§ 9.53 p.m.
§ Mr. Ernest Davies (Enfield, East)
I beg to move,That an humble Address be presented to Her Majesty, praying that the Harbours, Docks and Piers (Additional Charges) (Amendment) Regulations, 1956 (S.I., 1956. No. 548), dated 11th April, 1956, a copy of which was laid before this House on 16th April, be annulled.If it is agreeable, we might take this Motion and the two following ones relating to transport charges together.
We wish to debate tonight, in the short time that remains to us, the contents of these Regulations which have been made and laid by the Ministry of Transport. We wish to do so because we consider that they are the result of unwarranted interference by him in the affairs of the British Transport Commission. These three sets of Regulations, which limit the increase in freight charges on British Railways to 5 per cent., and, in certain exceptional cases, allow some higher charges, and which increase the charges on canals by 5 per cent. and in the case of the docks by 7½ per cent., prevent the Commission from fulfilling its statutory obligations. We therefore consider that the Minister is doing harm to the Transport Commission and to the country's transport system generally.
It is quite true that the Minister can intervene in the affairs of the Transport Commission when it is considered to be in the national interest, but it is doubtful whether, in this case, the laying of these Regulations, which result from his intervention, is in the national interest. It is true that they bring some temporary relief to the transport users by comparison with the charges which the Commission wished to impose, but it may well be that in the long run, as a result of the Minister's action, the charges which the Commission will ultimately have to impose will be higher than those they wished to impose earlier this year. In other words, in the long run the transport user will be in a worse position than he is now.
The Commission is at present in a very difficult financial position, and because of this it found it necessary to apply to the Minister to increase its charges. I 2338 want to remind the House of the position which has led to the making of these Regulations. We are not tonight concerned with passenger fares; these Regulations do not involve passenger fares, which come under the 1953 Act and are the responsibility of the Transport Tribunal. Nevertheless, the Commission had applied to the Tribunal for an increase in passenger fares and that application was before the Tribunal at the time the Commission applied to the Minister for an increase in freight charges.
The application in regard to freight charges had to be made to the Minister because, under the transitional provisions of the 1947 Act, he has the responsibility, but there is imposed upon him the obligation that when the Commission applies to him for an increase in charges he must act in accordance with Section 82 of the 1947 Act, which reads:… before making any regulations … the Minister shall consult with, and consider the advice of the permanent members of the Transport Tribunal.What happened? An application was made to the Minister on 21st February this year for a 10 per cent. increase in freight charges, for a 7½ per cent. increase in respect of docks and canals, and for certain higher charges. On 19th March, before consulting the Tribunal and before acting in accordance with the Section which I have quoted, the Minister came to the House and announced his decision to disallow an increase of 10 per cent. and 7½ per cent. respectively and to make these Regulations for an increase of only 5 per cent.
He said:… I consider that it is expedient that regulations should be made to make increases in general not exceeding 5 per cent. and I am accordingly consulting the Transport Tribunal." —[OFFICIAL REPORT, 19th March, 1956; Vol. 550, c. 830.]He had made up his mind that the increase was to be only the amount in the Regulations—5 per cent.—but, having made up his mind, he said, "I must act in accordance with the Act of Parliament and I will, therefore, refer the matter to the Tribunal." He prejudged the position by passing to the Tribunal his recommendation that the increase should be limited to 5 per cent. In asking for their advice, he was, in effect, telling them that he would ignore what advice they gave him.
2339 The Minister's action in this case was most extraordinary and irresponsible. He overruled the Commission's application in respect of passenger fares—although we are not concerned with that tonight—and, at the same time, informed the Tribunal of his decision about freight charges before he had given them the opportunity of deliberating upon the applications which had been made. Of course, the Tribunal is an expert body which during the last six months has had three occasions to examine the finances of the Commission. It had to do so in December last year and in February this year, when applications for increased passenger fares were made.
At the same time, it was considering the railway freights charges scheme over a period during which it had 44 days of hearings; and a decision on that has not yet been reached. But the Tribunal had been examining the finances of the Commission and was well aware of how they stood. The Minister ignored that fact and told the Tribunal that he was limiting the increase to 5 per cent.
The Minister's next move was even more extraordinary than this. In accordance with his request—and in accordance with the terms of the Act—the Tribunal advised the Minister, on 3rd April, that what he was doing in proposing to make these Regulations was contrary to the Commission's financial interests, that it would prevent it from fulfilling its statutory obligations and that the Commission should be permitted to put up its charges to the full extent that it had applied for, which was, of course, 10 per cent. instead of the 5 per cent. he had decided upon.
In the memorandum of advice which it presented to the Minister, the Tribunal stated:We regret that we are unable to agree with the provisional decisions which you have reached…That is, to make these Regulations limiting these amounts to 5 per cent.We think that in the light of the past history and present prospects of the Commission it is plainly necessary that they should be enabled to take all such measures as are available to stay the progressive deterioration of their financial position, and that the increases for which they have sought your sanction "—that is, the 10 per cent. 2340are urgently necessary if this object is to be attained. We recommend accordingly that regulations be made authorising the increases proposed by the Commission.The Transport Tribunal, in face of the Minister's recommendation and decision that the increases should be only 5 per cent., and knowing his views, came down categorically on the side of the Commission and said that it should be permitted to increase the charges to the full extent that it had requested.
In spite of that, in face of this definite advice of the Tribunal, what did the Minister do? One would have thought that he would realise his mistake and bow to the greater knowledge of the Tribunal; that he would accept its recommendation and scrap the Regulations as we are now suggesting. But no. On 11th April, a week after he had received its advice, the Minister, in reply to a Parliamentary Question which I put to him, told the House that he proposed to make these Regulations limiting the increase to half of what the Commission had asked for and to half of what the Tribunal had considered "urgently necessary". And he postponed the full increase for a period of at least six months.
The Minister, therefore, brushed aside the advice which the Tribunal had given him. He ignored its expert opinion. Apparently, he had expected and hoped that the Tribunal would act as a rubber stamp. He must have overlooked the fact that that Tribunal is a statutory body which has vast experience, with far more experience in the Commission's affairs than he has, and that it gave this objective considered and wise opinion.
On what grounds does the Minister justify the action which he took, and on what grounds does he still justify it? Actually, in the statement that he made to the House there are only vague hopes as to the position of the Transport Commission changing; only vague hopes to justify his not allowing the Commission to meet its statutory obligations to pay its way over this next period.
