HC Deb 16 April 1956 vol 551 cc745-53

6.30 p.m.

Mr. Watkinson

I beg to move, in page 7, line 4, to leave out Clause 5.

As will be within the recollection of many hon. Members, in Standing Committee I tabled an Amendment designed to act as a general anti-monopoly power, and also as a general power against unfair competition. I will not repeat the arguments that I used in favour of that power, which I considered to be necessary for the Bill and for the industry.

The right hon. Member for Vauxhall (Mr. G. R. Strauss) tabled certain Amendments the purpose of which was to extend the power to all sectors of the industry. I undertook to accept them, but they were not called and could not be dealt with. Since then the right hon. Gentleman has tabled a comparable Amendment to another Measure in which, I understand, it will be in order to apply the power to both sides of the industry. I do not think we should discuss the merits of the matter, but I thought I should explain to the House why I am moving to delete Clause 5. It is that a Clause can be inserted in the Road Traffic Bill which will apply to the whole industry, and that is acceptable to me.

Mr. Nabarro

I did not have the benefit of catching your eye on Second Reading, Mr. Speaker, neither had I the opportunity to raise certain important matters associated with the withdrawal of this Clause during the Committee stage because I was not a member of the Standing Committee.

A good deal has been said since the inception of the Measure about fair and equitable competition between the publicly-owned sector—British Road Service vehicles—and the privately-owned sector—private road haulage vehicles. That is a principle which is now evidently subscribed to by both sides of the House. If there is to be a mixed economy in long-distance haulage, presumably there must be precisely equal terms accorded to both parts of the industry. I am not satisfied that even with the withdrawal of the Clause, the purpose of which, among other things, is to ensure that … other holders of licences … that is, other than B.R.S.—shall not be placed … at an undue or unfair disadvantage in competing with them as respects the carriage of goods by road. I am not satisfied that if the Clause is transplanted to the Road Traffic Bill and even augmented by the terms of what the right hon. Member for Vauxhall (Mr. G. R. Strauss) proposes there will be fair and equitable competition between the two sections of the industry.

Let me say at once that I accept the fact that a part of the long-distance lorry fleet is to remain in public ownership in perpetuity. I believe that hon. Members opposite accept the fact that a large number of lorries are also to remain in private ownership in perpetuity. It is because of this duality of ownership that I now raise certain issues which I consider to be of fundamental importance.

Mr. Mellish

rose—

Mr. Nabarro

I cannot give way.

Mr. Mellish

It must be put on record that what the hon. Gentleman has said is not a correct statement. On this, I speak for myself. I should not support the principle that private enterprise should remain in perpetuity.

Mr. Nabarro

The hon. Gentleman is this afternoon suffering from a little more than his customary impetuosity. So far as I am aware, not even the hon. Member for Bermondsey (Mr. Mellish), representing what I consider to be the lunatic fringe of the Socialist Party, has suggested that long-distance C licence transport should be nationalised.

There is a mixed economy in road transport, and, therefore, there are four conditions which I consider must be applied both to nationalised and privately owned vehicles if there is to be fair and equitable competition. It is on these four points that I seek an assurance from my right hon. Friend, and I hope he will be specific when he replies, either to this Amendment or on Third Reading of this Bill.

The first is that British Road Services, becoming a separate and quite distinct Company and subsidiary undertaking within the Commission, shall publish separate accounts and a full annual report in regard to all its operations. The second is that this company should in all matters be subject to the provisions of the Companies Act, 1948. The third is that there should be absolute equality before the traffic courts as between British Road Services on the one hand and private haulage operators, on the other hand. I believe that my right hon. Friend will be able to give assurances on those three points.

My fourth point is much more difficult. It is that there shall be equality of terms and conditions for the subscription of capital for both Sectors. At present there cannot be fair and equitable competition between the nationalised British Road Services organisation and private hauliers when British Road Services raises its capital under Treasury guarantee. The last capital issue was part of the general issue of the Commission on the open money market but, subject to Treasury guarantee, it was issued at 101 and the guaranteed rate of interest was 4 per cent.

If a private undertaking engaged in long-distance haulage raises its money on the open market today its preference stock will probably have to pay 6½ per cent. and its ordinary shares may pay as much as 7½–8 per cent. There is therefore, a preference accorded and recognised in present circumstances to the nationalised service amounting to 3–4 per cent. per annum on the capital. If this organisation, to be called British Road Services, or the rump of it that we have been discussing, is now to operate as a commercial undertaking—my right hon. Friend pays lip-service to that principle; hon. Gentlemen opposite talk about it running on commercial lines—it must submit to the same financial discipline as private enterprise in raising money on the free, and open market. That principle will be anathema to hon. Gentlemen opposite because they believe in State monopolies operating upon preferential terms.

Mr. Ernest Davies

There is no monopoly.

Mr. Nabarro

It was the intention of the hon. Gentleman's party when it enacted the 1947 Act to create a monopoly. The hon. Gentleman cannot deny that. It is in the terms of the 1947 Act that powers are given for British Road Services to raise capital with a Treasury guarantee and on preferential terms. As usual, the hon. Gentleman is wrong on all counts.

