HC Deb 22 January 1957 vol 563 cc128-52

8.28 p.m.

Mr. G. R. Strauss (Vauxhall)

I beg to move, in page 5, line 9, to leave out Clause 4.

Of course, we really do not want to delete this Clause but to get an explanation from the Minister to clear up some of the confusion which was created in the minds of all hon. Members in Committee during the concluding stages, partly perhaps because we were a little hurried and partly because none of us, including the Minister, had given sufficient thought to the problem. The Minister added rather than detracted from the confusion in which the Committee found itself, and he himself asked for an opportunity to clear up the difficulties which surrounded this question and we now give him that opportunity.

The purpose of the Bill, as is well known, is to enable the British Transport Commission to tide over the next few years when it will be in particular financial difficulties owing to the modernisation scheme and to the large amount of capital, which in the early stages will not fructify, which it will be called upon to spend. The purpose of the Bill is to enable the Commission to capitalise the interest on the capital needed for the modernisation plan and to put in a special account and get a loan to provide for the deficit which is likely to face the Commission during these coming years.

The problem arises—I am not sure that it is serious—in making these calculations, what is the definition of "British Railways"? What should it include and what should it exclude? We are told in Clause 4 that included in the calculations for determining the deficit of the railways during these years will be the collection and delivery by road of goods for the railways; the generation of electricity for the railways, and possibly other things as well.

We were all quite happy with that definition, until the hon. Member for Truro (Mr. G. Wilson) moved an Amendment to the effect that the shipping responsibilities of the Commission should be excluded from the calculations of the railways' deficit, and the Minister said that that was what he intended to do. Then many of my hon. Friends and myself said that that was surely ridiculous. We said that shipping was part of the British Railways service. If a man buys a ticket from London to the Isle of Wight and goes on the ferry to the Isle of Wight it is nonsense to suggest that that part of the journey between Southampton and the Isle of Wight is not part of the railway service. There was a little heated argument upon this point. Then my hon. Friend the Member for The Hartlepools (Mr. D. Jones) mentioned some even more striking examples, and the Minister made certain observations.

8.30 p.m.

Having given the matter some consideration meanwhile, I have come to the conclusion that it really makes not the slightest difference whether shipping is included in the calculation—unless the shipping service makes a substantial deficit, which it is very unlikely to do. At the moment it is making a profit of about £2 million a year, and we hope that it will make more. In any case, any profit made by any other service run by the Commission is deducted from the railway loss before the loans are made by the Government to the Commission in respect of that loss, and any profit made by any other service is deducted from the amount which the railways can put to special account meanwhile. It therefore seems to make no financial difference whether or not shipping is included.

We were led to believe by some statements of the Minister, however—I do not blame him; it may be that he had not given this matter such full consideration as he has other aspects of the Bill—that there was to be some splitting between the shipping and the railway aspects of the work of the Commission. I should like to quote a few sentences from the report of the proceedings in Committee. The Minister said There will be circumstances where there is a mixed operation, of a train ferry or something of that kind, where an element of shipping must fall within the Commission's revenues, but if we tried to put that down in detail in the Bill we should never come to an end. Where a shipping service is playing some part in contributing towards the Commission's railway services that will be taken into account, although that will be difficult. We shall have to make an assessment of what contribution is made by the railways, which are the chief loss-makers of the Commission, and what part should be dealt with as purely shipping services."—[OFFICIAL, REPORT, Standing Committee B, 18th December, 1956, c. 46.] That suggests that in making these calculations there will be some splitting—a word which the Minister used later in his speech—of the revenue which comes from the shipping services, as between the shipping services proper and the railway services, in ascertaining the real deficit of the railways.

The Minister later said that that splitting would be exceedingly difficult, and that he was not looking forward to having to do it. If he tells us that the shipping finances, as defined and reported annually by the Commission in a separate account, will remain intact and be treated exactly as they are in these yearly accounts, and will be excluded in toto from calculations of railway finances, I can understand it, and there would be some sense in it. But if he says that some part of the shipping finances will be carried over into the railway finances I shall want to know where that will begin and where it will end.

That is what he indicated would happen, and it is in order to enable him to enlighten us upon the matter, and to give him an opportunity of telling us what is really intended and what the Bill proposes, that this Amendment is being moved.

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

I agree with the right hon. Gentleman that at the time when this matter arose in Committee both sides had been co-operating very well in order to try and finish the Committee stage at that meeting, and that the House ought to have a further explanation of this matter. I am therefore very grateful for the opportunity of trying to make it a little more plain.

The first thing that I ought to make plain—and I do not think that the right hon. Gentleman and his hon. Friends will disagree with this—is that, apart from the quite strict discipline which the Bill places upon the Commission, I am naturally anxious, as is my Ministry, to help the Commission as much as possible in what we all know is going to be a difficult enough job, so that it may get on its feet. Therefore, in these matters, so far as it has been possible or proper for me to do so, I have always tried to meet the wishes of the Commission and to carry on wherever possible the various practices to which it has been accustomed.

