public.
Its most unfair aspect is that the railway companies can demand, and are entitled to ask and obtain, higher fares if they can prove that costs have gone up. They do not have to take into account the increased revenue arising from increased traffic. We know there is very considerably increased traffic from the Government which may get less or increase; but that vital fact is entirely ignored under the present Agreement, and, therefore it is an extremely unfair one. There are many alternative forms of agreements which could be suggested, but for myself I wish to record my regret that the main structure is to remain as it is. Inevitably sooner or later there will be demands for further increases of fares, and these increases will have to be granted as the Agreement now stands. Every time an increase is allowed the inflationary spiral is given another kick upward, and makes the financial situation of this country worse. I think it is very unfortunate that the right hon. and gallant Gentleman did not do, as I hope he would like to have done, and make fundamental and drastic alterations in the Agreement when he had the opportunity of doing so.
The right hon. and gallant Gentleman said he was so busy with day-to-day affairs of administration that he has not 1780 had time, and is unlikely to have time in the near future, to consider the great problems of nationalisation and unification of the transport systems of this country except in an academic way. I appreciate that, and I think he can put up a very good case for it, but I beg him not to let it remain an academic problem throughout the length of the war, and that as soon as he is able to master the immediate problems which confront him, he will turn his mind to this matter. It is not just the question of the efficiency of the railways, nor is it a question of whether the 1.30 train leaves punctually and arrives punctually, but it is something which is much broader. Many of us believe that on that changed economy to which we must look forward after the war—the planned economy of this country, which is bound to be very different from the economy which existed before war broke out—the prosperity of this country will very largely depend. After the war the planning, co-ordination and unification of the railways is absolutely essential for that end, and it is very important that the best brains in the industry, and the brains and the very great energy of the right hon. and gallant Gentleman, should be devoted as soon as possible to studying that very important problem.
§ The Parliamentary Secretary to the Ministry of Transport (Mr. Montague)
I did not expect to be called upon to wind up this Debate quite so early and to follow my right hon. and gallant Friend so soon. However, I should like to refer to one or two points associated with the question of the Railways Agreement and the issues involved. I was no more responsible for the Railways Agreement than my right hon. Friend, and I am not concerned now with going into detail in the direction of defending it, but I think it is only reasonable to point out that, after all, it was a negotiated Agreement, and some part, at any rate, of the criticism which has been put forward in reference to it is to be met, if met at all, in the fact that the nation has taken over control of the railways for the period of the war, and for war purposes, and has made, by negotiation, an Agreement with the railway companies.
I think much that was said by the opener of the Debate was, by implication, unintentionally misleading in that it was implied that, if certain things had not 1781 been done or if certain changes were made in the Agreement, the whole problem of fares and freight charges would be resolved. I think that is the crux of the question. The hon. Member who spoke last was in an earlier period of the Debate wry insistent upon the fact that he did not stand for confiscating the railways. This position was necessarily accepted as the basis of any form of nationalisation of the railways. He has, in dealing with the problem in his speech, indicated that in his view the only way in which it would be possible to avoid the anomalies that we are debating—the increase of fares and charges and the raising of the spiral of inflation—would be by nationalisation. If we examine the financial terms of the Agreement, we find that the nation, in return for the right to control the railways during the war, has guaranteed to the companies an income of £40,000,000. In addition to that, the companies can keep another £3,500,000. There is a special reason for this, into which I need not enter now, connected with the London Passenger Transport Board. Up to £68,000,000 the amount is divided between the railway companies and the State, which means that the companies can earn approximately £56,000,000 in the course of a year. That is the limit of the companies' possibility of earnings, and it would be very desirable to understand, without taking sides on the issue at all, that to talk, as the "Daily Herald" does to-day, about excessive profits, is rather beside the mark in view of the actual facts of the Agreement.
