HC Deb 03 December 1956 vol 561 cc897-1002

Order for Second Reading read.

4.23 p.m.

The Minister of Transport and Civil Aviation (Mr. Harold Watkinson)

I beg to move, That the Bill be now read a Second time.

Perhaps those hon. Members who still remain in the Chamber will now turn their attention to another form of transport—a not unimportant one in the history of this country—and to what I think is the end of a very long chapter of railway history, and the beginning of a brighter one. I thought it might be for the convenience of the House if. in moving the Second Reading, I examined the broad sequence of events which has led up to it; otherwise it will be difficult to see the Bill in its correct perspective.

I hope to make an objective assessment, because it is ever-present in my mind—as I think it is in the minds of other hon. Members who have a deep interest in the railways—that the railways are this country's largest single employer of labour, and an industry on which the whole success of our national economy often depends, as indeed it will undoubtedly depend in the next few months. It is just over a month since I presented to Parliament a White Paper containing proposals for the railways and the British Transport Commission, and it is this White Paper which, as hon. Members will no doubt remember, contained the Government's proposals which are the background to the Bill which we are now considering.

I should like to say one thing in general about the White Paper. Its division into two parts is very relevant to the Bill, and was a very important decision. Although the Government and the Commission have essential parts to play, the Government are quite clear that the responsibility for running the railways efficiently and economically has been laid very firmly by Parliament upon the Commission, and the Government have no intention of doing anything which will detract from the Commission's responsibility. Equally, I take the view that it is the duty of the Minister who holds my office to see, so far as he properly can, that that responsibility is fully discharged. Early this year it was obviously time that the operations and finances of the Commission were reassessed in the light of the circumstances then obtaining.

The Commission and the Government were firmly committed to an ambitious modernisation plan which would put a heavy burden upon our national resources for at least ten years. It was essential that the plan should succeed. Equally, the Commission was in heavy deficit. There had been some loss of public confidence and esteem, due to the strikes of last year and the unfortunate sequence of accidents at the turn of the year.

Mr. J. A. Sparks (Acton)

And also the denationalisation of road haulage.

Mr. Watkinson

I have said that I consider it my duly to make a factual and non-political examination of this very important matter. If the House wants to be party political I shall be delighted to oblige, but I am not sure that it is in the national interest.

There was also the Commission's declared inability to meet its deficit by an increase in its charges; and the human relations background was not such at that time as to promise the most rapid implementation of new methods and equipment.

At that time some examination was inevitable. The only question was as to the form which it should take. Should there be some form of outside inquisition into the workings of the Commission, or should there be an internal re-examination of its position by the Commission itself? The reasons why the Government took the decision they did are best expressed by saying that I felt quite convinced that it was better to entrust this task to the people who would have to implement it—in other words, to Sir Brian Robertson and his colleagues on the Commission, in whom I then had, and still have, every possible confidence. It was just as important to the railwaymen themselves, because they have to implement this future, too.

Although, at the time, it was called an act of faith—and other less polite things—I do not think that the passage of time has proved that decision wrong, and in my view the light of experience has shown that the re-examination which led up to the Bill was in the best interests of the Commission and also the country. What is set out in the White Paper is a very complex operation, and its understanding is essential if we are to be clear what the Bill sets out to do, because it covers a very long-term operation; indeed, the whole of its purposes rest clearly on the view which the Government took in the Memorandum put forward and published in the Commission's White Paper.

The most heartening fact about that White Paper is that the Commission shows that, through its own efforts, it should emerge from its financial difficulties by 1962, and should then move steadily forward into profitable operations. Nobody who knows anything about railway operation would imagine that that end could be easily achieved. Therefore the Commission is right to stress that during the intervening years the position is a serious one and must be tackled with decision and urgency.

The House will remember that the Commission recommended urgently to the Government that some financial plan should be adopted which, while it avoided a subsidy, would place the Commission's organisation on a firm basis during the critical years of reconstruction. I want to say how earnestly the Commission has always maintained that the relief temporarily accorded to it should be strictly limited in time and amount, and should not in any way be held to be a subsidy. The proposals in the first part of the White Paper are the response of the Government to this recommendation. They require legislation, and the Bill now before the House is introduced for the purpose of implementing that part of the White Paper.

As I have said, that can be understood only if it is clearly seen what the railways are trying to achieve, and that is a point which has not been sufficiently understood by hon. Members or in the country. It is the very unpleasant truth that over the last eighteen months—perhaps longer but certainly over that period—traffic of all kinds, particularly merchandise traffic, has been declining; while, of course, basic costs have been rising.

The House will remember that early this year the Commission, in the belief that the establishment of an efficient, contented staff was essential to everything that it was trying to do, made a generous increase in the wages of its employees. I supported that at the time, as I do now. as being a generous and far-sighted move which at that time, and indeed in those particular circumstances, went far to do what the Commission desired that it should do to raise morale and to bring railway staffs to the view that there was hope and promise in the future, if the modernisation plan was implemented.

But that pay increase made the situation worse, and the hard fact is that railways with much of their equipment outworn and outmoded, as we all know, were, and are, finding it increasingly difficult to retain their traffics against the competition from other methods of transport, in the air, on the road and by sea. The Commission can no longer look to the simple expedient of raising its charges to keep itself out of those difficulties. In fact I would go further, and say that in the present state of railway development a simple rule of railway economy is that the higher charges are raised, the smaller the amount of traffic to which increased charges can be applied.

Therefore, we are confronted with the ugly position that if charges are raised, the railways will carry less traffic and therefore their finances will be in no better state. That is proved by the fact that last March, when the Commission came forward with broad proposals to try to recoup the position, and when it proposed to raise £37 million by increasing fares and freight charges, even then, with that proposal the aim of which, to say the least of it, was very difficult to achieve, the Commission was still left no less than £18 million short of the figure required if the railways were to make ends meet.

The review which we have completed has fully confirmed the view I held then, and which I certainly hold now, that it is time to put an end to the sterile business of putting up charges; to pull ourselves up in our tracks and reassess the whole basis of the operation. I sincerely believe that at that time the Commission ran a grave risk of being crushed—as I said at the time—between the upper and lower millstones of an increased deficit and an inability to recoup the deficit by increased charges. That is a hard inescapable fact of railway economy, and unless it is fully taken into account it leaves one with an extremely false view of the position in which the Commission finds itself.

That, then, is the real background to the Bill. The remedies contained in this Measure are based on the answers to the following questions. First, are the railways essential to the national transport system at all, or have we reached the stage when the money could be better spent on roads and our road transport system? I think it might be more politically convenient to any Minister of Transport to hold such a view. Secondly, if the railways have an essential rôle, has Parliament given them the right framework in which they can develop? Thirdly, and most important, can the railways ever become self-sufficient, and if so, how long will it take?

In answer to the first question I would say that the Government fully endorse the view of the Commission—we have said so in our part of the White Paper—that as far ahead as can be foreseen the railways must have a vital rôle in our national transport system. I would give only a few examples. Take the commuter traffic. There are a million people who travel by train to their work in London every day, and there is no road system which could ever carry that surge of passengers. Let that be clearly understood.

Then there are the long-distance passenger journeys, the car-and-sleeper combined service, which is proving so popular and giving the kind of service which people cannot get by driving their cars up the Great North Road. Then again, for the bulk movement of many freight traffics the railway has an enormous natural advantage; and from the national point of view it is by far the most economical way of moving heavy freight loads. I think that fairly disposes of the first question. It is one which is often debated, and I thought it right to say that the railways have an essential part to play, which is something that no one can deny.

On the second question, the Government took the opportunity of this review to try to show that the present framework for the railways was, on the whole, right, even now, with the advantages of decentralised organisation. Most hon. Members will agree that the regional boards are doing well. We should be grateful to the many businessmen who serve on them, and who are becoming just as enthusiastic about running them as were their predecessors about running the old railway system. I do not regard it as a dreadful thing if occasionally they go back to some of the old railway colours. It does not depress me if I see a chocolate-and-cream coloured train occasionally in the Western Region. If that provides the answer in esprit de corps it will pay off.

Mr. David Jones (The Hartlepools)

There are other things on the Great Western which are much more important.

Mr. Watkinson

I notice that the hon. Gentleman refers to the "Great Western." Perhaps that is sufficient answer.

I wish to draw the attention of the House to the contents of one paragraph in the White Paper about which the Government have thought seriously and which they approached on a reasonably nonpartisan basis. In page 4, paragraph 12, it is stated: Today the British Transport Commission much more resemble in organisation, purpose and status a large-scale commercial corporation. The Government are satisfied that this kind of structure is the right one for a concern which must be competitive in the services that it gives to the nation and in the charges that it makes for them. That is the view of the Government of the rôle that the Commission should fill. That is the view of the Government on how this kind of nationalised industry should steadily develop into what I hope in future we shall call a national utility rather than a national industry.

I come to the answer to the third question, which was a vital one in determining the Government's attitude to the whole matter and to bringing forward the Bill. The question is whether the railways could show that self-sufficiency was honestly within their reach, and how long it would take. This was something that was quite unknown before the White Paper came forward, with the Commission's memorandum in it. The Commission has shown that by accelerating modernisation and rationalisation it will be able to break even in about five to six years. How it will do it should be examined if we are to see the Bill in its proper perspective.

It will be done by speeding up railway modernisation, by rationalisation of services, by increasing productivity and by using the railways' greater freedom to charge competitive rates. If we do not accept these things and accept that they will work, it is wrong to bring forward this kind of Bill. The outlined plan for modernisation and re-equipment was published early in 1955. The memorandum in the White Paper shows in great detail how the plan can now be speeded up and how its expectations can be fulfilled. I will not trouble the House with the details, but I should like to say one or two things to show how the work and the progress of the plan are going ahead, and that advances have already been made beyond those shown in the White Paper.

Let me give two examples. In the Commission's part of the White Paper, an indication is given in page 16, paragraph 28, of the progress that has been made with multiple-unit diesel trains. It shows very interesting increases in receipts. The service on the King's Lynn—Wells—Norwich group of services is shown as giving an increase of 30 per cent. I am glad to tell the House that the increase is now 90 per cent. The increase on the Bury—Bacup service, instead of 164 per cent., is, I am glad to say, now no less than 238 per cent. I could give the House a good many other figures, but here is proof that the Commission can say, "If you give us a chance to let modernisation pay off it will do so." These figures are very relevant to our consideration.

Mr. Frank McLeavy (Bradford, East)

The Minister is making a very interesting point. Can he give us an idea of the estimated loss by road passenger transport arising from the increase in passenger carrying by the new diesel-engined trains?

Mr. Watkinson

I know that the hon. Member for Bradford, East (Mr. McLeavy) is an expert on this subject, but he will not expect me to give him an answer "off the cuff." I will obtain it and will give it to him. These vehicles are, to some extent, generating their own traffic and are not taking it away from other traffic. I had brought to my notice by an hon. Member one case in which, in the Cumberland area, it is customary for school treats to go on the multiple-unit diesels for the sheer pleasure of having a ride. Good luck to them.

The Commission has its greatest difficulty on the freight side. I do not want to burden the House with the details of what is printed in the White Paper from the bottom of page 17 onwards, showing how the Commission proposes to modernise its freight services, but I would draw attention to some indications given by the Commission that it proposes to go ahead and re-establish the "Green Arrow," which I think is familiar to hon. Members, and to modernise and improve its guaranteed delivery service.

Here again, the Commission has gone further since the publication of the document, although that was not very long ago. For example, it has now introduced export express services which will give a next-morning guaranteed delivery at docks. For example, from 19th November it has provided an assured next-morning delivery from 35 important London industrial centres to the docks of full wagon loads of export traffic. An interesting point about it is that this has been done in full co-operation with the Federation of British Industries, which is how these things should be done. Here again, the railways are seen to be doing what the Government want, which is that they should be run like a large, efficient commercial corporation, providing the kind of service which will attract the kind of passenger and freight that they must have if modernisation is to pay off.

Mr. Percy Collick (Birkenhead) rose

Mr. Watkinson

I am glad to say that my inspecting officers have now had a satisfactory final inspection, which included a series of running tests on 25th and 27th November, into the reliability of the production types of automatic train-control. Therefore, I have given my final approval to the system for general use with the vacuum brake—

Mr. Collick

What has been done to get back the coal freightage which was lost to the railways?

Mr. Watkinson

I am not sure that it would be entirely in order for me to answer that question. It may satisfy the hon. Gentleman if I say that supplementary petrol rations will not be granted for the transport of coal unless it is clearly shown that it cannot be carried by rail, which is quite adequate to carry it in many cases.

I was saying that automatic train-control is another sign that we are moving forward with modernisation, even since the publication of the White Paper only a month ago.

I turn to an aspect of the matter which I know is very dear to the hearts of hon. Members on each side of the House—branch lines. It is only fair to say that the Commission hopes to save more money by rationalised stopping train services and branch lines. It hopes to save a further £3 million a year by speeding up that process over the next few years. The whole question is whether, if the Commission spends money, it gets a return. It may well be that some branch-line economics will be transformed not only by the multiple-diesel but by the light rail-bus, which now looks as if it may have a future.

The Commission says that it has decided to order 20 light rail-buses. At least one of them have already been running its trials, and it may well be that if these have been the success that the trials of the multiple-unit diesel have been, some branch-line economics may begin to look much more hopeful. This is a changing position. No one has been more firm about the closing of branch-lines than my hon. Friend the Joint Parliamentary Secretary, but if branch lines can be made to pay, or at least to lose less, we shall examine their economics with the Transport Users' Consultative Committee as carefully and sympathetically as we can.

I come to the questions of human relations and productivity, which are most important. It is all very well to talk of the scientific application to the works side of electronic equipment and the rest, and it is quite right for the Commission to say that it hopes to obtain by 1961 an improvement amounting to £5 million a year on this front. That is a somewhat modest claim on the whole and is one in which I think it will succeed. The most important factor in helping me to come to a decision strongly to recommend to my colleagues that we should accept the plan was the signs that we can have a revolution among the men and women who work on the railways, by bringing them at least slightly up to date with their tools, their methods and their approach to the job.

Let me just give the House one example, conveniently enough from my own constituency, where trials have been going on about permanent-way maintenance. That is also very important. When from time to time I have had the pleasure of discussing matters frankly with the trade unions and others interested, they have naturally said to me, as they have rightly said to the Commission, "What is our share in all these operations? What do we get out of it? Are we merely to be told that we shall never be able to have any more increases? Is that the price we pay for modernisation?"

It has been found in many of these works study experiments, which are carried out with the full agreement and support of the unions, that men can earn 30s. or £2 a week more for working no longer hours, that in some cases they work rather less hard, and that that figure shows on top an adequate return to the Commission. Therefore, both sides are satisfied. I would add another important point, that here we have a form of increase in earnings which is not subject to the diminishing law of inflation. If there is a large general pay increase in any large industry, we all know how much of it is soon swallowed up in yet another round of inflation. This kind of earning is not at all inflationary, because it shows an adequate return to the Commission.

I must say to the House that the belief—and again this has been shown by results—that the implementation of that sort of thing might change much of the economics of the whole railway system was certainly one which I took carefully into account in assessing whether or not it was proper to go forward with this plan. I believe that it may have a great effect on railway operations and may show great rewards to those who work on and for the railways, and I am just as interested in that as anybody else.

The only other matter which is relevant to the Bill is the railway charging policy. It has a chapter to itself in the White Paper, and I am sure that hon. Members have read it. Therefore, I will say only that the Commission hopes to reap substantial benefits, £20 million a year by 1961, from a policy of freedom in charging. I think the Commission has been somewhat disappointed with the interim decisions on its freight charges scheme, but it has at least made a good deal of progress towards freedom.

There are two comments which I wish to make. Freedom to adjust charges without delay the Commission must have. That does not relieve it, nor do any of its remarks about charging policy relieve it—and the Commission understands this as clearly as I do—of the duty to recoup itself against any broad increase in prices, costs or wages, so the price restraint which the Commission has set itself is certainly not price freezing. It does not even mean that there will not be local increases where it can get them.

The Commission's charging policy is best set out by the fact that it will try to get in charges whatever the traffic will bear. I think that answers some of the alarm on the part of competing interests which feel that the Bill may be a way of subsidising the railways to hold down their charges to artificially low levels in order that they may attract more business and compensate themselves for their present position of being somewhat under-equipped. That is not so, and I think it is right to make plain that the Commission's policy—and the Chairman of the Commission has given me this assurance personally—is to seek to obtain the best possible revenue from the railways; in other words, what the traffic will bear.

Again, I must remind the House of one thing that the Commission said, because it is very relevant to what I said about charges and revenue, and it may well be that some hon. Members will take the view that what I say has some sort of political prejudice. It will be seen that in page 26, paragraph 85, of the White Paper, the Commission says that any immediate gain of revenue would probably be purchased at the expense of a substantial contraction in the traffics offered to the Commission. In other words, any attempt to impose large increases in their fares or charges…would, so far as can be estimated at present, damage the Commission's business temporarily for certain, and possibly permanently.

Mr. Collick

Can the right hon. Gentleman clear up this point? As the Minister knows, the Government, in co-operation with the Transport Commission, came to an arrangement that there should be no general increase in fares and charges. Does what he says now abrogate that; in other words, has that arrangement come to an end? Just what is the position in that respect?

Mr. Watkinson

Perhaps I can sum that up by saying that the general standstill, if I may call it that, held until the end of this year only. Thereafter, the Commission had the right to do what it thought best in its commercial interests. It is set out quite clearly that it thinks it best in its commercial interests not to impose large general increases in charges. That is a relevant factor—

Mr. D. Jones

If I understand the White Paper, it goes a good deal further than that. One of the conditions embodied in the White Paper is that the Minister will not do again what he did in March, and that is interfere.

Mr. Watkinson

No. That is not so. We debated a few days ago the question of what my responsibilities were and what were those of the Commission. Certainly. I did not undertake at any time not to fulfil what I consider to be my duty, and that is to see that the Commission generally fulfils its obligations to the nation. Therefore, I am certainly not willing to give the undertaking.

Mr. Jones

The White Paper makes this clear in page 11. It says: That the Commission will not be prevented from adjusting their charges without delay at any time to cover increases in costs, should they consider it expedient to do so. Does that mean what it says, or does it not?

Mr. Watkinson

What it means is the Commission has its part to play and I have mine. I have explained quite plainly to the House the relevant considerations and responsibilities. I have said that the prospects revealed by these plans are that the Commission will be in balance by 1961 or 1962 and that by 1970 it should be in the position of having a substantial annual surplus. For the next few years, however, during the period of reconstruction and development, the revenues of the Commission are not likely to be sufficient to cover the interest charges in full, and continuing deficits are, and must be, forecast.

Part of the reason for this is that modernisation yields lag some years behind modernisation capital expenditure. The ultimate prospect depends on modernisation, but we have to get over the next few years. The Commission's memorandum is a kind of prospectus on which it asks the Government to base its financial plans to get it over these coming difficult years. I do not think that anyone can say that the Commission has not provided all the facts and figures that it can give to the nation, or that the Commission of its own free will has not made itself extremely accountable for its future progress. It is very honest and brave of it to do so.

The memorandum sets out the facts and shows the measures which the Commission is now taking to intensify the drive behind them and the targets which it has set for the future. To sum up what I might call the reasoning behind the Bill, which has influenced the Government to bring it forward in this way, I would say that the Government's decision to co-operate with the Commission and have a six months' survey has been fully justified by results. The Commission has presented a convincing case showing that it can and will fully implement the modernisation plan and move forward to profitable operation.

The Government, on this understanding, have accepted the Commission's view which I quoted to the House, that any attempt to impose large increases in fares or charges in the near future would damage the Commission's business.

The Government have, therefore, agreed that the Commission must face continuing deficits for five or six years as part of the price of modernisation and reconstruction. The Government consider that it is sound commercially, and in the national interest therefore, to tide the Commission over this period of reconstruction until modernisation pays off. I think the House will agree that the Government have fully implemented the earnest wish of the Commission itself, and particularly of Sir Brian Robertson, that the solution should have in it no element of subsidy. Indeed, as I shall show briefly, the Bill is extremely tightly drawn, and it will exert a severe and continuing financial discipline on the Commission.

Those, then, are the factors which lie behind the Bill and the reasons for which the Government thought that this was the right way to face the dilemma of the inability to raise charges enough to cover costs and yet the necessity to tide the Commission over the next five or six years until it moves into profitable operation.

I come to the general details of the Bill itself, which I will deal with briefly. The Government's proposals fall into two distinct parts—and I think that that has not been clearly enough understood. The first part of the Bill concerns the interest payable on the sums borrowed to finance the modernisation plans. In other words, the first part of the Bill deals with the capitalisation of the interest on the modernisation plan. It is a proposal which has many parallels in commercial practice. If hon. Members want examples of statutory bodies which can do the same thing, both the Port of London Authority and the North of Scotland Hydro-Electric Board are enabled to capitalise interest on modernisation plans.

