TRANSPORT (BORROWING POWERS) BILL

HC Deb 11 December 1958 vol 597 cc514-634

Order for Second Reading read.

3.35 p.m.

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

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

As the House knows, Clause 1 of the Bill deals with an extension of the ordinary borrowing powers of the British Transport Commission, and Clause 2 with an extension of its powers under the Transport (Railway Finances) Act, 1957. Clause 1 extends the borrowing powers of the Commission by a further £600 million. In certain quarters this has been represented as a new sum of money suddenly injected into the economy and as something likely to be inflationary in its nature. Indeed, I think the words, "spending spree" were used about it.

The House will know, but perhaps I may put it on the record again, that this additional £600 million represents part of a sum which, in effect, was pledged in 1954, when the Government said that they would back the original modernisation plan. This is, therefore, the second instalment of the money which was promised at that time. I shall deal more fully with the matter later, but this is no sudden new injection into the economy, it is part of the original plan, not any kind of "spending spree."

All of us in this House who know the railways intimately—someof us have worked on them or for them for many years—will realise that it is not only a Bill that we are discussing. It is the future of what is still the largest single employer of labour in the country. We are debating men's jobs, their careers and their futures, as well as the bare bones of the Bill. I hope that I may approach the subject in that sense, as I am sure will other hon. Members.

As a background to the Bill we are discussing the extension of borrowing powers and the right of the Minister to advance further sums under the Transport (Railway Finances) Act. How the greatest engineering triumph of the Victorian age will streamline itself to fit the age of the motor car and the atom is, in some ways, a fascinating study. I am sure that no one will disagree that that is the crux of the problem facing us.

When one compares the older type of railway truck with the modern commercial vehicle commonly seen on the roads, one can appreciate the difficulties facing the Commission and the measure of progress which it has to make. Again, I do not think that hon. Members would deny that any industrial country must have some kind of railway system; obviously, therefore, it had better be a modern and an efficient system. We may differ over the means of achieving that, but I am sure no one would deny that we must have a modern and up-to-date railway system.

When dealing with the railways I shall also have something to say about roads because of their repercussion on the railways, and I am also mindful of the other responsibilities of the Ministry, for example, those connected with coastal shipping. I am sure that it is understood that these sums, which the House is being asked to provide for the Commission, are not a means of allowing the Commission to undercut its competitors but rather a means to bring it up-to-date so that it can be modern enough to provide proper services.

One other thing affects the Bill and perhaps the position of the Minister and of the Commission. One of my predecessors was run over by a train when displaying too close an interest in the railway system. That should be an awful warning to his successor. I think that it was a Mr. Huskisson. I want to make one thing plain. We will no doubt differ on methods, but I say quite plainly, as the Minister responsible, that I want, as the Government want, this great attempt at modernisation and the streamlining our railway system to succeed, both for the sake of the men who work for it and for the sake of the country. That is the wish of the Commission and of everyone in it.

In a notable speech which the Chairman of the Commission, Sir Brian Robertson, made last week he said what I think were heartening words. They were:

In spite of our present difficulties, and they have been much publicised, I am quite certain and so are my colleagues that the investment that the nation is making in British Railways will in the end pay a handsome dividend. It is my job to see that this statement is translated into fact and with my colleagues we intend to see that we do succeed. That is a fair summing up of the position of the Commission. Both the Government and the Commission are in partnership in this task of making a success of this very great venture.

Therefore, it is my duty today to set out as clearly as I can—and there is a lot to say—the views of the Government and of the Commission on the future of the industry and on its present position. I do not think that the House could consider the Bill otherwise against a realistic background. The hon. Member for Enfield, East (Mr. Ernest Davies) and the right hon. Member for Vauxhall (Mr. G. R. Strauss) know that I hold my political views as passionately as they do theirs. I will try to deal shortly with the past.

The railways were not given a large share of the national investment in the years following the war. The House debated nationalisation in those years when perhaps, on the whole, it should have been debating modernisation. [HON. MEMBERS: "No."] I do not question the sincerity of the idea of nationalisation and it is not my purpose now to argue the case; but it is my duty to say that those years, from the point of view of modernising the railways, were utterly and completely wasted. [HON. MEMBERS: "No."] It now makes the task of catching up with modern forms of transport ever more difficult. That is not an argument against nationalisation; it is a statement of fact.

The Government's job in 1951 was to free the railways from some out-dated restrictions and to fit them for a more competitive world and bring them up-to-date. That is why we started the modernisation plan. Perhaps it is worth mentioning that "Modernisation of the Railways," published by the Commission, December, 1954, says, in one of its concluding pages: The technical re-equipment of the railways is long overdue… So far British Railways have not been given a share of post-war capital investment comparable with that allocated to railways in many other countries. Now there is an opportunity to put this right. That is what the Government are trying to do by providing funds for this great modernisation plan to go forward. The Bill provides the second instalment of this fund. In the meantime it is, perhaps, an interesting comment on the motor age that in 1951 there were 4.3 million motor vehicles on the roads and that in 1958 the figure had risen to 7.6 million. That is a measure of the competition which the railways have to face, and whatever anybody does about it that competition has to be faced.

In 1956, it seemed right that the position should be looked at again and that the Commission should come forward with a prospectus to show how it would act in the changed circumstances. It will be familiar to the House that this was the basis of the 1956 White Paper, Cmd. 9880, and I will quote only two very short sentences because they are both important to our discussion. These are the words: In the long run the immediate gain of revenue "— that was, from fares and freight charges increases—

would probably be purchased at the expense of a substantial contraction in the traffics offered to the Commission. The White Paper goes on to say that large increases in fares or charges might damage the Commission's business, certainly temporarily and possibly permanently. That was the view in 1956. It said: The ultimate revenue prospects... will depend mainly upon modernisation. There has always been the difficulty of modernising quickly enough without increasing charges, which would gradually drive business away from the railways for good.

I would refer those critics who suggest that the Government have not backed this plan properly to the fact that the original capital investment in railways under the plan was £135 million in 1958 and £140 million in 1959. What has now been agreed for 1958 is £145 million; for 1959, it will be £178 million. The Commission is getting from the Government all that it can invest in the railways this year and next year. Any suggestion that the Government have not backed this plan up to the hilt is not founded upon fact.

Mr. H. Hynd (Accrington)

These are very interesting figures. Can the right hon. Gentleman project them a year forward, to enable the Commission to place contracts?

Mr. Watkinson

The Commission has an idea what the future figure is. It is at least sure of getting its money in 1959, in 1960 and possibly after that, and so it has a reasonable certainty.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West) rose—

Mr. Watkinson

I have an enormous amount to say and I hope that the hon. Gentleman will let me get on.

The Commission has all the investment money that it can usefully employ in obtaining its badly needed revenues. There is no doubt that the Government have backed the plan to the hilt. Because of the lateness with which the plan started, this is a difficult race to run. We have to make good the neglect of the earlier years.

The number of C licences issued in 1947 was 250,000 while in 1958 the number was well over 1 million. The number is still increasing. I would be very glad if the Opposition spokesman in the debate would tell us what the Opposition intend to do about C licences. Do they intend to limit them? That shows two things. It shows that the railways face the handicap of a late start with modernisation and face increasing competition on the roads, which, in any free economy, should be encouraged and certainly allowed to go on.

What of the present position? On the passenger side, the railways have lived up to their promise and their prospectus. While I shall give only a few examples, it is fair to say that passenger receipts, despite the competition I have mentioned, are more than holding their own. I shall give one or two individual examples to show where modern passenger equipment is paying off. On the Bradford—Leeds— Harrogate service annual receipts have increased from £23,000 under steam operation to no less than £116,000 under diesel multiple unit operation. The Newcastle—Middlesbrough service turned a deficit in movement costs of £10,000— in round figures—in 1955 to a surplus of £137,000 in 1958. The first inter-city diesel service, from Edinburgh to Glasgow, carried 700,000 extra passengers in the first year of operation.

The House is being asked to advance large sums of money on a prospectus by the Commission that modernisation will pay off. On the passenger side, it is practising what it promised; it has been performed and come to pass. It is on the freight side that the position is so different and, quite frankly, so very difficult. We all know that receipts have been sagging heavily on this side throughout the year. For the first 44 weeks of this year merchandise traffic was 14 per cent. below last year and 10 per cent. down on 1956, which is a more comparable year, mainly in the heavy traffics —coal and steel, in particular. None the less, the Commission is pressing on with modernisation here, but it is inevitably much slower. They are bigger projects and take longer to come to fruition.

The Green Arrow Scheme and the Export Express Scheme are both doing well. By the end of the year fitted freight trains will be increased to over 35 per cent. of the whole and the number of wagons fitted with continuous brakes will have risen to about 270,000. There will be 44,000 containers suitable for door to door carriage in use, 150 older marshalling yards will be closed, and 27 new yards will be constructed under the Commission's immediate plans. I give those examples only to show that on the freight side modernisation is being pressed forward, but it takes longer to do and, as I have shown, in the meantime competition with the roads goes on.

To sum up that part of the position, on the passenger side the Commission has done what it promised to do. On the freight side it has fallen behind, but for reasons I shall deal with in a little more detail in a moment. There are those who say, for example, that the great motor roads programme the Government are pushing forward must be detrimental to the railways' future. I do not take that view. I should like to say a word or two about it, because I think that it is the cause of some alarm to many railwaymen and others who look anxiously to the future of the railways. Can the railways stand the competition of new vehicles on fast roads, and so on?

There was an interesting leader in The Times on 1st December. It quoted a speech by Sir Reginald Wilson, which I hope hon. Members who are interested will read, if they have not already done so. The speech was to the National Conference of the British Institute of Management and was on the technical modernisation of British Railways. The Times said: Given reasonable conditions, two men in the country can move in one train as much as 25,000 ton-miles of heavy freight every hour. 'No other technique known to us can touch such figures of output for land transport'. If we couple with that the fact that each working day British Railways have to move 4 million passengers and 1 million tons of freight I think that that is proof of what I have said. We must have an efficient railway system. Competition from the roads is complementary and is part of the system and it is not, in any case, over-providing transport for our densely industrialised country.

The railways take some pride in the fact that during the recent foggy weeks they have conveyed 2,100 passengers who had hoped to travel by air. They went by rail because the railways were running and those airlines were not. Railways, of course, provide an essential service. We cannot do without them. To do without them would be beyond the capacity of any road system which any Minister of Transport could envisage being built.

The Bill tries to give the Commission the help it needs to make up the leeway of past years and in facing the competition which the Government think should not be curbed but encouraged because it is part of the free enterprise, expanding, regime of our country. None the less. towards the middle of this year it was obvious that the freight position was looking alarming. Therefore, the Chairman of the Commission and I had an interchange of talks. It was the Chairman's wish, as it was mine, that the very earliest moment should be taken to inform the House and the country of the position.

As the House knows, the Chairman wrote a letter to me, to which I replied, in which he set out clearly the freight position in the light of the setback in coal and steel traffics in particular. That was published as a White Paper, Cmd. 585. The Chairman set out the position there fully and frankly. At that time he had no need to do so because he will not know what the final figure is until the end of the year, but I am sure that it was right to bring it forward at the earliest possible moment.

In addition, I think that it would be helpful to the House and to the Commission to make clear that the position set out in the White Paper was due to a drop in traffics and not, perhaps, to a disastrous loss through competition. Therefore, I asked the auditors, who are independent and responsible to me, to check those facts. They visited the regions and advised me in their report that the drop in these traffics, the heavy freight traffics, in the second part of the period, was much more severe than that in other traffics, that is, relating to coal, steel, and so on, and added: We are of opinion that, in the absence of unforeseen adverse factors in the last two months of the year, the undertakings will have been substantially fulfilled by the end of the year 1958. Therefore, I do not think that it is a failure of the Commission to hold its fair share of the traffic.

I do not know whether the House knows that the Commission recently signed an agreement with the Electricity Generating Board, which means that about 3 million to 4 million tons of coal traffic will be regained by the railways in the first six to twelve months and more in succeeding years. There is a useful attempt to get coal traffic from the road on to the rail, as I think it should be. Coal output was expected to reach 228 million tons in 1960 and 240 million tons in 1965. In fact, in 1959, demand will probably be about 200 million tons. That is the measure of the stocks held. At present, railway carrying of coal is down by no less than 500,000 tons a week. That is a situation which, while it may be temporary, is none the less disastrous for the Commission's finances.

The steel industry, too, due almost entirely to destocking, is affecting the railways at least as much as was set out in the Chairman's letter to me. I understand that the production of crude steel in 1958 will probably be about 10 per cent, lower than in 1957, and, therefore, of course, rail freights will be affected by that position. So it might be said that this sudden storm, as I think the Chairman of the Commission called it in his letter to me, was not of the Commission's making. None the less, in view of the figures I have given for road transport, and of the general development of the economy into new patterns and new ways, it was quite obvious that the Government could not let matters rest as they stand.