The railways are earning a little over the £40,000,000 guaranteed by the State. In other words, the State is not called upon to carry out the guarantee. The £40,000,000 represents a fraction under 3 per cent. on the total capital involved. If the railway companies earned their £56,000,000, it would amount to a fraction over 4 per cent. I am not going to argue the theoretical and ideological question whether rent, interest and profit can be defended. I think hon. Members opposite know where I stand on the Socialist issue. In the first place, as has been recognised by every speaker, it is of little use to nationalise railways alone if you want to solve the problems of transport. It has to be a wide thing, embracing canals, roads, air, every kind of transport in the country, because they 1782 are all interlocked. They more or less impinge upon each other in every direction to a degree never before experienced in the history of transport. This is a very highly complicated affair. It is something that cannot be done merely by waving a magic wand. You have to get down to details and to financial settlements in nationalising and rationalising if you like, the whole of the transport of the country upon fair terms. If the Bill which Mr. Gladstone introduced in 1844 had been carried and its financial terms implemented, we should have had the railways publicly owned for very nearly 25 years and paid for lock, stock and barrel out of the expanded revenue. That was not done. But you cannot nationalise railways or other forms of transport without a settlement, unless you are talking about confiscation, unless you are going to take them right over without any kind of financial settlement whatever.
§ Mr. Lathan
I hope the hon. Gentleman will not regard this interruption as necessarily antagonistic, but surely he will not contend that the unremunerative capital of the railways should be taken into account in any assessment of the price that has to be paid in the nationalisation process. I wondered whether, when he was quoting those figures of 3 and 4 per cent., he had the large amount of unremunerative capital in his mind.
§ Mr. Montague
If I had not, I have it in mind now that I am reminded of the fact, but there is not nearly so much unremunerative capital to-day as there was. A great amount of the dead wood has been already cut out, and I doubt very much whether, even allowing for the unremunerative capital and existing dead wood, it would make very much difference to the immediate problem, the increased freight charges and fares.
§ Mr. Lathan
Will my hon. Friend permit me to point out to him and to the Minister that one of the forms of criticism that they will have to face is that the steps they are now taking in regard to this Agreement and in other directions will tend to make the public pay more heavily than they ought in the event of nationalisation or any other form of public control and ownership?
§ Mr. Montague
My hon. Friend knows where I stand on issues of that character, and when we get down, as I presume we shall have to sooner or later, to a co-ordinated system of transport, I do not think my hon. Friend will find me failing in a recognition of the importance of issues of that character. The argument that has been produced to-day is really an argument for a Government subsidy and nothing else. If we nationalised transport to-morrow, we would still have to make some financial settlement. I do not think it is conceivable that we could make a financial settlement that did not involve at least the 3 per cent. on the £40,000,000 which the Government guarantee involves under the agreement.
§ Mr. G. Strauss (Lambeth, North)
Why is that so? The holders of war stock are getting 2½ per cent. Why should holders of railway shares be given a Government guarantee of 3 per cent., assuming there is only £40,000,000 profit?
§ Mr. Montague
I said assuming there is £40,000,000 profit. There can be only £56,000,000, and that represents a fraction over 4 per cent. I am not defending railway interests. It is not my point to do that. I want to get down to facts and to insist on the importance of understanding what the actual position is with regard to this Agreement and the railways. If the difference between us is a difference between 2½ per cent. and 3 per cent., or even 4 per cent., I do not think that difference matters in the argument I am putting forward now. That is, that we do not solve the problem of increased freight charges and passenger fares merely by saying that we will nationalise or alter the Agreement, unless we are prepared to face the necessity for a Government subsidy to make up the difference. That is the important fact which, it seems to me, is not recognised.
§ Mr. Montague
My right hon. and gallant Friend has dealt with that point, and I think it will be generally recognised that it would be disastrous for any such post-war position to be arrived at as was reached after the last war. There, then, is the position with regard to the Agreement and its effects upon freight charges. 1784 There does not seem to be much prospect of the railways realising the £56,000,000. There are many reasons why, but we can only deal with what the railways are making now, which is a little over £40,000,000. If it is to be said that that amount should be applied to stabilising the charges at what they have been up to now and preventing them going up, then you are denying any kind of return to the railway companies for the services they are rendering to the State. I do not think that is practical politics. At any rate, let us recognise that either that is proposed or there is proposed a Government subsidy to make up the difference.