The only limit placed on the amount of money which can be borrowed by the Commission to meet interest payments is provided by the limit of £600 million imposed by the Transport (Borrowing Powers) Act, 1955, on the total borrowings of the Commission. They are also limited in time in two ways. First, they can be made only in relation to capital borrowings for the railways in each of the ten years up to the end of 1965. Secondly, they can be made only in relation to interest accruing up to the end of the third year after that in which the capital borrowing took place. The year 1965 has been chosen as the last year in which the Commission can borrow in this way because by then, the Commission say, the modernisation plan will be yielding substantial benefits.

As to the three-year period, again, as I think will be agreed, there is a very sound commercial precedent. I think it is normal to take the construction period of each separate asset as the time over which one can capitalise the interest. That is very difficult for British Railways, which has such a large-scale plan on hand, and therefore the expedient of allowing borrowing for interest for three years after the year in which the capital money has been borrowed is intended to give a broadly similar result to that which would have been obtained if we had treated each asset separately. That is sound commercially. The addition of those authorities to the Commission's borrowing powers, will, I am advised, have only a slight effect on the borrowing limit of £600 million laid down in the 1955 Act.

That is the first main purpose of the Bill. The second and separate part of the Bill and its proposals concern the deficits which the Commission itself estimates will be incurred on British Railways in the next five or six years. The proposal to cover that aspect is simply this: the Commission is to be given powers to borrow by means of special advances, which will be derived from the Consolidated Fund, the sums required to meet, first, the deficits on revenue account of British Railways during the years 1956–62 and, secondly, the payment of interest on the special advances, provided that such interest accrues not later than the end of the fifth year after that in which each special advance was made. The Commission, of course, cannot borrow to meet interest after 1964, because it should then be in profitable operation.

These powers are in addition to the Commission's normal borrowing powers under the Transport Act, 1947, and the money raised in this way will therefore not count against the £600 million which the Commission is at present entitled to borrow under its Transport (Borrowing Powers) Act, 1955. The limit of £250 million stated in the Bill is based on the Commission's own estimate of the total maximum deficit which it will incur before it begins to reap the benefits of modernisation and the other measures included in its own plan.

There is one other point which I should make. Any surplus earned in any other parts of the Commission's undertaking will have to go to help to reduce the deficit incurred by British Railways. That meets a point made by some people who have said that the railways, so to speak, have been put in a separate category within the Commission. That is not so. This Bill deals only with the railways because the railways at the moment are, unfortunately, the main and almost the entire deficit earners within the Commission.

Clause 2 deals with advances from the Consolidated Fund to meet these deficits and the interest on such borrowings. It provides for the determination of the rate of interest on advances made by the Minister and of the time and method of repayment. Broadly, the rate of interest which will be determined by the Minister, with the approval of the Treasury, will be based on current rates of Government credit.

As the House will see, an obligation is placed on the Commission before the end of the seventh year from that in which the money is borrowed to repay, or at least to pay an initial instalment in repayment. After the seventh year the Commission has no option, and those advances have to be repaid, but the amounts of repayment are not specified, and control passes to the Minister of Transport and the Treasury, who will determine both the rate of repayment and the amount of repayment. The Commission has initiative only in the seventh year—the first year of repayment.

Clause 2 sets the target for the Commission of the time at which it must start repaying each advance, and by leaving discretion afterwards to the Minister provides, I think, the necessary and fair flexibility which will be required to meet varying circumstances, but it in no sense detracts from the Commission's clear obligation to repay what are, of course, loans made to it.

Clause 3 provides for the treatment in the Commission's annual accounts of interest and deficits covered by the Bill. One very important point which I must make clear to the House is the amendment of the general duty laid on the Commission under the Transport Act, 1947, which is, to use these famous words: …to secure that the revenue of the Commission is not less than sufficient for making provision for the meeting of charges properly chargeable to revenue, taking one year with another. I think that those words are familiar to most hon. Members.

Clause 3 requires the Commission to carry to a special account the deficits on British Railways and the interest which can be met out of moneys borrowed under the Bill, as well as the accumulated deficit on the Commission's revenue account to the end of 1955.

One very important reason for the special account is that it will enable the Commission to show its capital position distinctly and unencumbered by a heavy and increasing balance of deficits during the period of reconstruction. The Commission is in no way relieved of those deficits, but I agree very strongly with the Chairman of the Commission, who has always represented to me that unless the Commission can set year by year targets which are realistic targets and are not obscured by running deficits, it cannot obtain the strict financial discipline which he wants to see in all the Commission's operations. There are ample commercial precedents for capitalising or charging to suspence interest on money locked up in works which are in the course of construction and therefore not yet revenue earning.

Perhaps I should also make plain that the deficits arise almost entirely from the Commission's continuing liability to pay over £50 million a year on its fixed -interest-bearing issue capital. It is as well that the House should realise that. If this were some great commercial concern fallen on evil days, I suppose that in some circumstances the equity stockholders could certainly not look forward to any dividends for some time to come. Shareholders would have their reward in the future.

Having regard to the future prospects of the railways, I think that it is reasonable that the Commission should be allowed to transfer to what is, in effect, a suspense account the railway deficits which it will incur after paying interest during the reconstruction period, as well as the additional interest which it has to pay through borrowing to finance these deficits. What it really amounts to is that it is now allowed to have the suspense account, in which these sums will be shown.

Perhaps I should add that the deficit of £70 million which accrues to the end of this year is not being financed under the Bill. That deficit will be transferred to the special account. To ensure that that amount in the special account will be cleared as soon as possible, there is power under the Bill for the Minister, with the approval of the Treasury, to direct that it shall be reduced by any amount as they think fit.

I do not think it probable that there will be much use of that power of direction, but it is possible that when the railways began to earn surpluses, a reduction in the accumulated deficit could be made a first charge against those surpluses, after meeting, of course, repayments due on special advances. As my right hon. Friend the Parliamentary Secretary rightly reminds me, the £70 million is really to the end of last year. I mean the year for which the accounts are in front of us.

Mr. D. Jones

I thought that the Minister was off the road.

Mr. Watkinson

I must thank my right hon. Friend for putting me back on the track. It is £70 million to the end of 1955. What I meant was that it is to the end of the year the accounts for which are still in front of us.

This special account has the merit of providing, as I have said, a quite simple way of modifying, in order to take into account the new arrangements, the Commission's general duty under Section 3 (4) of the Transport Act, 1947. Clause 3 (4) of the Bill modifies Section 3 (4) of the Transport Act, 1947, to the extent that, in assessing whether the Commission's revenue has been or will be sufficient to meet …charges properly chargeable to revenue, taking one year with another)… the Commission is not required to have regard to any interest or deficit so far as it is, for the time being, represented by an amount standing in the special account. In other words, the Commission is discharged from its obligations under Section 3 (4) of the Transport Act. 1947—for the moment.

I say "for the moment," because I want to say this. The Bill leaves the Commission with a new financial discipline in place of the general duty laid down in the 1947 Act. The Commission now has the duty to repay the moneys advanced to it, and to keep below the ceiling of £250 million imposed on the special advances. Thus, although the arrangements are flexible enough to secure that, as the financial position of the railways improves through modernisation and other methods, and as the period during which the Commission can make transfers to the special account comes to an end and the amount standing in the special account becomes smaller and smaller, so the duty of the Commission to break even progressively stiffens, until ultimately it is as clear and unqualified as it was under the 1947 Act.

Clause 4 is primarily a definition Clause. I do not think that I need to bother the House with it, except to say that it is right to define the railways fairly narrowly for the purposes of the Bill, and to exclude, for example, London Transport. As I have said, the main purposes of the Bill are to be found in the Clauses 1 and 2—to capitalise the interest, and to have the special advances and this special method of repayment.

That is the broad outline, and those are the broad reasons why the Government felt it right to assist the Commission to go forward in this way to what we believe can be a prosperous and an efficient future. In some degree, I suppose, it must be an act of a faith, because this is not the Government's plan but the Commission's plan. All that the Government are doing is to say that in their view that plan is a sufficient basis on which to lend this money, but it will be seen that this is a plan based on sound commercial principles. That is how the Government wish this great industry to be conducted.

I hope that I may say, and, perhaps, the House may have noted, that I have tried deliberately to avoid acute political comparisons in my remarks. We all know that the Government's view on how this kind of public utility should be operated, and the view of right hon. and hon. Gentlemen opposite are widely opposed and very different from one another—

Mr. D. Joues

Perhaps the Minister could clear up one point which exercises my mind. He says that Clause 4 is the definition Clause which separates the other undertakings from the railways, and provides for the deduction from gross deficit of any profit made on any of the other undertakings for the purpose of reducing the deficit on the railways. I gather that the London Transport Executive is to be in that category. The London Transport Executive, except in one year, has never contributed its share of the central charges, and, if one is to believe paragraphs 90 and 91 of the White Paper, it is not likely so to do in the foreseeable future. If I understand this correctly, therefore, it means that if there is a deficit on London Transport greater than the profits made on the other parts of the undertaking, excluding railways, there would still be a deficit to be met by the Commission?

Mr. Watkinson

No. I think that the hon. Member is perhaps confusing the purpose of Clause 4, which is merely to limit the area of British Railways over which the special advances can be used. For example, it would, I think, be quite wrong to take the railway shipping services into this particular operation. It would equally be wrong to bring in London Transport, which has separate duties and which is not dealt with in this Bill.

It is not a question of trying to settle how relative deficits are to be dealt with. but a question of saying that the £250 million advances shall be held to refer only to deficits arising over certain sectors of what might be called British Railways—which is a very omnibus term. If the hon. Member wants to develop that point further, I know that my right hon. Friend the Parliamentary Secretary will deal with it in more detail when he winds up the debate. This is not a device to apportion deficits, but is merely to show over what area of what is called British Railways this £250 million should apply. I think that that is in the interests of the Commission.

I am afraid that I have spoken for a very long time but this operation is a very large one. It is one of enormous importance to the whole future of the country, to say nothing of the future of the Commission and of the 800,000 people who work for it. I would end by saying that, although we may have differences as to our political approach to the British Transport Commission, I think that the House is at one in wanting it to succeed. It is right to say that it is absolutely in the national interest, and vitally in the national interest, that it should succeed.

I think that I carry the House with me—whatever may be our differences and. no doubt, our very proper arguments as this Bill proceeds through its stages—in wishing Sir Brian Robertson and his colleagues on the Commission and on the regional boards every success in their great task, of which this is the opening of a new chapter. I should also like to say to every man and woman who works for the Commission, that this is a chance to make this industry, and the jobs in it, more secure, more prosperous and more efficient. And I believe that if we lose this chance it will never come again.

5.19 p.m.

Mr. Ernest Davies (Enfield, East)

With the facts that the Minister has presented to the House most of us will be in agreement, and certainly, at the outset, I should like to join with him, on behalf of the Opposition, in wishing success to the Commission in this great task. We are with the right hon. Gentleman in wanting the Commission to succeed in carrying through this modernisation plan and getting into a financial position where it is able to meet its obligations and is free from the need for any assistance from the Government.

Having said that, I should like to refer to the statement he made in response to a very relevant interjection by my hon. Friend the Member for Acton (Mr. Sparks). He said that he proposed to deal with the position from a factual and non-political point of view, and then, towards the end of his speech, he proceeded to repeat that and to state that he had not deployed any political arguments, as he and we on this side of the House differed politically, which is true enough.

It is quite understandable why the Minister has not touched on the political issues which divide us. It is because the case against the Government with regard to the handling of transport matters since 1951 is overwhelming. The case against them is, of course, unanswerable. In the course of my speech, I am afraid that the Minister will find me somewhat political in that I shall refer to this case which we have frequently made out in the House, and to which we have never received a satisfactory answer. In fact, I was somewhat surprised at the way in which the Minister handled this matter this afternoon. I had expected him to come here perhaps not apologetically, as that is not in his nature, but at least with some regret, and possibly he might have revealed a little shame at the situation into which he has largely been responsible for getting the Commission.

Mr. Watkinson

If the hon. Gentleman is going to make the kind of speech which he appears to be making, perhaps I should say that my remarks about being non-political will certainly not apply to my right hon. Friend the Joint Parliamentary Secretary, who is going to wind up the debate.

Mr. Davies

We have nothing to fear from the Minister's right hon. Friend.

One would have thought from many of the remarks made by the Minister this afternoon that he was the saviour of the Commission rather than its wrecker. He did not reveal any realisation of the fact that during the last five years the Government have destroyed the transport policy which, if it had continued, would have enabled the Commission to be in a satisfactory position today. He destroyed the Labour Government's transport policy which aimed at the creation of a unified national transport system, and the Government have put nothing in its place.

The causes of the financial difficulties which make this Bill necessary today are fourfold. First, it should be remembered that when the Government took over in 1951, the British Transport Commission was paying its way. It had reached equilibrium in that year and actually had a surplus of nearly £3 million before providing for capital redemption; it was able to increase that surplus in the following year, and it was not until 1954 that the Commission actually encountered a deficit.

We on this side of the House have contended that the equilibrium could have been maintained but for the change of transport policy for which the Government are responsible. In fact, I would refer the Minister to the introductory statement in the 1951 Report by the then Chairman, Lord Hurcomb, in which he made it quite clear that if the Commission had been enabled to continue along the lines which it was pursuing, they could look forward with some confidence to the maintenance of the equilibrium which had already been achieved.

The main reasons why the Commission is in this difficulty are, first, the general economic policy of the Government, and second, the specific transport policy which they have pursued. With regard to the general economic policy, of course the Commission is suffering from the results of inflation. The Commission was compelled to increase the wages of the railway and other transport workers considerably, because of the steep rise in the cost of living, and that was largely responsible for the very large deficit which was encountered in 1955.

In fact, the Commission states on page 11 of its 1955 Report: It cannot be too strongly emphasised that the main explanation of the deficit of £70 million accumulated during the past eight years is the persistence of inflation. The Commission makes that clear in its Report, and it adds that the direct cost of inflation to British Railways and London Transport was over £100 million. In other words, the accumulated deficit is, in the view of the Commission, entirely due to the inflationary policy which has been pursued by the Government.

The second cause, coming to the more specific transport policy pursued by the Government, is the 1953 Act. The Transport Act, 1953, introduced by this Government scrapped the national transport system which was established under the 1947 Act of the Labour Government. It destroyed the concept of the single-owned and single-purpose transport system, and it put nothing constructive whatsoever in its place. It was not only the question of the sale of a section of British Road Services, but the general policy of disintegration, the abandonment of the principle that there had to be a common ownership of the means of transport and the operation of a national transport system as a unified whole.

It is significant in this respect that the Government repealed Section 3 of the 1947 Act which defined the general duties of the Commission as the provision of an efficient, adequate, economical and properly integrated system of public inland transport… They substituted the mere provision of transport services. They abandoned completely this general idea of the 1947 Act that there had to be an efficient, adequate, economical and properly integrated system of public inland transport… In passing, one can reflect on how much better it would be today in this emergency, with the shortage of motor fuel, if we were able to face it with a national transport system in which road and rail were co-ordinated under unified ownership. There would not be that great difficulty which confronts the country today of allocating fuel between a very large number of small road transport operators without any coordination whatsoever with the rail-road system. It would be far easier to ensure that the maximum amount of traffic passed to the railways if we had maintained that coordinated system which the Government have abandoned.

Mr. Geoffrey Wilson (Truro)

Is the hon. Gentleman now saying that if the Labour Party had remained in office it would have extended the system of the British Transport Commission? The British Transport Commission at the time that the Labour Party left office had only one in twenty lorries on the road. How could that have had any effect on the petrol situation?

Mr. Davies

I am not suggesting anything of the sort. I am saying that the long-distance commercial road haulage would have been in the hands of the Commission in the same way as it was when the Government embarked upon the disposal of British Road Services. The bulk of the long-distance traffic is still carried by commercial road hauliers today.

The third cause of the financial difficulties which make this Bill important and necessary is, of course, the disposal of part of the road haulage undertaking of the British Transport Commission. While the Measures were going through this House, the predictions of the Opposition were brushed aside by Government spokesmen. We predicted that disposal would not be possible over so short a term as was stated, and that the whole of the undertaking would not be sold off.

I do not wish to recapitulate all our arguments deployed at that time, but I do wish to point out that British Road Services were, from 1951 onwards, making substantial profits. In 1951, the figure was over £3 million, and it rose to practically £9 million in 1953, falling, as a result of disposal, of course, to £4 million last year. I understand that this year the profits are, unfortunately, likely to be negligible, the reason being, of course, further disposals and the consequent initial dislocation which has taken place.

This loss represents a substantial item in the budget of the British Transport Commission. If we assume that profits for the Commission from British Road Services would have continued at some £5 million a year, which, in view of the fact that the maximum profit was some £9 million, is a conservative estimate, then over these seven years during which deficits are expected and for which the Government have had to make proposals for finance, the total profit, which will not now accrue to the Commission, would have been some £35 million. If interest at 5 per cent. is allowed on that figure, in the same way as interest will have to be paid on these deficits, it works out at something like £5 million.

Unquestionably, allowing for profits on that basis, plus interest, the Commission will stand to lose some £40 million during this period which it would otherwise have received. That sum is equal to one year's deficit on the basis of the White Paper estimates. In other words, because of the sale of a section of British Road Services—at a loss, incidentally—the Commission is losing the equivalent of one year's deficit, and that amount will, of course, have to be borrowed.

There is one point on which I should like an explanation from the Minister. In the 1955 Report the Commission says that it may ultimately be left with a heavy loss on the Disposals account which would have to be written off to Revenue Account. The Commission clearly does not consider that the proceeds of the sales plus the proceeds of the levy are going to be equal to the loss it will encounter when the final disposals account is made up; it considers that there will remain a debit balance on revenue account as the result of disposals.

Mr. Watkinson

Capital account.

Mr. Davies

No, it says, to be written off to revenue account. Those are the words of the 1955 Report to which the Minister can refer.

How does the Minister propose to meet this? Does it mean that these borrowings which are to be authorised by this Bill will include borrowings to meet the loss entailed in the sale of the road services. If so, he should make that clear, and it should be so stated.

Disposal, of course, was for the purpose of getting the small man back into the industry. I wonder how those small men who came back into the road haulage industry are feeling today when confronted with this very severe shortage of motor fuel. Many of them are going to have to cut down the journeys of their vehicles to such an extent that it will be quite impossible for them to operate at a profit. They may well be wishing that the Government had never embarked on this process of denationalisation. Many of them, I predict, will go to the wall.

The fourth cause of the financial difficulties is this. The Government, not being content with their destructive transport policy and the breaking up of the industry's most profitable sector, thereby depriving the Commission of valuable revenue, interfered with the commercial operation of the Transport Commission. They prevented the Commission from fulfilling its statutory obligation to adjust its charges in order that it should pay its way. I will not recount the story of 1952 when the interference was for purely party political purpose, but I will deal with the interference earlier this year.

The Minister prevented the Commission putting up its charges to bring in a sum of, as he mentioned, £37 million a year; he limited it to some £20 million, with a loss of some £17 million a year. When he made his statement to the House on 19th March this year, the Minister said there were signs of renewed and strenuous efforts within the Commission, and he justified his interference with the Commission on the ground that the financial outlook would improve. His actual words were: There are now signs that renewed and strenuous efforts will improve the financial outlook on the railways through more efficient working arising from better relations in the industry. Later in his statement he said: During the next six months "— which expired in September— it is hoped that this new initiative will enable the British Transport Commission to put in train measures leading to improved efficiency and to getting its operations on a more economic basis so that a more favourable view can be taken of its financial prospects over the next few years."—[OFFICIAL REPORT, 19th March, 1956; Vol. 550, c. 827–8.]

Mr. Watkinson

Hear, hear.

Mr. Davies

The Minister indicates his assent. Is it an improved outlook when a deficit of £40 million per annum over the next five or six years has to be faced? Is it not a fact that when the Minister made his statement to the House the general impression was given—I am sure he intended to convey this impression at the time—that certain things were taking place in the Commission's affairs and under his initiative which were going to result in an improvement in its finances, so that he would be able to come here in September and inform us as to the position and say that it would no longer be necessary to put charges up.

Mr. Watkinson

I am sorry to interrupt, but if the hon. Gentleman is going to quote my words, he had better quote them correctly. If he can quote any words of mine which said anything like what he is now imputing, I should be very happy to hear them. I never said anything of the sort.

Mr. Davies

I have just been quoting the Minister's words from the OFFICIAL REPORT. If he does not recall them, I will repeat them: There are now signs that renewed and strenuous efforts will improve the financial outlook. How has the financial outlook improved during the last six months? He seems to have forgotten how right we on this side were when we stated that the situation would not improve and that the Government should take the responsibility for giving financial assistance to the Commission at that time.

There is nothing in the White Paper or in the Government's proposals which are now before us to justify the Government's interference with the Commission in March of this year. Certainly, there is nothing which justifies the rejection by the Minister of the recommendations made to him by the Transport Tribunal, the statutory body responsible for fixing the fares and charges of the Commission, which recommended that the full 10 per cent. increase in freight charges should be authorised. He brushed aside the recommendation of the body he was obliged to consult, preferring to get the Commission farther and farther into the red.