The right hon. Gentleman told the House that relations were better within the industry. They may well be, and for that we are all grateful, although I do not think that the Government can take the credit for that. He says that there is a new initiative within the industry and that economies and efficiency can 2341 now get the Commission on to an economic basis. He says that over the next six months there must be a review of the finances of the Commission.
The Minister seems to me to have a mistaken idea. He seems to think that until he came along as the "new boy," as he likes to call himself—he has done that on many occasions—with his great inexperience, the Commission had done nothing; that it had been standing idly by waiting for him to appear and tell them how to run its affairs. I say that because, on 19th March, the right hon. Gentleman said:Is the House really satisfied that we can go on with this sterile business of putting up charges year after year
§ Mr. Davies
The Parliamentary Secretary agrees. Let him wait.——"and making no effort at all to absorb some of the increased costs?"—[OFFICIAL REPORT, 19th March, 1956; Vol. 550, c. 832.]The Parliamentary Secretary agrees. Does he realise that in the past the Commission has succeeded in absorbing a very considerable part of the increased cost? I will give him some figures to prove it to him. Freight charges, including this latest increase of 5 per cent., have gone up by 185 per cent., compared with pre-war. Wholesale prices have gone up by 244 per cent. Therefore, freight charges have gone up considerably less than have wholesale prices.
§ Mr. Davies
The Parliamentary Secretary shakes his head. I have obtained these figures with some care. They can be obtained from published statistics which are available.
If one likes to refer to other figures, coal prices alone have gone up far more, and iron and steel prices have also gone up more than freight rates. As for sleepers, goodness knows how much they have gone up. Passenger fares have doubled. They have gone up 100 per cent. compared with pre-war. Retail prices have gone up 146 per cent. on an average. That means that what is purchased today costs almost 50 per cent. more compared with the cost of passenger transport. All the statistics of the Transport Commission show the 2342 greater efficiency of the Commission, of the operations of its system, and particularly the railways, since 1948.
If the Minister thinks that only now has the time arrived when the Commission is going to absorb some of these increased costs, he is very much mistaken. It is not due to him that this is taking place. It has been a continuing process over a very long period, and, certainly, the Commission will have to continue to absorb costs to the greatest extent possible. But it is quite impossible for the Commission to absorb all the increase in costs.
I will give a few figures taken from statements by the Minister and from findings of the Transport Tribunal to indicate the very serious position of the Commission and why these Regulations do not go far enough. As the House knows, the deficit at the end of 1956, when taking into account the increased charges under these Regulations will be £124 million. The 5 per cent. increases which these Regulations permit in a full year would bring in £20 million, but as they will operate for only eight months this year they will bring in only £13½ million, so that at the end of this year the Transport Commission will have an accumulated deficit of £110½ million.
Had the Commission's original application been accepted, and the full £37 million per annum been received—or rather, received for the nine months that remain in this year, which would have meant £28 million—the deficit at the end of the year wo0075ld have been £96 million, which is high enough, but it would have been £14½ million less than what it will be, thanks to the Minister's intervention.
However much the Commission improves its conditions during the rest of this year, does the Minister seriously believe that by delaying an increase in charges for this period of six months and laying these Regulations, limiting the increase to 5 per cent., he will in any way meet the deficit which will be running at the rate of £35 million a year on the basis of the present increases? On the increase of 5 per cent., under these Regulations, the Commission will still be running in a full year with a deficit of £35 million a year. If the Commission had been granted its full application, the deficit would be running at the lower rate of £18 million per annum.
2343 Does the Minister really believe that increased economies and greater efficiency and this new spirit which we welcome in the industry can possibly make up that deficit and enable the Commission to pay its way? He.knows that that is quite impossible, and, knowing that it is impossible, he had no right to prevent the Commission from endeavouring to meet its statutory obligations in the way which it wished to do.
When the Minister decided to make these Regulations what did he have in mind as to the Government's policy in the future? What does the Minister intend to do about the present position? He is acting most unfairly to the Commission because, on the one hand, he is preventing it from operating commercially, preventing it from fulfilling its statutory obligations, and, on the other, he gives it no assistance whatsoever. He leaves it with this annual deficit, running at £35 million, and does not say how it is to get out of its difficult financial position. He has nothing positive or constructive to offer. It is up to the Minister to tell us what he intends to do about the Commission.
Personally, I think that the Minister is heading for a subsidy, because I do not think that the action that he has followed so far indicates that he will put the Commission on a footing which will enable it to pay its way. That is partly due, of course, to the transport policy which the Government have pursued, and which, if I attempted to discuss it tonight, would be quite out of order; but I would mention. in passing, that the taking away of certain of the profitable sections of the Transport Commission has made the laying of these Regulations necessary and does justify them.
In conclusion may I say, that in introducing these Regulations, providing for only half of the amount asked for by the Commission and only half of what the Tribunal, with its expert knowledge, considered urgently necessary, the Minister has made it far more difficult, if not impossible, for the Commission to meet its statutory obligations in the foreseeable future.
He is piling up trouble not only for the Commission but for himself, because I think that he will have to come to the House six months' hence and ask for increases far higher than those which the 2344 Commission sought originally and which he has rejected. Ultimately, he may well have to seek a subsidy for the Commission. The right hon. Gentleman's intervention, leading to these Regulations, which have limited to such an extent the amount which the Commission can raise, and his failing to accompany them by any positive policy whatsoever, indicates that he has acted without due consideration, rashly and contrary to the national interest.
§ 10.15 p.m.
§ Mr. David Jones (The Hartlepools)
I beg to second the Motion.
The charge which we make against the Minister of Transport tonight is that he has tried to get the best of both worlds. On 19th March, he saidIn these circumstances the Government came to the conclusion 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 in regard to the nationalised industries' charges which I have already mentioned.Section 4 (1) of the 1947 Act statesThe Minister may, after consultation with the Commission, give to the Commission directions of a general character as to the exercise and performance by the Commission of their functions …If the national interest demanded that the Minister should disregard the request of the Commission, why did not he have the courage to take the responsibility on his own shoulders by issuing a direction? After all, we know about those convivial afternoons after lunch when the Minister tries to shake off his responsibility and place it on the Commission, even though under the Act he has the power to take the responsibility on himself. He does that deliberately in order to avoid making it look like a political move.