I do not want to go into the arguments about the various interpretations of what I did or did not say during the Committee stage debates, but I should like to remind the House, as appears in column 47 of the Standing Committee Report, that I said: It might help if I said that this was done at the express wish of the Commission."—[OFFICIAL REPORT, Standing Committee B, 18th December, 1956, c. 47.] The fact is—I think this is the first important fact which is relevant—that the Commission always has kept its shipping receipts and traffics separate from its ordinary passenger and goods traffics. As I said at the time, it is not always an easy thing to do, but at least it is a matter of quite long precedent. In the Eighth Annual Report and Accounts for 1955 on pages 184 and 185—and as far as goods traffics are concerned on pages 194 and 195—there are clearly set out passenger receipts and traffics for ships, and the freight receipts and traffics for ships. I will refer to this again in a moment, but I wish to make the first point that the Commission has always separated those matters in its accounts.

I understand the Commission separated them as a matter of convenience, and it is not improper for me to study that in trying to meet the convenience and established practice of the Commission. I did say that where the shipping service is playing some part in contributing towards the railway services of the Commission, that would be taken into account. I did say that, as the right hon. Gentleman has said, it would be difficult, and perhaps that has led the House to think that this is some new thing which I should have to determine under Clause 4 (4), which is That part of the Bill dealing with matters which cannot be settled in other ways and come to the Minister to be determined. If the blame lies with me, I will accept it, but the position is far less complicated than my remarks, and indeed the debate, suggested in the closing stages of the Committee discussions.

The established practice of the former main line railway companies which the Commission followed—and that is why there is much precedent for this—was to keep the accounts of their shipping activities entirely separate from the railway activities. As I have said, they are set out in the current report. On page 185 there is a footnote which states, in the words of the Commission: The statement shows all receipts and traffic carried in ships operated by the Commission, irrespective of whether the traffic is through-booked with British Railways or not. That is the first thing, that for some years there has been a clear separation of shipping from ordinary railway traffics.

Perhaps I may go on to explain that the ships account includes the receipts and expenditure on craft operated by British Railways used for the conveyance of traffic. Where traffics conveyed and rates and fares include rail and sea traffic throughout the charges are apportioned—this is what I meant by the split—and both activities are credited with their respective portions. In other words, there is a split between rail and sea portions on through tickets, for example, to the Continent. Similarly, expenditure on shipping is kept separately from expenditure on railways. On train ferries it is apportioned in the same way, except that the cost of track inside the ship is rightly treated as part of the cost of the ship. So there is that clear practice and there is nothing new in it. In fact, I believe it started in 1913.

Therefore, I do not think—and here, if I misled the Committee I apologise—that I am likely to be asked to determine any matter arising from that under the provisions of Clause 4 (4). An Amendment which attempted to write that into the Bill would, I am advised by the Commission, be very inconvenient to it, because there is this well-established practice and no new complications are likely to arise. The Commission does not want its form of accounts—although they are perfectly satisfactory to the Ministry and to the Commission at the moment—to be frozen by writing them into the Bill. So I do not think that adding, the existing practice to the Bill would do anything to aid the Commission or give any advantage to it.

The hon. Member for The Hartlepools (Mr. D. Jones) said that the Clause did not appear to run on all fours with, for example, the collection and delivery services. I do not think there is anything illogical about it. After all, those services are confined to traffic which, in the end, will be carried by the railways for some part of the journey, while the shipping services are open to everybody, some people go on British Transport Ships having come by road and others having come by rail.

Mr. David Jones (The Hartlepools)

What about the case of a train ferry that carries a train except for the engine? Is there a clear distinction about paying the wages of sleeping-car attendants while they are sailing across the Channel? The vessel which I mentioned in Committee was specially built to carry railway coaches. Does that mean that the men are treated differently?

Mr. Watkinson

The hon. Gentleman is really making my case. It is only fair to say that I drew attention in the Committee to these difficulties. I have explained that there is a clear division. The accounts are separately brought forward. We must leave decisions on that kind of detail to the Commission. All I have to be satisfied about is that what we are doing in the Bill is most convenient to the Commission. I am quite happy to leave to the British Transport Commission and British Railways the decision as to who pays the dining-car attendants. We shall not improve the Bill or help the Commission if we try to write that sort of distinction into the Bill.

The hon. Member said that the collection and delivery services did not run on all fours with the Clause. If vie could make a case for including the whole of the shipping services in the Bill we could make a case for including the whole road-passenger service. We should broaden out the Bill into serving quite a different function from that for which it is designed, which is, as the White Paper said, to deal with the railway situation. I am anxious to keep it in that field and so is the Commission.