I want to make it plain that it is no criticism of Sir Brian Robertson and his colleagues, or, indeed, any falsification of the 1956 prospectus, to say that, in the circumstances, it is necessary to look at the modernisation plan and all its financial implications again, to try now to project it into the future, and to see whether what is being done is right, and whether it is on the right front and of the right degree, and so on. Indeed, I would not have felt that I could bring the Bill forward to the House and seek its acceptance without looking again at the modernisation plan in the conditions of the next few years.

At my request, the Commission has already initiated a full, detailed and urgent review of the whole modernisation plan. It will take account of both present and likely changes in traffic, it will try to re-assess the level of activity in the coal industry, in particular, because of the development of oil and because of the high price of coal, which is making oil so much more competitive, and future developments in atomic power. These and a great many other matters could not, in all fairness to the Commission, have been foreseen in 1956, and, therefore, the Commission is in agreement with the Government's requirement that this inquiry should be thoroughgoing and detailed. The Commission will have any help which the Government can give.

I understand that the Commission is already having talks with the National Coal Board and the Iron and Steel Board to assess future levels of traffic there. What I think is very important is that it will be having detailed discussions with bodies which represent its customers—the Federation of British Industries, the Association of Chambers of Commerce and the National Union of Manufacturers— and I should like to express our gratitude to these bodies and others, as I know Sir Brian Robertson would, for the great interest that they are taking in this reassessment of the Commission's commercial future.

It is most important that the customer should be able to put forward at this stage his views on whether he thinks the modernisation plan is going in the right direction, whether it is going fast enough and whether or not what is provided is right or wrong.

Mr. Ernest Davies (Enfield, East)

Since this inquiry is being undertaken at the Government's request, will the report be presented to the House?

Mr. Watkinson

Yes; but perhaps I may come to that point later. I will certainly answer the hon. Gentleman's question.

This has all been put in hand, and I will give the House the terms of reference, which will set out clearly what is to be done. The review will take several months, and I shall try to lay its findings before the House by the early spring. It will be a new look at the whole position and a complete revision and reshaping of the 1956 prospectus.

Mr. Popplewell

This is an extremely important statement. May I ask the right hon. Gentleman whether the Commission will in any way slow up other programmes which are now in hand, such as marshalling yards, coupling of trains, and the questions of dieselisation and electrification?

Mr. Watkinson

I shall come to that in a moment. I am now dealing with the immediate position, but it will mean the very reverse.

Perhaps I may just deal with the terms of reference of the inquiry. They are three in number. The first is an account of the achievements under the modernisation plan to the end of 1958, and of the benefits obtained. The second is a detailed re-examination of the future course of the modernisation plan, with particular reference to the next five years, related to the future size of the railway system that will be needed in view of current economic developments and future expected requirements. The third is a reappraisal of the economics of modernisation in the light of the second term of reference, and the steps necessary to achieve the earliest possible break-even date based on an up-to-date assessment of future traffics, costs and economics.

These are the terms of reference of the inquiry which is now in hand. The House will realise that this inquiry will re-assess the Commission's future, and will deal both with modernisation and the Commission's deficit position. I must make it plain that at present both the Commission and the Government have not departed from the target, set in the White Paper, of achieving the break-even by 1961–62. I would also draw attention to a sentence in my letter to Sir Brian Robertson: The Government cannot envisage an indefinite extension of the time when the Commission will break even. I must go further and say that this means that the Government will have to receive a very complete economic justification for any change in the break-even date at all. The Commission appreciates this position, and also clearly realises— and this is the answer to the hon. Gentleman's intervention—that the work must go on without waiting for this reappraisal, and that much has now to be done.

The Commission is, therefore, going on, with the Government's full support, on two lines of attack: first, more modernisation, on a narrower front, but still more modernisation; and, secondly, more savings on a much broader front. Perhaps I may say a little about the details of this. Let me give one example. As regards main line electrification, the Commission proposes for the moment to concentrate its resources on the London, Midland and Scottish line to Manchester and Liverpool, and hope to accelerate its completion by several years to get a quicker return on the capital investment.

Secondly, there will be an acceleration of the introduction of diesel locomotives, to eliminate the use of steam on an area basis as quickly as possible. This will apply particularly on the railway routes north of Newcastle-upon-Tyne. Perhaps I may say again in relation to the North that the Government have already authorised an increased capital expenditure in 1959 to speed up the purchase of main line diesel locomotives, and that by 1961 nearly 1,100 of these will be in service. I could give a great many other examples.

Mr. Thomas Steele (Dunbartonshire, West)

The right hon. Gentleman said that the Commission was to concentrate on main line electrification. That does not mean that railway electrification already in progress in other places will be stopped?

Mr. Watkinson

No; I am talking of the future at the moment.

Mr. Popplewell

The Minister says that, first, the Commission is to concentrate on the London—Manchester electrification scheme, but, of course, there is the King's Cross—East Coast route scheme, on which a lot of work has been done. Will there be any danger that work now going on will not be proceeded with?

Mr. Watkinson

I will ask my hon. Friend the Joint Parliamentary Secretary to deal with that point, because I have still quite a lot to say to the House.

What I was doing now was giving an example of what the Commission means by more modernisation. It means modernisation more quickly to get a return more quickly; and I could go on to give a great many more examples. There will be some scrapping of obsolete wagons and many more multiple-unit diesel trains. They will be doubled from 2,300 to 4,600 by the end of 1961. That is the immediate task—more modernisation on a narrower front, but, particularly, on things which will pay off reasonably quickly.

The House will, I think rightly, be rather more concerned with the financial results of what is being done. It will be remembered that in the current year the Commission promised to make savings of about £14 million to meet its estimated fall in traffics, which fall, of course, has been exceeded, but it promised to make £14 million of savings. Associated with the wages settlement of earlier this year, the Commission promised to obtain an additional £6 million in a full year. It was said that the Commission cannot get all this in the current year, but it made a promise of a further £6 million, which would begin to be fully implemented during this year.

I thought it fair to the Commission, and of interest to the House, again to ask the auditors to see whether those undertakings were fulfilled. There were some of us—not myself, but newspapers and other people—who felt that they might not be achieved. I was always certain that the Commission would honour its undertakings and I am very glad to see that the auditors whom I appointed and asked to examine this matter have now reported that We are of opinion that, in the absence of unforeseen adverse factors in the last two months of the year— which, of course, have not yet run out— the undertakings will have been substantially fulfilled by the end of the year 1958. It is a great job which is being done by the Commission in carrying out its undertakings for this year to make these difficult and painful economies. With this in mind, I have discussed with Sir Brian Robertson the target of additional savings which the Commission must set for 1959. I have asked him to raise this from the £20 million which he mentioned in his letter of 29th September to a target of at least £30 million in a full year. I know that it will be very difficult, but I am confident that it is possible of achievement.

Mr. Popplewell

How?

Mr. Watkinson

I will give some examples if the hon. Member wants me to go on for a very long time. I will certainly give one or two.

For instance, the introduction of diesel traction in the Western Region alone can save £1 million in a full year. By 1961, when the replacement of steam by diesel shunters will be completed, the saving will be about £3 million a year. The reduction in the wagon fleet by 1960 will save £2 million to £3 million a year. By 1960, the London Midland freight modernisation and rationalisation scheme will save about £1½ million a year. All these measures will make part of the savings in 1959.

Mr. Popplewell

Are those—

Mr. Watkinson

Perhaps I may be allowed to go on. I have a lot more to say.

There is no intention—I would like the hon. Member to listen to these words; I think he would be interested— on the part of either the Government or the Commission at this time to undertake any indiscriminate slashing of either the labour force or of work in hand— obviously not. The House should, however, know that in the last twelve months, under the proper agreements between the Commission and the unions concerning redundancy, it has been possible to reduce the labour force by 20,000 men. That, again, is a great task well and necessarily performed. I do not think that any of us in the House would disagree—nor, I think, would the union leaders disagree—that if we are to have a prosperous railway system it will, and must, employ fewer men, but, I hope, more skilled and thus better paid men. That is the ambition for us and for the railways.

Mr. David Jones (The Hartlepools)

If, as the right hon. Gentleman says, there is to be a saving in manpower, will the Commission save at the expense of putting extensive orders out to private works while there are over 1,000 shopmen who have been dismissed in recent months?

Mr. Watkinson

That has nothing to do with my present argument. I am explaining the broad general principles. What I have said is that although there has been this large drop of 20,000 men in the last twelve months it has been carried out properly under the proper agreements between the Commission and the unions.

To sum up this part of my remarks, I am seeking the authority of the House for the Bill on two clear understandings: first, that early in the spring of 1959, we shall have a complete reassessment of modernisation; secondly, that the Commission is forthwith putting in hand measures such as will contain the 1959 deficit within reasonable proportions, which will be in line with the original plan presented to the Government in 1956. That is to be done as I have said: more modernisation more quickly, more savings more quickly. There is no idea of asking for any kind of blank cheque. I know that the Commission accepts these necessary disciplines as the discipline which falls on any industry which happens to be in the hands of its bankers, and that is the position of the Commission with the Government as its bankers.

I need only draw attention, in passing, to the third paragraph of the Explanatory Memorandum to the Bill, which makes it plain that I have quite adequate powers to keep a check on the expenditure of this money and advance it as I think fit. That is clearly set out in the third paragraph of the Explanatory Memorandum.

I read an interesting letter in the Manchester Guardian of 25th November by the hon. Member for Enfield, East. He concluded it on what, I thought, was a very gloomy note, because he concluded by saying, in effect, that there was no hope now but a large annual subsidy for the railways. The Commission rejects that concept as firmly as the Government reject it. There is no idea of any kind of subsidy. If we accept that, all discipline is lost and all hope for the future of the railways is lost, too.

If the railways become a subsidised creature of the Government, then, as the Economist said the other day, they will have a Minister round their neck for ever and a day. That would be a sad fate for any industry. Therefore, the Commission and the Government are determined that these necessary disciplines are a challenge to get on more quickly and are not in any way something about which to take a depressing view.

I know that some Members of the Opposition would like the Government to produce a subsidy, perhaps, in the knowledge that their method of running the railways would always demand one.

Mr. D. Jones

Has the right hon. Gentleman any evidence that there is a Minister around the farmers' necks?

Mr. Watkinson

I would not know.

Mr. Scholefield Allen (Crewe)

I have no doubt that the Minister has seen the article in The Times today. Has he anything to say about its concluding paragraph: If the Government want to see the deficits under control they must allow the B.T.C. to be in control—to carry full responsibility and, within the framework of existing legislation, to choose its policies freely. The Government have several times interfered in what the Commission wanted to do.

Mr. Watkinson

Hon. Members opposite are so impatient that they keep anticipating my speech, thus making it longer. The final points with which I wish to deal are these issues of fares and charges and the future on that side.

Another resource open to the Commission as a means of putting its finances into balance is certainly to conduct its affairs on a sound, commercial basis. Hon. Members opposite always bring forward these charges of interference. All I would say is that they should read again the 1956 White Paper, which I have read out, which shows clearly, in the Commission's own words, that it recognises that heavy increases in fares and charges will only drive away more customers from the railways. What would be the sense of doing that?

It is, however, a corollary of requiring the Commission to put its affairs in order that it should be able to raise its charges whenever it thinks it fair and expedient to do so. As the House knows, due to the action of a Conservative Government concerning the freight side and commercial charging, the Commission today has entire freedom to charge as it thinks fit, subject, of course, to getting the necessary powers from the Transport Tribunal. It is, I think, using those powers to the best effect, subject to the conditions of the market.

At present, the Commission has an application before the Transport Tribunal, which, I think, will be heard next week, dealing with passenger fares. I do not want to anticipate what will be discussed, but the House should, perhaps, know something of the Commission's intentions. The application is one for increased headroom. The purpose is, as the Chairman has said to me during these recent months, to allow the Commission to have a more flexible fares policy. For example, some luxury trains, like the new "Master Cutler", which is such a great success, might well justify a higher than standard fare. The Commission is thinking of an interesting experiment on branch lines to see whether higher fares might keep some branch lines open, if the customers will pay for them.

There is no doubt that there still remain to be dealt with anomalies and substandard rates. As for freight, if the Tribunal gives the Commission the powers it seeks it wants to use them in such a way as to sweep away anomalies, and, naturally, to get more revenue where it properly can. It is always very interesting for me to note that almost every Socialist-controlled local authority in London always opposes applications for fares increases before the Transport Tribunal and, no doubt, will do so again next week, but for those who have anxieties about these matters—and they are common, I think, to both sides of the House—the Chairman has authorised me to say that the increases that the Commission will make must be governed by market considerations. I understand that it has no intention of making effective any overall increases either in season or ordinary fares within the next six months.

I should like to mention another development in fares. As the House knows, I have set up this new London Travel Committee. I am very grateful to Mr. Alex Samuels and his colleagues for having undertaken this very heavy task. They have their first meeting today, and have much work to do. One of the things I hope they will do is to find out whether we can spread peak-hour travel, and encourage the more efficient use of public transport by a fares differential, or fares discrimination, between peak and off-peak hours.