§ The Minister of Transport and Civil Aviation (Mr. Harold Watkinson)
I should be interested if the hon. Gentleman would tell me a little more about convivial afternoons after lunch.
§ Mr. Jones
The right hon. Gentleman knows perfectly well that he follows the practice begun by his predecessors. After all, I served in a very humble capacity for four and a half years with his predecessors, but perhaps I had better leave the matter where it is.
All I am saying to the right hon. Gentleman is that if he desires to discuss 2345 the matter with the Commission and if, in the national interest, it was policy that he should not permit the Commission to carry out its request to him on 21st February, the courageous thing for him to have done was to have issued a direction to the Commission so that the responsibility would fall fairly and squarely on his shoulders and not be shared by the Commission.
The right hon. Gentleman knows perfectly well that in order to be commercially sound, as it wished to be, the Commission had to make an application to him and that he, in turn, had to submit the matter to the Transport Tribunal acting as an advisory committee. Even that procedure was not carried out as the 1947 Act intended. Section 82 (1) of the 1947 Act, dealing with transitional provisions, states:Provided that before making any regulations under this subsection, the Minister shall consult with, and consider the advice of, the permanent Members of the Transport Tribunal, acting as a consultative committee.How could the right hon. Gentleman consider the advice of and consult with the Transport Tribunal when on 19th March he told this House what he proposed to do even before the Tribunal had had an opportunity of looking at the matter at all? Even in his statement to the House on 19th March, if he will forgive me for saying so, the right hon. Gentleman was not as forthcoming as one would have expected from a Minister of the Crown, because he attempted to gloss over the fact that the purpose of the Commission was to increase the charges on the whole of its services—the railways and all its ancillary undertakings.
The right hon. Gentleman said:With regard to railway freight, dock and canal charges in respect of which the Commission has made an application to me under Section 82 of the Transport Act, 1947, I consider that it is expedient that regulations should be made to make increases in general not exceeding 5 per cent. and I am accordingly consulting the Transport Tribunal.
As regards those increases in passenger fares for which the Commission has an existing authority from the Tribunal, the Commission will be making its own announcement. These changes will increase the Commission's revenue by some £20 million in a full year."—[OFFICIAL REPORT, 19th March, 1956; Vol. 550, c. 829–30.] The Commission had previously asked for higher increases which would have given it £37 million.
2346 I suggest that to any impartial observer those two paragraphs meant that the right hon. Gentleman was merely talking about the railway services of the Commission, but we now know that the £20 million estimate, which he considered the 5 per cent. increase would give, not only included increases in railway charges but also increases in London Passenger Transport charges and in the charges of Scottish and provincial bus services, and indeed of British Road Services, but the right hon. Gentleman said not one word about that in his statement to the House.
We now know, from sources which are available to me, that the £20 million and the £37 million both included not only railway charges but charges on all the ancillary services of the Commission. Why did not the right hon. Gentleman take the House into his confidence and tell us on 19th March that the £20 million included all those services? Perhaps he will tell us tonight why he overlooked the matter.
He will remember, no doubt, that on 19th March, in a supplementary question, I asked him something about the deficit which the Commission has to carry. He will also no doubt remember that in another capacity he took part in a debate in the House on 3rd February, 1955. The right hon. Gentleman was followed in that debate by the present Leader of the House, who was then Chancellor of the Exchequer. That right hon. Gentleman, the present Lord Privy Seal, said on that occasion:I will now address myself to the particular remedies, the adjustment of fares and charges and modernisation. The adjustment of charges, to which reference has been made in the Press, has two aspects, sufficiency in size and flexibility. It is reasonable enough, if the Commission is to pay its way that it must be able, subject to proper safeguards, to raise charges to meet increases in its costs and thus reduce its deficit…."—[OFFICIAL REPORT. 3rd February, 1955; Vol. 536, c. 1303.]The present Minister of Transport sat alongside the Lord Privy Seal when that speech was made, and there is nothing in HANSARD to show that he sought to intervene in any way.
Five days later there was another debate on transport in the House. In winding up for the Opposition, I sought to raise the problem of the Commission's then deficit. This is what I said:According to the Transport Commission's 1953 Report there was a deficit in the accounts 2347 of £27.3 million at the end of 1953. It estimated that its deficit in 1954 would be a further £15 million. In paragraphs 42 and 43 of the Court of Enquiry Report the Commission's 1955 deficit is estimated at £25 million. It has been assessed that additional wage claims which have been made since the beginning of the year will amount to a further £10 million. According to my calculation, therefore, by the end of 1955 the Commission will be £77 million in the red.I wonder if the right hon. Gentleman would tell the House tonight how far I was out in my estimate of February, 1955? Certainly I was much nearer than his Joint Parliamentary Secretary, because the hon. Gentleman said this:However, we take the view that the estimates which have been put forward by the two hon. Gentlemen opposite"—that is, my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) and myself—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."—[OFFICIAL REPORT, 8th February, 1955; Vol. 536, c. 1838 and 1846.]I had argued in that debate that the modernisation scheme would not show any substantial savings and results for at least five years. Will the right hon. Gentleman deny that tonight? Will he admit that it is not now likely that any substantial savings from modernisation are likely to be realised before 1960? Will he tell the House what the Government propose to do about the £124 million deficit which will accrue in the accounts of the Commission by the end of this year?
The Minister cannot have it both ways. He cannot deny the right to the Commission to put its charges up on a commercial basis and leave it to carry this £124 million, and as much more as will accrue in deficit in each succeeding year from this year. Or will he take the advice offered by the right hon. Gentleman who is now the Minister of Fuel and Power, who, on 3rd February, 1955, was the hon. Member for Birmingham, Hall Green (Mr. Aubrey Jones)? He, speaking in the debate to which I have referred previously, had this to say:That being so, we must not think in terms of political interference in the affairs of the Transport Commission. It is laid upon the Commission to pay its way, and in so far as there is political intervention that onus upon 2348 the Commission is weakened and the Commission has an alibi or a pretext elsewhere for its inability to pay its way."—[OFFICIAL REPORT, 3rd February, 1955; Vol. 536. c. 1354.]I suggest to the right hon. Gentleman that that is precisely what he has done. He has refused to allow the Commission to meet its obligations in a commercial fashion, and he has refused to allow the Commission to raise its charges.