In Clause 4 we use the method of apportionment which the Commission took over from the railway companies and with which it is satisfied. It has told me, and I have personally spoken to the Chairman about it, that it would not wish this matter done in any other way. It is therefore right to leave matters as they stand. If anything unforeseen should arise in which some decision must be taken by the Ministry or by the Minister I have reserve powers in subsection (4) to deal with it. So far as I can see those powers are not needed in this matter. The split is clearly made the apportionment is decided by the Commission, which has told me that the Clause meets its convenience and meets operating efficiency.

I hope that the House will agree, after that explanation, to leave the matter as it stands and to accept that the division which the Commission makes between shipping services and railway services is right and should be left as it is.

Mr. G. R. Strauss

In view of the explanation we have been given, which we think is absolutely sound, and because we agree with it, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

8.45 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent)

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

It may be for the convenience of the House if I formally move the Third Reading so that my right hon. Friend may reply in detail to the debate.

8.46 p.m.

Mr. D. Jones

There is a phrase in railway jargon which describes a new entrant to the service as "learning the road". We are perfectly willing on this occasion to regard the hon. Gentleman as learning the road, but I warn him, while congratulating him on his transfer to this Department, that he is leaving the quiet amenities of the countryside and coming into the hubbub of the marshalling yard. I can assure him that most of his time will be spent in the marshalling yard dealing with problems there and not in travelling in the well-lit and comfortable expresses which, one surmises, are on our main lines.

We have got to the end of this Bill so far as this House is concerned. It is a Bill which seeks to help the British Transport Commission to overcome its difficulties. Within the last few months I have been reading a very voluminous and interesting document published by the International Union of Railways. So far as I could see, this problem of deficits in railway revenue is not peculiar to British Railways but is applicable to at least every railway system in Europe, and probably in the other continents as well. Therefore, I do not think that we should be too much concerned about this problem, except that it requires to be put right as quickly as possible.

During the Second Reading of the Bill, the then Joint Parliamentary Secretary, in the concluding stages of his speech, said that the trade unions concerned with the railways accepted the Bill. That has since been qualified by the trade union leaders as being "only so far as it goes." They agree that it does not go nearly far enough to solve the problem of the railways. I wish to address one or two questions to the right hon. Gentleman about the Bill. He will remember that it arose out of a review of the financial situation which was embarked upon by the British Transport Commission. That review was finally submitted to him, and it was issued by him in a White Paper in October, 1956, in which he reproduced the views of the Commission and included a preamble expounding the view of the Government.

In making an estimate of the consequences of its financial circumstances in a number of years ahead, the British Transport Commission went into considerable detail. In the beginning of its document—in page 11 of the White Paper—it laid down five conditions. It said that it based itself on certain assumptions on other matters outside its control. The first major assumption was: 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 should like to know tonight whether the Minister accepts that assumption without any qualification. Is the Commission to be entitled, without any interference from the right hon. Gentleman or any successor, if it so decides, within the ordinary terms of the Transport Tribunal, to raise its charges at any time to cover increased costs and without any of the kind of interference which it experienced last March?

The second assumption was: 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. If I understand the English of that assumption it is that should the British Transport Commission decide to withdraw services, to close down branch lines or to reduce services in parts of the country because it is unable to afford the loss incurred in operating such services, it shall be perfectly free to do so without any political consideration and without any interference from the Government of the day. My understanding is that unless these assumptions are guaranteed, it means that all the financial calculations made by the Commission in this document on which the Bill is based fall to the ground.

The third assumption was: That the necessary resources of all kinds will b.2 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. If I understand that assumption, it is that unless all the steel which the British Transport Commission considers is necessary for the building of locomotives, coaches, bridges, railway tracks or any other work in connection with the railways is available, and all other materials are readily available, that assumption is not satisfied. If, in that event, the assumption is not satisfied, the figures on which those calculations are based will be null and void. The other two assumptions are important, but I think that the principal assumptions are those that I have mentioned, and I should like the right hon. Gentleman to tell us tonight precisely what he understands these assumptions to mean.

I turn to another point, which deals with the deficit in relation to the London Transport Executive. A few moments ago, we were discussing the division of activities between the railway side and the shipping side of the Commission's work, but there is another part of the Commission's activities which is important and which is referred to in the British Transport Commission's Report If my understanding is correct, Sir Reginald Wilson, in giving evidence some time in the past before the Transport Tribunal, on behalf of the British Transport Commission, made an assessment of the proportion of central charges which are applicable to the several parts of the Transport Commission's various undertakings. He assessed the share of the railways at 71.17 per cent., and he assessed the London Transport Executive's share at 10½ per cent.

My calculations, based on the figures that are available to me, are that, at the end of 1955, on that assumption of 10½ per cent., the London Transport Executive was £27.8 million in deficit in regard to its contribution to central charges between 1948 and 1955. The Executive contributed a sum of roughly £17.2 million, and the total was £45 million, so that there was a deficit of £27.8 million.