The Commission is also studying that problem, and it knows that it is my very strong wish that we should try to make things more comfortable for those who have to travel to and from their work in London by offering some economic inducement to travel off-peak. That will be difficult, but it cannot be done at all unless the Commission gets increased headroom from the Tribunal. For obvious reasons, there does not seem to be any sign of any flat, general increase in fares, but I hope that we shall be able to find some new and diverse ways of helping the Commission and, perhaps, helping peak-hour travel, too.

To sum up, I do not approach this problem—nor does the Commission, as its own words testify—in a defeatist way. I think that the disciplines that I am forced, if I am to do my duty, to impose upon the Commission will be a spur to greater effort and a method of achieving more rewarding results. I do not think that anybody would expect that the second half of the twentieth century would not throw up new technical problems and new ways of doing things. Therefore, the railways will have to rethink from year to year—as have other great industries.

It is a good thing, and a healthy thing, and not, as has been suggested, in any way an attempt to put a brake on, or destroy, the great work that has been done. What, for the sake of the railway-men and of the country, we are seeking is to do the job more expeditiously and more efficiently, and to spend the country's money to the best advantage. That is why it is necessary to look at the position again, to take the powers that I have to control advances, and to subject the Commission to a reasonable degree of financial discipline.

I want to say to the railway men that the Commission is being given the right tools for the job. I believe that it has a much more efficient structure. The area boards, with their link with the Commission through their chairmen, are doing a first-rate job— —

Mr. G. Lindgren (Wellingborough)

What they are doing is spending many thousands of pounds on reorganisation.

Mr. Watkinson

They are getting very much nearer to their customers, and as for the decentralisation now going on within the regions themselves, if the hon. Gentleman likes to take the slightest trouble to talk to any of the larger users of the railways in the regions they will tell him how much they appreciate the new commercial management being set up within the regions, which is giving, for the first time, the kind of personal service that most people thought a nationalised industry could never give at all.

We still have many ideas for the future of the railways, and I am sure that we shall hear of some more from my hon. Friends today. We think that this process of decentralisation should go on. If, in that process, the trains are occasionally to be of different colours, if old loyalties are to be revived and closer contacts achieved, I see nothing wrong in that. Indeed. I see in it—[HON. MEMBERS: "Jobs for the boys."]—a brighter future for the railways on the management side.

If we are to put forward a fair comparison this afternoon, we should just look at what is happening to other railways. The French railways, the German railways—as, I think, some hon. Members know who have only recently been to Germany—are running into very heavy deficits this year. In addition, hon. Members will no doubt have read the articles in The Times describing the difficulties of the American railways. But, at any rate, as the general American economy has turned upwards again so have the fortunes of the American railways. I think that that is what will happen with the Commission, and that is why the

Government told the Commission that they regarded this check to its progress as temporary. Had that check not occurred, the Commission would have been on target with what is said it would do.

In this debate, each side of the House must take a different view, but I hope that I will carry the House with me when I say this of Sir Brian Robertson. I am very grateful to him. To be the chairman of a nationalised industry is a thankless task. He gets greatly knocked about, both by Members of this House and people in the country. He has to suffer Ministers of one kind and another, but I think that he and his colleagues do the job supremely well. I would. therefore, like to end with a word to him and to the railwaymen, for whom we all have a very soft spot in our hearts.

The railways are going through a difficult time—we all accept that—and it is always painful successfully to reshape a great industry to face new conditions. The Government have given the modernisation scheme their full backing, and will continue to do so. The country, although it sometimes criticises the railways, still has a very soft spot for them, because it knows, as the House knows, that we cannot have an efficient economy without an efficient railway system.

That is why I am sure that I speak for the whole House—whatever may be our political differences—in saying that we wish Sir Brian Robertson, his colleagues and every railwayman every success in their great task of trying to fit the railways to serve the country's needs in the different conditions of the second half of the twentieth century. I am sure that we believe that it is a job worth doing, one that those in the industry can be proud to do, and one that I believe they will carry through to great success.

4.28 p.m.

Mr. Ernest Davies (Enfield, East)

The Minister of Transport has made a long speech—of which we make no complaint —filled with a great deal of interesting detail, and some important policy statements. With the non-political and some other parts of that speech, most hon. Members will not find anything with which to disagree, but many of the facts he presented were interpreted in rather a peculiar way, as was obvious from the reactions of my hon. Friends. There are also some very important gaps in his speech which I hope now to be able to fill.

The most important statement in the speech was the announcement of the appointment of a new committee to inquire into the future of the modernisation of British Railways—

Mr. Watkinson

I must point out that this is something to be done by the Commission itself. It is not to be an outside committee of inquiry.

Mr. Davies

No, I appreciate that, and I thank the Minister for clarifying it. Nevertheless, it is something that has been instigated by the Minister. It is quite clear that a great number of problems confront the railways in all countries, one of the chief of which is this great growth in private transport, and it is necessary to reassess the extent to which capital investment is justified, and in which direction it shall flow. One has one reservation over these continuing inquiries, and that is whether there is not too great a burden put on the Commission, instigated from outside, which imposes upon it a great deal of labour and work which results in distraction from the job of carrying on and running the railways.

The Minister referred in his speech to two investigations made by his auditors, and each one of these must have involved a great deal of work within the Commission, as he stated that his auditors had visited the Commission's offices, travelled round the regions and so on—and that takes people away from their work. It has to be shown that this is really necessary and that the results from it are fully justified. Further, one has the reservation that the more Ministerial interference there is in this way the more difficult it is for those in the industry to act independently and to have that sense of responsibility which gives them confidence in carrying on the job.

one of the main gaps in the speech of the Minister was that he revealed no consciousness whatsoever that the Government might share the responsibility, or even be largely to blame, for the position in which the Commission finds itself today. I have long ceased to expect the Minister to come here and admit that he has been wrong. I no longer expect him to confess that he shares the guilt for the financial difficulties of the Commission. I would, however, suggest today that not only are the Government to blame because of their economic policy, with which I shall deal in a few minutes, but they are also to blame for presenting to this House in the past a picture which, in the event, has not turned out in the way in which the Minister presented it. For the optimism which he has displayed there is no excuse whatsoever. From this side of the House we have challenged his optimistic statements right from the outset.

When the original Transport (Railways Finances) Bill was introduced, on Second Reading, in Committee and on Third Reading we questioned whether the sums being voted would prove sufficient. In the event, they have not. More recently, only five months ago, we debated in this House the Annual Report and Accounts of the British Transport Commission, and then it was quite clear that already, due to the credit squeeze and the falling traffics, it was quite impossible for the estimates in the White Paper to be fulfilled and that the Commission would have to come to the Government and ask for further financing.

Already, within the first two years in which deficit financing took place, nearly half of the fund of £250 million originally voted had been drawn upon. It was voted for seven years, but in two years over half was used and there remains only £132 million for the following five years. We on this side of the House pointed out to the Minister that the deficit of the Commission for the current year would be very much greater than that for the previous year, and we pressed him to inform us what action he was proposing to take. At that time, however, he denied that any action was necessary, although, of course, consultations were already taking place with the Commission. It was a mere two months after the debate that the Commission's Chairman reported to him that the deficit would be £85 million.

I do not believe that the Minister could have been so ill-informed that, in our July debate, he was not aware that it would be necessary for the Government to come to the further assistance of the Commission. Yet the Minister repeated what he had said so often since the credit squeeze in 1957. He repeated in the debate on 17th July, 1958: …the Government have decided—it is well known and I need not labour it—that they are not going to increase the size of advances to the Commission which have been and are being given under the Transport (Railway Finances) Act."—[OFFICIAL REPORT, 17th July, 1958; Vol. 591, c. 1451.] The Minister must have known then that there was no alternative but to increase the amount that the Commission would have to borrow during subsequent years in order to meet its deficit.

When we pressed the Minister from this side of the House as to how the Commission was to be financed when the £250 million was exhausted, as we said it would be, next year and it will be next year—he had no answer to give. Either the Minister was bluffing himself or bluffing the House. It may be that one can be more generous and conclude that he has a blind spot about finance. In any case, the Act has not fulfilled his expectations.

I remember that, during the Committee stage, the Minister said that the Bill was …a kind of carrot and stick method. That is exactly what it should be and is what the Government intended it should be."— [OFFICIAL REPORT, Standing Committee B, 18th December, 1956; c. 36.] Presumably the Minister was then holding the carrot to the Commission and driving it along to solvency in 1962. Apparently the donkey did not know the rules of the game, because it has eaten the carrot and is now using the stick, or at any rate driving the Minister to eat his words. The Bill has not fulfilled the Minister's confident expectations.

There can be no more convincing evidence that the Government are to blame for the difficult financial position in which the Commission now finds itself than the Chairman's Report to the Minister which is published in this White Paper. The deterioration in the Commission's affairs is a direct result of the Government's policy of economic stagnation. It is proved, beyond any possibility of contradiction, that the fall in production—and this the Minister himself confirmed—particularly that of iron, coal and steel, has resulted in a fall in freight traffics which has put the Commission into this very difficult situation.

The Chairman summed it up in paragraph 10 of his Report when he said: The severe and unpredicted fall in the level of production by the heavy industries is thus the crux of the Commission's revenue problem at this time. In the conclusion which he drew in his Report, he repeats this by saying: The finances of the British Railways have been struck a violent, unexpected blow by the sharp setback in the output and traffics of coal steel and other basic industries. No further proof is needed than that that the Government must take the blame for the further deterioration in the position of the Commission. There just is not the traffic to enable it to pay its way or even to fulfil the estimates of the White Paper and, as we know, the deficit will be £85 million instead of the original £50 million or £55 million estimated in the White Paper.

The Government were already responsible for the deterioration in the Commission's position since 1953 owing to the transport policy which they had pursued and owing to the interference by the Government with the free commercial operations of the Commission. It is interesting to see that The Times referred to that today, as was pointed out by an hon. Friend behind me. It is this final blow which has made the situation so much worse.

The Minister revealed no change of attitude whatever today. He is still unduly optimistic. I regret that I find myself not sharing that optimism. Unfortunately, the position has continued to deteriorate since the Report of the Chairman was made to the Minister. Freights are continuing at a low level, and are down for the first 44 weeks of this year by about £24 million. This week, we have the unemployment figures published showing that they are now well over the half million mark. Today, it is announced that last month steel production was down to 18 per cent. compared with, I think, an average of 16 per cent. during the third quarter of the year. If the economic situation continues to deteriorate, so will the financial position of British Railways. In fact, the deficit figures are really reaching heights which in some ways, it is difficult to take in.

Mr. Douglas Glover (Ormskirk)

I am sure the hon. Gentleman does not wish to mislead the House or the country, but he said that steel production was down to 18 per cent. He means "down by 18 per cent."

Mr. Davies

Yes, I apologise. Certainly, I should have said that it is down 18 per cent. compared with a year ago.

Let us look at the present position as regards the deficit and deficit borrowing. It is certain—I do not think that even the Minister will deny it—that the £400 million which the Commission will now be authorised to borrow up to 1962 to finance its deficit will be borrowed in full. That £400 million is certain to be drawn upon, and, I think, drawn upon some time before we reach 1962. It still may not prove adequate, although we share the Minister's hope that it will. Interest on that accumulates at 5 per cent. That means that by 1962 the £400 million borrowed will be somewhere near £500 million. To that, of course, has to be added the deficit of £70 million which was there the year before this deficit borrowing came in.

Mr. Norman Cole (Bedfordshire, South)

I am sorry to interrupt the hon. Gentleman, but surely his mathematics are not correct. The whole £400 million will not be on percentage interest for five years; it is only a matter of so much every year.

Mr. Davies

If the hon. Gentleman will work it out, as I did, taking each year as the deficit accumulates, he will find that it is not far short of £100 million. The hon. Gentleman can get down to pen and paper while I am speaking.

This means that by 1962 the Commission will have a liability of about £600 million, which has arisen purely from the failure to pay its way and the accumulation of the deficit and interest thereon, the other £100 million coming from the deferment of interest on the capital borrowed for modernisation. It is bad enough to have this millstone around its neck, this £600 million unproductive indebtedness, but on top of that there will be a further charge on the capital central charges; in other words, interest has to be paid on that £600 million. This will be another £30 million per annum on top of the £60 million central charges which the Commission already has to meet.

Can anyone accuse us of being unrealistic if we sugggest that it would be extremely difficult for the Commission, in 1962, not only to meet this £60 million of central charges which now exist but half as much again, making some £90 million of central charges which must be earned out of surplus operating revenue? As I say, the outlook is not at all a happy one.

It will be impossible for the Commission to repay this loan which is now being paid to it to meet this deficit. However efficient the Commission is, however well administered, however many economies are effected, it is being set an impossible task. I suggest, therefore, that it would be more politically honest for the Minister and financially more prudent if he admitted that deficit financing on this scale is neither more nor less than a disguised subsidy. I am convinced that it will prove to be such in the end and that it will never be possible for the Commission to repay.