The principle of making a nationalised undertaking go to the money market for its financial resources is evidently not looked upon unfavourably by those persons who have carried out independent investigations into the affairs of nationalised industries. The only nationalised industry which has been subject to a septennial review by an independent body is electricity. The Herbert Committee Report published a few months ago—Command Paper 9672—has a direct bearing on what I am saying. I wish to quote something that is exactly analogous. The Committee recommended, among its many recommendations, in paragraph 68 in page 146: The efficient use of capital would be encouraged if the Boards had to compete for capital funds on the market without the support of the Treasury guarantee, but this course could only be followed if it were also applied to other nationalised industries. It is not sufficient for my right hon. Friend to fob off the Conservative side of the House of Commons by saying that this is part of a general problem and that he proposes to deal with it at some future date. I want it dealt with in the lifetime of this Government. [Interruption.] I would expect to be opposed in principle by hon. Gentlemen opposite, but I would expect to be supported in principle by my hon. Friends sitting on this side, and I think that they might cheer up a bit.

Mr. Speaker

The hon. Member is now going rather wide of the Clause which deals with road licences only and does not deal with the whole question of the competition between State and other industries.

Mr. Nabarro

I will return to the words of the Clause which my right hon. Friend proposes to remove. At the end of that Clause he uses the words: undue or unfair disadvantages in competing with them"— private enterprise interests— as respects the carriage of goods by road". It is my claim that so long as there is a Treasury guarantee applied to money used by British Road Services there will always be an unfair disadvantage placed on private enterprise. I leave that point because I notice that my remarks are not well received by the Chair. With the statement on the general principle—

Mr. Mellish

The hon. Member must not talk like that to the Chair.

Mr. Speaker

I do not think that the hon. Member for Kidderminster (Mr. Nabarro) meant to criticise the Chair, but I was at a loss to understand the relevance of some of his remarks to the precise points covered by this Clause. The hon. Member has developed a general argument which might be relevant on another occasion but cannot be on this. The hon. Member must confine himself to whether or not this should be a ground for the revocation of A or B licences. The Clause does not raise the whole question. The hon. Member must have some regard to the rules of relevance.

Mr. Nabarro

I am grateful to you, Mr. Speaker. I will return to the disadvantage, because the word "disadvantage" is clearly stated in the Clause which it is proposed to remove. I claim that it is manifestly a disadvantage that this publicly-owned sector of the industry will continue to be allowed to raise its capital under Treasury guarantee and on preferential terms.

Mr. Speaker

The hon. Member has made that point. If he will now show the relevance of the point to the A and B licences covered by the Clause, I think that the House will be obliged to him.

Mr. Nabarro

I hope that when my right hon. Friend re-enacts this provision in the Road Traffic Bill, which is his stated intention, he will ensure that these disadvantages placed on long-distance private enterprise are removed and that there shall be scrupulously fair and equitable competition between the two sides of the industry, the publicly-owned, on the one hand, and the privately-owned, on the other.

6.45 p.m.

Mr. Mellish

If I may reply to the hon. Member for Kidderminster (Mr. Nabarro), it seems to me that he has overstated his case and, in doing so, has become offensive to almost everyone, including his own supporters and the Chair. The burden of his case—and this is where he and I must always differ—is that he says that the nationalised undertaking evidently gets the benefit of Treasury assistance with regard to the money which it is able to raise—

Mr. Nabarro

Subsidised.

Mr. Mellish

—and, as a consequence, is able to give better and cheaper service to the consumer. I should have thought that that was not a bad principle. It is certainly a principle that I support. When he talks about the higher interest charges that private enterprise has to pay, the answer lies at the doorstep of his own Government, and nowhere else.

Mr. R. Gresham Cooke (Twickenham)

I am glad to hear that this Clause is to be carried forward into the Road Traffic Bill and not dropped, because a great many of us place a great deal of reliance on this Clause, which is a very formidable one. It must not be forgotten that British Road Services will be in a very preferential position compared with the ordinary haulier by virtue of one factor, that British Road Services will be about twenty times bigger than the biggest road haulage fleet. The largest road haulage fleet is about 300 vehicles and British Road Services has about 7,000 vehicles.

In all sorts of ways it will be in a very important and strong position. It starts off from a good strategic basis, namely, that it is a business which is running well. If, on top of that, British Road Services were to indulge in any unfair competition by providing services below cost it would be setting out to wreck the haulage industry as a whole. This is something which ought to be safeguarded and watched very carefully indeed. Therefore, I am glad that this Clause is to be carried on, because a colossus such as B.R.S. is in relation to the ordinary road haulage business may be able to run privately owned business off the roads.

Mr. G. R. Strauss

I am, of course, glad that the Minister has agreed to withdraw this Clause. I thought that it was a bad Clause from many points of view. I was always very doubtful whether the basic proposal in it, that the Commission should be liable to have its A and B licences suspended from its vehicles because it was charging less than the cost of the service, was really a practicable and sensible suggestion. It has always appeared to me that the whole matter was to a very considerable extent a sort of gesture to the Road Haulage Association, and a rather empty gesture.

Mr. Watkinson

No.

Mr. Strauss

The Minister says "No," and I accept that.

Mr. Cole

I am grateful to the right hon. Gentleman for giving way. May I assure him that, speaking for myself and, I hope, for a number of my hon. Friends, we do not regard this as an empty gesture but as a Clause of considerable potential practical value?

Mr. Strauss

The hon. Member must realise that, knowing the history and the past activities of the Road Haulage Association, we are very suspicious. It may be that we are sometimes suspicious in a particular case without justification. We were suspicious. We felt that the principle of the Clause was not harmful, but that it had serious defects, and we are glad that the Minister has agreed to alter it and accept the new Clause which would make the penalty equal on the Commission and on private hauliers which carried goods at charges below cost. If we are to have anything of this sort, it is quite obvious that the obligation should be equal on both sides. The Minister has agreed to accept that principle. We consider it an improvement on the present Clause and we support him in removing the Clause, which is wholly unsatisfactory.

Amendment agreed to.