In the White Paper to which I have referred, the Commission itself makes reference to the London Transport Executive, and says that because of the circumstances surrounding London's traffic, there is very little possibility of the total revenue derived from fares collected on either surface or underground services in London increasing. Indeed, the Commission goes on to say that, quite conceivably, over the years, revenue may decrease, and that there is no very great possibility of the revenue increasing.

If that be so it seems to me that there is a distinct possibility of the deficit of the London Transport Executive to the central charges fund increasing year by year. As the other services have to be hived off, does one understand that the London railways are to deteriorate, or is additional capital to be found to keep them up to modern standards? Alternatively, is some other formula to be found to cover the deficit which must of necessity arise on the operations of the London Transport Executive?

I turn to another question. Earlier, in reply to the Amendment moved by my right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss), the Minister referred to the passenger services. When the Act became operative on 1st January. 1948, the four main-line companies had substantial holdings in road passenger transport services. They amounted to about £10 million. The interests in those services were bought with railway capital. I understand that they are still chargeable to the railway account.

The Transport Act, 1947, by Section 3, made it obligatory on the Transport Commission to run all its businesses as one undertaking. Therefore, because the whole of the ramifications of the Commission have to be treated as one business, the fact that the road passenger services were paid for initially by railway capital does not matter, except from an internal accountancy point of view. But if the provincial road passenger services are now to be treated as an independent concern, and if any profit which they may make is to be denied to the railways, what happens to the investments which are chargeable in the central charges account to the railways? That seems unfair.

Either the central charges fund ought to be rid of the cost of the acquisition of the road passenger services or, alternatively, the railways should have some benefit from the advantages which might accrue from the operation of those services.

Finally, I should like the Minister to tell us what he estimates is likely to be the charge in the years from 1962 onwards on the central charges fund. I calculate that it will be between £100 and £120 million, and it may well be more. About half a million people are employed in the railway service. If they see an ever-increasing burden, to which the railways have to contribute by finding the necessary money to meet these charges which are now being placed on them, that will not be a very great inducement to them to exert their energies to make the system the kind of system which we want to have. Therefore, I would ask the right hon. Gentleman if he can give us any idea what, for example, the cost to the central fund will be in 1963, 1964 and 1965.

It is vitally important that the employed in the industry should be given the necessary encouragement. We can modernise the railway system as much as we like, and provide the railwaymen with the most up to date equipment, but unless we can win and hold their good will the chances that the railways will become assets of which we can be proud will be small indeed, and the railwaymen need all the encouragement which they can get in the years that lie ahead.

9.0 p.m.

Mr. A. J. Champion (Derbyshire, South-East)

My hon. Friend the Member for The Hartlepools (Mr. D. Jones) welcomed the Joint Parliamentary Secretary to this debate and to our debates on transport matters. In his last job, when the hon. Gentleman was Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, it fell to my lot from time to time to cross scythes with him. Then he was on his own dung-hill. He now comes to transport, and now, I suppose, he and I will from time to time cross shunting poles. Now that he has come on to my track we shall deal with him suitably, I am sure.

In Committee we of this party moved an Amendment to Clause 1 (1) because we thought that the three years prescribed for the accrual of interest was not long enough. I was hoping that today we should be able to move another Amendment, but, unfortunately, Mr. Speaker ruled it out of order. Therefore, I cannot discuss it at length. However, in Committee the Minister promised us that he would consult the British Transport Commission about this very important matter, and I gathered then that he would take a later opportunity to tell us his conclusions upon it and all that he thought about it. I shall not develop it, as, obviously, I should be out of order if I were to do so, but I would invite the Minister to reply upon that question, which we on this side regard as an extremely important one.

9.2 p.m.

Mr. Ernest Davies (Enfield, East)

The Bill is now in its last stage in this House. Its importance should not be judged by the attendance here tonight. We are considering authorising the Government to make advances on a very large scale to the British Transport Commission. Before we part with the Bill we are entitled to ask more questions of the Minister, in view of the time which has elapsed since the White Paper was drawn up and the estimates were made, and in view of certain changed conditions.

I think it would be helpful if, in his reply to the debate, the Minister were to tell us whether he thinks that the two main proposals in the Bill are now quite adequate to meet the financial difficulty with which the Commission is confronted, and whether that has changed at all because of the fuel and oil shortage and because of the high prices prevailing due to the uncertain economic situation resulting from the Suez policy. It would be helpful if he could assure that the modernisation scheme outlined in British Railways programme can now be carried through as planned, and that there will be no attempt to use the changed economic situation and the need for economies, which the present Prime Minister, judging by his actions when he was Chancellor of the Exchequer, seems to consider necessary, as an excuse for watering down that programme. Finally, in that connection, I should like to know whether the Minister thinks that the proposal in the Bill which limits the borrowing into which the Commission can enter to meet its deficit of £250 million plus interest will be adequate to meet the situation.