The Minister might have told us this afternoon what changes there have been which justify him in thinking that the Commission's position has improved since March in the way in which he predicted. Of course, the answer is that there is none. There is nothing new in this regard in the White Paper. It is merely an assessment of the position financially and it writes out in detail the scheme for the modernisation, which has already been published. The Commission has done an excellent job in preparing this statement and it is of great value to the House, but it contains nothing which was not known in general at the time of the Government's interference.

The Minister gave the House the impression at that time that economies were to be made through a new approach to the administration and operation of the Commission and that greater efficiency and greater economies were to result. The White Paper, however, makes it clear not only that these economies resulting from greater efficiency have been a continuing process and have help to close the gap between rising costs and charges, but that because these greater economies and this increased efficiency have already to a large extent been implemented progressively and continuously since 1948, it is possible for the Commission to estimate on an improvement of only a total of £5 million from this source over the next five or six years.

The Minister himself mentioned the figure of £5 million, for which credit is taken, from increased productivity and for that, of course, one is grateful, but considerable economies resulting from greater efficiency in railway operations in particular have been achieved to far greater extent than that over the last eight years. In fact, in the White Paper the Commission itself points out that since 1948 British Railways have a fairly good record in this respect and that productivity is estimated by the Commission to have improved at the rate of 2 per cent. per annum. It quotes the United States railways as having improved by only 1 per cent. per annum and it says that on the French railways, on which, of course, modernisation has already taken place, there has been an improvement of 4 per cent. Despite the Commission's starvation from capital investment, for which all Governments since 1948 have unfortunately been responsible, productivity have been increased by that amount and for that the Commission deserves congratulations.

Before I come to the detailed proposals of the Bill, I would refer to the railway regional boards, which the Minister mentioned. It would be useful to know how these Boards are working. The right hon. Gentleman spoke highly of them but one hears other reports and we on this side of the House have always expressed doubts whether these railway regional boards would prove helpful or whether they were not likely to be a fifth wheel of the coach, so to speak, another body which is interposed between the regional general managers and the Commission itself.

Be that as it may, there is one point upon which possibly the Parliamentary Secretary can give us information tonight. Since these boards were appointed, the trade unions have had reason to make representations to the Commission owing to the inadequate representation of those who have had experience in the organisation of workers. That is to say, the trade unions do not consider that they have been, or are, adequately represented on these boards. Partly, no doubt, as a result of representations—when the boards were first appointed on only three of them was there a trade union representative—five out of the six boards now have single representatives. One, the Scottish Board, still has no representative of the trade unions as such.

When one reads of some of the appointments which have recently been made, one feels that there is a negligence or an intentional refusal on the part of the Commission to appoint people from amongst those with experience in the organisation of workers. I say that because I noticed only recently that there was appointed to the Western Region Board a Mr. Anthony Berry. Mr. Anthony Berry's qualifications appear to be that he is an executive of the Kemsley Press, that he wrote a book on Conservative Oxford and that he served in the Life Guards. Those are qualifications which I can ascertain by referring to the record of this gentleman.

Mr. Douglas Jay (Battersea, North)

Is he paid?

Mr. Davies

I understand that he is paid £500 per annum. I should like to know how it is that Mr. Anthony Berry can better represent the interests of the community on one of these railway boards than a representative of the trade unions who has far greater experience in the organisation of workers and, probably in the running of the railways.

The Minister has helpfully outlined the Bill in detail this afternoon. I suggest that partially the Government have approached the Commission's financial problem in a manner in which they have tended to shelve their responsibility. They have refused to face up to the serious financial position which confronts the Commission. I say that because it provides for the Commission to borrow the necessary funds to meet expected deficits and to pay the interest thereon, but it creates this burden of a future liability.

It may be unavoidable, but it means that over the next five or six years there will be accumulated a deficiency fund of anything up to £250 million, plus interest, which will be a future liability on the surplus earnings of the Commission if they arise from the fulfilment of the estimates in the White Paper. It is, in effect, mortgaging the future of the Commission. The future surpluses are being hypothecated.

There are obvious disadvantages in that. In effect, the Commission is being put into pawn—it is being hocked with Uncle Harold. The future surpluses of the Commission will not be available to provide better services, to reduce charges or to improve the conditions of the workers in the industry, but will have to be used to meet future deficits. For the Commission to have this liability round its neck must have some adverse effect on the morale of the Commission's staff. One could ask whether the effects of such a liability may not be as unfortunate as would be those of a direct subsidy, even if the subsidy was similarly limited in amount and duration. There were alternatives to meeting these deficits through borrowings, but whether that would be better or worse is open to argument.

I suggest that the Government are responsible, at least in part, for the deficits already incurred and that it might have been preferable to provide for the writing off of those past deficits either in part or in whole; that is to say, if it were possible to assess precisely or approximately the extent in money terms to which the Government were responsible, through their interference over fares and charges and through loss of revenue from the sale of the British Road Services and otherwise, it might be preferable to make possible a direct grant to the Commission and to write off that loss once and for all; or alternatively, for the Government to say that it is impossible to assess that amount and accordingly to assess the accumulated deficit at the end of 1956—now estimated at £120 million—write it off and start from scratch at the beginning of 1957, and then proceed in the manner which is suggested by the Bill.

I mentioned that because one has to question whether the estimates in this White Paper are realistic. It is very difficult to believe that they can be, that it is possible to estimate today that the surplus of the Commission will be £50 million in 1970 as estimated in the White Paper. That is some way off. It is so much guessing. No doubt it is intelligent guessing, but there are so many unknown factors which are bound to affect this estimate that one wonders whether it might not have been better to have faced the situation and to have written off, at least in part, some of the deficit which has accrued up to the present time.

The fulfilment of these estimates depends on the assumptions which are made early in the White Paper and to which the Minister referred. The first is that the charges will be speedily adjusted. In response to the interjection of my hon. Friend the Member for The Hartlepools (Mr. D. Jones) the Minister did not, I think, give satisfaction. He made it quite clear in response to that intervention that he still reserves the right to interfere with the Commission in increases in fares and charges. I do not think he should reserve that right at the present time, in the light of the White Paper and in the light of assumption (a) in paragraph 3 of the Commission's Memorandum.

The second assumption is that resources will be available for the capital expenditure to enable the modernisation and re-equipment plan to proceed. I should like an assurance from the Minister that there is the intention on the part of the Government that the capital will be forthcoming. I find a rather ominous statement in the Government's statement on page 5 of the White Paper, which raises doubts in my mind whether the Commission can have any confidence that the Government will continue to provide the capital to enable this scheme to be carried out in full at the speed which is necessary if these estimates are to be fulfilled. It is stated there in paragraph 18: It is not possible to pre-determine many years ahead precisely the level and nature of the investment expenditure:"— that is reasonable enough— this will need to be reviewed from time to time in the light of economic conditions, the availability of supplies and the experience gained as the plan develops. One is inclined to be concerned at that statement, and to fear that the Government will find ample excuse in the light of financial and economic conditions for cutting down the availability.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Hugh Molson)

Will not the hon. Gentleman read the following sentence?

Mr. Davies

Certainly. It reads: The Government are, however, satisfied that the general shape of the Commission's investment proposals is sound, and that the Commission's forecasts of their requirements are reasonable. That is merely a nice general statement which does not protect the Commission at all, in my view.

The third assumption is that this flexible systems of charging will be preserved. Since the Transport Tribunal did not approve the full charges scheme which was put up to it I am a little worried that the Tribunal itself may not permit this flexibility of charges which is so essential to the Commission. I would ask the Joint Parliamentary-Secretary—perhaps he will inform me when he replies to the debate—whether this has been fully taken into account in the estimates which have been made. Reference is made to the fact that the Transport Tribunal has cut down, as it were, the flexibility of the freight charges scheme, but it is not clear from the White Paper whether that is taken into account or not.

The fourth assumption is the structure of the Commission will remain unchanged. I was delighted to read that, and I hope that the Minister will give us an assurance that this will be the case. If it is so, then clearly it means that the foolish disposal of the assets of the Commission will come to an end and that the parcels service and the meat organisation of British Road Services will not be sold off. If the Minister sells these off, that will definitely be a change in the structure and a further loss of revenue to the Commission, and mean the prevention of the fulfilment of its estimates. So I trust that the Joint Parliamentary Secretary will give me an assurance when he replies to the debate that the Government have every intention that these assumptions can be accepted by the Commission and will not be departed from.

The final assumption refers to financial discipline. Stress was laid by the Minister today on the fact that there is to be no element of subsidy in the financing of the Commission by the Government. It is said that this must not be held, or should not be held, to be a subsidy. I think we are deceiving ourselves if we think, and the Government are deceiving themselves if they think, and that the Commission is deceiving itself if it thinks that there is no element of subsidy in this financing of these deficits by Government funds.

Since the amount of these loans which are to be made to meet the deficits are highly problematical, and since by 1961 or by 1962 they may amount with interest to between £300 million and £400 million, it seems to me that this increased liability will be such that it is most unlikely that it will be in the power of the Commission to repay them. Even if it endeavours to do so, it will be burdened with an obligation which will hamstring its operations. Therefore, one must not shut one's eyes to the fact that there is an element of subsidy here. Government assistance is being given. It is disguised by the fact that an obligation and a liability remains.

Of course, in effect the person who is being subsidised is the transport user. As the transport user is to continue to receive transport at below the economic cost by the making up of the losses of the Commission by the Government, as the present transport user is to be subsidised because transport is being sold to him at less than cost, the unfortunate user of transport, when surpluses are earned, will suffer reversely, for he will be paying more for his transport than cost to repay the subsidy which is given to the transport user today. This seems to me rather crazy economics, but it may be unavoidable.

To sum up, while we on this side of the House accept that some form of financial assistance is essential, unfortunately, to enable the Commission to meet its prospective deficits, we do not consider that this Bill provides the full answer or is necessarily the best method. It leaves the Commission with a substantial burden of debt in addition to its central charges, and the Commission may be unable to meet that debt in the future. The Government, in our view, are largely responsible for the poor financial position of the Commission because they have lacked a constructive transport policy; they have abandoned all idea of a planned, unified transport system; they have disposed, at a capital loss, and with permanent loss of revenue, of that most profitable section of the Commission's undertaking; and they have interfered unjustifiably with the Commission's commercial operations. They have done all that and put nothing in its place.

These proposals are necessary, but they are no substitution for a constructive transport policy, which we still await from the Government. The Opposition regards the proposals in the Bill as no more than a temporary measure to tide the Commission over this transitional period. On its return to power, the Opposition will seek to restore the Commission's fortunes by again embarking upon a constructive transport policy aimed at rebuilding a unified and publicly-owned national system. Fortunately for transport and its users that day is not far off.

6.1 p.m.

Mr. Ronald Russell (Wembley. South)

I hope that the hon. Member for Enfield, East (Mr. Ernest Davies) will forgive me if I do not follow him in any of his political implications. The longer this subject can be kept out of party politics the better for the railways and everybody concerned. Nor do I intend to follow the hon. Member to a great extent into the financial aspect of this matter, but there are some points in the White Paper on "Proposals for the Railways ", for which the Bill is designed to provide, to which I should like to draw attention.

The first point that interests me is the paragraph in page 16 of the White Paper headed "Passenger Traffic," which, I am glad to see, contains a sentence to the effect that one of the principal objectives of the plan for improving the rail passenger services is To make still faster and safer the longdistance services of British Railways and to make them more comfortable, clean and punctual, thereby enhancing their competitive power and profitability. A good deal of progress has been made in making the railways faster in the last few years. There is a further sentence to the effect that whereas in 1953 only 20 express trains had a scheduled start-to-stop speed of over 60 m.p.h., that number has gone up to 58 in 1956. This is good progress.

I am sure that most of us were glad to see that when the Eastern Region introduced the Talisman service between London, Newcastle and Edinburgh a few months ago it had a speed not very much short of the speed made by the Coronation in the brief pre-war years when our railways achieved, by means of two or three trains, the fastest services that we have had.

I notice, also, that some of the coach stock of the old Coronation seem to be used in the Talisman service. Possibly the present speed of the Talisman is only a temporary one. It is 40 minutes longer from London to Edinburgh than was the old Coronation in pre-war years. Let us hope that we shall soon get back to that speed. I believe that I am right in saying that the Coronation and several similar trains like the Silver Jubilee used to have tracks cleared two sections ahead instead of the normal clearance of one section ahead for express trains.

I am also glad to see a reference in the White Paper to punctuality, because I think that that is more important even than high speed. There is nothing more irritating that to find an express train arriving half-an-hour and possibly one hour late at its destination, thereby perhaps causing passengers to lose connections and generally inconveniencing people who have other journeys to make.

There has been a considerable improvement in express train time-tables in the last few years, except possibly on Saturdays and Sundays. A few weeks ago I returned from Sheffield on a train which was 25 minutes late at its second stop at Luton. There had been no stop of unusual length at Leicester. Presumably it just did not go fast enough. I do not know whether its late arrival at Luton was because it had been burdened at Leicester with a large number of passengers travelling to a football match in London, but I should not have thought that an express train should have been so affected.

I know that there are often good reasons why services on Sunday do not keep time. Delays are often caused by repairs to the track, but I feel that Sunday services generally are probably less punctual than the weekly services. If there are services on which it has become impossible to keep the time more or less consistently, it is better to lengthen the schedule and give a truer picture in the time-table of what is likely to be the time of arrival. That would be far more satisfactory to passengers who, otherwise, are apt to have all their calculations thrown out.

I am sure that all hon. Members are glad to see the subject of cleanliness mentioned in the White Paper. There has been a falling off in this respect in post-war years compared with pre-war. I know that there are reasons, such as the shortage of staff. Practically the only country in recent years in which I have seen consistently clean railway engines is, strange to relate, the East German Communist Republic, where I suppose there are few engines compared with the numbers in this country and the number of electric engines in Europe generally. These engines were spotlessly black. [An HON. MEMBER: "Black with what?"] Black paint, with the wheel rims picked out in red.

I cannot help feeling a certain amount of disappointment at the rate of progress in electrification which the White Paper indicates. I am not suggesting that anybody can be blamed for that, for the White Paper shows some of the difficulties with which the country has been faced in post-war years. I see that the highest rate of electrification is to be reached in 1962, at 1,000 track miles a year. I believe that the total track mileage of British Railways is about 53,000. I do not know how many miles have been electrified so far, but I do not think that I should be wrong in guessing that the mileage is between 5,000 and 10,000. That leaves an enormous gap to be filled. At a rate which envisages a peak of 1,000 miles a year in 1962, it will take a long time to fill that gap.

I cannot help contrasting this with the rate of electrification in various continental countries. I know that it would be utterly unfair to compare Switzerland or Sweden with this country. Neither country suffered to anything like the extent that this country suffered in either of the two world wars. Both were neutral throughout. Leaving them aside, we are confronted with Belgium, Holland, France, Italy and Western Germany, all of which were occupied by the enemy during the last war, and two of which were enemy countries. Great progress with electrification is being made in those countries, particularly in Holland and Belgium. I know that Holland's railways were badly destroyed and that electrification has gone hand in hand with almost completely new equipment.

Mr. Collick

The hon. Member has implied the answer to his own question. Is it not the case that the countries which he has mentioned have been able to go ahead because they have had the capital resources made available to them? Unfortunately for British Railways, in post-war years the Government have not provided those resources or enabled the railways to obtain them.

Mr. Russell

I appreciate the point made by the hon. Gentleman, but I think he will agree that it applies to Governments of both political parties, and that there have been great demands for capital resources on every hand.

Many of us here who are taking an interest in this Bill also take an interest in the road programme. There, again, it is a question of capital commitments, but I cannot help wondering why those countries, two of which were defeated in the last war, and the other three allies occupied by the enemy for a long period, have managed to do it, whereas we have not. It is a matter of regret rather than of complaint, but I wonder why?

It may not be long before passengers will be able to travel on an all-electric service from the Hook of Holland to Vienna. There is only one gap in Belgium and Western Germany, from Lié00E9;ge to Mannheim, which is not electrified. This represents great progress compared with the period before the war. How long will it be before we are able to travel 400 miles, which is less than half that distance, between London and Glasgow or London and Edinburgh? I fear that it will be a long time according to this programme. But there is hope in another paragraph of the proposals which suggests that other plans may be put forward that might hasten this progress. I hope we shall hear before long something about those other plans.

There is also a paragraph about level crossings. It is astounding to think that no less than £1 million a year is the cost of maintaining attendants at the level crossings. I see that the Transport Commission is asking for the abolition of the statutory provision that attendants must be provided and will pay due heed to the needs of safety. I assume that that would apply mainly to branch lines where there is not much traffic, or even to main lines where there is not much traffic on roads crossing the track. I hope that this can be tied up with the road programme, because a certain amount of progress was made in the inter-war years, and also in the post-war years, by replacing railway crossings with bridges or tunnels. I am thinking especially of the Retford area, before the war. It seems to me that £1 million a year is an enormous outlay and I am sure that a good deal of saving could be effected, despite the expense of bridges. which, I know, cost a great deal.

I want to ask a question about the use of redundant branch lines in which my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallet) is interested. Can any use be made of the beds of former branch lines where the track has been taken up? I am thinking of then-use as one-way roads, for instance. It seems a waste not to use reasonably straight stretches of track which have no violent curves in them. Has any attempt been made to offer them to anybody? Have any applications ever been made for their use? If nothing is forthcoming, would it not be worth growing something on them? I take it that the land is still owned by the Transport Commission. Has the Commission made any attempt to dispose of this land, or does it intend to keep it?

Lastly, I have a complaint to make about the use of English. There is this shocking sentence in page 35 of the White Paper: During the period 1956–62, about 7,700 gangwayed locomotive hauled coaches for main line operation will be built. What is the significance of the word "gangwayed "? I suppose it means what we normally call a corridor coach, but I wish that such horrible expressions could be kept out of reports. The term "corridor coach" is expressive, whereas a gangway suggests something outside the coach and seems to convey that the railway staff are walking along the roof while the passengers are inside.

I am sure that every hon. Member here wants to see this Bill passed into law. I hope that the finances of the British Transport Commission will improve year by year and that the proposed programme of modernisation will be successful.

6.16 p.m.

Mr. Frank McLeavy (Bradford, East)

The hon. Gentleman the Member for Wembley, South (Mr. Russell) drew a fair picture of the comparison between the development of the rail system in this country and that of some continental countries. Many people who travel abroad wonder why the continental train services can be much more efficient in many ways than ours. The reason for this was put fairly by my hon. Friend the Member for Birkenhead (Mr. Collick), when he said that the finances made available for rail services on the Continent were far in excess of the financial assistance which Her Majesty's Government, over many years, was prepared to give.

Many of us would agree that even before the war a considerable amount of money was needed to bring our railways up to the proper standard, and that for many years they worked under the grave handicap of inadequate financial resources. I well remember how the railways asked for a square deal over the years and I felt that they made out a strong case for Government assistance.

The problem lies in the fact that not only long before the war, but since the present Government came into power, in 1951, no real attempt has been made to approach the question of national transport from the basis of integration and co-ordination. In 1947, the Labour Government made a serious attempt to grapple with this great problem in their Transport Act. We felt that, to be successful, there must be co-ordination of road and rail transport in such a way as to give not only to passengers, but also to freight, a first-class national service at reasonable and competitive rates.

The Conservative Government, in spite of finding that the Commission was doing a good job of work in building up the national transport system in a manner conducive to the interests of both industry and the travelling public, decided to play about with road haulage. In accordance with their pledge given to the Road Haulage Association, they began to denationalise the road haulage section of the industry. I told the Government then—it is appropriate that one should speak of this today—that the time might come when we should require all the co-ordination of transport that was possible in order to overcome financial and economic difficulties. That time has now come.

In the days to which I am referring, the present Colonial Secretary, who was then the Minister of Transport and Civil Aviation, adopted the "Drink and be merry" attitude, saying that it did not matter if the Government interfered with the co-ordinated system. The right hon. Gentleman was delighted with himself and was reassuring about the position, stating that little men were waiting to go into the industry. Nevertheless, he and his colleagues contributed to conditions in the transport industry the effects of which we are now feeling.

The White Paper, which was no doubt conceived in a desire to overcome existing financial difficulties, contains a considerable amount of wishful thinking. The Government's assumption is that by 1970 the Commission will be making a profit of about £50 million a year. The circumstances of the future are so unsure that it is impossible for any forecast of that character to be more than a mere speculation. We ought not to regard the estimate of £50 million profit in 1970 as a certainty or even as likely to be obtainable.

I do not like to feel that the Commission will continue to carry a very heavy financial burden. I agree with my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) that it is unrealistic to expect rail transport to carry a heavy burden of debt and to accumulate debt year after year. If it does, when it makes a profit—presumably the profit will be made as a result of the efforts of the whole staff, from the lowest paid workers to the management—it will not be able to say to those engaged in the industry, "We are now making a reasonable profit and can afford to pay you rates of wages and give you conditions of employment which are far better than at present." Instead it will have to say to the railway-men, "We have a very big deficit to clear off, and cannot afford to increase your wages and give you better conditions of employment."