Here again may I make the point to the right hon. Gentleman that he has not even been fair to the Transport Tribunal. For instance, it makes the point plainly in paragraph 2 that the Commission is not likely to be able to make both ends meet, and that in fact the charges which it sought to apply were reasonable in all the circumstances.
We should like to know, too, what the right hon. Gentleman proposes to do about the deficit. Does he really believe that he can get out of the people employed in the Commission's services the best possible service if they have to carry this deficit from year to year, if they are precluded from raising their charges, if he ignores the advice of the Transport Tribunal, acting as an advisory committee, if he submits the matter as a matter of course to the Tribunal after he has made up his own mind, when he could act under power given in the 1947 Act, by which he could take the responsibility fairly and squarely on his own shoulders?
According to The Times of 16th May, the right hon. Gentleman was described in another place as the "Napoleon of the air". I suggest to him that if he carries on in this way he will be known as the pasteboard Cesar of the railways as well.
§ 10.32 p.m.
§ Mr Geoffrey Wilson (Truro)
I should not venture to delay the House by intervening in this debate at this late hour were it not for the astonishment I feel at the attitude taken by the hon. Member for Enfield, East (Mr. Ernest Davies) and the hon. Member for The Hartlepools (Mr. D. Jones). We have heard much from them about the Minister; we have heard much about the Commission; we have heard much about a deficit. We have not heard one word from them about the people who seem to me to be the people most concerned with transport—the users. It does not seem to have occurred to either of the hon. Gentlemen 2349 that these Regulations could have anything whatever to do with the people who use these facilities.
§ Mr. Ernest Davies
If the hon. Member had listened to some remarks which I made fairly early in my speech he would have known that 1 said that in my view the transport users will be worse off because of the Regulations, because they will result in higher charges than there would have been had the charges asked for been accorded. It is the transport user who will suffer.
§ Mr. Wilson
If the hon. Member did say that, I did not gather that from his remarks. The greater part of his speech and of the speech of the hon. Member for The Hartlepools dealt with the Minister and the Commission.
I think that the general public welcome these Regulations as an indication that here at last we have a Minister who is able to bring to the attention of a nationalised industry that there may be other ways of meeting a deficit than immediately putting up the charges.
§ Mr. D. Jones
If the Minister was so concerned with the interests of the users, why did he not implement the provisions of the 1947 Act and take the responsibility fairly and squarely on his own shoulders?
§ Mr. Wilson
I cannot tell what my right hon. Friend's motives were. I am saying merely that the public welcome these Regulations as some indication that there may be other ways in which such deficits can be met.
The provisions which we made in the 1953 Act for greater flexibility in charges have not yet come into force. We hope that they will have an effect in increasing the revenues and the earning capacity of the railways. In the meanwhile, there are people in the House and outside who are not wholly satisfied that everything has been done that could be done to achieve economies and to run the transport undertakings on commercial lines.
The hon. Member for The Hartlepools referred more than once to the commercial management of transport, but that, apparently, to him means merely raising charges. Other commercial undertakings have to consider other matters as well, because a deficit may 2350 arise not only because of unavoidable costs but because the public do not want the services they provide. That might apply to railways or anything else.
So, when one finds a falling off in revenue, it is common sense to do every thing one can to meet the needs of the moment, which may not have been the needs of yesterday. Transport, like any other undertaking, has to be under constant review to try to improve its services and meet the changing needs of the public.
My hon. Friends and I, who welcome the Regulations, think that this is at any rate an indication that something could be done in those directions. Perhaps increasing charges is not the only method of dealing with the problem.
§ 10.36 p.m.
§ The Minister of Transport and Civil Aviation (Mr. Harold Watkinson)
I am grateful to the Opposition for putting down these Prayers. Hon. Gentlemen opposite would, 1 am sure, agree that they are put down more to elicit from me in greater detail than one is able to give at Question Time the reasons for my action than to try to deprive the British Transport Commission of some revenue. I realise that the House is entitled, as the hon. Member for The Hartlepools (Mr. D. Jones) said, to a full explanation from the Government as to why they took this action.
First, may I say that I do not regard this as a political issue. It is far too important, as I shall show, for it to be that. This is the point which I must get on the record. If there is to be an argument about the delays which have been imposed on the Commission—which have undoubtedly lost it revenue—I must tell the House, having turned up the various decision which have been taken since the railways were nationalised, that the largest estimated loss of receipts to the railways through delaying the demand to increase charges occurred in the life of, not the Conservative Government, but the Socialist Government. The date of the decision was 1949.
I merely say that to show, quite fairly, that if one is to say that there is an element in the deficit—of course there is—which arises from delayed applications through Government action, then the Socialist Party is at least as guilty, 2351 or, as I think, rather more guilty than the present Government. Let us get it on the record and make it quite plain that, if one is going to look at the deficit in that way, the Socialist Party and the Conservative Party equally bear some responsibility.
There are, however, much more important things than that. The hon. Member for The Hartlepools mentioned my relationship as Minister with the nationalised industries for which I am responsible. I want to make my position quite plain. These industries, as we would all agree, are a major factor in the increasing drive for efficiency and prosperity in which we all know this country has to succeed to survive. If they are to play their full part, they must—I do not think that there would be any disagreement in the House about this— reflect the highest standards of team work, efficiency and productivity in the national interests.
That is part of what I conceive that I have to try to achieve through the proper exercise of my statutory duty. It may be said that it is rather a tough assignment. None the less, I must try to discharge that responsibility and I would say that this position is fully understood by the Chairman of the Transport Commission. I do not have the benefit, I regret, of convivial afternoons after lunch with the Chairman— it may be that the hon. Member for Enfield, East (Mr. Ernest Davies) had that benefit when he had responsibility for such matters.
I conduct my affairs with the Chairman on the basis of the greatest co-operation and the greatest willingness to work together in what is, in my view, not a political task but a very urgent and practical task, to try to make our railway service play its full part in the economy and not in any way to put a drag upon it. I have had the utmost co-operation from the Commission, the regional boards, and the Chairman himself in this task.
I repeat that I think it follows quite logically from the Government's view that those industries which are not denationalised should, none the less, be made as efficient as possible. It is only by taking them out of acute party political controversy that they can be made 2352 efficient. These industries must be treated as public utilities and the Ministers responsible for them must try to improve and increase their efficiency and service to the public in every possible way. I see nothing wrong in doing that, or in trying to run an industry of this kind on sensible and practical lines. Neither do I see anything wrong with using the general principles that are applied to enlightened public industry. It is, indeed, as a public utility that we must judge the Transport Commission.