In the circumstances, we must face the situation and see what can be done to ensure that the Commission breaks even in 1962, or attempts to reach that target. I share the Minister's praise of the Commission which he expressed this afternoon. I think that the Commission is showing great courage in having so much confidence in itself that it can fulfil the task. I believe that it is doing its utmost to achieve that end. In the circumstances. it would be very easy for it to be defeatist, to say that it cannot be done and, as it were, to throw in its hand. But the Commission is making the attempt, and we must all wish it success.

What do the Conservatives propose shall be done? We have had a scheme from the Tory back benchers, a very interesting scheme. It appeared in the Sunday Express last Sunday. I will read what was said:

A plan to restore British Railways to private ownership, step by step, is being drafted by Tory M.P.s. They rate it an election winner and will press for its inclusion in the party's manifesto.

Mr. John Peyton (Yeovil) rose—

Mr. Davies

I should like to finish what I am reading before I give way.

Mr. D. Jones

The hon. Member for Yeovil (Mr. Peyton) is one of the auctioneers.

Mr. Davies

This is not the place for auctions.

The report goes on: First of the railway properties to be sold to private ownership would be the hotels and catering establishments. Station bars, refreshment rooms, cafeterias and kiosks would all be put up for sale to the highest bidder. Next.

engines, wagons and passenger coaches will all be made available for purchase to new private railway companies. What a brilliant idea. What imagination. How revealing.

Mr. Peyton

It is not true.

Mr. Davies

I know that the hon. Gentleman will get up to say that it is not true.

Mr. Peyton

Of course it is not. The hon. Member really has the most astonishing gift of foresight. That is exactly what I was going to say. If he had read The Times the following morning, and several other papers, with at least the same degree of attention as he devoted to reading that article, he would have seen my denial. I have said quite clearly that there is no plan on the part of the Conservative Transport Committee to denationalise the railways, for one reason, apart from any other, that there are no buyers.

Mr. Davies

The Times said this about the hon. Gentleman: Mr. J. W. W. Peyton, M.P. for Yeovil, who is chairman of the committee, discounted the suggestion"— quite right—

(made in weekend reports) that they had a plan which contained proposals for drastic changes in the organisation of the railways by restoring them by stages to private ownership. He said that, apart from other considerations, it was 'very unlikely that anybody would buy the railways'. With that we all agree. But I ask the House to listen to this: He agreed that discussion had taken place from time to time about the possibility of selling off to private enterprise certain railway properties—the hotels and catering services, for example—but the committee had no intention of making formal proposals to this effect. The next reference is to the hon. Member for Truro (Mr. G. Wilson): Mr. G. Wilson, M.P. for Truro, a former chairman of the committee and now vice-chairman, having only recently returned from the Continent, did not know the details of tomorrow's meeting, but he, too, knew of no plan for the denationalisation of the railways, though some M.P.'s had canvassed the idea on occasions. The Times therefore confirms that talks have been going on and proposals have been put forward with regard to the disposal of sections of the railways.

Mr. Geoffrey Wilson (Truro)

My reference in The Times was to the fact that over a period of years Conservative Members have from time to time considered what could be done to denationalise nationalised industries. It was no more than that. Various back bench Members at different times have considered various ideas, but no official scheme has been proposed, either by this Committee or any other.

Mr. Davies

I thank the hon. Gentleman for confirming what I have said. It is clear that some hon. Members opposite share those views. They never learn. One would have thought that the amputation of the most successful part of the British transport undertaking, British Road Services, at a time when it was earning practically £9 million a year showed the foolishness of further disposals of profitable undertakings.

In addition to selling off the road haulage section, other proposals are put forward. But if profitable undertakings like catering, Thomas Cook & Son Ltd., Pickfords, hotels and even road passenger services are disposed of, the Commission would be deprived of a surplus of £4½ million which was earned on them last year. What crazy economics it would be to hive off from the Commission those sections which are earning a profit at the present time.

Sir Spencer Summers (Aylesbury)

Would it be fair to infer from the hon. Gentleman's remarks to the effect that it would be a mistake to hive off the profitable section of the Commission that it would be sensible to hive off the unprofitable sections?

Mr. Davies

The hon. Member for Yeovil (Mr. Peyton) stated that he doubted very much whether anybody would buy the railways.

Sir S. Summers

From his knowledge of the subject, I thought that the hon. Gentleman would have grasped at once that I was referring to the Bowes Committee's recommendations to dispose of the unprofitable canals and branch lines.

Mr. Davies

One does not want to get diverted into discussing that. I hope that the House will have an opportunity to discuss the Bowes Report in due course. That will be the occasion for the Opposition to put forward its views

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

The hon. Member for Aylesbury (Sir S. Summers) can buy the canals.

Mr. Davies

Apart from the suggestions of Conservative back benchers, what are the Minister's proposals? This afternoon the Minister rightly concentrated on two propositions: first, economy; and secondly, modernisation. We must get the question of economies in its correct perspective. The Minister is insisting on a further economy of £20 million which, with other economies already made, he has asked the Commission to make £30 million next year. But the Commission must be seeking economies all the time. It is a continuing process. In this respect,.the Commission has achieved a great deal since nationalisation in 1948. That is shown by the operating statistics which are published regularly, and every yardstick of efficiency, if applied to the Commission, shows considerable improvement over the last ten years.

I think that the word "economies" is often a misnomer and is often wrongly applied. Genuine economies are effective if the same services are provided or if goods are produced for less real cost—in other words, where higher efficiency results in increased productivity. That is true economy. That can be achieved by rationalisation which, in the case of the railways, is mainly modernisation. That the railways have set out to do.

I do not think that by closing down part of one's business or ceasing to provide facilities, irrespective of whether they are required or not, is economy in the true sense. The inconvenience caused may far outweigh the monetary advantages gained. I have a fear that because of this searching after solvency, this great desire to pay our way, the yardstick of profitability under the guise of economy is being too rigidly applied.

Mr. Arthur Holt (Bolton)

What does the hon. Gentleman use for a yardstick as to whether a thing is necessary? If five people are using a ten-mile branch line, is it therefore necessary? What other yardstick can the hon. Gentleman use other than whether a branch line is making a profit or not?

Mr. Davies

I was going on to say that clearly there are cases where the removal of a facility is justified. There may be adequate alternative facilities. Some services may be making such a loss or used so infrequently and by so few people that to keep them open would not be justified. But the prime test must not he profitability but public need. Facilities must be provided which are commensurate with the needs of the public. There has and always will be an element of public service in all transport undertakings. Those responsible should ensure that it is preserved. They should not assist in its destruction.

Economies are necessary, but they are not the main answer. It is not a question of saving the railways by reducing their expenses, necessary as that is. The answer is to get the traffics. That is the way by which the railways will save themselves. The position is made so much more difficult when the traffics are not there. The House will agree, I think, that traffic cannot be obtained without an up to date, efficiently operated railway system.

Clause 1 is the most important part of the Bill because it is constructive. It raises the borrowing powers by £600 million. That is far more important than meeting the deficit, necessary as that unfortunately is. As I have stated, railways all over the world are suffering from the same difficulties. Articles in The Times yesterday described the difficult situation in the United States, and, as the Minister said, some hon. Members have recently been to Germany and found that the same position obtains there as obtains here.

Public transport is confronted with the great growth of private transport which has to be regulated in some way. It is partially regulated already by a licensing system. Nobody wants to halt the growth of private transport because it is a natural growth. Sometimes it is more economic for goods to go in vehicles owned by those who produce goods, and it is certainly more economic for many goods to go by road, but—

Mr. Glover rose—

Mr. Davies

I cannot give way, and what is more, I cannot give way in the middle of a sentence.

It is economically foolish to allow the vast capital investment in the railways, which are still capable of carrying a great volume of traffic as economically and in many cases more economically than the roads, to become redundant. It is also uneconomic to allow our roads system to be unnecessarily cluttered up with such traffic. It is equally foolish for the railways to carry traffics which could more economically go by road.

It is necessary, in my view, to find a way of dividing the traffic between the different forms of transport so that it follows the most economic route. It is necessary that goods are carried by the form of transport which is most economical. In the long run that cannot be done, and in the long run there is no solution to the problem which confronts British Railways, unless we have a planned transport system in this country. The Minister accuses me of being pessimistic and of writing in the Manchester Guardian about permanent subsidies. I would point out to him that everything I say is in the light of the present policy under which the transport system of this country is operating. If we were in power and were able to pursue our policy of returning to a fully planned transport system, we should be able to overcome the difficulties which confront us today.

Mr. Peyton rose—

Mr. Davies

I prefer not to give way again. I am sorry. I have given way a great deal and it is not fair to those other hon. Members who wish to speak.

In any case, the railway system is becoming obsolete and it is necessary to modernise it. Technically we in this country are as capable as any country in the world of providing the most modern, up-to-date railway system. Those of us who visited France and Germany to look at the railways there found that these techniques today are international. If one visits an automatic signal box at Frankfurt it is like an automatic signal box at York. It is international and it is only a question of having the funds to introduce it.

In this connection, when the Minister stated that he had backed up modernisation to the hilt, I could not help remembering the exchanges which we had in the House from September, 1957 onwards, when we were rightly accusing him of putting a ceiling on the capital investment of the British Transport Commission which retarded the modernisation programme. That was denied at the time, but in the Commission's Annual Report we can read on page after page that project after project was not proceeded with because of the retarding of capital investment.

This modernisation programme, on which we are now embarking in full spate, has been made possible only by nationalisation. I am convinced that if the railways had remained under private enterprise it would not have been possible to embark upon this unified, centralised modernisation programme. In spite of this, the Minister, speaking at Dorking on 7th November, was reported in The Times the following day as having said: If only the Socialist Party had worried about modernising the railways instead of spending years of bitter controversy in nationalising them, without a shadow of doubt today their competitive position would be completely changed. I observe that the Minister assents. Of course it would be changed—changed for the worse. I hate to think what would have happened to the railways and what conditions they would be in today if they had not been taken over in 1948.

The Minister deceives himself. Before the war they were in a pretty poor shape under private enterprise and they were heading for bankruptcy. My father, Emil Davies, was one of the pioneers in advocating the nationalisation of the railways. When he died I found a large number of books on railways which he had kept. I have some of them now. Last night I turned to some of them, and I found one with the entrancing title, "Our Bankrupt Railways." That was written in 1929. Another was entitled "Red Light on the Railways.".

I found another more soberly entitled "The Future of British Railways", which had been written for investors, and I turned to the appendices of this book. I looked first at what capital investment there had been on the four groups during the period covered by the book. The capital expended by the four groups in the thirteen years from 1923 to 1936 was only £67 million and £34½ million of that was lent to the railways by the Government under the Railway Finance Corporation Act. That £34½ million was fully guaranteed by the Treasury and was lent to the railways at 2½ per cent., which was 1½ per cent, less than the market rate of 4 per cent. Private enterprise was treated better in those days than the nationalised railways are treated by the Conservative Government today—and in both cases they were Conservative Governments. During those thirteen years the reserves of the railways fell by about £50 million.

I turned to the dividend records to see how well those private enterprise railways were doing then. Let us first take the London, Midland and Scottish Railway. In 1932 and 1933 it paid nothing on its 4 per cent. redeemable preference stock. In 1934 it paid 1⅝ per cent. This fell again by 1938 to 1½ per cent. On ordinary stock it paid no dividends for the four years 1932 to 1935, only 1¼ per cent. in 1937 and 1½ per cent. in 1938.

Let us take next the London and North Eastern Railway. [HON. MEMBERS: "The Great Western."] Very well; I will take the Great Western Railway, which has always been quoted as such a great example of private enterprise in those days. We admit that in some ways it was superior to the other groups.

Mr. Lindgren

It had the easiest job to do.

Mr. Davies

From 1931 onwards it was paying only 3 per cent., and in those days 3 per cent. on ordinary stock was not considered the height of success for private enterprise.

To return to the London and North Eastern Railway, I will not bore the House with the figures except to say that on the 5 per cent. preferred ordinary stock, no dividends were paid from 1931 onwards. The deferred stock, which was issued to the public through the normal Stock Exchange channels in 1926, never paid a dividend from the day it was issued. Just imagine these proverbial widows and orphans who in 1926 had bought this London and North Eastern. Railway deferred stock at par, who had been promised a good income and who received nothing up to the time of nationalisation, since when they have received a pittance.

I trust that we shall hear no more from the Minister about nationalisation delaying modernisation. The poor physical condition and the appalling financial state of the British railways before the war, and the disgraceful wages and working conditions they provided for those who worked upon them, should stand as a lasting reminder of the failure of private enterprise in the railways.

We on this side of the House, far from being disillusioned with nationalisation, are satisfied that it has made the modernisation of British railways possible, helping to put them into the position of becoming one of the best railway systems in the world. We believe that nationalisation has made that possible and has saved the railways for the nation. So great is our belief in it that when we return to power we shall extend the nationalisation of transport by carrying out our pledge to re-nationalise long-distance commercial road haulage.