The Minister said that it was well within the power of the railwaymen to wreck the scheme. What does that amount to? Railwaymen are just as much entitled to receive increases in wages on account of the rise in the cost of living as are other sections of the community. If prices rise, is the railway industry to be selected as the one section of industry which must not apply for wage increases because of the industry's financial state? We should be treading on very dangerous ground if that were so. I have not been connected with the railway side of the transport industry, but I have never regarded railway employees as being paid an adequate rate for the job which they have done—in many cases, it has been a fine job—in the transport world.

It may well be that the introduction of the diesel railcars will, in many cases, not materially affect ordinary road transport vehicles, but if diesel railcars are introduced indiscriminately, and without regard to existing services provided by road transport, it may well mean that the railways will benefit by skimming off the cream of transport traffic. It may be that road passenger transport vehicles will be left to provide the services between townships and rural areas, while the longer-distance inter-city traffic will be creamed off by the new diesel services. This is a very serious matter from the road passenger transport point of view.

It is appreciated that the railways have to modernise their equipment and services and that the introduction of diesel train services in certain areas will be a tremendous advantage not only from the point of view of the economy of the railways but to the travelling public. However, unless the diesel services—I am referring to the smaller types of diesel railcar are made complementary to, rather than competitive with, other services, a serious financial position will be brought about in the road passenger transport industry.

Mr. Molson

I am listening with close attention to the hon. Gentleman and I should like to know to exactly what he is referring. Is he referring to diesel multiple unit vehicles or to what the Commission says that it hopes to introduce at some time—lighter vehicles on branch lines?

Mr. McLeavy

I am referring not to the diesel engine to be used for journeys such as from London to Manchester but to the small diesel train to be used on local lines, such as between Bradford and Leeds.

If road passenger transport services are expected to provide services for country areas and small townships while the railways are allowed merely to cream off the through traffic on the major routes, we shall be in a very difficult position. It must be borne in mind that 60 per cent. of road passenger routes and 40 per cent. of the miles are run at a loss. In North Wales, the loss per mile varies from 9d. to 1s. As the Minister knows very well, there is also a heavy burden of taxation both on seating capacity and in the use of oil. Those are extremely important factors in the running costs of passenger vehicles.

I ask the Minister to see whether the introduction of diesel cars in the circumstances I have endeavoured to describe cannot take place after consultation with road services about the effects of such an introduction on the road passenger side of the industry. There is no point in merely building up the railway traffic at the expense of road passenger traffic. We want to see the railways attracting traffic which they do not now get because of the high cost of travel.

The economic difficulties which confront the road transport industry are such as to entitle us to ask the Minister not to do anything in this or in any other Bill which will reduce the ability of road passenger transport undertakings to meet their financial responsibilities. We want to continue, as the Minister knows, to provide the services in rural areas and for small towns, but we are entitled to ask for a square deal.

I do not want to appear to be in opposition to the development of the railways, because they are essential to the well-being of the community. I wish them every success in the efforts they are making to become modernised and to bring back some measure of prosperity to the country, but I hope that full consideration will be given to the need for thinking in terms of co-ordination, of making services complementary to one another rather than too competitive.

6.35 p.m.

Colonel Sir Leonard Ropner (Barkston Ash)

The House will have gathered from the speeches which have already been made that there is general agreement that the Government should be empowered to take some action to ensure that at a future and perhaps problematical date the railways shall become efficient and financially self-supporting. The pamphlet "The Modernisation and Requirements of British Railways" issued by the Transport Commission last year, and the White Paper, "Proposals for the Railways ", also issued by the Commission, in October, are both imaginative and convincing documents, though I must confess that I do not fully share the optimism of the Commission and the Government about the future finances of the railways.

Sir Brian Robertson, as Chairman of the Commission, has asked for assistance of a kind which avoids any element of subsidy. We shall see; but, meanwhile, I venture to foretell that this is by no means the last occasion on which the House of Commons will be called upon to consider financial assistance to British Railways. Meanwhile, we can all join in wishing luck and good fortune to Sir Brian Robertson and his merry men, in all ranks of the British Transport Commission.

It has already been said in the debate that the employees of the Transport Commission may wreck our hopes. Equally, they may well triumph in the enterprise upon which they are setting out. I, for one, want to repeat that I wish them the best of luck in the endeavours that I know they will make, perhaps largely as a result of the financial assistance which they are receiving through the Bill.

I shall certainly vote for the Second Reading of the Bill, but, before doing so, I am most anxious to express the hope that the assistance which British Railways are to receive—£450 million—will not be used to cripple or even to crush competitive forms of transport, namely, road and sea. I hope that the hon. Member for The Hartlepools (Mr. D. Jones), should he be called to speak, will find among the battery of notes which he has before him some references to the coastal shipping which so closely affects the men and women he represents.

There is very real apprehension among those responsible for coastal shipping. In page 4 of the White Paper, under the heading: The Present Position is the sentence: The Commission have to a large extent inherited the position in which they find themselves. The difficulties arising from the pre-war depression, from the war itself and from post-war problems are also shared, perhaps to an even greater extent than by the railways, by coastal shipping.

The House will perhaps be surprised and, I hope, a little grieved to learn that the number of ships comprising the dry goods cargo fleet of this country has fallen from 1,506 in 1939 to 822 in June of this year. The fall has been especially severe among the smaller ships. In page 15 of the White Paper attention is called to the value of our railways to national defence and in emergency, but at Dunkirk it was ships that we wanted, especially little ships.

In parenthesis, I may point out that ships are always wanted in national emergencies and national crises. Coastal shipping is not the only section of the Mercantile Marine which is falling in numbers in the face of competition. Ocean-going shipping is also suffering, but this is by reason of foreign competition and not through any attack by British Railways. I suggest that my right hon. Friend should have close consultations with the First Lord of the Admiralty and the Minister of Defence about this fall in the number of small ships. I feel that both the First Lord and the Minister of Defence will join with me in urging that when the Bill becomes an Act it should not be used in any way to increase the difficulties of coastal shipping.

That the fears of those who have the responsibility of managing coastal shipping may be justified is abundantly clear. They arise from a number of statements in the White Paper and the pamphlets to which I have already referred—statements which, at the best, are a little ambiguous and, at the worst, may contain a very real threat that public funds may be used to accentuate the difficulties of coastal shipping. I understand that the Minister has very recently agreed to meet representatives of coastal shipowners, and I will, therefore, say no more now than to express the hope that the Joint Parliamentary Secretary will be able to give an assurance that most careful consideration will be given to the views of coastal shipowners and that, if necessary, safeguards will be inserted in the Bill in Committee.

6.42 p.m.

Mr. David Jones (The Hartlepools)

I welcome the Bill so far as it goes but, like my hon. Friend the Member for Enfield, East (Mr. Ernest Davies), I do not think that it goes nearly far enough. I share with the hon. and gallant Member for Barkston Ash (Sir L. Ropner) the concern which has been expressed about our coastwise shipping. I believe that our coastwise shipping; our inland waterways; our road haulage services and our railways, used in their proper ways, can make a contribution towards our economic life.

However, I am rather surprised that the hon. and gallant Member apparently wants a measure of co-ordination between railways and coastwise shipping. I would remind him and his hon. Friends that the 1947 Transport Act was designed precisely to achieve that end. It contained provision for the co-ordination of road and rail transport, and for a close degree of co-ordination between the railways and coastwise shipping. Since 1951, by a series of steps, that provision for co-ordination has been destroyed.

The hon. and gallant Member knows as well as I do that the dock situated in the constituency which I have the honour to represent tranships thousands of tons of coal each year from the coalfields of Durham to the Thames and the South-East Coast. The coastal shipping involved does a magnificent job. It is true that the speed at which it travels is less than that of the railways, but the job is done much more cheaply and the ships bring far larger cargoes to the Thames and the South-East Coast. The cost of electricity and gas in London and the South-East of England would probably be considerably higher were it not for the fact that we were using coastal shipping for this purpose.

I agree with the hon. and gallant Member that co-ordination is necessary but if one believes in competition one cannot ask for co-ordination at one moment and then go into the Division Lobby at another to destroy the coordination which has been set up. As the hon. and gallant Member knows, the 1947 Act sought to achieve that co-ordination step by step, but it has since been abolished.

I want to ask one or two questions about the other phases of co-ordination which, as far as I can see, are in serious danger of being destroyed by the Bill. I was not altogether surprised when I heard the right hon. Gentleman talk about the closing of one phase and the opening of another. One of the things that he does not want to do is to hold an inquest into what has happened in the rail transport industry in the last five or six years, because, if he does, he knows quite well that the evidence which can be adduced to indict him and his predecessors is formidable.

On this occasion, it is proper to look back over the years and see what has been the result of the policies pursued by the Government since 1951. On 8th February, 1955, we had a debate on the Transport (Borrowing Powers) Bill. During that debate I ventured to make a number of calculations based upon the available evidence, to try to determine what would be the position of the Commission at the end of 1955. In winding up the debate, the Joint Parliamentary Secretary said: However, we take the view "— and I presume that he was speaking for the Government— that the estimates which have been put forward by the two hon. Gentlemen opposite are more than they need be and more than we think they will be. We are relying upon an improvement in the position as a result, first, of the modernisation scheme coming rapidly into operation. I am sure it was due to a misunderstanding that the hon. Member for The Hartlepools suggested that the modernisation scheme will begin only after five years."—[OFFICIAL REPORT, 8th February, 1955; Vol. 536, c. 1846.] What I said, in fact, was that it would only begin to show results after five years.

What is the position tonight? It is shown in page 16 of the Commission's share of the White Paper—we had better be careful on that point—where it points out that: The plan is spread over fifteen years; it is conceived as an integrated whole, and is not properly remunerative unless treated as such, but in its detail it is nevertheless flexible. It is already well under way; a few projects are already complete, and a great volume of work is now in progress, which will be completed, and begin to fructify, in a few years' time. It must have been patent to anybody who knows anything about the railways that the result of the modernisation plan would not be apparent for a number of years. It looks now as thought my hon. Friend the Member for Enfield, East and I were very much nearer the mark in February, 1955, than was the Parliamentary Secretary. Of course, we cannot altogether blame the right hon. Gentleman except in a corporate capacity, because he was not then the Minister of Transport and Civil Aviation. But he has been a member of the Government for a considerable time. The right hon. Gentleman knows that on at least three specific occasions, and generally over the whole period, there has been political interference with the operations of the Commission.

The right hon. Gentleman will remember, as will most hon. Members, and as my hon. Friend has reminded us today, the political interference of 1952; when the London Transport Executive was denied the capacity to earn an extra £19 million a year. We know now that the disturbance caused by the 1953 Act has been considerably more serious for the Commission than we were led at one time to believe. If anyone requires evidence of the general effect of the 1953 Act and its operations on the Commission's undertakings, it is to be found in the Seventh Report of the Road Haulage Disposal Board.

In that Report, on 30th October, 1956, in page 4, it states: The 1953 Act laid the duty of disposing of its road haulage undertaking on the Commission itself. We think that in fairness to the Commission this report should put on record some indication of the administrative task thus imposed on them, a task which had to be fulfilled while also carrying on their road haulage undertaking without avoidable disturbance to the transport system of the country. Apart from the failure of the Transport Levy to measure up to the loss I wonder whether it would be possible for a mathematician to calculate how many millions of pounds more this publicly-owned authority lost by the general disturbance which occurred as a result of having to call in its vehicles and all the work involved in that operation. What a dismal story is told in this Report of the Road Haulage Disposal Board. Far better would it have been had the party opposite not been quite so doctrinnaire on this policy, but had tried to understand the industry a little more, and not pandered to the blandishments of the Road Haulage Association.

Again, in the early part of this year, there was interference, and once or twice the right hon. Gentleman tried to ride off by saying that there had been agreement between the Commission and himself. But we know now from a document circulated by the Commission to its employees, that it wanted to undertake the responsibility of increasing its charges to such an extent as to provide £37 million in a full year. But the right hon. Gentleman was so convinced that his case was right that he did not make the direction he was entitled to make, but persuaded the Commission to abandon its claim to £37 million and be content with the sum £20 million—presumably in return for the Bill which we are now discussing.

Quite apart from the specific instances where there has been interference with the responsibility of this publicly-owned authority to balance its accounts taking one year with another and acting on a commercial basis, there has been the general policy of the Government concerning prices. When Ministers of the Crown seek to justify in the House the reduction or the abolition of subsidies on foodstuffs—we saw it a week ago tonight—the constant cry is that it is better that these commodities should find their economic level than they should be kept at an artificially low level by the injection of a subsidy into the price.

We have heard that from the Chancellor of the Exchequer, from the Lord Privy Seal, from the Minister of Agriculture, Fisheries and Food, and from a number of Parliamentary Secretaries. But when the Transport Commission seeks to apply that principle of economics to its service, and to provide its commodity at an economic level, the right hon. Gentleman steps in and says that it is not in the interest of the nation that it should be done.

That is precisely what he said in March of this year, that the Government had taken the view that they would be justified, in the national interest, in asking the Commission to take a course which would involve an exception to the general policy. I wonder why it is wrong for transport, as a commodity, to be sold at the economic price, but that there should be no element of subsidy when other industries carry goods at prices lower than the economic level?

If that is a sound principle for transport why is it not applied to bread, for example, or milk, or tea, or any other commodity? If it is a good policy that consumable foodstuffs should be sold at their economic price level, what is the basis for the argument that transport should be provided at a cost considerably below the economic level?

What argument can there be for suggesting that the railwaymen should have to provide this service in the transport industry under conditions which are governed by the fact that the income of the industry in which they are employed does not meet up to its expenditure and that, therefore, they have to face worse conditions than would otherwise apply? What a pity it is that the Minister of Transport and Civil Aviation did not listen to the present Minister of Fuel and Power. Before he became Minister of Fuel and Power the right hon. Gentleman, who represents the constituency of Hall Green, was a back-bench Member.

On 3rd February, 1955, the right hon. Gentleman took part in a debate in this House on British Railways and he said: We in this Chamber, on both sides of the House, have imposed upon the Commission an obligation to make its ends meet. Having done that, and having in the 1953 Act legislated for a form of competition' against the railways, we cannot, at the same time, block and hinder the railways if they endeavour, for instance to close branch lines or to end uneconomic concessions in fares. It is easy to say that. Psychologically, it is difficult to act on the precept. Nevertheless we, too, have to think of the railways as a commercial proposition. That being so, we must not think in term's of political interference in. the affairs of the Transport Commission."—[OFFICIAL REPORT, 3rd February, 1955; Vol. 536, c. 1354.] I hope that the Parliamentary Secretary will ask his right hon. Friend to have a look at that statement.

He went on to say: It is laid upon the Commission to pay its way, and in so far as there is political intervention that onus upon the Commission is weakened and the Commission has an alibi or a pretext elsewhere for its inability to pay its way. I do not think that we ought to do that."—[OFFICIAL REPORT. 3rd February, 1955; Vol. 536. c. 1354.] In that case, the responsibility for some of the losses incurred by the Transport Commission falls fairly and squarely on the shoulders of the Minister of Transport.

What does the Minister seek to do by the Bill? Does he think it will solve the problem, or is he merely buying time at the expense of the Commission? He is just delaying a solution for a few years; but the problem must inevitably be faced. To judge by the present political situation it will have to be faced by an alternative Government. I wonder whether that is what the Minister is thinking.

The Minister's interference has already cost the Commission many millions of pounds. Let us aggregate the total interference. The results of the 1953 Act, the general disturbance, the many millions by which the levy plus the sales fell short of the cost of the fleet that has been disbanded, the £1.9 million per year which the London Transport Executive was denied in 1952, and the £17 million which the present Minister denied to the Transport Commission in March this year, make a formidable part of the £120 million by which the Commission will be "in the red" by the end of this year.

In the White Paper, the Commission now says that it hopes to be in balance by 1961–62, but it lays down five specific conditions which must be observed if it is to be in balance. Upon a careful reading of the figures given in the White Paper by the Transport Commission it is clear that the Commission is dependent upon the five conditions being met. They are: first,

That the Commission will not be prevented from adjusting their charges without delay at any time to cover increases in costs, should they consider it expedient to do so. I interrupted the Minister earlier today to ask whether that meant that in future he would not interfere with the Commission when it sought to adjust its charges to cover increases in costs.

Like my hon. Friend the Member for Enfield, East, I am far from satisfied with the Minister's reply. Do the words I have read out mean what I understand them to mean in plain English, that it is for the Commission to decide, with, of course, the Transport Tribunal so far as it applies, and that there is to be no further interference of a political character by the Minister or his successors? If, as the Minister claimed in reply to my interjection, that he is still entitled to interfere in the way that he interfered in March his year, it makes nonsense of the whole of the White Paper.

The next condition is: That the Commission will be free to operate on flexible systems of charging and to determine on a reasonable basis the scale and scope of the services to be provided. Does that mean that the Commission is to be free to withdraw as quickly as may be possible all the unremunerative services which it runs, without any political interference either from the Minister or any of his supporters?

The next two conditions are: That the necessary resources of all kinds will be available to enable the Commission, in co-operation with industry, to carry out their Plan for the Modernisation and Re-equipment of British Railways according to programme. That the Government policy regarding the framework within which the Commission operate will remain as at present. Does the latter condition mean that the framework of the Commission's services is to remain in precisely the condition that it is at present or that, if sufficient pressure is exerted on the Minister from the back benches behind him, he will seek to implement that part of the 1953 Act which compels the Transport Commission to sell so much of its holdings in road passenger undertakings as to make it a minority shareholder? If not, is the Minister saying that he does not now propose to implement that part of the 1953 Act? We would like to know.

While I am on this point I would ask a question. In the 1948 Report of the Transport Commission a figure of approximately £10 million is shown as the value of the shares owned by the previous four main line railway companies in road passenger services, which brought in a revenue of between £2½ million and £3 million. As I understand the matter, the central charges for that £10 million are now earmarked as part of the central charges that have to be met by railway operations.

If, as the Minister said earlier this afternoon, a surplus earned in any one year from the passenger-carrying services operated in the provinces by the B.T.C. is to be divided from the gross deficit, in order to ascertain the net deficit of the railways, is that £10 million to be taken out of the central charges and transferred to the road passenger services; or are the charges to be met by diverting any profits which the service might earn?

It is not expected that the railways are to meet it both ways, that if they have to meet the central charges they ought to have the advantage of the profit return. If the profit return is to be taken away from them the central charges ought to be transferred. I believe that these charges amount to considerably more than £10 million, which was the figure in 1948 when the railway companies were taken over. Since then, the Transport Commission has acquired a large number of other services, so the figure is probably very much higher. I would like to have an explanation on this point.

If I understand this complicated business correctly, by 1961–62 the Commission will have to meet a £100 million central charge, comprising about £40 million interest on the cost of the modernisation scheme, plus £15 million or £20 million for the servicing of the deficits which are to be incurred from 1957 to 1962. If my calculation is correct—like a very eminent right hon. Member of this House, these "damned dots" get me into difficulty very quickly—the central charge will not be far short of £150 million by 1962 or 1963. Therefore, one of the first charges to be made upon the revenue of the Transport Commission will be a sum of about £100 million for central charges.

This afternoon the Minister said, and I agree with him in this, that the mere physical modernisation of the railways will not, of itself, give us an efficient and modern railway system. That system must be co-ordinated with the natural skill and ability of from 450,000 to 500,000 railwaymen. Does the Minister really believe that he will inculcate into those people a spirit of adventure, a spirit of doing their best for this industry, if they know that in any one year £100 million is to be set aside, right at the beginning of the distribution of any gross profit there may be, to meet central charges; and that a substantial proportion of that deficit has been incurred in the years from 1951 to 1956 by the political interference of a Conservative Government?

Does he really believe that it is to that kind of inspiration that the railway men are likely to respond? Does he really, in his heart of hearts, believe that that will help the matter at all? Had we not better face this problem fairly and squarely now? Had he not better do something drastic and radical with this deficit now, in order to give to both this industry and those employed in it an opportunity of giving of their best?

While I welcome the Bill as far as it goes, it does not go nearly far enough. It does not make that kind of radical change which one thought was envisaged by the Minister when he spoke to us in March of this year. It does not do anything of that sort. I want to utter this word of warning. This Bill will not meet the situation on the railways. A much more radical change is necessary in the immediate future, and it will have to come about if we want the railways to succeed. That this country cannot be economically great without efficient railway services, stands out a mile. Therefore, I suggest to the Minister, and to his right hon. Friend, that they had better start thinking of a better solution than this as quickly as possible, because this will not solve the problems of the British Transport Commission.

7.15 p.m.

Mr. Rupert Speir (Hexham)

The hon. Member for The Hartlepools (Mr. D. Jones) said that he did not want to be doctrinaire, and I agree with him that it is very undesirable to be doctrinaire in our approach to these problems. But I do not think that he lived up to his own maxim, because he made a very doctrinaire speech. However, I know that he is very attached to the railways, and has himself given them long and loyal service in the past; and I am sure that, on second thoughts, he will welcome this Bill, even if it does not go quite so far as he would like to see it go.