I ask the Minister these questions because it seems to me that there has been a change in the situation and it is necessary to review the estimates. The fuel tax has been increased by 1s., and the price of oil has also risen. I understand that this adds about £8 million a year to the Commission's expenses, that is, taking the British Road Services, the collection and delivery services and the other oil-consuming activities of the Commission. Since these estimates were prepared, the busmen of London Transport have also been granted a well-merited increase in wages of about £1½ million, and the locomotive engineers have had an increase which I believe will cost the Commission about the same amount. Therefore, with these increases alone a sum of £11 million per annum has been added to the cost of operating the Commission's services, and the Commission is also facing higher wage demands from other railwaymen and other employees, including the road haulage workers.

One can, of course, offset these higher costs to some extent with the changed traffic situation. Certainly, petrol rationing has brought one relief to Londoners in the improved traffic flow through the streets which has a direct effect, I presume, on the earnings of London Transport. The vehicles are more heavily loaded and are able to keep to their schedules far more satisfactorily than was the case during periods of traffic congestion. I hope that the Minister will learn the lesson and that, having experienced the improved traffic conditions in London, he will now engage on bold imaginative schemes to tackle the normal traffic congestion so that Londoners can enjoy this improved situation permanently.

The time is not far off when it will be necessary to present to the House a modernisation programme for London Transport. When petrol rationing ends and traffic congestion returns to the streets it will be necessary to give far more serious consideration to the Route C project, to be known as the Victoria line, so that traffic taken over by the public service will be held by that service by means of more speedy travel underground. This will help the British Transport Commission's finances despite the fact that heretofore it has not been able to meet capital charges on the central charges fund.

On the other side there is disappointment at the failure of the railways to attract as high a proportion of traffic from the roads as had been expected. It appears from the Press that the response has been disappointing. It has been estimated at an additional traffic in merchandise of only from 3 per cent. to 5 per cent. on the railways. The addition in passenger traffic, apparently, is somewhat higher and may be as much as 10 per cent.

The position on the freight side is disappointing and reflects not upon the immediate management of British Railways but upon the past history of the railways. It shows that because they were starved of capital investment for modernisation and because they were unable to or failed to provide services to hold the traffics which they had in the past the goodwill of industry has been lost to a certain extent.

Apparently it is also extremely difficult, even in this period of oil shortage, to attract traffics back to the railways, since they have heretofore not provided the necessary facilities. This is relevant to the modernisation programme because it emphasises the urgency and the need for modernisation and re-equipment. It shows that in the view of industry British Railways are not able to provide the services which it requires, and therefore industrialists resist transferring their traffic from road to rail, in spite of the oil shortage and tile difficulties that accompany it, since their past experience has been unhappy. So this modernisation programme which the Bill makes possible is essential in order that the railways can provide those speedy, regular and reliable services which will compete, we hope, at competitive prices with other means of transport.

Whether this modernisation programme succeeds depends, in my view, upon the fulfilment of the assumption made on page 11 of the White Paper concerning the provision of the necessary capital. It is gratifying to see that a large number of contracts for electrification and for other parts of the programme have already been placed. Needless to say, I am specially grateful to find that contracts have been placed for the electrification of the Enfield line, but I ask the Minister to give the House an assurance this evening that the programme is up to schedule; that is to say, that the sum of £90 million, which it was estimated in the White Paper would be spent during 1956, has been forthcoming, that contracts have been entered into for the authorisation of that expenditure, and that the Commission will be able to obtain the necessary materials and the other assistance required from the Government to carry out that programme.

I hope that now the Minister has entered the Cabinet—on which I congratulate him—he will be able to bring to the Cabinet greater force for the fulfilment of his wishes as Minister of Transport. I hope also that he will be able to add strength to the demand for the fulfilment of this year's programme, and will get an assurance that the amounts given in the Appendix to the White Paper will be forthcoming.

Another assumption, to which my hon. Friend also referred and on which a great deal of the success of the programme and the fulfilment of the estimates depends, is whether the Commission is given freedom to get on with its job, and the extent to which freedom to charge and freedom from interference in determining charges is granted to it. The assumption made is that there will be a speedy adjustment, a flexible system of charging, and an opportunity to determine on a reasonable basis the scale and scope of the services to be provided.

Our past experience has not been happy. During previous debates on this Measure we asked the Minister for an assurance that he will not again interfere with the charges proposed by the Commission as he did last year. The response of the Minister and his former Joint Parliamentary Secretary did not give us the feeling that we could be confident that he would not again interfere.

The Government must be consistent in their approach to the Commission. They must allow the Commission to fulfil the terms of the 1953 Act, which was Government policy, and they must allow it freely to make the charges which it considers necessary if it is to be able to compete and fulfil its statutory obligations and thereby pay its way and ultimately achieve the fulfilment of the estimates which we are now considering and on which the Bill is based. If the Government refuse to leave the Commission free to make the charges which it desires, they cannot expect it to operate on a commercial basis, and it will prevent the Commission from reaching balance in 1961 or 1962, which is the aim of the modernisation scheme.

