HC Deb 27 May 1954 vol 528 cc757-68

Motion made, and Question proposed, "That this House do now adjourn."—[Sir Cedric Drewe.]

10.40 p.m.

Mr. William Teeling (Brighton, Pavilion)

It is possible that tonight will be the last time that the Pullman Car Company will be debated in this House, for it may well be that within the next few weeks that company will be taken over, or handed over, to the British Transport Commission. I do not think that it will be the last time that Pullman cars as such will be discussed in the House, because it may be that we shall be able to get round the question of whether we are discussing details of administration, when, in the years to come, someone suggests that Pullman cars shall be eliminated, as some of us think that they will be.

I think my right hon. Friend the Minister of Transport may cavil at my describing this as taking over the company. He will no doubt prefer to say handing over, but there is considerable uncertainty whether it is a case of taking over or handing over. Just because the chairman of a company sends out a document saying that he has come to an agreement with the Commission, and, as I understand it, the Commission say that they have not originated the negotiations, it does not mean that the company is being handed over. It may well be that in a sense the directors of the company feel they have been forced to pass this company into the hands of the British Transport Commission. One is forced to ask why this is happening at all.

I believe that the policy of my party, before, at and after the General Election, has been that we should discourage nationalisation rather than encourage it, and that we should do our best to decentralise and to see that nationalised concerns do not go about swallowing private enterprise concerns. This question of the Pullman Car Company is a national matter. It is also of tremendous international importance to the traveller. When a foreigner comes to this country across the Channel and finds himself in the "Golden Arrow" train, he knows that it is something different from the ordinary run of transport on the continent. The service given by the staff on these trains is of a very high class, and is certainly not produced in a few weeks. It is the result of training and the great pride of the staff in themselves and their tradition of service.

In my constituency we look on this matter as a serious one. There are regular trains, more than once a day to the town, called the "Brighton Belle," or there are Pullman cars attached to ordinary trains. People in my borough are anxious to know what will happen about these cars in the future. They know that the service is excellent, the food is good, and it is known too that on the ordinary trains the staff of the Pullmans go through the coaches and provide passengers with the food and beverage they require. It is only when they have been taken over and we get on the Brighton Belle the general catering services of the British Railways about which the people of the country complain, that everyone will realise what they have lost. Why should the company be taken over, or hand itself over?

In the last three or four years, and certainly since the Conservative Government came in, the profits of the Pullman Car Company have gone up very considerably. Indeed, its report for last year tells us that it made nearly £70,000 profit that year, a record amount, and £6,000 more than in the year before. It would have been even greater had it not been for the disastrous French strikes at the peak of the holiday season, for these prevented people going to and coming from the continent. The tone of the report last year was one of optimism for the future. The company planned a new form of enterprise. It carried out as a new venture catering arrangements at Apsley House for the Coronation for continental guests on Pullman trains. It went out of its way to improve cars.

Why did it do that if it thought it was going to collapse and be taken over? It has another eight years to run before the time occurs for the renewal of its contract. It has in hand well over£500,000 of its own. What could the company not do with that if it wanted to? Why does it not want to? That is what we cannot understand. At an annual rate of profit of £70,000 for eight years the company could make well over £500,000, and yet it is selling its £500,000 and 206 cars for just over £700,000. It means the company's cars are being handed over to the Commission for about £200,000. We do not understand it. It seems to me very odd indeed, to put it mildly. I can only wonder that the ordinary shareholders are not doing more about it. They still have a few weeks in which to do so.

It has been said by the chairman of the company that for political and economic reasons this is being done, because in eight years' time it may not be so easy to make an agreement with the Commission; but I understand that the Commission is quite prepared to make a further agreement with the company, even if not for so long a period as before. There are other private enterprise concerns that are working with the Commission—W. H. Smith and Son, with their bookstalls, and the Grosvenor Hotel and others providing hotel and restaurant facilities at railway stations. They have been able to renew their contracts in the last year or two without any difficulty whatever.

If the Pullman Car Company directors are worried about what is to happen in eight years' time why do they not ask for a renewal now, and get the matter cleared up? Can it be that there is some reason political or economic why they do not? If that is so my right hon. Friend, a Conservative Minister, who has to look after the national interest, ought to make the fullest inquiries why this is being done.