I speak as one who has considerable attachment for the railways, although I readily confess that since they were nationalised I have felt bound to make considerable criticism of them. It has been very discouraging in recent years to have had so many disparaging remarks made by foreigners about our railway system. There is no doubt that our railways, before they were nationalised, were second to none in the world. It is only recently that they have come in for such contemptuous remarks.

Mr. Arthur Skeffington (Hayes and Harlington)

Not quite so recently.

Mr. Speir

I remember the B.B.C. last year intervewing a distinguished American who had lived here for many years. He was asked what he liked, and what he disliked about this country. I am glad to say that there were only two things which he disliked; one was the climate, and the other was British Railways. We cannot do much about our climate, but we can—and I am sure that if this Bill goes through we shall—do a great deal to improve British Railways.

Mr. Skeffington

Is not the hon. Member being a little unfair to the reputation of British Railways since public ownership? Surely he remembers that Charles Dickens himself wrote a sketch on the "London Smashem and Turnover Railways," which deplored the way in which the railways were being run a hundred years ago?

Mr. Speir

I was not there then, but I do remember that in pre-nationalisation days, great pride was taken in the railways by everyone concerned, and I hope that that pride will be restored.

I do not want to make a doctrinaire speech, or to criticise nationalisation. We accept nationalisation as a fact, as we accept also as a fact that during the war years the railways rendered a tremendous service to their country. Their equipment was then strained and stretched to the utmost; and since the war, they have not been allowed, as have the French railways, to spend large sums on capital re-equipment.

Mr. Collick

That is the full explanation, not nationalisation.

Mr. Speir

It is part of the explanation.

I am saying that our railways have run down. I will also say that there has been a very considerable improvement in main-line operation in the last year or two. The main-line trains are now running much more punctually, they are much cleaner, the food provided is far better, and the trains are even faster—although not as fast as they were in prewar days. There has been a very considerable improvement in those services, and I should like to pay my tribute to the British Transport Commission for that improvement.

I cannot, however, say the same about the parcels and freight service as yet. It is still incredibly slow. It takes a long time for any goods to turn up, and if one does commit anything to the railways one is really apprehensive as to whether or not it will ever arrive at the other end.

Mr. Sparks

I would remind the hon. Gentleman that the Minister said, in praise of the railways, that they had a twenty-four hour service from many parts of the country to the London docks. Therefore, in any principal part of the country, any item for shipment handed to the railways today will be at the docks tomorrow. What could be better than that?

Mr. Speir

It is very unfortunate, but I do not always want to send my goods to the London docks. If I have goods for the North of Scotland I do not want them to turn up at the London docks.

I agree that, because the Commission was not allowed to get the necessary capital equipment, it could not, up till now, introduce really fast freight trains, but under the Bill it will get the money to enable it to introduce more modern equipment, and that will help it to provide a better service for industry and commerce. But do not let us pretend that we have a good freight service at the present time.

However, what is lacking is not only the equipment but an imaginative approach. The local Stationmasters and agents could be given far more discretion. At the moment, even in quite small matters, they are absolutely hamstrung by regulations, and cannot go out to attract traffic to the railways. I believe that they could be given, and should be given more encouragement, because we are living in a highly-competitive world. Although I am quite prepared to see a certain amount of co-ordination in our transport system, I do not think that we should eliminate competition altogether.

I should like to say a word or two about this old subject of the closing of branch lines. It has been going on now for a good many years. For over eight years, it has been pursued fairly ruthlessly, and over 2,000 miles of branch lines have been closed down. I was glad to hear from the Minister this afternoon that the diesel units which have been introduced by the Transport Commission are proving far more satisfactory than was originally expected, and also that they are bringing in much more revenue than was estimated. But it was rather bitter news for those who live in rural areas to learn that only now is the Transport Commission prepared to tell us that it has got some twenty light diesel units which are proving successful.

We have raised this subject time and again. We have recommended that the British Transport Commission should experiment with these light diesel units, and we have been told time and again by the right hon. Gentleman the Parliamentary Secretary that those experiments have proved unsuccessful and that we could not hope for any salvation for the branch lines by the adoption of these light diesel cars. By the time that those experiments have been concluded, all the branch lines concerned, I should think, will have been closed down, and it will not then be of much use to introduce these units.

I should like my right hon. Friend to bear in mind that there are some lines which have been closed to passenger traffic but where goods traffic is still running, and I hope that the railways will see whether it is possible to reintroduce some light diesel units on some of these lines which are still open to freight traffic. I have in mind one line in particular, and that is the Hexham to Hawick line—what is known as the Border Counties line along the North Tyne Valley—and I think it would still be well worth trying to introduce a light diesel unit on that line.

We must agree that although many unconvincing excuses have been made for closing down those lines quite ruthlessly, the Transport Commission has not been as ruthless as it should have been in eliminating unnecessary costs on those branch lines. All too often no attempt has-been made to see whether those lines could become, if not remunerative. at least a paying proposition and enabled to hold their own by the establishment of unattended halts, by cheaper forms of level-crossing gates, which could be mechanised as they are in Canada and on the Continent, and by simpler forms of signalling. If the unions will not agree, or if Parliament has laid down restrictions which are now out of date, I wish that the British Transport Commission would say so quite frankly, and ask for revised conditions, if they are necessary.

The impression one gets of these branch lines is that there are still a number of economies which could be made, and that they could be turned more or less into rural tramways. That has not been done, even experimentally; but if only the Transport Commission would try it out on one or two stretches of line, it would have more support and understanding from the general public that it has at present.

I think it is natural and right at a time when men and materials are still limited that the main lines should have priority for modernisation, but I hope that consideration will also be given to modernising the branch lines serving the rural areas. Incidentally, when I talk about branch lines, I mean not the line between Leeds and Bradford, such as was mentioned by one hon. Member, but branch lines serving rural communities, especially in the hill areas where there are poor road systems and where there are wintry conditions to contend with which can be dealt with better by the railways.

British Railways still have a great future. They still have a very large annual turnover. They have a great future if only they will go to it with a will. I am very glad indeed that at long last the railways are to be given the green light to go ahead with their modernisation proposals. I hope and believe that the measures laid down in this Bill will enable them to give themselves a really new look, and I should like to join with other hon. Members in wishing the British Transport Commission and its personnel all success in their great endeavours.

7.25 p.m.

Mr. Arthur Skeffington (Hayes and Harlington)

I have sat in this House during a number of railway debates, but this is the first time that I have had the good fortune to be called. I am very glad because I am by way of being a railway enthusiast, although I have never had the distinction, as has my hon. Friend the Member for Birkenhead (Mr. Collick), of being in charge of an "iron monster" as it dashes through the land—an ambition still denied to me.

I also have an interest in that a large number of railwaymen work and live in my constituency. Some years ago a railway estate was built in Hayes, and I have had the opportunity from time to time of discussing with them, and their trade union branches, and with railway engineers, some railway problems which confront us. I am hoping that the White Paper, and, to some extent, the Bill which we are discussing today, will mark a real turning point in the post-war fortunes of railway transport.

The Transport Commission has laboured from its very inception under heavy financial difficulties. As my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) said during the passage of the Transport Bill, in 1947, on the whole the Commission acquired a "pretty poor bag of physical assets" in respect of the railways. I know that that is not true of all sections of the old railway companies. There were distinguished exceptions, but if one takes one test of their efficiency and of their worth one knows how many of the companies, year after year, paid either very low dividends or no dividends at all.

Mr. G. Wilson

Can the hon. Gentleman tell us to which company he is referring?

Mr. Skeffington

I am quite prepared to give all the details if the hon. Member does not know them, but, knowing his own interest in the railways, I am certain that he does. Many of the railway companies paid very low rates of interest on shares. I am not saying that that is the only test to apply; indeed, that is the last test that I should apply, but it is an indication which I should have thought would have appealed to the hon. Member for Truro (Mr. G. Wilson).

In addition—and nobody can deny this—during the war the railways were subjected to excessive wear and tear. Because of war conditions, that damage could not be made good, and there have been repeated difficulties in respect of capital development. Now we have a vast plan of modernisation which I am sure every hon. Member welcomes. As I say, I hope it means that the railway industry is to begin a new and highly satisfactory chapter. In all the circumstances, I think it is remarkable that the Commission has managed financially to do as well as it has done.

In page 12, paragraph 6, of the White Paper, I notice that in the eight years from 1948 to 1955, the working surplus—that is to say, before taking into account the interest payments—amounted to over £350 million. I think, therefore, there is every reason for believing that not only is the railway system basically sound, but that, given adequate opportunities to modernise, there is every hope for new successes.

My only fear is the one which has already been expressed by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies), from these benches, and, I think, by other hon. Members, that without sufficient central co-ordination there may be disappointing results even from the modernisation plans. In this small, highly congested island there must be some co-ordination between all forms of transport, particularly between road and rail services. If there is not some kind of balance, unfairness and inequalities of service will arise.

I am appalled still at the amount of goods traffic which is sent by road which could quite conveniently, and, from the point of view of the nation, much more advantageously be sent by rail. If it were sent by rail, there would be a considerable saving. At the moment, of course, I am thinking particularly of petroleum, but petroleum is at all times an imported product which costs a great deal and ought not to be wasted; and there would, of course, be a considerable saving in manpower.

Earlier in the year, I had some correspondence with the Parliamentary Secretary and I also addressed a Question to him on this very point. In East Kent, there are a great many paper mills. I have been concerned at the vast amount of heavy paper mill traffic coming along the A.2 and other roads, in an almost continuous stream, from Northfleet, Gravesend, Maidstone, and Sittingbourne. I am told that the firm of Bowaters has, in fact, built a new garage at Sitting-bourne for 100 heavy six-wheeled lorries.

I should have thought that that was largely unnecessary. Every one of these paper mills is close to a river which used to take this traffic on or near to railway tracks. I can see no reason at all why the greater part of this traffic could not quite conveniently go by rail. Much of it comes to London anyway; a great deal is newsprint. There are excellent railway goods yards where the traffic could be received on the banks of the Thames. Of course, it would have to be transported from there to the newspaper offices, but that could be done at night, as a good deal of such work already is. There would result fewer accidents, because, through nobody's fault, continuous heavy traffic does give rise to conditions which lead to accidents, and less traffic congestions. We should have a saving in petrol, oil and rubber, and, above all, we should have a saving in manpower, which is still an important matter.

The Parliamentary Secretary said that he and, I assume, the Transport Commission, are always interested in new business; but I doubt whether very much has happened. I have no doubt that it is much easier and more administratively convenient for the paper interests to have their own transport system, but I do not think that it is in the interest of the nation that they should. At any rate, I hope that some efforts have been made to persuade them to send some of this traffic by rail, for the reasons I have given.

Unfortunately, one does not derive very much encouragement from the attitude of the Government in this matter. Their tendency has been to break up the national transport organisation and such co-ordination as did exist, or, at least, to weaken it. Generally speaking, they are not the exponents of planning in this or anything else. Nevertheless—and I do not think that it is a doctrinaire point—I am sure that this is the kind of object in which we should interest ourselves, and I hope that hon. Members on both sides will think of ways in which we could induce manufacturers and others to send some of this traffic, which is suitable for it, by rail.

I turn now to a subject which was mentioned by the Minister today and which is referred to in page 36 of the White Paper. This is the decision to adopt the vacuum brake as an alternative to the air brake, for freight services. This is a subject which has interested a number of my railway constituents and railway engineers whom I have met. Many of them are surprised at the decision of the Commission to adopt the vacuum brake throughout British Railways. Here again. I had some correspondence with the Minister and his predecessor. As a result, I had an interview, together with an hon. Gentleman from the other side of the House, with the Chairman of the Commission. We were most courteously received and we had a very frank and informative discussion.

Broadly speaking, I think that the view of the Transport Commission is this. If the Commission were starting from scratch, it would be quite prepared to consider the air brake, which, on balance, it considers has advantages; but owing to the fact that some freight wagons are fitted with vacuum brakes it does not think it would be the right policy to have two or three different systems operating together, at any rate, for a time. The Commission wants to run longer and heavier freight trains quickly, even next year, and therefore, on grounds of quick commercial advantage, it has decided to adopt the vacuum brake.

In any case, it does not consider that the air brake is so vastly superior to the vacuum brake. I think that that is a fair summary of the Commission's point of view. Nevertheless, in my opinion, it is an astonishing decision to take. Many distinguished engineers are very disturbed about it. They regard it as a shortsighted policy and not really in the interests of modernisation taken over a long period.

First, I will refer to the Transport Commission's own Report on the subject, the "Report on Continuous Brakes on Freight Trains," issued in October last year. This Report was prepared by a committee composed of the Chief Operating and Motive Power Officer, the Chief Mechanical Engineer, the Chief Carriage and Wagon Engineering Officer, the Director of Research, the Chief Freight Officer and the Assistant Director of Costings, all senior officials of the Commission. I think it would be difficult to find a group of operating railway experts of greater authority or experience.

In Part V of its Report appears the committee's unanimous recommendation: Since, in the committee's opinion, nothing should be done to prevent the possibility of operating trains longer and heavier than at present being run, the committee recommend that the air brake should be adopted as the future standard for all vehicles on British Railways.

Mr. Collick

Was there a locomotive engineman on that committee?

Mr. Skeffington

I expect that my hon Friend is very familiar with the Report. I do not know whether a locomotive engineer was on the committee, but very extensive tests were conducted. In paragraph 79, the committee says: The technical evidence set out in Part I shows that the advantages of the air brake progressively increase as the weight and length of freight trains becomes greater. At paragraph 82, the committee says: It is clear that present operating requirements would just be met by adopting the vacuum brake for freight stock. The House will note that the words are "present operating requirements ". A decision in this sense, however, would prevent any further development in the length and weight of freight trains running at similar high speeds, which the future might render desirable, having regard, for example, to the use of more powerful motive power units which electrification and dieselisation "— I apologise to the House; the word is in the Report— would make possible. The Committee consider, therefore, that a decision in favour of the vacuum brake would be inconsistent with the modernisation plan and with forward-thinking generally. As I said, I imagine that it would be difficult to find a more influential and authoritative committee to come to a more conclusive view than that there expressed, that the air brake ought to be standard equipment. These are very weighty arguments indeed.

There are three criticisms of the vacuum brake which should be considered. First, the vacuum brake cannot be completely released until the vacuum has been restored. This is a point which was made in an article in The Times, on 20th June, 1956, by Sir Charles Goodeve, Director of the British Iron and Steel Research Association. He says: With the airbrake…a long train can be under way in 30 seconds. With the vacuum system, the air in the brake cylinders of each wagon must be pumped out by the locomotive exhauster, an operation which may take some minutes. There is not very much doubt that in running long and heavy trains, with the necessity for getting them away quickly after a stop, which is bound to arise frequently with this sort of traffic, the air brake has an advantage. Further, the vacuum brake, as any railwayman will say, suffers from the fact that leaks sometimes occur and are difficult to trace.

In Modern Transport, not many weeks ago, there appeared an article by Colonel Cantley, who has had experience in operating freight railway services all over the world, in which he commented on the decision of the Commission and developed the point of the time that is lost in trying to find out where leaks occur in the system. Finally, the maximum pressure obtained with the air brake is much higher, about 50 lb. per square inch, as against 10–12 lb. per square inch in the case of the vacuum brake. This means that the equipment on wagons fitted with the air brake can be smaller and for longer and heavier trains this higher pressure is a matter of importance.

When we visited the Commission, it was suggested that trains of more than 50 wagons would not often be run and it was felt that trains of this length would be within the capacity of the vacuum brake. I should have thought it was impossible to specify precisely the length and speed of trains in the future, particularly when one takes into account the advertisements which are appearing for new traction units of one kind or another, obviously of great power and capable of great haulage. I should have thought that this was a decision which should be looked at again even at this stage.

I noticed that there was a second letter to The Times by Mr. M. W. Shorter, the managing director of the Westinghouse Brake Company, who said that had the air brake been adopted it would have provided an efficient system at a low first cost and subsequent economical maintenance. It would also have provided a sound basis for the future introduction of any refinements required to meet the higher standards that railway development will no doubt demand. That is from a gentleman whose firm manufactures both types of brake and, as far as I can see, he is not predisposed from any unworthy point of view to argue one type as against the other. I hope, therefore, that in view also of the strong scientific opinion and of the committee's Report, this matter will be looked at.

To turn to one more local matter, many people in the West of London, and in Middlesex in particular, were disappointed to see that in Appendix A of the White Paper there is no reference to any electrification in the Western Region and certainly not in that section which serves Acton, Ealing, Southall, Hayes, and West Drayton. The steam passenger services from Paddington are, on the whole, rather poor. It is true that in the case of Hayes we have had some improvement in the number of trains, but the timekeeping is generally very poor indeed in winter. I get many individual letters of complaint and letters from Hayes and Harlington Urban District Council.

This is due, in part, to the fact that the line coming into Paddington is served by a number of junctions and that if trains coming into the junctions are late the connecting trains going right through to Paddington are late, also. It was hoped that at long last this area would get some possible relief by a quicker acceleration, and so on, through electrification. I emphasise to the Minister, even at this stage, that it is a particularly important area.

If one considers Acton, Southall and Hayes in particular, it will be found that the concentration of industry is heavier there than anywhere else in the country. We often regard the Black Country as being the most heavily industrialised, but, taking the number of establishments per square acre, in Acton, Southall and Hayes, one finds that it is the most heavily industrialised area in the whole country. I do not say that it was good planning development that it should be so, but the fact remains that it is. In addition, on the periphery of the area is London Airport. Despite all this, however, we are still to get no improvement in the passenger services under the modernisation schemes.

It is a little disappointing when one sees in Appendix A that there are electrification schemes for Enfield and Chingford—

Mr. Ernest Davies

Do not stop those.

Mr. Skeffington

The last thing I want to do is to stop them. I am delighted by the good fortune of those areas. I should have thought that the line passing through this heavily populated and industrial area is at least as important as the Chelmsford to Ipswich and coastal branches, which are to be electrified. Without in any way prejudicing the chances of those who are more fortunate, I would hope that the Minister and the Commission would feel that some electrification in the area is possible.

I gather that the Home Counties Electric Traction Society has sent a plan to the Commission, which has replied that it is a practical and feasible plan without, however, giving any indication that it will be adopted. I make this urgent appeal that an electrification scheme should be considered. I believe that improved services in this area of the West of London, where so many workers are going to and from the factories and in and out of the area morning and night, would be not only profitable but would redound greatly to the improvement of traffic facilities in that part of London.

I hope that the Bill, with all the limitations which have been expressed by many of my hon. Friends, and which I share, nevertheless will mean for the railways and for railwaymen that they may have another new and glorious chapter in their history.

7.46 p.m.

Mr. Norman Cole (Bedfordshire, South)

I hope that the hon. Member for Hayes and Harlington (Mr. Skeffington) will forgive me if I do not follow him into the respective merits of the air brake and the vacuum brake—I am sure he knows more about it than I do—but I do know, as does the hon. Member, that the White Paper says that it has been decided to adopt the vacuum brake and I am sure that the Transport Commission would not do so without having very good reason for that decision.

I should like to refer to some remarks made by the hon. Member for Enfield, East (Mr. Ernest Davies), who was the first Opposition speaker in the debate. He suggested that the Bill should give a subsidy to the Commission instead of using the financial method which will be implemented by way of loan.

Mr. Ernest Davies

I do not want the hon. Member to misinterpret what I said. I explored the giving of a subsidy as a possible alternative. I did not come down in favour of it; I said that it was an alternative and I wondered whether the Government had considered it.

Mr. Cole

I thank the hon. Member for making that delicate difference clear. He did, however, explore the virtues of a subsidy for this purpose as against a loan.

My purpose in raising the point is to underline what my right hon. Friend the Minister said, that the Commission itself had earnestly asked that the matter should not be treated by way of subsidy. We ought to respect the Commission for that, and pay due credit in every way and carry out its wishes. In fact, in the Introduction in the White Paper, it is stated as one of the assumptions of the Commission that it follows that financial targets must be set which are reasonably possible of achievement in the circumstances, but which contain no element of subsidy. That is the expressed assumption of the Commission itself in the opening section of the White Paper.

I hope that the hon. Member for Enfield, East will not mind my saying that I consider that he did a disservice to the Commission in suggesting that although the Bill will implement a loan, it will in the end turn out to be a subsidy. That is a very bad foot to put forward at the start of this whole proposition. It will not help the Commission, it will not help our general consideration of the Bill, and it is of little help to the public at large. It is one of those things that certainly cannot be proved for another fourteen years. If I read anything in the White Paper at all, it is the full intention of both the Commission and of my right hon. Friend that the Bill should do what it says and make facilities for a loan for the time being which in due course will be repaid over the years by the Commission. I am sure that is the way they want it.