This is the season of largesse, although I admit that the Minister does not look exactly like Father Christmas. Coming here today presenting the Bill to the House, he has in effect been presenting a Christmas Box to the Commission, but in fact he has robbed little Brian's money box in order to fill his stocking with these 150 million golden sovereigns. When poor Brian grows up and ceases to believe in Santa Claus there is a nasty shock awaiting him. He will find that Uncle Harold wants them back—and with interest.

We do not, of course, oppose the Bill. We regret the necessity for the increase in the amount to be borrowed by the Commission for financing its deficit, but for that we blame the Government's economic policy. There is no alternative but for the Government to make this further advance possible over the coming years. We hope that it will prove adequate and that the expectations of the Commission breaking even by 1962 will be fulfilled. We welcome the doubling of the Commission's borrowing powers, because that is necessary to carry through the great railway modernisation programme on which it is engaged. In that we wish success to the Commission, because in its speedy completion its very future lies.

5.10 p.m.

Mr. John Peyton (Yeovil)

I do not want to follow the remarks of the hon. Member for Enfield, East (Mr. Ernest Davies) at any great length, but I should like to remind the House that what I said was far from being a confirmation of the remarks he made. He quoted from an article in a Sunday newspaper with which I had no concern whatever, and he appeared not to accept my denial. [HON. MEMBERS: "No."] The hon. Member began his speech on a note of great pessimism. I was glad to note that at the end there had been a considerable change to optimism, but what I could not and can never understand about speeches from hon. and right hon. Members opposite is that they seem to think that a recession of trade, particularly in the steel industry, has been confined to this country.

The right hon. Member for Vauxhall (Mr. G. R. Strauss), from his knowledge of the steel industry, will be very well aware that there has been a considerable and sharp recession in the industry in America, in this country and in Germany. He will know that there is a very reliable index of ore prices and scrap prices which marks that sharp recession, It does not do for hon. Members opposite to say to the House that it is simply and solely the Government's fault that there has been this recession in trade, which we all admit vitally affects the railway industry.

The hon. Member for Enfield, East permitted himself one or two words with which I can heartily agree. He said quite clearly, and I do not want to argue with him, that the railways can save themselves by getting the traffic. Both sides of the House will cordially agree with that, but apart from that the hon. Member made few remarks with which I am disposed to agree or to which I would give much attention, apart from his great threat that the party opposite intended to nationalise the road haulage industry. He paid no attention to the question of C licences. Everybody knows that the real reason why the Socialist plan for the nationalisation of transport failed in 1945 and after was that the party opposite could not get away with the nationalisation of the C licences. What we want to know is whether, if it is returned to power, the party opposite intends to nationalise C-licence vehicles.

Mr. Ernest Davies

It has never been proposed by the Labour Party that C-licence vehicles should be nationalised. That is a hare which the Minister is always running. It has never been suggested that there should be nationalisation of C licences. All that has been suggested is that they should be restricted in one form or another. There is a large number of ways in which that can be done, including restriction by distance and by weight.

Mr. Peyton

I will not follow the hon. Member's example by talking about the past, but I seem to remember that in 1947 there was a great deal of disappointment in the party opposite when his right hon. Friend the then Minister of Transport, who is no longer a Member of the House, announced that the party had given up its plan to control C licences, and I accept the word "control".

There is in the House a very genuine anxiety, shared by the public, that these requests for rescue by the railways should not become a recurrent feature of our economic life, I particularly welcome the assurance which the Minister gave at the beginning of his speech that this subvention given to the railways would not be used in any way to support uneconomic and unfair competition with road competitors. I also take it from what my right hon. Friend said that the Bill, as the previous Act, will have no bearing whatever upon the Commission's shipping undertakings.

Mr. Watkinson indicated assent.

Mr. Peyton

I am very grateful for that assurance.

Apart from the temporary but very severe loss in freights which the Commission has suffered with coal and minerals, it seems to me that it has three main problems. There is the problem of size, the problem of age, and the problem of morale. Before we seek to remedy these problems, both common sense and honesty demand that we should give a clear answer to the question of what we expect of the railways. Do we want and are we looking for a social service or a commercial undertaking which is on a sound basis and which will pay its way? There may be a difference of opinion as to which we want, but it behoves politicians of all parties to make the choice, stick to it, and accept the consequences. I frankly admit that to do otherwise is grossly unfair to the Commission.

I have grave doubt as to the consequences if the choice is made that what we want is a social service. I also accept that if we really wish to make the railways into a social service it will be very difficult for us to avoid taking the whole transport machine into our net, and that includes the very vexed question of C licences. I have always had a strong suspicion that this talk about an integrated system of transport sounds so nice but in practice would turn out to be pie in the sky and very heavy, bureaucratic, over-centralised, and insensitive to market demands. Emphatically from these benches we would always reject such plans, although we recognise that they are important to the party opposite.

If we want, as we seem to want on these benches, the railways to be a commercial undertaking, then, despite all kinds of constituency aches and pains and embarrassments, we must accept that the Commission is entitled to freedom and that it is entitled to expect that it will not constantly made a plaything of mere political considerations.

Mr. D. Jones

If the hon. Member is speaking on purely commercial grounds, would he relieve the railways of the responsibility of being common carriers and make them as free as the long-distance road haulage people are to refuse to carry any traffic anywhere unless they receive an economic price?

Mr. Peyton

During this Parliament a large measure of freedom has been restored to the railways, and, for my part, I would go a very long way to relieve them of obligations which are alien to their commercial operations.

Mr. Popplewell

What does the hon. Member mean by that?

Mr. Peyton

This is not the only country that suffers from these troubles. We should not look at them smugly, complacently, or with undue optimism, but at the same time we should not be unduly depressed and cast down about them.

The hon. Member for Enfield will correct me if I am wrong, but I was with him on the recent visit to Germany to which he has referred, and I was interested to hear the Germans, who are suffering from a similar problem, say that it was their desire to avoid regimentation in their transport system. In the matter of railway profitability, of a sound, strong railway industry in this country, there is a vital issue at stake. Since this is a problem common to many countries, the country first able to solve it satisfactorily will have an immense economic advantage over its competitors.

I have said that the railways have three major problems, namely, size, age and the present state of morale. I cannot help feeling that size is an enemy of efficiency. It brings over-centralisation and, therefore, militates against efficiency. I am not arguing the question of nationalisation or denationalisation as I have already tried to make clear, it would be idle to talk now of the denationalisation of the railways. Yet I wonder very much if there is not room for hiving off some of these functions and streamlining the operations of the Commission. [An HON. MEMBER: "Such as what?"]

At present the Commission is a landowner, docker, hotel-keeper and caterer. It has a vast advertising realm and it owns kiosks all over the country. I suggest to the Commission that it should carefully examine the possibility of hiving off, or even selling, many of its assets which are not necessary for the running of a railway. I am not for the moment concerned with whether or not they are profitable. I am simply concerned with the fact that they are not necessary to the efficient and profitable running of a railway.

Secondly, as regards public relations, it is vital that those functions which are not strictly relevant to the running of the railway should be polished up. A good wash and brush-up of the Commission's catering services would help greatly. I do not want to make too much of this point, but we all recognise that old, stale sandwiches and dirty teacups are not an advertisement for the railways.

Hon. Gentlemen opposite appear to have nothing but contempt for regionalisation and for the area boards.

Mr. Popplewell rose—

Mr. Peyton

I believe that the area boards have made a most useful contribution in bringing the railways nearer to and in closer relation with the public who are their customers.

Mr. Popplewell

What does the hon. Gentleman mean by that?

Mr. Peyton

The hon. Gentleman will have an opportunity to make his speech afterwards.

Mr. Popplewell

What have they got?

Mr. Peyton

There is a quite simple answer to the hon. Gentleman. Many people who previously were vigorous and bitter critics are beginning to realise that the railways are able to serve them and relations with the customers, which hon. Gentlemen so often ignore, have been substantially improved.

Obviously age brings its own problems, and they are none of the Commission's making. Here we accept that modernisation is the only remedy, and I congratulate both the Minister and the Commission on having had the courage to go through with this programme and not to falter. One would like to be satisfied, and I hope the Commission will give careful thought to this, that every avenue of modernisation has been properly weighed, the one against the other.

Particularly on the question of power, I wonder whether adequate consultation has taken place between the Commission and my right hon. Friend, and also with his noble Friend the Minister of Power, on the proper use of the right form of power in the future. Because it is obviously a sensible course, I welcome the announcement of my right hon. Friend this afternoon, on behalf of the Commission, of the intention to proceed faster with modernisation on a narrower front, and not to try to do too many things at the same time.

I wish particularly to deal with the last of the problems I mentioned, namely, morale. For far too long now the railways have been every comedian's whipping boy. They have also been the shuttlecock of party politics, and that has not helped morale. It is true that trains are late, and late trains are always things which people find it interesting to talk about. It is odd, however, that nobody is prepared to say that their train is punctual from time to time. In fact, the line on which I travel is regularly and consistently a good timekeeper. I am not talking from a party point of view and I think we could all make a contribution to the efficient running of the railways by being reasonable in our attitude to them, and by not voicing purely petty, irresponsible criticisms.

I hope it will be within the memory of hon. Gentlemen opposite that on one or two occasions I have raised in this House the problem of labour relations on the railways. One of the most urgent tasks facing the Commission is that of restoring to the railwaymen, as well as to the public, not only a sense of the importance of the job done by the individual railwayman but confidence in the future which the railways have to offer.

I recognise that labour relations in so large an enterprise as the British Transport Commission are not easy, either from the point of view of the Commission or from that of the union leaders. I hope very much that the new atmosphere of co-operation will grow. Particularly do I hope that it will be possible, by cooperation between the unions and the Commission, to eliminate some of the frustrating complications of railway grades. It should be the immediate concern of the Commission and of the unions to ensure that avenues of promotion are kept clear for men who intend to make their careers in the industry.

The question of how many unions there should be, and what are the advantages of having one railway union, is far too tender for me to deal with, but I shall be most interested to hear the views of hon. Gentlemen opposite on this point. I do not believe they will be unanimous.

Lastly, I refer to Sir Brian Robertson himself. Sir Brian Robertson has had one of the most difficult tasks in post-war industry. He has had many critics. At this stage of railway history those critics would do well either to come out into the open and clearly demand his resignation, or give him their support, because it is clear that nagging is most unhelpful. I am profoundly impressed by the sober confidence with which Sir Brian, a man of known uprightness, maintains the objectives of the Commission. I believe that in that task he is entitled to strong support from the House of Commons, anxious as we are to see his own prophecies and his own confidence justified by the events which lie ahead.

5.31 p.m.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)

I could not agree more with what the hon. Member for Yeovil (Mr. Peyton) said in his closing remarks. However, I suggest that if he wants to end the nagging at the British Transport Commission he should sack the Minister and the Government, for since hon. Members opposite came to power they have done nothing but nag at the Commission and try to prevent it from doing that efficient job of which it is capable. If the hon. Member spoke as chairman of the Tory back benchers' transport committee, and was sincere, the sooner he sacks the Minister and the Government the better.

Mr. Peyton

I hope that the hon. Member will not doubt my sincerity, for I would not doubt his. I hope he will accept my assurance that I consider that nothing I have said is in any way contradictory to the policy of my right hon. Friend and his colleagues.

Mr. Popplewell

That is to run away from what the hon. Member said about nagging. There are many instances where the Government have nagged the Commission.

I listened to the Minister with great interest. I was struck by the "flannel "at the beginning of his speech, in referring to the livelihood of railwaymen, and by the end of it when he paid tribute to the men engaged in the industry. Those were the two outsides of the sandwich of which the contents were such that railwaymen could not get much confidence from them.

The right hon. Gentleman stressed that the Commission agreed that it should not charge fares which were too high. That is an example of nagging, for the Commission has never attempted to charge fares which were too high. When the Commission asked the Transport Tribunal to permit a 10 per cent. increase in fares it asked for less than the minimum required to meet increased costs, to which I hope to refer later.

Another example of nagging comes from the way the modernisation programme has been handled. First, the Minister curtailed it, and then he began to jerk it up.

Mr. Peyton indicated dissent.

Mr. Popplewell

The hon. Member had better remember that he will not be chairman of the Tories' transport committee very long, and that his hon. Friend the Member for Truro (Mr. G. Wilson) will go back to that office if he denies my words on this subject.

After the original plan had been envisaged, the inflation caused by Government policy led to a retardation of the plan, and the result was that the Commission was involved in another £300 million expenditure. That is an example of nagging. Another example was given today when the Minister said that he intended to set up a committee of inquiry to consider the future prospects of the plan. The Minister has narrowed the plan and has talked about a further saving of between £20 million and £30 million. When we asked him where the extra economies could be made, he referred to dieselisation in the West Riding and other places.