I know that in years gone by the Commission did not feel very happy on certain occasions about the company. There were, undoubtedly, difficulties between the Commission and the company. On one occasion there was some difficulty about arranging a restaurant car for the Grand National because certain people connected with the railways did not like the idea. Round about Brighton and in other parts of the country there has often been a movement to get rid of Pullmans altogether, especially amongst the trippers going down to the seaside, who said they could not get on the trains.

But Pullmans are the only trains on which one is guaranteed a seat. Moreover, in Brighton we like people to come down who can afford Pullmans, as well as those who cannot. Besides, there are third-class Pullman cars, and in the holidays the third-class ones are those always full. There are other Pullman trains besides the Brighton Belle. There are the Tees and Tyne Train, and the Devon Belle. An hon. Member from the North told me, "I wish it were not that Pullmans were being taken over by British Transport, but that British Transport was being taken over by the Pullman company."

Mr. Gerald Nabarro (Kidderminster)

And the dining cars as well.

Mr. Teeling

We should like to know just what the reasons for all these things are. In the days when Lord Dalziel was in control, he was able to make contracts with the Southern Railway and the other railways, then independent lines. Why should not the British Transport Commission make some agreements as those railways did? Could it be that it is jealous or nervous of having a competitor very much in its line of trade? If that is the case and the British Transport Commission is a bit jealous of the whole thing, surely the Minister should ensure that the Pullman Car people are not being pressed on this point. No doubt he will answer me on that matter later on.

If it is inevitable that this should happen, I should like the Minister to give us some assurance that the Pullman cars and Pullman trains will not only continue but, in view of the £500,000 which the company has, will be considerably increased. We want them in other parts of the country. My hon. Friend the Member for Westmorland (Mr. Vane) has for a long time been trying to get the British Transport Commission to get Pullman trains up to that part of the country. He tells me that he has had very little sympathy from the British Transport Commission in this respect.

Many of us feel that ordinary promises are not good enough. What we really want is something more definite from the Minister himself. We feel that if we cannot do anything about it, the ordinary shareholders should do something. Why at the last annual meeting was there no mention of this happening or of the possibility of its happening? Everything seemed to be optimistic and to be going well, and there was an increase in the profit. The chairman is also chairman of other nationalised companies and concerns. I understand that he is particularly interested in the French Railway cars. I have been down to Bush House—I think it was only fair to do so—to find out who are the biggest shareholders. In his circular the chairman said that a very large proportion of the shareholders had accepted—

Mr. Nabarro

Would my hon. Friend tell us at this stage, if he is able to do so, what exactly is the connection between the chairman of the Pullman Car company and the chairman of Thomas Cook and Son, or whether the chairman of the Pullman Car Company has any direct association with the British Transport Commission?

Mr. Teeling

I think it is a very well-known fact that the chairman of the Pullman Car Company is also chairman of Cook's and of Dean and Dawson, both of which are nationalised, and in that sense I suppose he is closely connected with the British Transport Commission.

With regard to the question of the shares, the chairman said that a very large proportion of the shareholders had agreed. I find that a very large number of the shares are held by insurance companies. Others are held by nominees, and one cannot tell who actually owns them. One must presume that the shares held by the insurance companies must have come into this.

I am a little worried these days as to the way in which insurance companies are always playing for safety.

Mr. Ernest Davies (Enfield. East)

Private enterprise

Mr. Teeling

I do not like this idea of too many big companies. I would far rather have smaller companies all over the country. I hate monopolies in any form, and I should like to see more vitality in the Pullman company in future if it is not taken over by the British Transport Commission.

There are only four directors of the Pullman company. One is a Frenchman who is closely connected with Wagons-Lit, which in turn holds many shares in these companies. There is also Lord FitzAlan, a very charming elderly gentleman, whom I know, and I should not say that he was a vitally active or knowledgeable person as far as concerns experience of railway companies. There are also Mr. Stanley Adams and Sir Basil Goulding, who lives in Ireland. These four people are in control of the company at the present moment, and as far as we can see, they do not want to go on with it. Could not others take their place?

We ought to be doing our level best about this since a Conservative Government has come into power and especially in view of the fact that the Prime Minister only today in his speech at the Albert Hall stressed how much we in the Conservative Party are against nationalisation and said how keen he was to set Britain free.

This evening we are discussing a company with £500,000 in its pocket with the possibility, if it wants to, of renewing its leases and agreements with the British Transport Commission. The company has a tremendous international reputation, which is very largely due to the way in which Mr. Adams built the company up in the years gone by.