I think it is due to the House that I should briefly give a little of the back history before I come to the actual decisions taken by the Government and say what we intend to do. Although I have been charged with responsibility for the Commission for only five months, I saw a great deal of it during the four years when I was at the Ministry of Labour and National Service. I was led to the view that one of the basic things wrong with the Commission—I do not say this in any spirit of apportioning responsibility —was that its human relations were not right or conducive to efficiency.
As I think hon. Gentlemen know, two-thirds of the Commission's total costs is represented by salaries and wages. They also know, I think, that we cannot hope to get the right answer out of our great modernisation plan unless it is backed by the people who have the old spirit of railway service duty, and a desire to give efficiency to the travelling public and to industry. All these things, in my view, were not as good as they should be, and I saw a good deal of them when I was at the Ministry of Labour and National Service during those four years.
When I came to this office, it seemed to me that the unlucky Christmas rail crashes and the beginning of yet another difficult argument on pay did not provide the kind of atmosphere in which one could look for the implementation of the modernisation plan by the people who had to do it. Yet I was quite sure that the old underlying loyalties were there. Perhaps I might mention that I showed my belief then by the telegram which I sent to the Deputy-Chairman of the Commission about the very fine work the railway men did in the fog of early January of this year, when the railways were the only public service that kept moving. Later, the Chairman of the Commission 2353 marked his belief in the men in a rather more practical manner by awarding a pay increase in a just and swift settlement which, I think, surprised many railway men. He showed that he believed something had to be done to sweep away the bitterness and frustration of the past and to try to get back to the old spirit of the railways.
I mention that because it is the beginning of the story about the deficit. The pay claim was a claim which I support—and I did so publicly at the time—as being right, just and fair. But none the less, it cost £20 million—
§ Mr. Watkinson
I am coming to that in a moment.
I said that that increase of £20 million to the deficit, which arose quite properly from the pay claim, was the beginning of the position which led to the application to increase the charges, which is the subject of the debate tonight —
§ Mr. G. A. Pargiter (Southall)
Is the right hon. Gentleman suggesting that there was frustration on the part of the workers on the railway before nationalisation, or that the frustration came with nationalisation?
§ Mr. Watkinson
I hope that the hon. Gentleman will not try to bring in an argument about nationalisation, because I have no intention at all of dealing with it; there are far more important matters to be dealt with. All I am saying is that the situation at the beginning of this year was not a very happy one and I believe that no railway man will deny that there is a new feeling as a result of the just and fair pay claim which I have been discussing.
But here I come to the price for this, which is £20 million. These were the decisions taken before the Commission came forward to me in February with proposals to increase freight and passenger charges so as to produce some £37 million in a full year. These decisions were essential to get the human relations right and to try to back up the modernisation plan with the most efficient use of the new equipment.
2354 Why were they essential? This is a point to which insufficient attention has been paid and which has not been mentioned at all in this debate. What has not been noticed is that the Commission's proposals asked for £37 million more in increased charges, all of which would have to be borne by industry and the travelling public. The hon. Member for The Hartlepools has talked about commercial charging and I am quite sure the Commission came forward with the highest charges it thought it could commercially get; if it did not it was neglecting its duty, and I do not think it was. Those charges left it £18 million short of what was necessary to discharge its obligations under the 1947 Act.
Therefore, we have a position where, whatever the Commission apparently could do, in February of this year we were £18 million short of what was necessary to fulfil the Commission's duty under the Act and, on the railways alone, no less than £24 million short of what they should do to fulfil their obligations. When we are faced with facts of that sort it is not much good doing what both hon. Members have asked the House to do, just to try to blunder on by raising charges and hoping for the best.
§ Mr. Watkinson
I have carefully explained that the Commission, although doubtless raising the charges to the maximum commercial extent, found that there was a gap of no less than £24 million which it could not recover. Therefore, action such as the Government decided to take at that time, which I will in due course describe to the House, was inevitable.
I say frankly to the House—and the House must take account of it because it will hear more of itx2014;that if something cannot be done in the next year or so to gain improvements in operating efficiency, the Commission may well find itself crushed between the upper and lower millstones of an increased deficit and an inability to recoup the deficit by increased charges, because the economic limit of increasing charges has been reached. This is the situation which faces me as Minister.
§ Mr. Ernest Davies
I am trying to follow the right hon. Gentleman. He says that there was this very big deficit of £18 million, which we do not deny. The action he took was to increase that deficit to £35 million. That is what we cannot understand. Why did he take that action?
§ Mr. Watkinson
Perhaps the hon. Gentleman will have the kindness, if he can bear it, to listen to me to the end. I think that I shall be able to satisfy him. The Commission runs the risk of being literally crushed under an increasing deficit which it cannot recoup because it has reached the economic limit of the charges it can impose on the public and on industry. The Commission could have applied the full level of the freight charges it wanted to only over a very small field. Indeed, if it comes forward and increases them in September, as I have informed the House that it may have to do, the increased charges will have to be applied over a smaller and smaller field of traffic unless more business is not to be lost to the railways.
This fact alone made it essential, in the Government's view, to take stock of the position. As the hon. Member correctly said, it is the Government's view that we must try to make a concerted and definite attempt to see that this industry does all it possibly can to absorb its increased costs instead of passing them on to the public and to industry—because, when passed on to industry, these increases are a direct addition to the cost of everything which industry makes.
It was decided to put a brake on the charges to the extent of allowing roughly half of the increase in freight charges requested. The hon. Member for The Hartlepools asked why I did not give the Commission a directive. Because it was not necessary. As the Tribunal clearly recognised, I have the responsibility for taking this action, and I took it on my shoulders, as it was proper for me to do.
Another matter which has not been mentioned tonight—and I understand that it was not entirely relevant to the Regulations, since they deal with freight, docks and canal charges—is the fact that the Commission at this time, with no pressure from me and no request from me, of their own volition did not go forward with passenger fare increases of nearly £5 million 2356 which they could have carried out without any authority from me at all. The Commission took that decision because it wanted to play its part and because it accepted that this was a time of great decision for the railways, when the whole matter had to be looked at in the urgent light which we can get only when everybody is put under some pressure to take action speedily.