I am sorry to refer to the hon. Member for Enfield, East so much, but he made a number of provocative statements, of which I took careful note, and he said something else which requires answering. He said that the transport user was being subsidised by this Bill. The implication of what the hon. Member said was that the present transport user ought to pay more for the services he gets from the British Transport Commission. I think that is a fair analysis of the implication of what the hon. Member said. Does not the hon. Member remember that my right hon. Friend said—what we all know to be true—that the Commission has reached its maximum point of returns from charges?

Mr. Davies

Not on all tracks.

Mr. Cole

The more the Commission charges now the less it will get in returns. Therefore, there can be no subsidising of the users, but the users will tend to vanish if they are charged any more. I hope that the hon. Member will accept that answer to his argument.

My right hon. Friend spoke, and rightly, of the great and important rôle which the railways play, and must play, in the economy of our country. We have not heard any talk tonight about the strategic value of the railways. That was evidenced in the war. They have a strategic value in our economy too, a value which, I hope, will be considerably enhanced when their bold and imaginative modernisation scheme has been finalised and put into effect.

My right hon. Friend spoke of improvements such as the automatic train control, and the success of the larger diesel units, and of the success of the smaller ones on the branch lines. Those are the fruits of the present imaginative and forward-looking policy of the Commission. They are all very fine things, but they all cost money, and I would align that imagination with the amount of money being provided at the present time.

One thing which I am particularly pleased to see, and which the 400,000 or 500,000 employees of the railways will be very glad to learn about, I am sure, is that by virtue of this new equipment it will be possible for a man to earn more money—my right hon. Friend said as much as 30s. a week—by working the same or even fewer hours than he does at present. It is very proper that the employees should share in the benefits of this modernisation.

There is in this financial operation an important fact, to which my right hon. Friend referred, but which bears repetition. One thing is quite clear, that by its very full memorandum—and it is very full—and by the very complete figures which the Commission has produced, the Commission has rendered itself for all time entirely accountable both to this House and to the nation at large. It appears to have held nothing back, but to have revealed the entire position, for good or for ill, as it is and as it will be for the future. The estimated deficits amounting to possibly 120 million by the end of this year, instead of having to be brought forward year after year, are brought into the financial scheme and are to be capitalised, and I think that that is a very good thing.

In general the Commission, and particularly British Railways, have shown that they want to go forward, as my right hon. Friend said, as a commercial and competitive undertaking. That, of course, is the only way in which a Commission of this kind, nationalised or not, can hope to live in a competitive world. We are giving the Commission the tools and the weapons by making these financial arrangements possible. It is now up to the Commission to make full use of the skill at its disposal and to provide the enterprise and imagination with which to make the fullest use of the money available, and to produce the best services.

I cannot conclude without following the hon. Member for Hayes and Harlington in his plea, and to make one for south Bedfordshire. I hope that in the expenditure of this money the right and proper claims for services for the increasing population and the industrial development of the towns in, and the other parts of the area of, South Bedfordshire will not be forgotten. We there are disappointed at the moment that, like the area to which the hon. Member for Hayes and Harlington referred, we are not getting the advantages of electrification or dieselisation. We hope that that will come in the near future. We hope we shall not be forgotten or overlooked by those whose job it is to plan the enterprises of the Commission.

My right hon. Friend was at pains, and worthily at pains, to underline the fact that there was no kind of political bias in the matter of the Bill. Of course, that is so today. This business has gone beyond political argument, beyond party differences. The economic future of the country depends on the success of British Railways. As I see the picture, they have a part to play in the economic success of the country, and they in their turn will share in the increased prosperity of the country and will become more flourishing. However, the initiative must come from them, as providing basic transport services. If they do their part, I am sure the prosperity of the country will increase and that they, in their turn, in the long run will gain as well.

I wish the Bill well. I hope that it will have a speedy passage, and I hope that the Commission will use the money which will be available in the future.

7.57 p.m.

Mr. Percy Collick (Birkenhead)

This Bill is one of the few Government Bills affecting transport which we on this side of the House have not radically opposed, but it must not be taken that, because we are not opposing it, and because we shall not vote against it in the Lobby tonight, it is a satisfactory Bill. I do not myself think it is a satisfactory Bill. I think I share almost completely the reasons which my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) gave, when he opened the debate for this side of the House, why we do not regard it as a satisfactory Bill. Therefore, since that is my view, there are only one or two points I want to underline.

This is a necessary Bill, because quite obviously the British Transport Commission, if it is to undertake the task of modernisation, must have capital provisions such as the Bill is intended to provide. To that extent it is a necessary Bill. Whether it is a satisfactory Bill is quite a different matter altogether. I still take the view—and I want to emphasise this—that the Minister is not facing the problems but is merely running away from them. Running away from the problems which are so obvious is not a satisfactory way of dealing with the situation.

We have heard speeches from the opposite side of the House, about which I make no complaint at all, drawing attention to the improvements which have been effected on railways on the Continent in contradistinction with what has happened on British Railways in the post-war period. The answer, of course, is a quite simple one, that whereas British railways were simply overloaded year after year during the war, their engines and stock deteriorating to a degree which those of us who travel on them know only too well, Continental railways have had capital provision made for them by which they have renewed their engines, renewed their stock, renewed their permanent way. The British Transport Commission has been hamstrung right through its term of life because it has not had adequate capital provision to make all those replacements which the war-time services of British railways made necessary. It is that and that almost alone which is responsible for the tremendous difference in the rate of modernisation—I think one can call it that—which has taken place on Continental railways in contrast with our own.

The Minister is not facing even the present problems of the British Transport Commission. I do not suppose that it would be denied that the position now is approximately as follows. The Commission faces a deficit of roughly £100 million which is, of course, very undesirable but quite understandable. It arises largely by virtue of the fact that railway freight charges and railway fares have not risen in anything like proportion with the rise in the prices which the Transport Commission has had to pay for all the material which it needs and uses in the making and running of railways. If, therefore, railway passenger and freight charges are not equal to the charges which the Commission has to pay to maintain its services there is this inevitable deficit.

The situation is not peculiar to British Railways. If the Minister has made himself acquainted with what is happening on the Continent he will know that there is scarcely a railway service in Europe which is not facing a deficit. If he looks at the position in the United States, where circumstances are in many respects much more favourable than they are here, he will find plenty of evidence that there is no great profit in the running of certain United States railways at the moment.

Therefore, since the Minister starts off with the proposition, with which I am in wholehearted accord, and which I was glad to hear him state, that the railways are essential to the economic life of the nation, then the nation must face the simple fact that somehow or other we must deal with the deficit which will accrue in running the railways. But does the Minister face that fact, or does he run away from it? The right hon. Gentleman does not face the fact of this deficit of roughly £100 million. He has no positive proposals for saying to the Commission, "Let us deal with it in this way ". All that he proposes to do is to create a bookkeeping transaction in which this is to be regarded as a special arrangement and by which this deficit will be entered up and carried forward year after year.

What is to happen then? Are we to go on seeing this deficit rise year by year, or are we to do something about it. In the White Paper, "Proposals for the Railways", the Minister puts the position in this way: The immediate problem, therefore, is to find a satisfactory basis for the Commission's finances in the intervening period. As is indicated by what has already been said, two alternatives face the Commission. One is to carry substantial though diminishing annual deficits until 1961 or 1962, the other is to place on the heavy bulk traffics substantial additional charges which, even if they could be imposed without driving further traffic off the railways, would be a serious addition to industrial costs. For this reason the Government consider that it would be against the broad national interest to adopt the second alternative… The Government do not adopt the second alternative, and I do not dissent from that, but if they do not and do not allow the railway freight charges and fares to rise, they must be honest and face the inevitable consequence that these deficits will not decrease but increase. That seems to me the position which the Minister is not facing but from which he is frankly running away; and he has no positive proposals to make to the House other than carrying the deficit forward as a separate book-keeping transaction.

It may be that here I speak for myself, but I have taken up a position consistently on this matter. I have put it forward in previous debates and I still stand by it. I think that I shall live to see the day when some Minister of Transport will have to put forward something on the lines which I am about to suggest. During the war, the Government made a surplus of £115 million from running British railways.

Mr. Sparks

I think that that figure is higher.

Mr. Collick

My hon. Friend wishes to correct me by making the figure higher, but I am deliberately understating the case, for certain reasons. I put the figure at £115 million, which is a low figure. It is time that some Minister of Transport faced the reality and said, "After all, in war time the railways are obviously necessary, as we knew too well in the last war and as we shall know now as the results of Suez become more apparent. Increasing traffic will inevitably have to go by rail because there is not enough petrol available for transport by road." When there is need to move immensely dense traffic, the railways are absolutely essential, and that is the time when the railways make a surplus, just as they made this £115 million.

The time has come when we should ask whether it would not be sensible to try to persuade the Government to wipe off some part if not the whole of this deficit, and be realistic enough to say to the Commission, "We had £115 million out of running the railways during the war and we shall give some of it back to improve this account and to give you a clear road on your new modernisation plans". That is the only worthwhile way in which we can face this problem.

That has some connection, too, with what is being done on the Continent, where there is a method of financing these operations which is very different from the unsatisfactory arrangements in this country. In many States the account is carried on the State budget, and I am not sure that it would not be wise to do something like that in this country. I know that it pleases hon. Members opposite when I say that I have never had the feeling that it would be a shocking crime to finance some of these operations by some form of subsidy.

More and more we have to regard our transport service as a social service. Again and again, whenever a branch line is to be closed down, we have hon. Members opposite making the strongest case possible to the Minister that the line ought not to be closed because it is necessary to their constituents. But none of them faces the logic of it. The hon. Member for Hexham (Mr. Speir) spoke of Hawick in Scotland and the problem that occurs there with the closing of the branch line. Is there not a case for saying that that line is necessary, and that the cost should be carried on the general transport charge? There are other cases that have an equal right to similar treatment.

The hon. Gentleman the Member for Bedfordshire, South (Mr. Cole) said that he did not know whether we would get through this period of loss for twelve years or more. I can tell him at once that he will know this in much less than twelve years. I venture to say that for a few years it will not change—

Mr. Cole

If I may interrupt the hon. Gentleman, I should like to make clear what I said. It was that since an hon. Member had been saying that this money would never be paid back but would become a subsidy, I asked how anyone could know that, because it would be fourteen years before that could be known.

Mr. Collick

Yes, I said twelve years and the hon. Gentleman said fourteen years, but the same point emerges. We do not need to wait for fourteen years. I venture to say that unless the Government give a subvention we shall not need to wait for fourteen years.

I accept the bona fides of the British Transport Commission in putting forward this scheme. I share its hopes, but I do not share its conclusions, especially those on financial matters. Nevertheless, I shall do all I can to ensure success, but it will be no easy matter. I will point out to the Minister one reason why it will not be easy, so that he can clear up the point for us. I do not know whether the right hon. Gentleman is conscious of the impression which he conveyed to the House today? We know, and no one can dispute it, that from time to time the Government have interfered with the charging of increased fares for purely political reasons.

There is no dispute about that. I remember the previous Prime Minister boldly acknowledging, on the eve of the county council elections, that the Government would not allow fares to be put up because they were afraid of the effect on the elections. When one of the hon. Members for The Hartlepools raised this point—

Mr. D. Jones

There is only one.

Mr. Collick

I am sorry, I meant to say the hon. Member for The Hartlepools (Mr. D. Jones). When he raised that point, the Minister seemed to give the impression to the House that he was not putting aside that consideration.

I give credit to the Minister for taking a rather non-party attitude today, and I welcome that approach, but I should like him to carry it further. I may be wrong but I interpreted what the right hon. Gentleman said to mean that, because he has certain responsibilities to discharge under the Transport Act, from time to time he might wish to give the British Transport Commission directions. I should have thought that on an occasion like this the Minister would leave no doubt whatever that there will be no directions from the Government on fares for political considerations. If the right hon. Gentleman could remove that doubt, I am sure that the House would be grateful.

I said a moment ago that I thought that this Bill was necessary because of the capital needs of the British Transport Commission. The language of the Command Paper reminds me of what happens so often in this House. We discuss a Bill, the Minister tells us what it is intended to do. Then within a few weeks, months, or perhaps a year, the Minister comes down one day to the House and makes an announcement which nullifies what we believed would happen under the Measure.

Let me remind the Minister of that because of the capital needs of the British Transport Commission. Referring to those needs paragraph 18 in page 5 states: The Commission's view, which the Government share, is that the rate of investment for the railways in 1957 should be increased substantially, as compared with previous years, to about £120 million. There would under the plan be further increases in later years. It is not possible to pre-determine many years ahead precisely the level and nature of the investment expenditure: this will need to be reviewed from time to time in the light of economic conditions… Note that last sentence. Are we to be told a few weeks hence that because of the Suez crisis, and all that has happened in consequence, with its effects on our economy, a situation has now arisen in this country in which the Minister much regrets that it will now not be possible to allow the Commission this amount of capital expenditure for 1957?

I wonder if the Minister feels so confident of his position today that he feels able to ask the Joint Parliamentary Secretary, when he winds up the debate tonight, to give the House an assurance that the Government mean to stand by that figure? If I assess aright the economic situation of this country following on Suez, I should not be surprised if in a few weeks' time the Minister comes to the Box opposite to say that Government expenditure on railways will have to be cut, as in times past we have had the capital expenditure on the roads cut. If he does that, then the question will arise, where does the Commission go from there? Necessary as this Bill is, it is tinkering with the situation and is not facing up to what is required. I should like to think that I was wrong in saying this; I should like to think that the capital will be forthcoming and I should like to see the railways make a real drive for modernisation.

Out of consideration for other hon. Members who wish to speak, I shall not enter into the interesting argument of the hon. Member for Hayes and Harlington (Mr. Skeffington) about the respective merits of the vacuum and Westinghouse brake, about which I could say a lot. I will end on this note. I am certain, as is the Minister, that if this scheme is to be successful there is one prerequisite, namely, the co-operation of the entire staff of British Railways to carry it through. I have had occasion previously to criticise those responsible for labour relations on British Railways and I should not hesitate to do so again, if it were my duty to do so. I hope that in the delicate months ahead of us a far more sensible approach will be made towards handling labour relations than was the case a year or eighteen months ago.

Given that, I hope we can reach the day, which some of us remember only too well, when among the highly-skilled railway staffs men were not only proud of their job and proud of British railways, but were proud of all the things they were doing. We lost much of that, as I warned the House eight years or more ago we would, because we would not face up in time to creating labour conditions for the men which they ought to have had, and so we lost many of them in consequence.

Can the Minister resolve that? We are now at the stage when, I suppose, a tremendous amount of the freight traffic will return to the railways. I do not suppose the House knows the figures, and I do not want to shock hon. Members too much, but the amount of coal traffic lost by British Railways recently is staggering. For many reasons, almost the whole of that traffic should return to the railways. There is every justification for that happening. When it does happen, I hope that the railways will be wise enough and skilful enough to keep it, and I hope that they will do the same with all the other traffic. If railway staffs are handled in the right way during the next two months, there is every reason to believe that that hope will be transformed into deeds. That is my earnest hope, disappointed though I am with the Bill.

8.21 p.m.

Mr. Geoffrey Wilson (Truro)

I want, briefly, to welcome the Bill, and, in doing so, to make one remark about the speech of the hon. Member for Birkenhead (Mr. Collick). In referring to the continental railways and their modernisation, he pointed out, rightly, that much more capital was made available to them than to British Railways, but he did not mention that the one continental nationalised railway which is paying is that in Holland. That is a railway which, in its form of organisation, most closely resembles a private enterprise railway, somewhat after the style now being attempted with British Railways.

Mr. Collick

I appreciate what the hon. Gentleman has in mind. I am very familiar with the Dutch railways, but he will know that much of the reason for that is that the Dutch railways had not a very heavy capital debt such as the British railways had when the Commission took them over.

Mr. Wilson

The Dutch railways were largely renewed and many branch lines were cut.

I found it most refreshing to hear the hon. Member for Bradford, East (Mr. McLeavy) introduce a new element into a transport debate. As a former employee of a railway company at the time of the square deal plea, I found it rather novel to hear the accusation that the railways were creaming the traffic from the roads. With the hon. Members for Enfield, East (Mr. Ernest Davies) and The Hartlepools (Mr. D. Jones), we were back to the old story that it was all right so long as the railways were nationalised and integrated under the Transport Act, 1947, introduced by the Labour Government, but the moment we interfered with them it was all wrong.

The plain truth is that Section 3 of the 1947 Act did not work, could not work and never would have worked because it did not integrate, and never made it possible to integrate, the majority of the traffic in this country. It made it possible to nationalise only the railways, one-third of the buses and about one in twenty of the lorries on the roads. When we bear in mind the remainder of the traffic in the country, it was impossible to produce an integrated service.

It was for that reason that I interrupted the hon. Member for Enfield, East and asked what were the intentions of the Labour Party if they wanted to return to that system. I have never been clear on that point. Perhaps the Labour Party will, some time, make it clear. If hon. Members opposite want to go back to that system, do they propose in future to nationalise the municipal buses and the C licence lorries? If they intend that, they should say so.

We on this side of the House do not attribute the difficulties of the railways to the Act of 1953. Several hon. Members have mentioned the six years' standstill during the war, when no capital development was going on upon the railways and maintenance was inadequate. In addition, there was not enough provision of capital for railway development in the period before the war. Therefore, whereas, fifty years ago, people could say that we had in this country the best railways in the world, nobody can say that now with any degree of conviction. In fact, the railways have fallen behind in the face in comparison with other forms of transport. In other words, they are not as efficient as they used to be when compared with other forms of transport. That is no criticism of the railways; they have not been able to develop to the same extent as other forms of transport for lack of capital.

In my view, increasing competition is a symptom of failing efficiency rather than a cause of it. One cannot cure the position merely by forcing traffic in one direction or another. One can force traffic on to the railways temporarily in an emergency, as is happening at present when there is a shortage of petrol and one can force people to send their goods by train, but, in the long run, the only way to induce people to prefer one form of transport to another is by providing the service which they want to use. People always use a service for one or other of two reasons, either the cheapness of the service or its convenience. Consequently, if we want to increase the traffic on any form of transport, we must cheapen the service or make it an improved service which people will want to use.

One of the interesting features of the White Paper is the chapter dealing with the rôle of the railways. It refers to the services which are available on the railways and must be used in the national interest because no other service is available and in no other way can the traffic be carried. It refers to the heavy suburban passenger traffic which is of such a quantity that if the people concerned tried to go by road, they just could not do it. It is more convenient for them to go by train, and consequently they will use the trains, and our duty must be to provide them with the best service possible.

Much the same considerations arise in connection with long-distance passenger traffic, particularly by night when a much better service can be provided for passengers by train than by any other means. Also, a much better service can be provided for the carriage of bulk mineral traffic on railways than by other means.

Those who are afraid that we shall return to conditions in which there will be undue competition for traffic between road and rail really have not much to fear. If it be true that the country's total production is increasing at the rate of 3 per cent. per year, then I assume that in the course of the next ten years our total production will have risen by about 37 per cent. To carry that additional amount of traffic will call for every development, on both road and rail, that we can possibly achieve. The difficulty will be finding enough transport to carry the goods, rather than cut-throat competition between road and rail as to which shall carry the goods.

The White Paper indicates a number of means of adding to the attractiveness of the railway services. I think that that is the right approach to getting traffic back on the railways. The Minister referred to the impressive table on page 16 of the White Paper and I was very glad to hear him say that some of the figures have been improved even since the table was published.

There are other sections of the White Paper which are also of great interest, particularly those dealing with vacuum brakes which can give a very considerable increase in the speed of railway goods traffic, speeds up to 60 miles an hour, which would make a tremendous difference in delivery times, particularly on long distances such as from my constituency in Cornwall. There are many features about the White Paper which are most attractive and very encouraging for the future of the railways. If it be true, as is indicated in the White Paper, that the railways hope to break even in their accounts by 1961–62 and to be making a profit of about £50 million a year by 1970, then that is certainly something which we should very much welcome.

During the debate there were references to greater flexibility in charges. My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) referred to coastal shipping and the competition it might suffer. Similar complaints have been made in connection with road passenger services. I think that Members with those fears are under a misapprehension. I take it that it is not intended that the Bill shall be used as a means of subsidising the undercutting of another form of service and that other transport interests have nothing to fear from the Bill in that direction. For those reasons I warmly welcome the Bill.

8.30 p.m.

Mr. J. A. Sparks (Acton)

Since the present Government have been in office, the deficit on British Railways, after allowing for central charges, has increased from £31 million to £120 million. The Bill may be regarded in a sense as the Government providing conscience money to British Railways to help to rectify some of the consequences of their own policy. When I intervened during the Minister's speech to remind him about the denationalisation of road haulage and the effect which that has had upon the condition in which the British Transport Commission finds itself, he said that he did not intend to introduce politics into this topic.

Unfortunately, the intervention of politics into this problem is to some extent responsible for the plight in which the Commission now finds itself. I do not want to go back too far. The right hon. Gentleman himself, in his preface to the White Paper, outlines some of them. Even before the last war there was far too much political intervention in the organisation of the railways, and in the last few years that intervention has continued.