Another assumption made was that the Commission's framework should remain unchanged. We sought assurances from the Minister—he did not give them; he carefully ignored them—that he had no intention of proceeding with the disposal of any further sections of the Commission's road haulage organisation. The 1946 Act provided that there could be sold, through the company structure, the British Road Services parcels and meat companies. One understands that the parcels service is making very satisfactory profits. If those sections are to be hived off, the framwork of the Commission will have been changed and it will have greater difficulty in reaching a state of balance. The Minister should give the House an assurance that at least until balance is reached in 1961 or 1962 no further consideration will be given to the possibility of disposing of any more of the Commission's assets, particularly the parcels and meat companies.

In addition, there is power under the 1953 Act for the Minister to direct the Commission to dispose of its road passenger shareholdings where it has a majority in the road passenger companies. That represents a profitable section of the Commission's undertaking, and it would handicap the Commission in reaching a state of balance if that profitable section were disposed of. There is no justification whatever for proceeding with any further measure of denationalisation. That is not to say that there was any justification for it in the past. However, in the light of the results of denationalisation, surely the Minister can now give us an undertaking that the Commission will be left free to carry on within its present framework, structure and organisation and will not be interfered with or deprived of any of its profitable sections.

The provisions of the Bill are necessary in order to enable the Commission to work towards a state of balance and, we hope, to reach a stage where it will be paying its way and ultimately making a surplus. Whether the provisions are adequate or not, only time will show. In the light of present circumstances and the inadequacy of the assurances given by the Minister, I have grave doubts whether it will be possible to fulfil the estimates. At the same time, one must not overlook the fact that Government policy is, of course, the cause for the necessity of this Bill. But for Government policy in changing the transport policy of the previous Government and disposing of certain assets of the Commission at a loss, the Commission would be in a far more satisfactory financial position today than it is.

I do not say that the Commission would necessarily be paying its way or making a surplus, but it would not be incurring these very heavy deficits if it had been left to continue along the lines on which it was started in 1948. This Bill is no substitute for a national transport policy, nor, in itself, does it provide a solution of the Commission's difficulties. It tides the Commission over a difficult period; it makes advances to it, but it leaves those advances as a liability. It may assist the Commission to reach a state of solvency so far as revenue and expenditure are concerned on an annual basis, although, as I have stated, that is open to doubt, but it prejudices the Commission's future by postponing the final financial reckoning.

The losses already incurred and to be incurred during the next five years are estimated at a maximum of £250 million plus the interest thereon. But that amount is to become a liability on the Commission which future users of its transport services will have to meet. It will continue to be a burden upon the Commission's finances which will prejudice its future operation. I think that it would be far preferable to accept the fact that at least those losses made to date are permanent losses. They have been incurred and cannot be won back. Since those losses were due largely to policy decisions which were taken outside the control of the Commission, the Commission should be relieved of those losses which have already been incurred.

Finally, recent events have demonstrated once more how essential it is to have a national transport policy, and how we are suffering today from a lack of one. Abandonment of the planned transport system is the reason why this Bill is now before the House and it is only in the direction of returning to a planned transport system and not through temporary financial assistance that lies a permanent solution of the Commission's difficulties.

9.19 p.m.

Mr. Watkinson

I should first like to thank the hon. Member for Enfield, East (Mr. Ernest Davies) for his congratulations on my Ministry going into the Cabinet. I think it is a well-deserved tribute to a very great Ministry, and one which has now been recognised to have an immense importance in the economic sphere.

The hon. Gentleman said one thing which, I think, is a very fair comment on the proceedings on this Bill. He said—I think I am quoting him correctly—that on the whole perhaps this House and others interested in the railway industry had not, I will not say paid enough importance to, but perhaps had not given quite enough consideration to what is a very major Measure if we take into consideration the Commission's plans set out in the White Paper. This is a very important chapter in the long history of the railways, and, therefore, before we part with this Bill I want quite shortly to say one or two things on the general policy in answer to the points raised by the hon. Gentleman.

The Bill is the end of a long chapter of events as far as Conservative Governments are concerned. In the Government's view it is the right and logical end, and I do not for a moment accept the view of the hon. Member for Enfield, East that this plan is a sort of temporary solution to the difficulties of the railways. It is a large and progressive plan, and if it goes well—and I will deal with that in a moment—it could be a permanent solution to the problems of the railways, and that is what the Government want it to be.

It is our view, as set out in the original White Paper, that the present organisation of the Commission is the right kind and the one most likely to ensure a profitable and efficient future. This present development, which has taken place under successive Conservative Ministers of Transport, bears no relationship at all to the original conception of nationalisation as enunciated by the party opposite. I say that in no party spirit, because controversy has been noticeably absent from the proceedings on the Bill. It is right the Government should say where we think we stand on this issue of nationalisation which has been so often debated in the House.