This commercial concern has been built up and has been preserved through these difficult years. It is in a position to go on again to still greater heights, and that is why I want to know why the Minister does not feel that he can intervene in this matter, when to many of us it seems to be not only a matter of local importance to our constituencies, but also a national matter as well. It is the first case of a prominent company being swallowed up by a nationalised industry, without, as far as we can see, any real reason.

10.55 p.m.

The Minister of Transport and Civil Aviation (Mr. Alan Lennox-Boyd)

I am grateful to my hon. Friend the Member for Brighton, Pavilion (Mr. Teeling) for cutting his remarks comparatively short to enable me to answer at some length. I must apologise to hon. Members on both sides of the House who I know would have liked to take part in this brief discussion. But Members will appreciate that I wish to make my position in this matter quite clear. If I sit down before the half-hour has elapsed I will carefully consider anything that may be said after I have made my reply. The hon. Member for Brighton, Pavilion was unduly pessimistic when he said we might not have the opportunity on many other occasions of debating services of this kind in the future. This is certainly not a question of nationalisation, and I think that on reflection the hon. Member will agree that that is a misuse of words. These are negotiations, perfectly freely entered into, by two independent parties on the initiative of the directors of the Pullman Company on the one side and the Transport Commission on the other side.

The point has been made that this was due, on the part of the directors, to their realisation that their splendid business was on the verge of collapse. That is not only very ungenerous, but, if I may be very frank, it is grossly untrue. There is no such question at all. This is a case of competent business people realising that, when their franchise lapses in 1962, if they negotiated a new one it would probably last until 30 years later. Certainly they had this to bear in mind as trustees of their own shareholders' money.

My hon. Friend raises the question as to my possible intervention. It has been my desire throughout my period as Minister of Transport not to use the Minister's powers of direction on any occasion. I have never used those powers of direction in the many controversies in which transport has been involved. But in this particular case, assuming I had the powers of intervention I should not dream of using them. But have I got powers of intervention? I cannot see that I have on this occasion.

Under Section 4 of the Transport Act it is clearly not Parliament's intention that the Minister should interfere when the Transport Commission undertakes a commercial transaction of this kind. The conditions under which the Minister's permission would be required are clearly laid down. If hon. Members would look at Section 4 they will see that this particular transaction does not fall in any of those specified classes. So I have no powers to intervene, and even if I had the powers I would not dream of using them.

In regard to the Pullman Car Company, both for historical and personal reasons I regret the disappearance of any great historic entity which the share- holders, as in this case, desire. I do not share the view which hon. Gentlemen opposite might perhaps feel—I hope I am not being unfair—that because the majority of the people do not travel by Pullman therefore those who do deserve no consideration. I think they deserve a great deal of consideration, and that is generally the view of the House as a whole.

Indeed, the Commission tells me that recently more than ever it has been demonstrated that Pullman services are the most popular type of services with business men to Brighton and many other places, and undoubtedly these extra facilities help to keep people travelling by rail, which is the prime concern of all of us in this House. Therefore the Pullman Car Company and the Pullman services are important, but I have no power of intervention in this case.

Now as to the situation. The directors of the Pullman Car Company, on their own initiative, started conversations with the Commission. I am a little sorry that my hon. Friend should quote individual members of the board of the Pullman Car Company. There is nothing improper in the same gentleman, a very distinguished person, being Chairman of Thomas Cook and Son, Chairman of Dean and Dawson, and also Chairman of the Pullman Car Company. In all these activities he has won great renown and the trust and confidence of the share-holders and of the travelling public.

This is the case of a willing buyer and—it looks like—a willing seller, judging by the result of the first week's notice to shareholders. The holders of some 73 per cent. of the A shares and the holders of 84 per cent. of the B shares have already said that they approve of the suggestion of their directors, and there is until 15th June to see whether the requisite 90 per cent. in both groups is attained.

Why have the directors arrived at this conclusion? They are working on a franchise which expires in 1962. Hon. Members will remember that there was the original agreement in 1932 with the Southern Railway and one in 1919 with the Great Eastern. The 1953 agreement consolidated and streamlined these agreements and covered all the Pullman Car Company's fleet. This agreement expires in 1962. The life of vehicles that the Pullman Car Company might have to buy can be expected to be 30 years and therefore, they have to look a long time ahead to see whether it is worth while investing their shareholders' money in this transaction.