On this side of the House and in the transport industry it is believed that the intervention of the Government in the Commission's affairs has very considerably and materially altered the financial prospects of the undertaking. It has caused the Commission completely to review its long-term objectives. The Commission has had to do a rightabout face in a very difficult time to try to consolidate something from the shambles which Government policy has produced.

All those people who are eminent in transport matters have for many years advocated the integration of road and rail. In that they find the only solution to the country's national transport problem. In the main they are not politicians and are concerned not with politics but with transport, which is vital to the country's future. They have said that the only salvation for transport is some means of integrating or co-ordinating mainly the road and rail systems. Hon. Members on this side of the House still believe that, and we believe that the Government have tried to put the clock back in the transport world by hiving off from the Commission that part of its undertaking which was the most successful and financially profitable, leaving it with that which is least profitable.

What is the position with which we are faced at the present time? We have here a Bill to provide a certain sum of money by way of loan to the Commission, in order to carry out the first stages of the modernisation plan. I do not agree with all the assumptions that the Minister has made, or with those made in the White Paper, about the successful outcome of these proposals, because they depend so much upon so many unknown factors. The proposals can produce the effect which is attributed to them in the White Paper only on condition that the cost of living does not rise or, in other words, that costs and prices remain steady at their present level. There is no prospect of that at all at the present time, as we all know—without going too deeply into the reasons, of which we are all well aware, arising mainly from the difficulty of bringing oil into the country, and other similar matters.

One of the pillars upon which the success of the modernisation plan depends is that costs and prices are stabilised. The second is that the modernisation plan goes through without any interruption or deferment by the Government. Earlier, the Minister himself said that he retains the right to interfere with it; to defer it, and generally to mess about with it, just to see that things fit.

Mr. Watkinson

That just is not true. What I said was in reference to an interjection with regard to the charging policy of the Commission, which is quite a different matter.

Mr. Sparks

Let me read what the White Paper says. These words appear in the introduction, for which I believe the right hon. Gentleman himself is responsible. In page 5, under the heading "The Government's Conclusions and Proposals," it is stated: It is not possible to pre-determine many years ahead precisely the level and nature of the investment expenditure: this will need to be reviewed from time to time in the light of economic conditions, the availability of supplies and the experience gained as the plan develops. We all know that the Goverenment have intervened in matters to the detriment of the Commission, and we have no guarantee whatsoever that they will not intervene in future years in the putting into operation of the main essentials of the railway modernisation plan.

Whether or not the plan produces the results anticipated, which appear to be admirable on paper, depends not so much upon how much money is going to be spent but upon whether British Railways are able to secure more of the nation's traffic than they are doing at present. The carrying of more traffic at a remunerative level is the basis of the success of British Railways. If the modernisation plan does not succeed in attracting to British Railways a greater percentage of the nation's transport traffic all the money in the world will not produce the results which are anticipated in the White Paper.

The Minister has not yet made clear to us how British Railways will attract to themselves a larger volume of the nation's traffic as a result of these proposals. Let us suppose that they do in fact attract a larger percentage: where will they get it from? They will get it from the roads. They will not in the main get it from the C licence holders, but from the private road haulage organisations.

If British Railways are to attract sufficient additional traffics to justify the claims in the White Paper, it will mean that many private road haulage organisations will go out of existence, and we shall have a move from them for a modernisation plan of some kind. Proposals will be advanced to spend money on the modernisation of the private road services. They will be trying to get back what the railways have taken from them, and we shall be engaged in a kind of cat-and-dog fight. We shall see more and more money going down the drain in order that road and rail may get from each other traffics which will be shuttled backwards and forwards between them.

That idea of competition in transport being good for the country is Victorian. In fact, it is not a good thing. It is not a system advocated by people at present engaged in the transport industry and who are aware of the problems confronting transport. I do not mean people interested merely in railways or roads, but those interested in transport as an efficient asset. I can see little in these proposals which have been commended to us by the Minister, because they are based on a very insecure foundation. In the main they will result in the imposition of a far heavier burden of interest responsibility upon British Railways. Already British Railways are carrying far too heavy a burden for central charges, and these proposals will merely add to it, and to the burden of interest which all railway-men must work hard to provide.

The figure of £50 million as the surplus revenue at the end of 1970 to be reaped as a result of these proposals is very largely a fictitious one. As a matter of fact, I am told that the figure is really £35 million and not £50, after taking account of the various interest charges on deficits. If this is the surplus revenue to be obtained for the railways, it will not be enough to cover their central charges. Therefore the prospects for British Railways are by no means as healthy or as rosy as the right hon. Gentleman would have us believe.

I wish to mention one local matter and to support my hon. Friend the Member for Hayes and Harlington (Mr. Skeffington), who appealed to British Railways to provide a better local service between Paddington and Hayes. My constituency is situated between Paddington and Hayes, and I know that in the Western Region to and from Paddington we have one of the worst local services on any of the trunk railway lines running out of London. It is a poor service. Soon after I became an hon. Member of this House I endeavoured to get matters improved, but without any success.

In the hierarchy at Paddington there must be a white-whiskered railway official who gives advice to the regional manager and to the British Transport Commission that there is no demand for an improved service. That advice would be nonsense. Between Paddington, Hayes and my constituency is one of the greatest industrial concentrations in the country. A belt of factories stretches from my constituency to Hayes, and thousands upon thousands of workpeople are employed there. My constituency is small. Nearly 70,000 people live there and it is completely built up, but more than 15,000 workpeople come daily into the constituency to work.

What happens, especially during peak periods? London Transport buses are overcrowded. People have to queue for long periods for buses to take them home, and when buses come they are full, nobody can get on and the people have to wait for the next one. Perhaps two or three buses come along full and nobody can get on. Nevertheless, a short distance away is the shortest route from Acton to the West End. The journey takes nine or ten minutes by Western Region railway, but the service is so shocking and so poor that few people go near it.

Mr. D. Jones

Have the carriages on this shocking service been painted chocolate and cream?

Mr. Sparks

I have not taken much notice of the colours. I believe they vary. Some of the carriages are chocolate and cream but since they have been painted chocolate and cream we have had only one train an hour during the greater part of the day. Previously, we had a far better service on that local line to Paddington.

I did not want to miss an opportunity to mention this matter, which might appear quite small but which, to workpeople in this great industrial concentration between Paddington and Hayes, is very important. They expect a far better service on the Western line than they have at present. It is not good enough to say that there is no demand for it in that great concentration of industry and population. If there is no service, of course people do not go to the railway station, but if the Commission tried to run a good service they would find that it would be well patronised. It is the shortest run from my constituency to the West End.

We cannot oppose the Bill, because it is a measure of good policy to assist British Railways out of their difficulties. They have come into a very difficult period largely because of factors beyond their control, but that is not to say that there is not room for improvement in internal organisation. No Government could afford to stand by and see this great national asset wither away or deteriorate. Does not the present international crisis reveal how important British Railways are in the event of an interruption of our oil supply? If there were no oil, where would road transport be? Not a wheel could move on the roads. We have plenty of coal, and so long as we have it British Railways can run and be the main arteries of the life of the country. At last we are beginning to realise the vital importance of British Railways.

Despite what I have said in criticism, I hope that these proposals will help our British railways to get on their feet and prove once again that they can undertake the great responsibility of conveying the nation's traffic.

8.50 p.m.

Mr. R. Gresham Cooke (Twickenham)

The views of the hon. Member for Acton (Mr. Sparks) about this Bill were as depressing as his own local train service. I do not take that sort of view. I think that we have before us a Bill that is a businesslike attempt to make the railways pay. I am quite certain, despite the doubts of the hon. Gentleman opposite, that the modernisation of the railways which is about to be undertaken will, in fact, attract considerably more traffic to them.

I thought that one of the saddest sentences in the White Paper was that in which the reasons were given for the failure to modernise the railways in the 1930s. It said: That advantages of electric and diesel traction were not then so great or so apparent, nor was technical opinion on, and experience of, the different systems so far advanced or so clear. That, of course, may well be true. But it is rather extraordinary that electric traction was not proceeded with generally by the railways at that time despite the fact that Sir Herbert Walker was introducing electric traction all along the Southern line.

Mr. Walter Monslow (Barrow-in-Furness)

Will not the hon. Gentleman pay some attention to the monetary consideration of this problem in relation to the 1930s.

Mr. Gresham Cooke

I appreciate, of course, that the railways were short of capital, but, at the same time—and I talked to many railway people in those days—there was a resistance to getting away from the old "iron horse ", for which there was a great nostalgia. One had great difficulty, before the war, in proving to railwaymen that a diesel engine was four or five times more efficient than a steam engine, although that fact is admitted today. With petrol rationing coming into operation, the railways are at least going to get off to modernisation with a flying start.

Traffic carried by road today is three times as great as that carried by rail. If only the railways can get back a fraction of the 900 million tons of traffic carried by road each year they will be grossly overloaded. While they are going ahead with that, I submit that the railways should stop the leaks which are leading to a loss of £40 million a year.

I was very impressed by an article in the British Transport Review for April this year by Mr. E. R. Williams, who was District Passenger Manager for Sheffield. The article stated: A recent Traffic Costing Survey of railway passenger services…shows that, although we make a handsome margin of profit on our longer-distance main-line services, we only 'break-even' on our suburban services as a whole, and incur enormous losses, amounting to many millions of pounds a year, on our stopping services. These stopping services represent over 40 per cent. of the mileage run, or 90 million 'loaded' train miles out of a total of 216 million annually…It is almost as if it were an offence against good taste to mention the guilty secret that we are running hundreds of trains whose movement costs are more than five times their receipts. The article went on to say that the three main reasons for this were: First, a misplaced zeal to compete, at all costs, with road transport; secondly, the mistaken idea that only trains can act as feeders to our profitable main-line trunk services; and lastly, an understandable reluctance to face the wholesale public complaints which any drastic reduction in services inevitably produces. The railway system and railway stations are, of course, based on the age of the horse. The average distance apart of railway stations in this country is about three miles, based on the distance that a horse could take people to a station. I think that it would be much better for the railways to leave these local services to the bus services. If one travels by any of these slow, stopping trains in our industrial areas—from Sheffield to Nottingham, for instance—one can see that a train which costs 10s. a mile to run has in it probably just a few railway workers, and one or two coal miners. It is at once realised that that train is bringing in receipts of perhaps only 1s. or 2s. per mile. Then, of course, road transport can act as a feeder to the main lines just as well as, and, in fact, better than, the railway services.

The third reason given for the continuation of these stopping trains is the wholesale public complaint there would be if they were stopped. Here we must help the Transport Commission and, in Parliament, say that the railways must be run like a business, and cannot subsidise services. We should not listen to the lady who recently wrote to The Times complaining about her Lake District railway station being closed. She complained very bitterly that this was the only station in England with a harmonium in the waiting-room.

There is a great need for modernisation. If I may give an example, I happen to be a director of a machine tool works at Sowerby Bridge, in the West Riding of Yorkshire. It is the practice of that company to send its machine tools by road transport, straight from the loading bay to the customer. Last September, I asked the manager why he did not send more by rail. He replied, "Oh, I send the small stuff by rail, but I have to send all the large stuff by road."

That is the exact opposite of what everybody thinks happens, and, perhaps, should happen. He was sending spares by rail. The answer was that at the station at Sowerby Bridge there is no crane big enough to lift a machine tool weighing from 10 to 30 tons. That shows, dramatically, the need for the modernisation of railway equipment.

Perhaps I may give another example. Traders are acutely sensitive to the slow transit of small parcels and consignments. There are many complaints by traders to the effect that, for example, it took ten days for a parcel to go from London to Leicester. There I think the fault lies, not so much in the train services as in the sorting of these goods. It really makes one weep to go to any London terminus and see the piles of parcels, and the cumbersome hand-sorting. If one goes to the road transport depots one sees the small parcels being carried on conveyor belts.

Therefore, I particularly welcome paragraph 45 of Commission's "Proposals for the Railways," which states: The railways deal annually with many millions of small consignments, which are and will continue to be an integral part of the trade of the country. The assembly of small consignments into trunk haulage loads involves handling operations costly in manpower. These services will be highly mechanised. Railheads for small consignments will be equipped with power operated conveyor belts, stillages. power trucks and fork lift trucks. Plans for development of such terminals are actively in hand.' That is a very practical step forward, because if the railways cut down the time taken in sorting, and in finding things that get lost, they have a chance of attracting that kind of traffic.

I very much agree, too, with what has been said about branch lines by hon. Friends behind me. [HON. MEMBERS: "Where are they? "] They have been very patient, sitting here all the evening. If one sits in a train on a branch line, one can see how safe and simple the driving of the train is, because of the slow speed. I cannot see why level crossings in rural areas should not be operated by traffic lights, or by gates automatically controlled from a long distance. To put this into effect, the railways have to have changes in the law. At present, they cannot do this sort of thing. We ought to make it our job here to try to assist the railways and persuade the inspection officers to relax requirements which are really Victorian.

It is now nine o'clock, so I will not deal with the remaining few points which I had intended to raise. I would merely say that the Bill gives a great opportunity to the railways to increase traffic and to modernise themselves, and that it should give hope both to the management and to every grade of railway worker.

9.0 p.m.

Mr. G. R. Strauss (Vauxhall)

The whole House clearly supports the Bill and accepts with admiration the report of the British Transport Commission about its plans for the future. Although there may be unanimity on those two points, that does not mean that we have to consider these matters uncritically. The Minister, in moving the Second Reading of the Bill, said that he was going to speak in a non-political way. I have found in the course of rather long experience that when Ministers hope to avoid criticism of their policy they always start by saying that they are going to be non-political, and that also enables them to give an impression of making a worthy, objective survey of the situation.

Indeed, I remember occasions when it has been advocated that such important social matters as housing or poverty should be taken out of politics. Of course, important social questions such as those and the question of our transport system must come under the sharpest Parliamentary debate, and criticism from the Opposition. We should be letting down the whole of the Parliamentary system if we as an Opposition did not criticise. where we think criticism is justified and put blame on the Government where we think such blame should be put, and it is for the Government to make their answer.

This Bill is essentially a rescue Measure, rescuing the railway system from a serious situation for which the present management of the railways are in no possible way responsible, rescuing them indeed from actions and policies for which hon. Members opposite and their predecessors are mainly responsible. I want to go back a little and consider the past history of the railways in order to trace the responsibility for the present situation.

My first comment arises from page 4, paragraph 13, of the Government statement: I agree entirely with what they say. The Commission have to a large extent inherited the position in which they find themselves. For thirty years the railways have been unable to undertake any large schemes of modernisation or, indeed, to keep up an adequate programme of replacement. The Government go back thirty years in their assessment of the situation—that is 1926. They are absolutely right in saying that a large part of the difficulties of the railways today stem from the fact that in the pre-war years 1926—which is the date suggested by the Government in the White Paper—to 1939, little was done to modernise the British railway system or to deal with the urgent problems confronting it.

If one wants to allocate responsibility for that state of affairs, one can put it nowhere else than on the combined effect of private ownership of the railway system together with a Conservative Government who refused to tackle the problems which were arising from day to day. It is the combination of those two factors that was responsible for the ill-equipment of the railways, including non-electrification. It will be remembered that some railway companies could not raise the money to do that work, which they wanted to do, and which they knew should be done. I should have thought that that was incontrovertible.

This, perhaps, is controvertible, but I am expressing my own opinion and that of my colleagues when I say that I very much doubt whether, if it had not been for the 1947 Act and the whole railway system becoming a Government and a national responsibility, we should today be seeing the launching of a vast modernisation scheme to the extent of £1,200 million. I do not believe such a thing would have been possible, let alone likely, if the railways had remained under private ownership during recent years.

There are other factors which have caused the serious situation which confronts us. There was, of course, the war and the immediate post-war situation, for which no one is responsible. There are, however, some things for which the Government cannot escape responsibility. There is the breaking up of the coordination envisaged in the 1947 Act. There is the selling-off of the profitable road haulage section which was bringing in millions of pounds and would have brought in more millions as time went on. No one could question that that is a very important factor indeed in any consideration of the Transport Commission's finances.

Next we must consider the action of the Government on two occasions in stopping the raising of charges which the Commission considered desirable and economically necessary, once for purely political reasons and once for a mixture of economic reasons. That was interference by the Government in the affairs of the Commission, and the Commission was paid no compensation. These are factors which have contributed to the unfortunate economic situation of the railways today and their lack of modern equipment.

If it had not been for these things, the railways would have been in a much better position than they are to stand up to the troubles which confront them. We should not be faced today with the colossal losses which are bound to accrue during the next few years, and we should be concerned with the problem of how the railways will pay their way during that period.

That is the situation today. Those losses have to be overcome somehow or other, and the Government have come forward with this Bill as a rescue operation. They are rescuing the maiden who has fallen into the river, but I cannot congratulate them on it because they are the ones who pushed her into the river.

I want to say a word now about the immediate actions of the Government preceding the introduction of the Bill. One can start the story, as the Transport Commission does in its Report, with the statement by the Minister of Transport in the House on 19th March. He rather surprised us then by telling us that there was to be a deferment of all increases of fares and freight charges which the Commission had contemplated, some of which were considered desirable by the Transport Tribunal.

We were all given to understand—I do not think that it was an impression received only on this side of the House—that something new was brewing in the Transport Commission; there was a new spirit abroad, which had been inculcated there very largely as a result of the intervention of the right hon. Gentleman himself. We gathered that we should see new and startling things emerging within six months which would change the whole appearance and prospects of the Transport Commission.

I should like to read to the House a sentence or two from the statement the Minister made at the time. The right hon. Gentleman told us: During the next six months it is hoped that this new initiative will enable the British Transport Commission to put in train measures leading to improved efficiency and to getting its operations on a more economic basis so that a more favourable view can be taken of its financial prospects…"—[OFFICIAL REPORT, 19th March, 1956; Vol. 550, c. 828.] The right hon. Gentleman suggested that the Commission would bring forward "sweeping proposals to increase its efficiency," and on 4th July, in reply to a question by me he said: I am very hopeful that by applying the ordinary principles of enlightened private enterprise to the railways we shall show how they will make a profit."é2014;[OFFICIAL REPORT, 4th July, 1956; Vol. 555, c. 1320.] We thought that that was something new, and we were all agog to find out what would emerge from all this.

All that has emerged is a Report by the British Transport Commission in which it says that it has now reviewed once again the financial prospects of their undertaking and in particular the economics of the Modernisation Plan for the railways. It is a review of the modernisation plan announced in 1955 and merely an assessment of the economic consequences of that plan year by year. There is here nothing new whatsoever, as we were led to believe.

When the Minister told us that these increases in fares and freights were to be postponed for six months, he gave us one reason on one occasion and another reason on another occasion. I must point that out because he rather misled the House in that respect. On the first occasion, he said that the postponement was due to the fact that these new ideas were brewing inside the Transport Commission. One felt that by the force of his personality and persuasive capacity he had somehow induced the Commission to think afresh about all these problems.

Mr. Watkinson

I hope that the right hon. Gentleman will make it plain what my responsibilities are in this matter. They are concerned purely with freight charges. The passenger side has nothing to do with me. The Commission has every right to do what it likes.

Mr. Strauss

Technically, the Minister is right but plainly it was as a result of his discussions with the Transport Commission and his persuasion that the Commission came to these decisions on fares as well as on freight.

After telling us that the reason for postponement of these increases was because of the new efficiency which would spring out of the Commission, he told us later, in July, that the main reason was to keep down prices in this country. That was something quite different, and which we had not been told in the earlier days, although we suspected that that was the case.

Mr. Watkinson

Will the right hon. Gentleman quote my remarks in which I said that it was done entirely to keep down prices?

Mr. Strauss

I said "primarily", not "entirely".

Mr. Watkinson

I am sorry. I thought the right hon. Gentleman said "entirely".

Mr. Strauss

The Minister said that it was done primarily to stabilise costs and prices, but we had not been told anything about that on the first occasion.

We now have before us an interesting and most valuable document setting out in greater detail than we have ever had before the proposals of the Commission about its modernisation plans. We are told broadly how the Commission will carry them out, how long they will take, and what will be the financial effects year by year. We should all like to congratulate the Commission for producing such an excellent document, which is very good reading and full of most important and interesting matter.

I wonder, however, how reliable the financial forecasts in that document really are? Is it possible under present conditions to make any worthwhile forecast at all about the finances of British Railways in 1970? I very much doubt it. I think that the Commission has done the best it can. It has said that if present conditions continue that is the sort of result which it hopes to see in 1970. I think that it would be most unwise for anybody in this House to take those figures as being more than the best possible guess in the circumstances, and we should be wise to have at the back of our minds—certainly I have—the probability that the outcome is likely to be very different from that forecast by the Commission.

Indeed, the Commission puts forward certain conditions which, it says, will have to be fulfilled if its plan is to be implemented and its figures are to be of any value. It says it should be free to adjust its. charges without any political interference, to adjust them as and when it feels proper. Can we get a guarantee from this or any Government that there will be no interference in the adjustment of charges? I doubt it.