However, we know that that was part of the original plan. We know that dieselisation and electrification have helped to increase the Commission's receipts. We asked how the savings of £20 million or £30 million were to be made, but the Minister shielded himself by "passing the buck" to his Parliamentary Secretary, saying that the hon. Gentleman would deal with the matter in more detail. One would have supposed that the Minister would have had such information at his finger tips. This is more evidence of nagging, and this is why railwaymen do not trust the Minister or the Government.

Mr. Glover

I am sure that the hon. Member does not want to mislead the House. The Minister said that the Transport Commission had already got £20 million of savings, and that he had asked it to try to increase that to £30 million, so that what we are arguing about is the difference between £20 million and £30 million.

Mr. Popplewell

I wonder whether the hon. Member is on the Tory transport committee, because that interjection shows a complete lack of understanding. I understood the Minister to say—and no doubt the Parliamentary Secretary will correct me if I am wrong—that the Commission had agreed to make an additional saving of between £20 million and £30 million.

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

What my right hon. Friend said was that he had asked the Commission to increase its undertaking for 1959 of additional economies of £20 million per annum— that appears in paragraph 35 (a) of the White Paper—to £30 million.

Mr. Ernest Davies

It cannot be done.

Mr. Popplewell

Of course, it cannot be done and if the Minister is honest he will admit that it cannot be done. This is another example of drawing a red herring across the trail and of being overoptimistic, as often happens in these debates.

The hon. Member for Yeovil pinpointed the main cleavage between the two sides of the House on the subject of transport. We believe in a fully integrated transport system. The Government, on the other hand, believe that transport can be worked on what they term a profitability basis. It is, therefore, as well to see exactly what the position is today. We began to build up a fully integrated transport system. We took over the railways and large sections of road haulage, and we had visions of taking over bus transport. We believed that by doing this we could combine profitability with the provision of a service according to need.

My hon. Friend the Member for Enfield, East (Mr. Ernest Davies) has rightly referred to the position of the railways in pre-war days. He could have gone further and referred to the position of road transport then. He could have referred to the many Acts which had to be placed on the Statute Book to provide safeguards in relation to adequate loading and hours of employment. We began to integrate the provisions of the Acts. We introduced the Measure which became the Act of 1948. It is astounding to think that by 1951–52 we had turned an undertaking which was in financial difficulty into one showing a profit of £4½ million, after paying out between £50 million and £60 million in central charges.

That was a remarkable feat. We were provided an efficient system. The 3,000 firms who were taken over in our road haulage build-up were well satisfied, and users were better pleased than ever before with the service provided. Hon. Members opposite know how many protests came from Tory businessmen when the Government decided to break up road haulage. In four years we had caused the undertaking to build up a profit of £4½ million.

What a contrast today. From 1953, when the policy of the present Government commenced to operate, the Commission began to go into the "red". Today, that profit of £4½ million has been turned into a deficit of £220 million. That is a remarkable transformation. Is there any wonder that nobody trusts the Ministry of Transport? It is the nagging policy of the Ministry towards the Commission which has brought about this situation.

I have made certain statements, and it is up to me to prove them.

Mr. John Howard (Southampton, Test)

In which year did the Commission make this loss of £220 million? The hon. Member compared a profit of £4½ million with a deficit of £220 million.

Mr. Popplewell

I wonder whether the hon. Member is a Member for the Tory transport committee. I said that a profit of £4½ million for one year had been turned into a total cumulative deficit of £220 million between 1953 and 1958.

Until recently the Commission had been making an overall profit on working costs. The deficiency does not arise on working costs. The Commission's accountability is different from that of an ordinary commercial undertaking, which shows a profit or loss according to whether or not it makes a profit or loss on its working expenses and kindred charges. Before the Commission can say that it has made a profit or a loss it must make certain payments—in the last year totalling £58,900,000, and in the year before £60,400,000—by way of central and interest charges.

The Commission is in tremendous difficulty. It cannot adjust its charges as other undertakings can. In 1956, it submitted an application for an increase in fares based upon the fact that certain costs had risen against it. Let me enumerate some of those costs. By February, 1956, when the application was made, the cost of steel rails, as compared with the cost in 1939, had risen by 330 per cent.; the cost of steel plates by 275 per cent.; the cost of copper plates by 270 per cent.; the cost of copper tubes by 245 per cent.; the cost of brass bars by 470 per cent., and of timber sleepers by 550 per cent. The cost of coal—and here I am taking 1938 as the comparable year—had risen by 410 per cent., and labour costs had risen two-and-a-half times.

That was the background to the application made by the Commission for an increase in fares. It asked for an increase of roughly 10 per cent. on goods charges, and an adjustment in passenger fares. The Commission could see a loss of £55 million in 1956, having already made a loss of £30 million in 1955. The 10 per cent was to reimburse the Commission only to the extent of about £37 million, and the remaining £18 million was to be obtained through economies. After everybody had had the opportunity to object, the Transport Tribunal agreed that the Commission had a good case.

What did the big "Pooh-Bah" at the Ministry do? Even when this had been agreed, to meet the extortionately high costs of raw materials which I have enumerated, and which, in some instances, were 550 per cent. above pre-war levels, even when the Tribunal had agreed to a 10 per cent. increase in freight charges, to give the Commission elbow room, and had also agreed to allow the Commission to adjust the passenger charges, the Minister said to the Commission, "You should not increase by 10 per cent., but only by 5 per cent., and only for six months. At the end of that time we will have another look at it." At the end of six months the Minister persuaded the Commission to keep the increase at 5 per cent.

Here is another piece of evidence of the nagging which has been going on. As a consequence, instead of the Commission being able to recuperate that £55 million, it now faces a loss. The Commission was not able to impose the proper charges and at the end of the year it was £54 million "in the red". That is an absolutely fantastic situation.

As I have said, the Commission does not practise ordinary commercial methods of accounting to arrive at a figure of profit after deducting working expenses. It has to take into consideration the amount of £60,400,000 in respect of central charges in 1956. Of that sum £57,700,000 represents interest. In 1957, the total figure went down from £60 million to £58,900,000. All this has to be paid before the Commission can decide whether it has made a profit or otherwise.

Against that background the Minister had the audacity to send the letter of 30th October to the Chairman of the Commission in which he stated: The B.T.C. restates its view that a modern railway system is essential to our industrial future. I do not dissent, although as you recognise, it will have to be a more compact and efficient system than it is today. What cheek! The Minister refers to a more efficient system when the Ministry has already done its best to damn any efficiency.

The letter goes on: I shall look to you and your colleagues therefore to press forward with your plans for securing economies with the utmost determination. I appreciate that your 1958 financial picture is, to a large extent, due to external causes, but continued repetition would impair financial discipline and confidence in the financial future of the railways. Nor can the Government envisage an indefinite extension of the time when the Commission will break even. That last sentence was emphasised by the Minister in his speech today. In view of the action taken by the right hon. Gentleman, by his nagging and his prevention of the Commission from doing a proper job, for him to send out a letter like that is, to say the least, the very last word in cheek and hypocrisy.

Today, we are faced with a Bill which, in its second part, gives permission to the Commission to borrow an extra £150 million to cover the period until 1961–62 when, the Government say, the Commission should break even. This £150 million is in addition to the £250 million which was given in 1957, making a total of £400 million. The Commission must go on paying interest and central charges to the tune of about £60 million and this £400 million is borrowed to pay that. In other words, money is being borrowed to pay the interest charges on money which has already been borrowed. Is not that a fantastic "Alice in Wonderland" system of financing?

I do not query the first part of the Bill, where reference is made to £600 million for capitalisation and modernisation. That is entirely the right thing to do.

Mr. R. Gresham Cooke (Twickenham)

It is not nagging?

Mr. Popplewell

That is certainly not nagging. What I have been referring to represents nagging on the part of the Government, and the hon. Member for Twickenham (Mr. Gresham Cooke) must know that as well as I do.

As was said by my hon. Friend the Member for Enfield, East, the Commission will not find itself saddled with only £60 million to pay in central charges, but with an amount which will be nearer £100 million.

Mr. Cole

Suppose this £400 million were not the subject of this Bill. As the Commission expects to make a loss this year of £85 million, and as central charges are only £58 million, what does the hon. Gentleman propose about the way in which the £27 million should be found by the Commission, if not by some form of borrowing?

Mr. Popplewell

We shall support the Bill because Government policy has made such a Measure necessary. All along I have argued that if we had an integrated transport system, the present position would never have arisen. In support of that argument I refer hon. Members to the profit of £4½ million made in 1951–52. Over the years that has been converted into a deficit, making it necessary to introduce this Bill.

Let us examine another example of the nagging which has taken place and which was referred to by my hon. Friend the Member for Enfield, East—the breakup of the road haulage service. British Road Services were building up a very efficient road haulage service of which everyone was becoming very proud. It was beating private enterprise. Its administrative costs were 25 per cent. less than those of private enterprise. Its operating costs were 20 per cent. less than those of private enterprise for every 100 tons carried, and that was a wonderful achievement. The present Government broke up that service. I could quote quite a lot of figures in connection with that. The Government said that the British Transport Commission could retain only one-fifth more of its road haulage fleet than the railways had in pre-war days, and they directed the Commission to sell its vehicles.

So adamant were the Government on this point that vehicles were put up for sale several times, because when they were first offered there were no buyers. It was the Teddy boys who preceded the present Minister who insisted on that, and with what result? There was a net capital loss to the Commission of between £10 million and £20 million. This is a debt and a difficulty which the Commission has to carry the whole time. It is the policy of the Government which has brought about the necessity for this £400 million to be found and which never should have been necessary.

There has been much talk about C licences. It has been suggested on more than one occasion by ill-informed Tory propagandists, or probably by propagandists prompted by the Tory Central Office off the record, that the Commission has a monopoly service. I give credit even to the hon. Member for Twickenham for denying that. The Commission, of course, has no monopoly services except on the railways, where it has common carrier obligations because it is the only undertaking which can run a railway service. It has a common carrier obligation which was rightly pinned on the railways at the time when there were very few other forms of transport than by rail. I do not want to see that common carrier obligation taken from the railways. I should be perfectly frank about that. There is no argument from this side of the House that that obligation should go.

What we draw attention to is that if road competition and C licence holders are to carry commodities, as they do, they should not have only the best types of goods to carry, but should have common carrier obligations the same as the railways have. On 1st June, 1957, the B.T.C. had about 33,000 road haulage vehicles on the roads. Other road operators, private hauliers with A and B licences, had 151,000. As the Minister rightly said, C licence holders had more than I million. I believe that he said the number was 1,047,000. That was the position on 1st June, 1957, but, between December, 1946, and September, 1957, C licence vehicles increased by no fewer than 657,800; in other words, 176 per cent. About 80 per cent. of those are vehicles of under 2½ tons unladen weight and consist of private vans operated over limited areas.

There is no objection to that type of thing. It is the right thing to do, but when we come to the question of vehicles of 2½ tons unladen weight and over carrying goods well over the 40 mile radius—very long distances—there is a challenge not only to the nationalised section, but also to the 151,000 private A and B licence holders. In the independent survey made by Messrs. Glover and Miller, in 1952, when there was a far smaller number of C licence holders than there are today, it was suggested that C licence holders were carrying more than 50 million tons of goods over a 40 mile radius and in doing that those people were in an extremely privileged position.

Mr. Gresham Cooke

Like C.W.S. milk vans?

Mr. Popplewell

They are the people who can select what traffic they like. They have a selective market and operate under extremely favourable conditions, to say the least. They have no common carrier obligations nor anything of that description. They are grossly inefficient in their operations. The empty travelling of those vehicles reaches astronomical mileage figures per year. All this increases the difficulties of congestion of the roads and difficulties over fuel. It is estimated, on the nearest calculation that can be made, that out of an annual expenditure of approximately £1,000 million spent on road haulage only about one-third goes to the public haulier. The real competition and difficulty is not from the B.T.C., whose competition is extremely fair, with better vehicles and better maintained vehicles, but comes from the private road haulier.

It is estimated that 19 per cent. of the C licence holders are carrying more than 16.5 per cent. of the total amount of goods carried by road over a 40 mile radius. If we want an efficient transport it is no use the Minister nagging at the Commission in the way that he has repeatedly done. If he wants to be helpful, and to serve the best interests of the nation as a whole, these are some of the things he should deal with in an effort to get a co-ordinated system. He could then have it on much cheaper terms than he has today.

Often we get complaints from constituents and from hon. Members opposite about the closing of branch lines, and so on. It is well to look at what is happening to the bus services. From 1946 to 1956 the number of buses increased by about 21,000, an average of 2,000 a year. Seating capacity was increased enormously and receipts from road passenger services, excluding the L.T.E., rose to £233 million in 1956. Of that sum, £176 million was for bus services other than those in which the Commission has a financial interest. Road passenger journeys in 1956 went up to 12,254,000 against rail passenger journeys, which dropped considerably from what they were in pre-war days. Yet people say that the Commission would be wrong to withdraw branch lines.