No doubt in the fullness of time right hon. and hon. Gentlemen opposite will define what they mean by "a national transport policy". I am sure that I do not know. At the moment the Government would like to make their position plain. It is, first of all, that one cannot make generalised statements about so-called nationalised industries. It depends entirely into what class they fall. Some have a monopoly of the services and products which they provide. Others, like the transport industry, exist in an intensely competitive field, and the Transport Act, 1947, although no doubt intended as much as possible to protect the Commission against competition, just could not do it to the extent which I believe would have secured any kind of prosperous future for the Commission.

It is the Government's view that the right way to run a competitive nationalised industry is to seek to reflect in its policies the best and most enlightened principles of both public and private enterprise, to adopt the most modern methods of management and cooperation between every section of the employees, to press forward with productivity and modernisation and to conduct itself much more like a large-scale commercial corporation than a sort of political creature subject to all the difficulties and problems of political pressures and direction.

It is fair to say that today the Commission, particularly British Railways, has been completely decentralised. Executive management is in the hands of the six general managers who are responsible to the area boards. Co-ordination is effected, as it should be, by the Commission. The area boards have been a great success and the country should be very grateful to those public-spirited men giving a great deal of time and trouble to work and serve on the area boards, particularly the area board chairmen who are daily taking a much larger share of the management of their regions—as they should be.

I do not think that this is at all funny, although the hon. Member for The Hartlepools (Mr. D. Jones) seems to find it so. We both want to see the railways prosperous and efficient, and I consider that this method of devolving their management is the only successful way to attain that end.

Mr. D. Jones

Perhaps the right hon. Gentleman will tell us of one or two of the amazing things which the local management boards have done.

Mr. Watkinson

I am telling the hon. Member that I consider that they have been a great success and that the pattern now set by the area boards, which were set up by one of my predecessors, is a success. Under the leadership of the Commission, and particularly its Chairman, Sir Brian Robertson, the railways are being run in a much more efficient and businesslike way than they have ever been run in the past.

If I may just sum up—the Government's view is that we have the right organisation for the Commission. It is working well. What this sector of the transport industry now needs is to be taken out of party politics for a time and left alone to get on with this vital job. That is what I hope the House will allow.

Mr. Percy Collick (Birkenhead)

After having imposed your own party's policy on it.

Mr. Watkinson

The question of the parcels and meat services was raised. I made the position of the Government quite clear during the passage of the relevant Bill, namely, that attempts to dispose of them having failed, they must be left alone for the moment to acquire some background—some operating experience and some balance sheets—and there is no doubt at all in the minds of those who work in them, or in the minds of members of the Commission or even of hon. Members of this House, that they will be left alone, for the moment, as integral but separate companies within the framework of the Commission. As to the future, we must wait and see, but that is their position for a year or so.

The next point is that it was not sufficient to be satisfied that the structure of the Commission and its organisation were right. I agree with right hon. and hon. Gentlemen on both sides of the House that that would not have put the railways right. There were the arrears of modernisation to be made up—a major task; there were immense sums of money to be spent which, as the right hon, Gentleman correctly said, would show no immediate gain to the Commission, and there was the awkward fact, which the House has often refused to face—it certainly refused to do so in March of last year—that on the goods side particularly the limit of charges has been reached in many categories, and that if they are put up still further the railways will merely carry less freight.

That is an ugly fact which the House, and especially hon. Members opposite, did not wish to face nine months ago. If anyone now thinks that it was wrong, proof is coming from the complaints raised by hauliers and businesses who had, at least temporarily, to transfer their traffics to the railways and found that by so doing they had to pay a great deal more. In the Government's view we must face the fact that, at the moment, the question of charges rests not upon what the Commission or what I, as the responsible Minister, might want to do but on what the customers are prepared to pay. That is a fact which I hope the unions and managements in the railway industry will bear in mind, because it is one which no one can get over.

As to the general policy of charging by the Commission, which was raised by the hon. Member for Enfield, East, that is clearly set out in paragraphs 21 and 22 of the Government's portion of the White Paper, on page 6, which states that it is the Government's wish that the Commission should overcome its financial difficulties by taking advantage of the freedom it has been given to vary its charges in accordance with sound commercial principles, and to relate its freight charges, wherever possible, more closely to costs. There is no doubt about the general policy on fares and charges, but the Commission must take account of the fact that it is no use the railways carrying less traffic because they are charging higher rates than their customers are prepared to pay.

As to the immediate financial outlook, we need not take the view that the present shortage of fuel—which nobody regrets more than I do—will have an overall net disadvantage to the railways; in fact the position today is rather more hopeful than the hon. Member indicated—though I appreciate that he could not know the latest figures. For example, British Railways receipts from passenger traffic during the first two weeks of 1957 have risen by over 20 per cent. compared with 1956, and receipts from parcels and other merchandise sent by passenger train are up also by nearly 20 per cent.