I accept this policy of deferment. Although it will have lost the Commission about £8 million in revenue in the six months, it has to be considered against the necessity of bringing home to everyone in this great industry the present position of the industry in order that a more efficient and profitable future can be secured for it.
We have had nine years' experience of the Commission, and I think that it now has the right kind of organisation. A measure of justice is being done in sorting out its ancillary services so that there is the right mixture of public and private ownership—and that answers the suggestion that we are interfering with the Commission. If we are doing so, we are interfering to give it about 7,500 lorries more, which will continue to bring revenue to the Commission.
We must consider this matter against the background of an increasing deficit—and I doubt whether that deficit can be overcome by increasing charges, unless there are some countervailing economies. Against this background, we must remember that the Transport Commission is asking the Government and the country to provide it with £1,200 million of scarce resources in steel, wagons, electrical gear and other equipment. Many of those resources could be exported. Much of the equipment could be used elsewhere at home, for example, for building roads. It might be politically more convenient for me to build roads than to press on with this task on the railways.
It must be faced that we have this demand on the national economy from an industry which, at the moment, does not appear to be able to make ends meet. I am quite certain that it is in the best interests of the railways to face the position now. Unless they can show —as I believe they can, and I will give some facts in a moment—that, from clearly ascertainable facts, the expendi- 2357 ture of this great sum and the use of all these scarce resources is justified, in just the same way as the railwaymen are already showing that the new deal they are getting is justified by their greater skill and efficiency—and I pay that tribute to them—it will be increasingly difficult for the Government, and for me as the responsible Minister, to justify this great and continuing expenditure of resources on modernising the railways. We all know that unless it is done the railways cannot march forward into the future as a modern system at all.
That is the general background which forms the full justification for this action, which was taken in order that there should be the six-month critical reexamination of the whole system of railways—of their efficiency, and of their operation. I will just indicate now some of the things which we are considering in this six-month period—only a few of the things; others will be disclosed at the appropriate time.
We are considering the advantages likely to be derived from the modernisation plan. The hon. Member for The Hartlepools was right in saying that at first it was thought that nothing much would result for about five years—
§ Mr. D. Jones
No, I claimed that, but the Joint Parliamentary Secretary said that I was quite wrong and that the deficit would be wiped out in a short time.
§ Mr. Watkinson
I was just about to deal with that point.
The fact is that, in the end, the modernisation plan should add in global figures about £80 million a year to the Commission's revenue. We have also to examine these important decisions about electrification and vacuum brakes, and so on, and what sort of ascertainable effect they will have on the Commission over a period of years. We have to look at the regional organisation, which is now beginning to settle down and, I believe, showing very good results. The regional boards, comprising business men and trade unionists of all shades of opinion, are working well together in a practical fashion. We must see what sort of benefits will flow from that. 2358 We have to pay more attention to the progressive improvement in morale, which is essential to the proficient use of the new tools and the new equipment which will come. Very little account has been taken of the immense advance —it is quite a revolution—in, for example, setting up a work study department in the railways, supported by both unions and management. It recently went to France to see what good ideas it could crib from the French railways and put into operation on ours.
Then there is the greater flexibility in charging—a most important thing. We are awaiting the decision of the Tribunal on that. It is expected reasonably shortly. The railways will be able to take account of the new flexibility which will be given them and, I am very glad to say, may be given greater freedom from interference by Ministers, which is, perhaps, a good thing, too. There is the elimination of uneconomic services, another thing that has to be faced, as I have told the House before, and it does not include only branch lines. The railways have now to regard themselves, in the second half of the twentieth century, as long-term carriers of both freight and passengers. They have to streamline their services.
Those are just some of the things on which the Commission and I are working very hard. When I say "I" I must add that I am not interfering in this task, but merely saying to the Commission, "This is how I believe you can best help me to show the country that you mean to put yourself into a more efficient and greatly improved state. This is how you can help me to justify the immense sums which you are rightly asking the country to devote to your modernisation plan "
In this way we are trying to prove that all the money and skill that is going into the job is worth while and not being thrown away; that it is better to spend it on the railways than on the roads or anywhere else. Does the House really think that that is a task which should not be undertaken? Does the House really think that it is not right for me, as Minister, to apply all the fair pressure I can on everyone in the railways to make them feel that they must get on with the task? I think that it would be 2359 very difficult to argue against this. I believe that this is the essential task; neither denationalising nor renationalising the railways and the other activities of the Commission, but really making them serve the nation. This is what we must try to make them do.
The hon. Member for The Hartlepools talked of the Tribunal's Report. I want to say how grateful I am to the Tribunal, because it has produced a most factual Report, which I am sure the hon. Gentleman has studied, on the position in which the railways find themselves. I think it is right that the Report should come from such an impartial body. The Tribunal has done a public service in reinforcing every word I have said about the financial difficulties in which the railways will find themselves unless they can speed up their reorganisation and modernisation.
The answer to why, quite rightly and properly, it had to say that it did not agree with me is shown clearly in paragraph 12 of its Report. It was, as the Tribunal said, its constitutional duty to do so. The Tribunal said:It is no part of our duty to discuss this possibility.that is, the possibility that there were other reasons why this action should have been taken—Even if we considered ourselves competent to do so. We are expressly prohibited by Section 85 of the 1947 Act from doing anything which would in our opinion prevent the Commission from discharging their general duty to secure that their revenue is not less than sufficient for making provision for the meeting of charges'.
§ Mr. Watkinson
I have read the whole Report several times. It is very familiar to me. What I am saying is that I am grateful to the Tribunal for impartially setting out the facts which I have indicated to the House. I do not disagree with the Tribunal in its advice to me, because it was advice which, as it said. it felt bound to give.
§ Mr. Watkinson
Certainly we disagreed, but for entirely proper reasons. The Tribunal cannot take account of the 2360 wider matters of policy which 1 have been discussing this evening, and it would not be proper for it to do so.
I am sorry to have spoken at some length, but this may be the only opportunity we shall have to discuss this question for some time, and I thought it right to set out some of the facts to the House. I have asked the railways for their cooperation in a task on which their whole future depends. The Government have also decided, as I have said, to put the brake on increasing their charges until we can see and make a final analysis of their true position.