When this question was being debated the other night the Joint Parliamentary-Secretary made the defence that these branch lines had to be closed and that people living in country areas could cadge lifts in neighbours' cars. Was there ever such a barren idea? These people, many of whom vote Tory, must go to charity. They ought to remember that it is the Tory Party which now is suggesting, "If you have not got a car you should go to your neighbour who has a car and ask for a lift". It is no use the Minister shaking his head. The Joint Parliamentary Secretary was saying this the other night. The Minister must think that it is always election time.

Mr. Watkinson

I was only wondering when the hon. Member would address himself to the Bill. That is all.

Mr. Popplewell

I am doing the same as the right hon. Gentleman did I am dealing with the causes of the Bill.

The right hon. Gentleman dealt with modernisation. We are avowed supporters of modernisation, and have been all the time. I am not going to devote as much time to modernisation as the Minister did, because we are agreed upon that. I am drawing attention to the second part of the Bill, which the Minister does not like to have pin-pointed, because it is he and his policy which have brought this state of affairs about.

Another point with which the Minister dealt and I want to deal concerns the area boards. We have repeatedly asked the Minister for information about these boards. Frankly, I still have to be convinced of their usefulness. I do not think they serve a useful purpose at all. Hence my question. I am open to be convinced, but I am not going to accept the brief statement we have had that these boards make contact with outside traders, and that relations are better in consequence. That can be done with a public relations officer of a good type.

There are other questions which I should like to ask, and I hope the Joint Parliamentary Secretary will reply to them. First, what is the actual cost of these area boards? How much is being paid to the members? What are the expenses involved? What are their actual duties? How often do they meet?

Mr. D. Jones

Once a month.

Mr. Popplewell

What task are they performing which could not be carried out better by the chief regional officer without their interference? When we set up our system, we believed that we had to have a centralised system to start with and for a time, but we said that we should have to decentralise certain functions. When the present Government came into power, the Commission was in process of doing that, and the Government told the Commission to set up area boards. I want to know what these boards are doing that these chief regional officers could not do, and I hope that this question will be answered. It is no use saying, as the Minister says, "Oh, well, the area boards decide the type of paint that goes on the engines and coaches in the area." What is the cost of these area boards, and what are they actually doing?

Will the Minister say what has been the increase in administrative appointments internally within the areas since the setting up of these area boards? I strongly suspect that the setting up of the board has carried a whole train of administrative appointments in area headquarters. I know that in the head offices, instead of one chief of a department making contact with the chief of the next department and getting a settlement, as was the case, he now has to write a memorandum and have it carried to the next office. This is the type of thing that has been going on. I tell the Minister, quite frankly, and I am saying this seriously, that this kind of thing—the top-heavy structure which has been instituted since the setting up of these area boards—has become a standing joke among practical railwaymen. I should like a very serious detailed investigation to take place there, because I think that it is entirely unnecessary and not in the best interests of the transport industry.

There are other questions to which I should like answers. How many members of the area boards are connected with undertakings making commodities required for railway use? How many members of the area boards have outside financial interests in such undertakings? There is a suspicion attached to this, and I could quote chapter and verse for the suspicion that has been aroused in this direction. If the Minister refuses to give answers on this point, I shall claim that that simply confirms our suspicions that these boards are not justified at all, but are simply the means of providing more "jobs for the boys". We know that the Government have been very active in rewarding so many of their friends since they came into power.

The Government have forced the Commission to close a lot of branch lines. They have forced the Commission to look at every single unit of its undertaking and weigh it up, as it were, in a profitability account. This is entirely foreign to a transport undertaking. Even under the old private enterprise days the railways used to carry a certain amount of non-profitable branch line traffic. To force the Commission to close so many branch lines is not in the best interests of the nation as a whole. The Commission itself has a soul of its own, but it has to obey the directives of the Minister. It has to look carefully into these things.

We know about the safeguards of the transport users' consultative Committees, and how careful the Commission is in making a check on all expenses and such matters before they adopt any suggestion. It goes even further. To try to give some service to the people in the countryside the Commission actually subsidises private bus operators so that they may give a service. I could quote chapter and verse for these subsidies given by the Commission to provide a service at all, because the Commission is more service conscious than the Minister himself.

I am probably speaking for far too long. [HON. MEMBERS: "Hear, hear."] Hon. Members opposite may cheer. Perhaps they do not like what I am saying; at least, the Minister does not.

On the question of staff problems, we know the difficulties there have been in staffing, and how difficult it has been for the men actually engaged within the industry. The Commission itself has acknowledged that the railwaymen have been extremely reasonable when rising costs, for which they are not responsible, have compelled them to make application for increased wages, so as to lift themselves from the lowly position which they occupied in the wages table in relation to the very responsible positions they hold. Government policy, however, has repeatedly prevented the Commission granting to the men some increase, or at least making a gesture which the Commission itself felt it was entitled to do.

It was a very interesting day in the history of industrial relations when Judge Cameron made his famous declaration that the Government, having willed the end, must provide the means. That was one of the most momentous decisions ever taken, and we have seen from then onwards that there has been co-operation and a realisation by the Commission, and by the trade union leaders in conducting negotiations, of a responsibility second to none throughout the whole industrial field. That is a wonderful achievement.

The setting up of the new committee of inquiry, of Messrs. Guillebaud, Bishop and Clegg, is a very important matter indeed. I hope that this committee will go quickly ahead with its task of investigation and see exactly what the status of railwaymen and their responsibility should be. I hope that if they make any recommendations for giving railwaymen the correct status for their responsibility the Minister will not clamp down and prevent the Commission from implementing them. The co-operation between the trade union leaders and the Commission has been a wonderful achievement and is of the highest order. Given an opportunity in this direction, we can go from strength to strength.

One hon. Member has referred to morale among railwaymen. Of recent years, there has been a tremendous increase in their morale, not because of the area boards, but because, although the men realise the difficulties that the Commission is facing as a result of Tory policy, there is a genuine desire to do the right thing.

Railwaymen have recently been shocked. We had the prosecution of Driver Trew for the Lewisham disaster and we have had the prosecution of Driver Wembridge for the Eastbourne disaster. Remember what a responsibility these men carry. It is staggering. I wonder how many realise that the basic pay of top-rate drivers is only £11 9s. a week. They carry all this responsibility on £11 9s. a week and then face a charge of manslaughter or the like.

How many people realise that the basic rate for signalmen goes from the lowest rate, Class 4, £8 16s., to the highest-paid, Special Class C, £11 6s. 6d. in the London area? In the rest of the country it is 3s. a week less. It is these top-rate men who staff the modern boxes. The York signal box is the pride of the world and we all like to visit it. There is a lot that could be said about these power-equipped boxes. Those are the rates of pay for the work.

It is the Minister and the Government who refuse to allow the Commission to make it a more efficient undertaking by paying everybody the right amount. They have reduced the Commission to the absurdity of finance by having to borrow this extra £150 million to make their borrowing £400 million to pay interest charges. The Minister may not like this line of approach, but it is fundamental to the borrowing powers that are necessary in the Bill.

I do not wish to cross swords with the Minister on modernisation, because there is no keener supporter for modernisation than the railway man. He has been astounded that he has had to operate an undertaking efficiently with such antiquated machinery at his disposal when he knows how our railway engineers, among whom are the finest brains in the world, are capable of producing what is necessary to make ours an efficient transport system. Therefore, in anything that can be done to press forward the modernisation plan, the Minister can be assured that we on this side are behind him.

I agree that capital was refused to the railway undertakings even in our day, and I think it was a mistake, but it was not our mistake alone. It was perpetuated by the Minister's predecessors in office over a period of years when conditions were more favourable than during our term of office. We had, first, to restore the economy. In anything that can be done to improve efficiency, we on this side are behind the Minister. We shall support the Bill, because it is inevitable that the Commission must have the money. As my hon. Friend the Member for Enfield, East said, although we dislike the necessity for it, we think that it is necessary.

6.26 p.m.

Mr. Geoffrey Wilson (Truro)

I do not propose to follow the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) into all the ramifications of his speech with which he has regaled the House for the last fifty-five minutes. I want to raise one point which is fundamental to the consideration of the Bill and which has not been specifically mentioned, although my right hon. Friend the Minister did touch on it.

Before deciding how railways should be financed and how much public money should be available to them, we must decide on the nature of the operation that we are proposing to carry out. To take an analogy from the building industry, before deciding on the amount to be spent on repairs to a house, one must decide whether one is making temporary repairs to a building that is due for demolition or whether it is to be a permanent improvement to a structure which is intended to remain. To put it more bluntly, in spending money on railways, are we spending on a form of transport which is usefully necessary at the present time but which ultimately will become extinct, like the sailing ship, or are we improving a service which we expect to continue as far as we can see into the future?

The hon. Member for Enfield, East (Mr. Ernest Davies) mentioned that a number of hon. Members had visited both France and Germany and seen their modernisation plans. It is interesting to compare the general attitude towards railways in different countries. As far as one could see, the French regard railways as a social service. French railway finance is extremely complicated. It was difficult to get a clear picture of their financial arrangements because the French Government impose so many concessionary fares, and so on, upon the French railways that it was not easy for them to give us figures compar- able to our own. Furthermore, the French officials were not very much interested, because it was assumed that their Government would in any case meet the deficit. If railways are treated as a social service, the question whether they are paying their way becomes less important.

The Germans, on the other hand, do not accept railways as a social service. It is intended that they should pay their way. The State, however, appeared quite happy to pay out deficits year by year on the assumption that some day or other the difficulty would be overcome. As far as we could see, the general difficulty was that the German railways were subject to a number of legal restrictions, similar to many of those which we have removed from our own British railways by the 1953 Act. The official German view was that they wished to get rid of these restrictions and also adjustments of taxation, so as to get an equal starting point in competition as between road and rail and inland waterways.

One hon. Member has already referred to the articles in The Times on the American railways, from which it appeared that the Americans take the same view as the Germans in assuming that the railways are here for good. In America, the railways will be run by private enterprise in conditions of free competition, and it is assumed that the thing to do is to get an equal starting point in competition by equalisation of taxation as between railways, roads and waterways, and relief from legal restrictions on railways.

A large number of people in this country are gradually coming to question whether, as a form of transportation, the railways have a long-term future. Even twenty years ago, such a view would have been unthinkable. As the pioneers of railways and the originators of the steam engine, we have always been greatly impressed by this system, and have built up a tradition of regard, awe—almost of veneration—for it. In a previous debate I quoted a number of the Victorian writers to show their attitude towards railways. In particular, I quoted a passage from Charles Dickens, in which he compares the omnipotence of the railway engine with the wings of the Angel of Death— as well question the future of the Bank of England as the future of our railways in those days.

That attitude is not prevalent now. A generation is growing up which questions the future of the railways in times when one family in four has a car, and when more and more travel on their holidays by air. More and more are now inclined to the view that transport in future will be mostly by air, with the roads taking care of the rest, and that the railways are only a temporary provision.

When, all over the world, we see the railways suffering from the same difficulties of deficits and of falling traffics— with the notable exception of Holland— there is some superficial support for this view, but I think that it is altogether too facile. In transport matters, one country cannot be compared with another.

As I have pointed out before the choice that the private individuals and traders make between competing forms of transport is either to consider cheapness as the main factor, losing sight of such considerations as speed, comfort or convenience, or to pay less regard to the price and greater attention to other factors such as speed and convenience. No one can say which of those considerations will prevail. Therefore, the gentleman in Whitehall finds it quite impossible to plan a properly integrated service of passengers and goods without doing violence to the views of many people. He is not in a position to judge which choice the individual will make.

As one hon. Member interjected to say, the only way of finding out what transport people want is to find out whether they are prepared to pay for it. If they are prepared to pay for it, they want it— otherwise, they do not. The difficulty is that that test is not ascertainable forthwith. The providers of transport— whether private enterprise or nationalised —have to estimate in advance what the demand is likely to he, and, in doing so, must take into consideration, not only the history, geography and economic position of the country with which they are concerned, but the temperamental differences of the people in it.

I understand, for instance, that in the United States, air travel is quite a serious competitor of the railways. That is as one would expect, not only because the Americans are more prone than we are to be interested in a new thing, not only because their high standard of living makes them less interested in cheapness and more interested in the other factors that I have mentioned, but because their principal cities are far apart and, therefore, air travel has the great advantage of speed.

In our little island, fog-bound as it is, with its cities clustered close together, each surrounded by suburbs, and by agricultural land of high value, making it difficult to site airports at convenient spots, the advantage of speed of communication in air transport is much less than it otherwise would be— —

Mr. Glover

I think that my hon. Friend is, perhaps, putting too much stress on the great distances between American cities. Boston and Montreal are only 250 miles apart, and the airline there makes four stops. It is, therefore, making four 50-mile hops, on feeder lines, and I think that we could do the same.