That brings us to the only other question I want to deal with, that is, alleged inflation. I doubt whether inflation is the right word. The hon. and learned Member for Montgomery (Mr. C. Davies) spoke in earnest terms and was much concerned about the vicious spiral. I do not know whether he would as a business man carry out the practice of passing on increased costs of production to the consumer. I should imagine that he would, and I do not know why the railway companies should be expected to act otherwise, apart from any question of Government subsidy. It is not only a spiral, but it is also a vicious circle, and what is suggested is that that circle shall be cut at the point of transport. In Eastern mythology a circle is regarded as a symbol of eternity. There is no beginning and no end to inflation. If you look at it from another point of view and alter the symbol, and say there are links in the chain, surely transport has as much right to call itself the last link, as anyone else has to call it the first link, because the railways cannot increase charges until well after there has been the increased costs which have made the increased charges necessary. There is always a lag.
There is a considerable lag at the present time, and I do not see why, from the point of view of theory—and there is a great deal of indignation expressed against the railways on this point—we should say that the railways are responsible for the inflationary movement. The whole position is responsible for that movement, and there may he a useful argument in favour of a Government subsidy in order to prevent the inflation getting worse. That is a different thing from blaming the railway companies for 1785 inflation or even blaming the Agreement for it. It is, I am afraid, part of the inevitable results of war-time conditions. If it is to be a question of Government subsidy let us understand that, before taunts are thrown either at the railway companies or anyone else about the position as it exists.
I fail to see where profiteering of the railways comes in. The railways are doing a very fine public service at the present time, and although I am personally in favour of as rapid an organisation of a national transport board as anyone in the House, we must not forget that, as long as we have a system where private investment of capital is necessary to the maintenance of that system, so long as the system is tolerated, and so long as the nation is satisfied with that system, then, if we use private capital, we must expect to pay for the use of it. Putting all theoretical objections on one side, that is the practical position in front of us in reference to the railways. Even in Russia—the hon. Member for West Fife (Mr. Gallacher) is not present, or I would hesitate to refer to the subject—we find that about £100,000,000 a year is paid in interest to the original foreign investors of private capital which was necessary for the purpose of developing the industries of Russia upon modem lines. One hundred million pounds a year is equal to 3 per cent. interest upon about £3,300,000,000 of capital, and I should imagine that we could quite well use £3,300,000,000 of capital to nationalise transport and do a lot of other things in this country without repudiating recognition of the fact that so long as you depend upon private investment you must recognise the right of investors to a charge upon the results.
The reason why it pays Russia to do that is the reason why it would pay this country to do the same kind of thing, and has paid it in the past, and that is, that out of expanded revenue you can amortise all charges, with the result of eventual public ownership and the eventual complete socialisation of whatever industry is concerned. But there is the position: and I put it to hon. Members from the other side who have taken part in this Debate that it is no use playing fast and loose with a principle. Either you recognise the right to compensation on the part of private capital or you do not. If you do recognise it you must take it into account in any kind of settle- 1786 ment that is made either public control or national ownership. There are objections and I do not deny them. But by and large that is really the position of the Railway Agreement at the present time. The Agreement was a negotiated one. It would be necessary to reach some settlement whatever was done in respect of the railways, and there is no other method except that of making the whole community pay the costs of transport charges.
Let me point out that when we are talking about these extra costs we are not really talking about expenditure. We are not talking about costs as such, but about war costs—quite a different thing. The railways might find it convenient to employ 100 or 1,000 more men and that would not be an increased cost. But if the wages of those men go up it is an increased war cost, because it is part of the inflationary spiral or circle. That is the position of the case, and I thought I would take the opportunity of winding up this Debate to endeavour to bring the issue down to the practical facts. If one has done that, it is a contribution to really clear-cut thought upon the subject; and one hopes that as soon as possible we shall get some really sound communal and fair and practical solution of this vast problem of transport, which is, indeed, the key of all our industrial and social problems.