I can say with confidence that the company never asked the B.T.C. to consider any terms on which it could continue after 1962. In the view both of the company and of the Commission it would be extremely difficult, if not impossible, to arrive at terms on which the franchise could be extended. It would have to be a long franchise. [An HON. MEMBER: "Why?"] Because of the fact that the vehicles concerned would last for a long time. The routes and timings of such services could not be guaranteed over a long period.

Mr. Teeling

They were before.

Mr. Lennox-Boyd

We are living in a very different world in regard to the future of British Railways and the form of rolling stock and other problems that confront the railways. It takes a wholly different form.

This is a commercial matter, in which it would be unwise and indeed impracticable for the Minister to intervene. If it is the view of the Pullman Car Company that it should not enter into a long-term agreement without assurances which it realises could not be forthcoming—though it has never initiated a discussion as to whether it should so enter—we must rely on the judgment of those private enterprise people in whom normally my hon. Friend and myself delight to trust. The decisions on the way in which this company will develop must be taken in any event, but it will be far easier for the railways to take them as owners rather than to plan ahead within the framework of some rigid contractual conditions.

My hon. Friend made some comments about prices to be paid. He has his figures a little wrong. The total purchase consideration, in fact, amounts to £1,148,500, made up by the taking over of £386,000 4½ per cent. redeemable preference stock and £727,500 offered for the A and B shares, together with a small amount of £35,000 for other obligations which the company may be deemed to carry.

Mr. Teeling

Does that include the £500,000?

Mr. Lennox-Boyd

That is the total sum involved. My hon. Friend referred to the £750,000, the price being offered.

I must repeat that this is a commercial decision arrived at by a commercial company, and so far endorsed by a very high proportion of its shareholders who are under no obligation whatever to agree to their directors' suggestion or advice, and who are entirely free agents in this matter. At no point has it arisen that that they are being forced into this position because their directors, having asked for certain requirements from the Commission, have been refused them.

Had there been a situation under which the directors had said to the Commission, "We want to continue. Will you give us the following guarantees?" and had the Commission said "No," then a very different situation would have arisen. But the situation has never arisen of the company asking what the terms would be for a continuation of their franchise. That is a matter between the shareholders and the company. It is certainly not a matter for the Minister to inquire into or to interfere with, and my hon. Friend's natural feelings, both as a Conservative and as a believer in private enterprise, should make him extremely chary about trying to interfere in matters of this kind.

Will the service be so good? Clearly, the Commission is going to involve itself in heavy capital expenditure of a particular kind, and naturally it will be presumed not to do that unless it will get a good return from it. But the Commission has gone further than this. Not only is it paying a very high price, though not an excessively high price, if the transaction goes through—which suggests that the Commission believes there is continuing health and efficiency before the Pullman conception—but it has also given definite undertakings to the shareholders, to their staff, and to the travelling public who owe them a debt of many years of happy transport.

The Commission has said that it does not intend that there should be any alteration in the control and operation of the Pullman cars, nor that the specialised services given by the Pullman Car Company should be altered in any way whatsoever. The Commission adds that it is its intention to continue the Pullman car service and to give consideration to the extension of this facility to other lines throughout the country.

I regard a proper Conservative approach to problems of this kind is to retain the good things that we have in a field of this sort and to open them up to more and more people. I am not in favour of dull mediocrity and uniformity. I believe that the Pullman services have given something which is unique, and I believe the words of Sir Brian Robertson and of the Commission that it intends to preserve the unique character of these services. Let us open them up to more and more people who ought to be entitled to enjoy the good things in a developing world.

I hope that my hon. Friend and others who live on the routes served by the Pullman Car Company will be satisfied by what I have said. This is a private commercial transaction between the company and the Commission. In wishing success to this transaction, should the shareholders so decide, I hope that the advantages of this good service may be extended to even more people than have enjoyed it hitherto.

11.9 p.m.

Mr. Ernest Davies (Enfield, East)

For once it is a pleasure to be able to say that we on this side of the House consider that the Minister of Transport has made a right decision in deciding not to intervene in this matter of the acquisition of the British Pullman Car Company by the British Transport Commission.

What struck me when listening to the hon. Member for Brighton, Pavilion (Mr. Teeling) was the somewhat irresponsible attack he was making on private enterprise. It was surprising that he should attack the Pullman Car Company in the way he did. The important thing to remember is that the initiative, as the Minister pointed out, came completely from the Pullman Car Company. There was no responsibility on the part of the Commission to intervene in any way.

The Question having been proposed after Ten o'Clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Ten Minutes past Eleven o'Clock.