As regards freight, the extra coal traffics have so far been disappointing, but I think that they will come. It is a difficult thing to move a heavy commodity like coal from road to rail. But the general merchandise traffic, which is very important to the railways, has again increased by something like 10 per cent., and receipts have risen rather more because of the higher proportion of long distance traffic. If we set that fact against the heavy drop in receipts towards the end of last year and which was continued into this year, I think that there has been a very substantial shift of traffic to the railways.

Whether that will remain when fuel rationing is over and when free competition returns, I do not know. That is something which the railways must try to deal with. But it is wrong to say at the moment that the railways are not playing their part and are not carrying a very substantial increase of both passengers and freight in the present emergency. No doubt that will affect their financial results for this year and go a long way to counterbalance any disadvantages which may be suffered on the road side from increased costs. I do not think that we need feel too worried about that.

May I deal with the point which the hon. Member for Derbyshire, South-East (Mr. Champion) specifically asked me to cover, the question of whether the three-year average for the new capital assets is fair or not. Of course, it is a normal commercial practice to treat the fructifying period for every capital asset as a separate item. But that would be quite impossible for the railways, and therefore it was with the full agreement of the Commission that we adopted this average of three years.

I know that there may be arguments about the time needed to secure the full benefit from, if hon. Members wish, diesel shunting locomotives, if we have not fully modernised marshalling yards which was the point made by the hon. Member for The Hartlepools who has had vast experience. But taking one thing with another, I think it a fair average. I asked the Commission again to consider the period provided in the Bill and have been informed that the Commission think it sound and reasonable. That is some answer to the hon. Member.

As I have said, it is the view of the Government that we have set up the right structure. But that was not enough. Because of the difficulties of charging, particularly on the freight side, it was quite obvious that some special action had to be taken. Therefore the Commission came forward with its bold and imaginative plan which would have received a great deal more attention, both inside this House and outside, had not the country been preoccupied with Suez and other matters. But it is a bold and imaginative plan, and if it can be made good, the railways will change into something more appropriate to the second half of the twentieth century and not something resembling a hangover from the end of the nineteenth century.

I wish to make plain that there are other forms of transport on which it would be considered suitable to spend large sums of money. The Government might be more popular in the transport sphere were they to spend, or arrange to spend, more money on roads, and perhaps air transport, and less on railways. I should like it to be clearly understood that the decision to apportion this large sum of money from the very scarce national resources has been a difficult one to take. It is one which, regarded from pure reasons of popularity, might have been better spent on roads or in other ways. At least, there are many people who think that we should be spending on roads amounts similar to what we are thinking of spending on the railways.

I want this great industry to realise that this plan is not a soft option for it. I do not think it regards it as such, but the position must be made plain. It is a challenge. I could not agree more with the hon. Member for The Hartlepools that if the men in the railway industry do not want to work the plan then the plan is finished. The railways will, in the end, have to be broken up, sold and disposed of. It is the men who matter; they are the people who will implement the plan and make it work.

The plan is not a soft option, not an easy thing to work out. I shall always be pressed by other interests that this money would be better spent on other forms of transport. If the railways cannot answer the challenge by making the plan work, then the whole question of disposing of these large sums of money might well have to be reconsidered.

In the past few months there has been a great gain of good will on the part of the general public, a feeling that the railways are making a come-back to what they ought to be, much higher in the industrial hierarchy. There is a feeling now that the railways are playing an important part in helping to save the country's fuel. All that good will can easily be destroyed if this plan does not work. It will work only if both management and men will co-operate as a united team.

I still think that the formation of the Railways Productivity Council might yet prove to have been one of the turning points in modern railway history. I understand from the Commission that a very large proportion of its staff can now benefit under one or more of the new productivity schemes which, it is only fair to say, have been most loyally and enthusiastically supported by the trade unions. The Commission has a very big drive on to raise that proportion still higher.

If this plan is to succeed, all concerned must take account of the fact—this is in answer to the hon. Member for Enfield, East on wages—when considering their attitude on wage applications, that as time goes on, a higher and higher proportion of them will be able to earn extra money and sometimes, I am glad to say, very good extra money out of the increased productivity. It will not be a burden on the cost of the railways at all in the way that a direct round of wage increases would be. I am not expressing any views on current wage negotiations, which come within the proper constitutional machinery.

The proper implementation of the plan depends upon team work. I hope that the railways are prepared to put in something now in the hope of building up a more prosperous future for themselves, and for the country. If they do that, the success of the plan is assured. The railways will move forward to profitable operation and the plan will succeed, not in the interests of this Government or of any other Government but in the interests of the railways, of the men who serve them, and of the country. We cannot have a prosperous country without an efficient railway system.

I commend the Third Reading of the Bill in some of the words I used on the Second Reading. This is a great chance for the railways. I sincerely mean that. I equally sincerely mean that it is a chance that will not come again, and if all of us who are concerned cannot seize it and make a success of it the railways will have missed a chance that will never come again. Their prosperous future, which we all so much desire, will never come in our generation.

Question put and agreed to.

Bill accordingly read the Third time and passed.