The decision was certainly, in my view, forced upon us by the fact that the Commission had to admit that it could not increase its charges to a sufficient amount to balance, or counter-balance, its deficit. Equally, we faced the awkward fact that we are already very nearly at the point where the more charges that are put on, the more business is driven away. One cannot run a modernisation plan if there is a sort of buyers' strike at the same time. I want to do the reverse thing. As the railways begin to improve their service, as they will if we can get this matter right, they will rightly expect to have an opportunity of getting back a lot of these traffics which are now leaving them. They will rightly expect that the business community, instead of very often taking business away from the railways as a matter of policy, will try equally as a matter of policy to put it back on the railways. But, first, the railways must show that they mean to give the service which would justify that kind of action.
Those are, as fairly as I can explain them, some of the difficult matters to which the Commission, with my full support and, as far as I can give it, my cooperation, are now turning their minds and hands. It is a year of decision for them, and a time when the decisions they make will affect the whole future of the railways and every man and woman who works on them. If we can get the right decisions, the modernisation plan will have its full effect and the railways can look forward in a changed form to a greater efficiency and prosperity than they have ever known. If we get it wrong, as hon. Members rightly pointed out, we are merely faced with a deficit which cannot be overtaken, and, as the Government 2361 firmly reject any element of subsidy, and I do so again tonight, we can see the impossible position in which the railways would be placed.
I have tried to outline as fairly as I can the position, that through nobody's fault, but through a combination of circumstances, I found the increasing of the deficit by a justifiable pay claim which is to pay a very big dividend and which was absolutely essential but, none the less, put another £20 million on the deficit; the fact that the modernisation plan, unless we can speed it up, is not going to come quickly enough if we do not look out; and the fact that the deficit cannot be overtaken by simple measures—certainly not by increasing charges. I believe that all these things can be overcome, and I say that because of the co-operation and good will which I have received not only from the Commission but from the union leaders whom I have met, and everybody else on the job.
I have tried to give the Opposition a fair explanation. There will, no doubt, be a further opportunity of examining the matter when the detailed proposals are brought before the House and when the Commission, as I have warned the House, may have to make a further increase in its charges against the new background which I have described. In those circumstances, I ask the Opposition to withdraw its Motion and to let the railways get on with their essential and vital task.
§ Mr. Percy Collick (Birkenhead)
I think that the full case for the annulment of these Regulations has been completely stated by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies). Therefore, there is very little that I want to say apart from what arises out of the Minister's statement. It seems to me that the Minister has made half the sort of statement that the House might reasonably have expected him to make in this connection. I think that the other half which he omitted to state to the House is by far the most important part.
The whole point of these Regulations is, of course, to increase certain charges. The vital point is that the Minister, by his own act, has chosen to prevent the Transport Commission making charges which, in its opinion and that of the Transport Tribunal, are completely justifiable. Yet, 2362 despite all that, the Minister comes to the House, intervenes and prevents these seemingly perfectly proper charges being effected.
I should have thought that if the Minister have proved to the House that this was part of a well-considered Government policy the House might have understood it. I have very great difficulty in understanding Government policy. One day the Postmaster-General comes to the House when wages are increased and introduces a whole lot of increased charges for postal and telephone services and all the rest in order to recoup the Post Office for the extra wages paid, and hardly has he done that than the Minister of Transport presents to the House Regulations which are intended to prevent perfectly proper charges being introduced for railway freights.
§ Mr. G. Wilson
It was possible for the Post Office to collect those charges, because the public could pay them, but it might not be possible for the railways to collect their charges, because the public would not pay them.
§ Mr. Collick
That is quite hypothetical. The Transport Commission quite sincerely thinks that it could collect them. The Transport Tribunal also thinks it could collect them, and the hon. Gentlement thinks it cannot. He is entitled to his opinion, but he is not entitled to say that the Commission cannot or would not collect them.
§ Mr. Watkinson
I do not want to interrupt the hon. Gentleman, nor do I really want to discuss the matter in this House, but I think he had better, no doubt through his contacts with the railways, brief himself as soon as possible on the present position as regards freight traffic, and then I do not think he will pursue that argument very far.
§ Mr. Collick
I understand to what the Minister is referring. If it is part of his case that if the full extent of the charges desired by the Transport Commission was imposed it would not succeed in fulfilling the object of the Transport Commission, that is an argument I can understand. But I certainly know that it was not in the mind of the Commission when it put forward these proposals, because otherwise it would obviously not have put them forward.
2363 I find it very difficult to follow the policy of a Government which, on the one hand, acts in the way that the Postmaster-General acted and then, on the other, follows through the Minister of Transport and Civil Aviatian a completely opposite policy. In other words, the Government appear to say that what is good for the Post Office is not good for the railways, and that they are therefore following a precisely opposite line of policy in this case.
There is another matter to which I should like to draw the Minister's attention. My hon. Friend the Member for Enfield, East made a few comparisons between the cost of private enterprise products and the cost of transport. He showed, and I think that anybody could show to reasonable satisfaction, that the prices of private enterprise products are far higher than the cost of passenger fares. They have risen very much more than passenger fares and freight charges have risen, but I know of no occasion when the Government have intervened to bring down the price of private enterprise products. We have had the classic case of potatoes at 6d. a 1b., which has been raised in the House. The Government have not chosen to interfere to bring down the price of potatoes, yet the Minister has followed this line in the matter of transport charges in a nationalised industry.
I as a Socialist have no objection to any Minister of the Crown doing anything to keep prices down. I wish to goodness that the Government had been far busier in that direction and had kept their promises to the people to keep prices down. If they had done so, the need for these Regulations would never have arisen. They have come about largely because of the Government's failure in that respect.
I do not therefore object to the Government acting in this manner even to keep the cost of railway freight down. I accept as perfectly good Socialist policy that the Government should do all they can to keep down the cost of transport or anything else, provided that it is part of a well-considered policy. I can understand the Government acting in this way if it is all part of a well-thought-out social policy. But the Minister has persuaded 2364 the Commission to dodge about the country and cut out every uneconomic railway line, when every hon. Member who afterwards raises the matter on the Adjournment knows that the line should remain in being.
I have never thought it right that transport should be conducted in that way. If the Post Office followed the same practice and said that it was not going to carry a letter at 2½ from London to the Orkneys somebody would soon be in a bad way. Just as that is a sound principle in Post Office administration, so it is equally sound in the administration of transport.