The Commission tells us that another condition is that it must operate within the existing framework. That means that there must be no alteration in the scope of the Commission's work; in other words that the Government must not sell off any more of the Commission's services or activities. Can we get a guarantee from the Government that that will be so? I wish we could. Unfortunately, no such guarantee, I feel, is likely to be forthcoming from this Government, and therefore the conditions which the Commission lays down as essential if it is to carry out its plan and bring about these financial results may or may not be fulfilled, and we have nothing more than a very rough guess at what the future is likely to be.

Turning to the Bill itself, I ask the House to consider whether the figure of £250 million, which is the maximum which the Commission is to receive as loan from the Government for this period of the gap until the Commission is able to pay its way, is sufficient. It is perfectly true that the Commission reckons that its gap is not likely to be more than £240 million, but in this very uncertain world I should have thought the Government would have been wise to have provided a margin, and a margin of a substantial amount, and not to have put in the Bill the figure of £250 million. It would be better surely to put in a higher figure, £275 million or £300 million, to be on the safe side and to avoid the danger of having to come to the House again in a few years' time to ask for another £25 million.

I want to make what may be considered a rather petty comment about the wording of para. 25 of the Government's statement. When I was in the Government I did my best to avoid what I considered one of the worst pieces of Civil Service jargon, which is, whenever it mentions a big figure, a figure over £1 million, to put in front of it the words "of the order of." We are told in paragraph 25 of this White Paper that the Government are proposing to take powers to lend out of the Consolidated Fund advances of the order of £250 million. It is really nonsense. If they do not know exactly what the amount will be, why not say, "about £250 million"?

It seems to me that almost every Department of the Civil Service is quite incapable of mentioning a substantial figure in any document, whether public or for circulation within a Department, without putting in front of it the words "of the order of." If these few words of mine will help to improve English in the Civil Service they will have been worth uttering.

There are many people, including some of my hon. Friends, some who have expressed this view in their speeches, who feel that it would be much better, now that the Commission has the opportunity for launching this big modernisation plan, and so open a new chapter, in the history of our railways, that it should start with as clean a financial slate as possible; and that it would have been wiser to have wiped out completely the accumulated deficit up to date. Many of my colleagues feel that very keenly. There is a good deal to be said for that.

There is a great deal to be said, anyhow, for wiping out that portion of the deficit which is directly due to Government interference. I suppose that it would be possible to work out the sum. Many million £s of the deficit are due to the Government stepping in, for example, in preventing it from increasing freight rates. It should be possible for the Government to say that actions had resulted in the loss to the Commission of so much money. Any independent body of chartered accountants could calculate on a broad scale, perhaps to within £5 million, what financial loss was due to direct Government interference.

The Government might interfere in any private company and say, to I.C.I. for example, "It is in the national interest that you keep down the price of a certain basic commodity that you sell. You sell it at X price now whereas it is in the national interest that you should sell it at X minus 10 per cent. We want you to sell it at the lower figure." It is desirable that the Government should be able to say that to a company but if they did so they would also say, "We will compensate you against losses for not being able to carry out your business in the normal manner."

The Government should act in exactly the same way in the case of a nationalised industry as in the case of private industry. If they, by direct interference, cause a definite loss to that industry, they should say that they will compensate the industry for that loss, in the same way as they would certainly have done if the industry so damaged had been a private company.

Another smaller point about the Bill is that I am sorry that it does not survey some of the financial difficulties and problems of the railways more closely. I appreciate that the Bill deals only with the broad question of the loans to be advanced to tide over the gap before the Commission should be paying its way, but there has always been one burden on the railways which has struck me as being grossly unfair. There is a historict reason for it, but that is no ground for not dealing with it as soon as possible. It is the burden imposed on the railways for the upkeep of road bridges which cross their lines. The burden of looking after both the bridges and roads is ridiculous. They should be looked after by the local authorities in the same way as other roads are looked after. I do not know that the cost is substantial. It cannot be enormous, but it is grossly unfair. It may be that we shall find it possible to deal with the matter in Committee.

We on this side of the House support the Bill, of course. It moves in the right direction. Some of us would have liked to see it go further and relieve the Commission more directly of some of the burdens which it will have to bear during the next few years. But the Bill is all right as far as it goes, and we shall do our best to see that it passes through its various stages as soon as possible. I am certain that not only will the Bill have the support of the whole House but that the Commission will have the support of the House too in its attempt to carry out successfully the far-reaching and imaginative modernisation scheme which it has devised.

It would also be the opinion of the House, I think, that in view of the difficulties which it has had to face in recent times and the burden placed upon it and accepted with great reluctance and unwillingness, the Commission has done magnificently in the years during which it has been in existence. The financial returns on the whole are excellent, and show how well the Commission was doing until about a year or two ago, when restrictions were placed upon it, such as the cutting off of the road haulage section. But, as every hon. Member who studies the Annual Report of the British Transport Commission knows, what it has been able to do by way of increasing efficiency has been a remarkable story, particularly in view of the absence of capital development over that period.

The British Transport Commission has done extraordinarily well, and most of us in this House are convinced that, given a square deal by Parliament and the Exchequer, we now have every reason to look forward to seeing our railway system transformed into one that will stand favourable comparison with any in the world, and one that will be a source of ever-increasing pride to those who work in it and to those who use it.

9.26 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Hugh Molson)

This afternoon all the speeches from both sides of the House, much as they differed in their views of Her Majesty's Government's policy, were agreed in paying tribute to what the railways have done in the difficult years since the war, and in expressing hope, and indeed confidence, that they have a bright future before them.

We have heard so much pessimism about the railways that two speeches, one from each side of the House, gave me special pleasure because they expressed anxiety lest British Railways should prove too keen competitors with their own vested interests. The first speech was that of my hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner). He was concerned to make sure that this additional financial assistance to the railways would not be used to undercut coastal shipping. I can give him a complete assurance upon that point. So that we can be fully informed of the particular problems which face coastal shipping, my right hon. Friend has agreed to receive a deputation from that interest.

Then, from the other side of the House, there was the speech of the hon. Gentleman the Member for Bradford, East (Mr. McLeavy). With his customary courtesy the hon. Gentleman intimated to me that he would not be able to be here at the time when I should be replying to his speech. He expressed concern lest the multiple diesel units, which British Railways are now introducing, would prove so successful that they would draw back to the railways many of the passengers who have left them, and have gone to the roads. He was, in fact, concerned for the road passenger vehicles.

Much as I should like to do so, I am unable to give the hon. Gentleman the same kind of assurance that I have given to my hon. and gallant Friend. We feel that it is desirable that the large commuter traffic between, say, Leeds and Bradford, should travel on the railways. But when we are concerned, as we are in this Bill, to try to give assistance to the railways, it is impossible for us to be equally solicitous at this moment if, with the help they are receiving now and the enterprise they are showing, they are drawing some passengers back to the railways.

However, I believe it should be possible for the buses to deal with the ever-increasing amount of passenger traffic which the railways are not able to deal with. When I have had occasion to justify the closing of branch lines, I have pointed out that, in many cases, in rural areas the house to house service given by the buses is not only cheaper but actually more convenient to the people who use it than by going by train. We on this side of the House believe in co-operation and co-ordination between different kinds of transport even if we are not prepared to accept the methods which hon. Gentlemen opposite advocate for that purpose.

My hon. Friend the Member for Hexham (Mr. Speir) began with a tribute to the improvements in the passenger services on main lines which he has noticed in recent years. He went on to say that he hoped that something would be done to relieve British Railways of the burden of the level crossings. I entirely agree with him that it is a most serious burden, amounting now to £1 million a year, four times what it was before the war. I hope that it will be possible, in the British Transport Commission's Private Bill, to include a provision which will relieve it of obligations which I think are no longer appropriate.

My hon. Friend referred to the 20 light diesel units, which, he said, had proved successful and which might keep branch lines going. What is actually said in the White Paper is that they are on order, but I hope they will prove as successful as he expects.

The hon. Member for Hayes and Harlington (Mr. Skeffington), in a speech which raised a number of points, to some of which I hope to reply later, dealt with the question of the vacuum brake. That is a highly technical matter. The hon. Member said that he had discussed it with the Chairman of the Commission and I would not wish to enter upon it beyond saying that I understand that the main reason for adopting it was that it should be possible to apply it throughout British Railways sooner than if a new departure had been made and the air brake had been introduced.

The hon. Member for Enfield, East (Mr. Ernest Davies) raised a number of points, with most of which I propose to deal in the general line of my argument. He raised the question of the representation of trade unionists on the area boards. I have not had an opportunity to go into the matter in detail since he spoke, but I think I am right in saying that there are trade unionists on five out of the six area boards and that in the case of Scotland there is a director who has been concerned with the organisation of labour.

It was the hon. Member for Hayes and Harlington who said that criticism of the railways does not date from the time they were nationalised. That is true. The late John Bright, about a hundred years ago, said: The railways have rendered more service and have received less gratitude than any other institution in the country. If that was true then, it has continued to be true for a long time. However, I believe that the general tone of the debate today has shown that that spirit is at long last changing. Hon. Members opposite may derive such comfort as they can from the fact that it seems to have changed after the nationalisation of the railways and despite the harsh treatment which hon. Members opposite consider that the railways have received from the present Government.

The main charge which has been made against the Government by the Opposition today is, first, that we are to blame for the deficit of British Railways as a result of our general policy and, secondly, that my right hon. Friend intervened improperly in March when he took the decision which has resulted in the production of the White Paper.

Hon. Members opposite will perhaps forgive me if I do not seek, in my limited time, to go over all the arguments about the first charge which were used in 1953 and again in 1956. It is, unfortunately, the fact that the Government's view of what is the right policy for the organisation of transport in this country is different from that of the Opposition. However long we continue to discuss it it seems doubtful whether either will convince the other.

The argument that the deficit of British Railways is due to the denationalisation of road haulage is dependent upon the assumption that it is right that road transport's profits should be used to subsidise the railways. That is a view which we have never accepted, and the Bill is concerned entirely with the finances of British Railways.

The hon. Member for Enfield, East also referred to goodwill and said that it was the item of goodwill in the Commission's accounts which would be a burden as a result of the sale of the lorries. When buses and lorries were first nationalised, the Commission had to pay for the value of both the physical assets and the goodwill. The goodwill was shown in the Commission's balance sheet as £31 million for the buses and £32 million for the lorries.

For the buses, the item of £31 million still remains. There is an item of £15 million for goodwill in respect of the lorries. Of that, £4 million will be paid off out of the proceeds of the levy for the year 1956. The remainder, £11 million, is in respect of the goodwill of the lorries which the Commission continues to hold. There is no reason why it should be paid off out of revenue as it can be perfectly well left in the balance sheet, just as the £31 million in respect of the buses still stands there today.

Mr. Ernest Davies

The hon. Member does not get the point. The point is that in its last Report, in paragraph 188, the Commission said: On the basis of the revised financial arrangements contained in the Transport (Disposal of Road Haulage Property) Bill, the Commission may ultimately be left with a heavy loss on the Disposals Account, which would have to be written off to Revenue Account. The Commission itself made that statement. There has been a loss as a result of the sales which will not be made up by the Transport Levy, or out of proceeds.

Mr. Molson

The hon. Member will realise that I cannot undertake to explain each item in the very considerable accounts of the Commission. This matter does not directly arise out of the debate, but I had thought that I had answered that point. However, I will gladly go into the matter further and certainly write to the hon. Member upon the subject. If he likes to table a Question on the subject after I have done so, I will give him as full an answer as I can.

I come now to the question of inflation. It is true that a rise in prices adds to the difficulties of any railway. Even the Canadian Pacific Railway, although it is not nationalised, has to go through a certain procedure to obtain an increase in its charges as a result of an increase in its costs. I am quite willing to admit that we have not arrived at a solution of the problem of maintaining full employment without an increase in prices at the same time. But I have obtained from the Library comparative figures of the increase in prices during the time hon. Members opposite were in office and during the time that we were in office.

If there is inflation—and I have never known this Government to deny its existence—it was in existence, also, at the time when hon. Members opposite were in office. Therefore, this problem, which so adversely affects railways, is one which cannot be put exclusively upon this Government's shoulders.

Mr. Sparks

The Tory Government said that they would do much better. That is what they told the people in 1951 and 1955.

Mr. Molson

Yes—and the people believed them in 1951, and again in 1955. Judging by recent by-elections, they continue to believe them.

I agree with a great deal that has been said by hon. Members opposite about the causes of the difficulties from which the railways are suffering. There has been the competition of road transport since 1919; there was the depression of industry from 1926 to 1939—

Mr. G. R. Strauss

For thirteen years?

Mr. Molson


Mr. Strauss

There was not a depression all the time. The depression started in 1930. To suggest that there were thirteen years of depression, in which no capital investment could take place on the railways, is ridiculous.

Mr. Molson

The right hon. Gentleman has conveniently forgotten that 1926 was the year of the General Strike. There then ensued the war, and the restriction of capital investment which followed afterwards.

The hon. Member for Birkenhead (Mr. Collick) emphasised the difficulties in which the railways had been put because of the lack of capital investment at that time—and he is entirely right. I am not making any political criticism of the Government that was in power immediately after the war when I draw attention to the fact that they strictly limited the amount of capital which could be invested in the railways. In that their line was in contrast to that of the Governments of France and Holland. I am not saying that they were wrong, because the destruction of the railways in France and Holland was very much greater than it was here.

In this connection, however, it is relevant to bear in mind the allocation for capital investment in the railways. The figures I am going to give are the most accurate that I can obtain. There was a difference in the manner of calculation, but I have tried to have it corrected. In 1948, only 40 million was invested; in 1949, the figure was £43 million; in 1950, it was £45 million; in 1951, it was £46 million; in 1952, it was £43 million; in 1953 it began to go up; it rose to £53 million; a year after that it was £64 million; then it rose to £69 million; and then to £84 million. That increased investment in the railways means that for the first time they are having an opportunity to carry out the necessary modernisation programme.

The fact that they have gone through all the difficulties of the war, the aftermath of the war, and the depression before the war, justifies some temporary help being given to them. That temporary help is being given under the Bill in the form of a loan. A subsidy, a gift, is not justified.

I am bound to say that I have listened to hon. Members opposite today with some mystification. They have frequently referred to the desirability of considering whether something more should be done. I did not gather from the right hon. Gentleman, or from the hon. Member for The Hartlepools (Mr. D. Jones) or from the hon. Member for Enfield, East, whether they thought that a grant should have been made and this accumulated deficit written off. They said that it was a matter which required careful consideration. The Government do not sit on the fence in that way. They have considered it and come to the conclusion that the answer is in the negative.

Mr. D. Jones

As the hon. Gentleman challenges us, may I make it clear that, in our view, three times specifically there has been interference with the power of the Commission to act on a commercial basis. My right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss) said that it was a matter to determine what was the figure. In our view, that should be reimbursed to the railways.

Mr. Molson

I am obliged to the hon. Member. I now know for the first time that a calculation should be made showing exactly what was the cost of the alleged interference; that that should be written off, but that the rest should be left as a burden upon the Commission. I wonder whether it would be possible for anyone to arrive at a clear, factual calculation of the effect of the alleged interference, and whether the figure would not depend very much on the political prejudices and sympathies of the auditor making the calculation.

There has been a criticism of my right hon. Friend for his decision not to approve the full increases originally asked for by the Commission in March of this year. I wish to deal with that matter and give some figures, even at the risk of wearying the House.

First, let me recall that the deficit foreseen by the Commission was £55 million and the extra revenue which it sought was only £37 million, leaving a gap of £18 million. Why was that? It was because the traffic would not bear the heavier increase in charges needed to wipe out the deficit. But even lesser increases were foreseen to yield diminishing returns. From the estimate given to the Ministry by the Commission, it was apparent that a 5 per cent. increase in charges, if fully effective, would yield £18½ million, but, in fact, it was estimated that it would yield only £14 million, approximately 75 per cent.

A 10 per cent. increase, if fully effective, would yield £37 million. In fact, it would yield only £24 million, approximately 65 per cent. A 15 per cent. increase, which was originally suggested, if fully effective, would yield £55 million, but, in fact, it would yield only £27 million, approximately 49 per cent. That clearly establishes that the point of diminishing returns has been reached.

The Commission knew that when it imposed these heavy nominal increases, if it was not to lose traffic, it would be necessary to make reductions in respect of those particular forms of traffic in which there was competition. It was with that in mind, as well as with the general national consideration that it was desirable to try to arrest this spiral of ever-increasing prices and costs, that my right hon. Friend took the courageous decision that he did in March of this year.

I now turn to the statement that has been made by the Transport Commission in paragraph 85, in which it deals with two possibilities, either of borrowing money and keeping its charges down or trying to put the whole burden upon the users of transport. Public opinion. it says, would be particularly resentful of any heavy increase at this time. In the long run the immediate gain of revenue would probably be purchased at the expense of a substantial contraction in the traffics offered to the Commission. In other words, any attempt to impose large increases in their fares or charges in the near future would, so far as can be estimated at present, damage the Commission's business temporarily for certain and possibly permanently. That is the view put forward on its own responsibility by the Commission and that was the view which my right hon. Friend took in March this year when he had before him the figures which I have quoted.

I was asked explicitly by the hon. Member for Enfield, East whether my right hon. Friend would undertake that he would not, in similar circumstances, act in the way that he acted in March. My right hon. Friend is not prepared to give such an undertaking. He is convinced that he acted in the right way in March, and in similar circumstances he would act in the same way again.

I turn to the statement that my right hon. Friend made on 19th March, which has been strangely misunderstood. I do not believe that hon. Gentlemen mean to misrepresent my right hon. Friend. What my right hon. Friend had in mind in March was exactly what has happened. Having foreseen that the Commission was being ground between the upper and nether millstones of increased cost and inability to make increased charges to users of transport, my right hon. Friend was anxious that the Commission should review the whole situation during the period of six months with a view to seeing what the modernisation programme would produce.

It was never the intention of my right hon. Friend, nor was it in his mind, that in six months any substantial economies would, in fact, be made. [HON. MEMBERS: "Oh."] This is the six months' period in which the Commission would be able, in the new spirit of the industry, to bring forward sweeping proposals to increase its efficiency. Those are the proposals that are contained in the White Paper. My right hon. Friend went on, later, to say to my hon. Friend the Member for Truro (Mr. G. Wilson): In six months we shall be able to reassess the position in the light of what the Commission has been able to do between now and that time."—[OFFICIAL REPORT, 19th March. 1956; Vol. 550, c. 831.] What the Commission has been able to do is to produce this White Paper, with chapter and verse showing exactly what economies it expects to be brought about.

Mr. Ernest Davies

I will not read out all the passages, although both myself and my right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss) have quoted them. How does the Parliamentary Secretary account for the statement that it would mean more efficient work arising out of better relations in the industry? That is in complete contradiction to what the Parliamentary Secretary has now said.

Mr. Molson

In January of this year the Transport Commission agreed to a substantial increase in wages. From that time there has been a very great improvement in the general relations in the railway industry. An efficiency committee has been set up, and a most close and cordial relationship exists between the Commission and the Trades Union Congress on the measures that are to be taken. The trade unions support the proposals that have been put forward in the White Paper.

It has been suggested, not with any very great confidence, that the burden of the capital structure of the Transport Commission is unduly great. I hardly think that hon. Gentlemen opposite will press that point. If they will turn to the Fourth Schedule of the 1947 Act they will see the basis upon which their Act pays compensation to the shareholders and other security holders in the old railways. The value there taken was the Stock Exchange value. For example, holders of the London and North-Eastern Railway Company's deferred ordinary stock of £100 nominal value were compensated at the rate of only £3 12s. 6d.

I make no complaint about that, because it was based on the fact that a dividend had not been paid on that ordinary stock for a considerable period. The fact that the compensation was based upon the market value of the shares shows that what the country was able to take over in the form of the railways represented the investment of a great deal more capital than the State paid for.

It was a little ungracious of the right hon. Member for Bishop Auckland (Mr. Dalton) to refer to what was taken over as a pretty poor bag of physical assets".—[OFFICIAL REPORT, 17th December, 1946; Vol. 431, c. 1809.] when, in point of fact, the compensation paid took that into account and when, also, it was so largely due as the hon. Member for Birkenhead has pointed out, to the fact that there was not much capital available for reinvestment.

In conclusion, I will quote what was said by my right hon. Friend the Member for Woodford (Sir W. Churchill) at the beginning of this Government. He gave an undertaking that in respect of those industries which we did not denationalise we would do our best to make them a success. He said, in his inimitable and whimsical way: We abhor the fallacy, for such it is, of nationalisation for nationalisation's sake. But where we are preserving it, as in the coal mines, the railways, air traffic, gas and electricity, we have done and are doing our utmost to make a success of it, even though this may somewhat mar the symmetry of party recrimination."—[OFFICIAL REPORT, 3rd November, 1953; Vol. 520, c. 23.] That has been the policy of the three Ministers of Transport under whom I have served and it is to try to give effect to that policy that we are asking the House to agree to the Second Reading of this Bill today.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).