There is, therefore, nothing in principle to which I would object if a Government followed the policy of keeping prices down, provided that they also did something else. It is there that the Minister stops short. What is the use of acting like this to prevent revenue going to the Commission, which it should properly have, unless the Government themselves do something to make up to the Commission the loss which they are imposing upon it?
Why did the Minister not go on to say what he is doing about that? He deliberately omitted to say anything about it. He clearly objects to subsidies. I speak for myself, but I think that I carry a large number of my hon. Friends with me in saying that I have no objection to subsidies. [Laughter.] You laugh, of course, when the Minister keeps railway freights down so that your private enterprise people get the benefit. [HoN. MEMBERS: "Rubbish"] Of course you do.
§ Mr. Speaker
The hon. Member is saying "you" When he says "you" he is addressing me, and I have had nothing to do with all this.
§ Mr. Collick
I am sorry, Mr. Speaker. The Minister is acting quite deliberately in this way to keep charges down, and some of the private enterprise people will receive the benefit of it. But I have no great objection to it as a Socialist. My objection is that the right hon. Gentleman does not follow it to its logical conclusion and tell the country exactly what he is going to do to make the Transport Commission's finances economically sound and put them on a commercial basis.
2365 The British Transport Commission clearly cannot do that if the Government prevent it getting the revenue it otherwise would and does nothing to make it up. The Minister read out a list of things which he tells us are to happen on the railways. With respect, I must say that there is nothing very new about them, apart from the modernisation plan. All these things have been happening on the railways for 20 years. There is nothing revolutionary about them. Economy in administration, economy in manpower, the use of rolling stock to greater efficiency—these are a continuing process in railway administration.
§ Mr. Collick
The solicitor to the Great Western Railway likes to make these interventions. I cannot see any point in this one. If the hon. Member refers to his Great Western Railway experience, even in the solicitor's office, he must have known that these things were day-to-day experience on the Great Western Railway.
§ Mr. Wilson
I suggest to the hon. Member that greater flexibility of charges is something which the railways wanted for 20 years and which they now have.
§ Mr. Collick
I have never dissented from the Transport Commission having much greater flexibility of charges. It is a sensible proposal. It is one thing on which the hon. Member and I agree. What I am complaining about is the Government mystically holding out the notion that in six months something is going to happen to put all this right. The Minister knows as well as I do that nothing is going to happen; that six months hence there is not the remotest chance of the £100 million deficit which the Transport Commission is carrying being wiped out unless the Government does something.
The Minister tonight has not told us one word about the Government's policy. I know something about what the railwaymen are thinking. They would like to know what the Government's policy is. Are they to go on carrying the £100 million deficit, which, as the Minister knows, will continuously increase? It will be increased by several hundreds of thousands of pounds weekly as a result of the Minister's action. Is this to go on, 2366 mounting like a snowball, or is something to be done about it? During the late war the Government made a profit of £115 million by running the railways. Why does not the Government put some of that profit back into the Transport Commission to help to clear up this position and create the spirit which the Minister talks about among operating railwaymen? That £115 million was made out of the blood, and tears and sweat of railwaymen in the conditions in which the railways were run during the war. The Minister would do better if he devoted some time to producing a clear financial policy for the Transport Commission. In six months he will have to face that problem, whatever he tells the House now.
§ Mr. W. T. Proctor (Eccles)
One a the Minister's phrases struck me as sinister. He said that it would be increasingly difficult for him to justfy the huge expenditure on the modernisation plan. I hope that does not indicate that behind the scenes there is some question of abandoning the modernisation plan.
§ Mr. Watkinson
The hon. Member knows very well that I devoted a great deal of my remarks tonight to the absolute essentiality of carrying on with the modernisation plan. I hope he is going to face facts, as I and the Transport Commission have to face them in the next few months.
§ Mr. Proctor
I am very pleased to have that repudiation of what I thought was a hint that something of that sort was in the air.
We on this side of the House have a certain amount of sympathy with Ministers in charge of the nationalised industries because they have to contend with Tory Party policy in all these matters. It it the consequences of the Government's policy for the transport industry that faces us tonight. The Tory Party has done irreparable injury to the transport system of this country. Although the Government have to increase charges, they cannot equal the cost of the damage that has been done.
The British Transport Commission has spent much of its time since this Government came to office in defending itself against the Government's attack on its 2367 road services, the most prosperous part of its undertakings. If competition is increased against the Commission on the roads, it is impossible to see how the Commission can recoup itself. It is a task almost impossible of accomplishment as long as the Tory Party follows the policy it is following in road transport.
The Minister prevents the charges being placed on the traffics so that the public do not pay, but they cannot escape paying in the end because the deficit increases, and as the industry is a nationalised one the public have final responsibility for that deficit. It is impossible for the public finally to get out of their liability. If they do not pay the increase in charges now, the deficit persists; it is huge already, and the public eventually will have to face it.
What folly it is for the Government to take away from the nationalised industry the most prosperous part, and to sell lorries at much below their natural price at the present time. It is impossible to perceive any sensible plan in these proposals of the Minister. By his action in repudiating the advice given him by the Commission the Minister is only putting off the evil day. He has given us no constructive plan, or shown how he will meet the problem. The nation must realise that the Government's policy for the transport industry must be changed, and that we must return to a co-operative basis for it, instead of cut-throat competition between road and rail. They must be organised on a co-operative basis to run efficiently with proper charges.
Much has been said about subsidies, but we do not hear any great grumble amongst hon. Members opposite about the hundreds of millions of subsidies given to the agricultural industry. There is no difference in principle between paying a subsidy to agriculture and a subsidy to transport.
§ Mr. Speaker
The hon. Member is now dealing with the finances of the Transport Commission in a rather broader way than these Regulations justify.
§ Mr. Proctor
I intend to say no more than a couple of sentences, Mr. Speaker. We must face the fact of the financial difficulties which confront our transport system. I am certainly not one to say 2368 that they would not have existed had it not been for the Government's action, but they have been multiplied ten-fold by it. Continuing to follow the Government's foolish plan will not bring any relief to the nation's transport difficulties.
§ Mr. Ernest Davies
In spite of his interesting remarks, the Minister did not say a single word which justified his intervention in the affairs of the Commission and his laying of the Regulations in the way he has done. In spite of that, because we feel that in relation to the Commission something is better than nothing and 5 per cent. is better than 10 per cent., I beg to ask leave to withdraw the Motion.
§ Motion, by leave, withdrawn.