Mr. Wilson

Yes, I agree. but that is another point. Internal hopping might be operated in this country if we had aircraft that could take off and land vertically, but we have the disadvantage, which some countries are fortunate in not having. that the conditions in our country make it necessary to have the most elaborate and costly precautions in relation to landing and taking off in had weather. A local airport is not much use for a regular service unless it has those precautions and, unless there is a reasonable amount of traffic, it is too costly to make provision for them. My point is that, because of that, competition from airlines in this country is likely to remain less than in more spacious lands.

Next, I turn to competition from water transport. We do not really need to concern ourselves with that form of competition. It is met with on the Continent, but whatever is done about the Bowes Report, I do not think it likely that our canals will be used sufficiently to make them a serious competitor of the railways.

The other competitor is road transport. There are those who say that the money spent on railway modernisation would be better spent on speeding up the roads programme. We in this House have been circulated by a group of people who want to pull up the railways altogether and put roads on the sites. I suggest that those interested in better roads should be cautious in the advocacy of either of these views.

When other hon. Members and I visited Germany, we were given some interesting figures by the Swedish firm that is interested in constructing a monorail. I give the figures as I took them down, but I do not profess to know whether they are correct. On the basis of a single line of road, we were told that there could be carried past a given point about 2,000 passengers an hour in private vehicles, and 8,000 per hour in buses; and that the equivalent capacity by train on the same site would be 50,000 passengers per hour.

As I say, I do not know how accurate those figures are, but the general principle certainly is true that a given stretch of land can carry more people or goods in a given time as a railway than would be possible were it used as a road. I therefore think that those who imagine they can improve the services of this country by taking up the railways and putting roads in their place are deluding themselves—quite apart, of course, from the fact that the over-bridges and other structures would not give sufficient clearance for road vehicles unless altered.

My right hon. Friend has made very great progress with road construction and improvement but, as every motorist knows, so many new vehicles are coming on to the roads every year that any Minister of Transport will be hard put to it to improve the roads fast enough to meet the demands made on them. It would be disastrous for road users if the railways ceased to carry the thousand million passengers they carry at present; and if all those people were suddenly diverted to road transport. In a limited field the railways ought not to have any difficulty in holding their own. I have already indicated that in connection with rush hour suburban traffic, railways can carry more passengers on a given space than the roads can. In such conditions railways ought to be able to provide profitable services. For long-distance night travel it ought to be possible for railways to provide cheaper and more comfortable services in many cases than could be otherwise provided and for heavy goods in bulk it ought to be possible for railways to carry large quantities for a cheaper price than by road, for reasons which have already been mentioned in this debate.

The two great advantages of road transport are that the owner of his own vehicle can start or stop when and where he likes and he can have door-to-door delivery with much less handling. The first of these advantages the railways cannot overcome. But the second disadvantage railways can and do minimise to a large extent by means of containers, fork lifts and the like, so they ought to be able to retain quite a lot of traffic by such means.

It must be remembered that we as pioneers of railways built a large number of railways in our enthusiasm in the early days which were redundant from the day that they were built. Long before there was any serious railroad competition one mainline terminus in London was always known to railwaymen as the "bird-cage", because it was supposed that the railway staff in that particular case had little to do but whistle. Many of these lines were abandoned long ago, and others have been recently. No doubt others will have to be abandoned, but with a proper pruning of the services I have no doubt that the railways can fulfil a useful function.

It is a mistake to suppose that the motorways can provide a faster service in transit than the railways. The new diesel or electric express engines can travel at 100 m.p.h. and goods trains can travel at 45 to 60 m.p.h., and even on the motorways a private motorist or a lorry driver will find difficulty in doing better than that. The great advantage of the road is its flexibility and the ability of people to travel where and when they like. For these reasons, while there is every need to build more roads, I think that there is a good future for the railways and that we are not unwise in supporting this Bill even with regard to long-term policy and not merely as a temporary bolstering up of something which will eventually disappear.

6.43 p.m.

Mr. Scholefield Allen (Crewe)

I am sure that the House has listened with great interest to the hon. Member for Truro (Mr. G. Wilson). He has spent many years, before coming to this House, in the railway industry and I am sure that it will be a great consolation to my constituents in Crewe, one of the biggest railway centres in the world, to know that there is a future for British Railways. When the hon. Member started examning the problem I wondered where he was coming down. I am glad that he supports the Bill and that he sees a great future for our railways.

In my submission, a large part of this great deficit is directly due to the deliberate policy of Her Majesty's Government. The falling off of traffic is due to the credit squeeze and the great reduction in industrial activity. In Cmd. 585, from which the Minister quoted, Sir Brian Robertson, in many paragraphs, points to the present deficit and loss as due to the grave fall in bulk and heavy traffics which has occurred, particularly during the third quarter of the year. In paragraph 2, he states: The serious drop in activity, particularly in heavy industry, in recent months has, however, caused a precipitous fall in the revenues of British Railways. In paragraph 3, he states: The sum total of all railway traffic receipts for the first 36 weeks shows a decline of over £18 million. In paragraph 10, he states: The severe and unpredicted fall in the level of production by the heavy industries is thus the crux of the Commission's revenue problem at this time. The Government wished to deflate. That was their specific object in imposing the credit squeeze.

The hon. Member for Yeovil (Mr. Peyton), chairman of the Conservative transport committee, rather doubted whether what my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) said was correct because there has been a decline in the steel industry elsewhere. The view of hon. Members on these benches does not accord with that, nor does the view of hon. Members opposite, because we have heard it claimed that the credit squeeze which has been a deliberate policy of the Government had, in fact, caused deflation in the economy and was productive of good results. They cannot have it both ways, and that is what the Conservative Party is so anxious to do on so many occasions.

Not only that. The deficit is also due to cuts in the capital investment programme. They have led to the great decrease in the work available in railway workshops. The cuts which have been imposed, reimposed, taken off, and reimposed again are due to the vacillations of the policy of the present Government. I quote the words of Sir John Benstead as to its effect on the morale of people in the industry. He said: It is difficult to sustain the morale and enthusiasm of the staff when cuts and changes are made by Government action. They start upon a programme of expansion and then the Minister comes along and says, "This must be played down. We must delay the programme."

I wish particularly to speak about the position of railway workshops, because in my constituency we have one of the largest railway workshops in the world. We are very proud of the steam locomotives which have been produced in Crewe, and we hope that in future the Crewe railway shops will make as large a contribution to British railways as they have done in the past, and that they will be allowed to make diesels.

There is in Crewe a great reservoir of human skill and capacity; but unemployment is rising. It was 1.5 per cent. twelve months ago and it is 2.8 per cent. today—0.5 per cent. above the national average. The Commission, in my submission, should make the fullest possible use of its own workshops. The staff of such workshops should be fully employed before work goes elsewhere. That is fundamental. The work is going elsewhere today while men are being declared redundant in Crewe. It is going to private enterprise and it is increasing the costs and also increasing the deficit. The cheaper that these things can be produced in our own works, the less loss will be made by the Commission at the end of the year. Diesel units could be made in Crewe works. Private sources are now employed and I am informed, according to figures given by the right hon. Member for Derby, South (Mr. P. Noel-Baker), that it would be possible to produce in the railway workshops diesel units at two-thirds of the cost of those produced and bought by the Commission from private enterprise. At present, according to my information, private enterprise is behindhand in the supply of units, and this causes waste of time and under-utilisation of the labour available. That is another source of constant loss to the Commission.

In addition to diesels, the continuous braking gear is being made outside by private enterprise. We in Crewe consider that we have the capacity and the skill to make these things inside the workshops. Other equipment goes outside. I am told that private enterprise is behind in the planning and delivery of automatic train control equipment. We ask the Minister to look into these possibilities of using to the full the great workshops at Crewe, which ought to be his pride.

As a result of the Minister holding back permissions, and not allowing the Commission to know how much it had to spend, and when it could spend it, it is not possible for planning to be carried forward continuously and as early, and in as uniform a manner, as it should be. The diesel units, for instance, were not planned until June this year. That delay was the result of the cuts in the modernisation plan. The units to be built, are, therefore, not coming along in time, and the men are held up in their work. Many of them are being declared redundant.

There is a consequent loss of productivity in the works. We have heard a great deal about productivity, but if the works are under-employed we do not have the productivity we ought to have. Then there follows these deficits, which we asked to cover by the Bill, instead of the surpluses which should be possible.

Wagon and carriage construction is going outside the railway workshops. The capital invested is not fully employed, and this leads to further losses. It stands to sense that equipment made outside must cost more. When equipment is made in the railway work-ships, there is no need to make a profit to be added to the cost. Equipment made in the railway workshops, therefore, should be available to the Commission at costs and rates lower than private enterprise can offer.

The policy of the Government has led to greatly decreased traffic. The effect of this goes on right through the works. There are fewer engines coming in for repair. Seventy-five per cent. of the work done at Crewe is on repairs. In 1957, 28 locomotives a week were coming in for repair. By March, 1958, the figure had gone down to 25, and it has now gone down to 23 a week. As a result, no fewer than 205 fitters have had to be discharged from Crewe works, or reduced in status. There is also a reduction in overtime equivalent to the work of another 60 fitters, and piece-rate earnings are down by 10 per cent.

Skilled men are being put on semiskilled and labouring jobs. Five years ago, when the Crewe works committee was asked to press young men to come into the industry, apprentices came in then, induced to do so by the committee. Now, when they are coming out of their time, they find themselves unable to get jobs in the skilled trade for which they have been training during five years. I am told that 76 of these young men of 21, who hoped to start a career, cannot be found employment at the works.

There would be less loss of work if the work as a whole were allocated with more foresight. Our great workshops, in which millions of pounds of the Commission's capital is invested, ought really to be run in the most efficient way possible and ought to be used absolutely to the full. I plead with the Minister to ensure that the work of British Railways and of the Commission is done inside these great works. It really is most important that it should be.

I do not know what the capital value of Crewe works is. Most people know Crewe only as a railway station. Incidentally, one hon. Gentleman was criticising railway sandwiches and hotel services. If anyone cares to stop off at Crewe now, he will see a station very different from the private enterprise Crewe of ten or twenty years ago. There is a magnificent cafeteria, with every modern convenience.

Mr. Glover

That is part of our modernisation.

Mr. Scholefield Allen

I am not criticising the scheme. I am criticising the hon. Member who suggested that railway sandwiches and accommodation were not good. I can vouch for Crewe, I can vouch for Liverpool, and I think that Euston is showing great progress, too.

We really ought to allocate the work between workshops so that the staff is used to the full. This year, when 205 fitters were declared redundant at Crewe, 20 of them were offered work at Swindon. Moving to Swindon would mean uprooting the men and their families, and there is no accommodation for them at Swindon. The housing problem there is equal to the housing problem at Crewe. I suggest to the Minister that the locomotives could be sent to Crewe for repair instead of the men being sent to Swindon. That would seem to be a sensible arrangement, and I hope that he will look into the possibility.

I am told that, at Derby, which is going ahead with its modernisation and reorganisation, there is over-employment. Crewe is under-employed. The Minister might well direct some of the work done at Derby to the Crewe works. It is said that Eastleigh is working overtime, but Crewe fitters are being sacked. I suggest that there should be a better allocation of the work, if that is at all possible. I know that the Commission has a difficult task. When I have made representations to the Commission, it has certainly met me and endeavoured to put things right, and I have no doubt that it will look into these matters. It would, perhaps, do it with an even greater urgency if the Minister would assist me in my endeavour to keep this great enterprise of the Crewe works and the capital invested there fully employed. That is the object of the suggestions I make tonight.

There has been talk of the ability of the railways to carry traffic compared with the ability of road haulage. I was in Crewe last weekend, and I was given this example. For the purpose of electrical work being done in Crewe workshops, many very large drums carrying electric cable were required. These large, valuable drums are brought by road by private enterprise. The empties are left for the railways to carry back. That is typical of the way in which the railways are treated.

The railways can have the "muck" and the heavy stuff; the goods on which the road hauliers cannot make quick returns and quick profits, but, when there is a difficult or dirty job to be done, people use the railways. The doctrine is, "When there are profits to be made, give it to our friends the road hauliers". That is a typical case in which valuable drums were taken by road and by private enterprise, and the empties were left to the railways to carry back.

In Crewe, we are feeling the results of the Government's credit squeeze and of their cuts in the capital investment programme. These are the direct acts of the Government. A considerable amount of the deficit being met by the Bill is thus due directly to Government action. That action has led to losses in traffic and to a decrease in employment. Crewe will know where to place the blame for the staff dismissals and the redundancy. It will be placed fairly and squarely upon the shoulders of the Government.

7.2 p.m.

Mr. Douglas Glover (Ormskirk)

We have all listened with interest to the hon. and learned Member for Crewe (Mr. Scholefield Allen), and I echo his feeling for the great railway centre of Crewe which, in its history, has probably seen more trains and merchandise pass through its various platforms than any other railway junction.

Mr. Scholefield Allen

And built more.

Mr. Glover

I hope the hon. and learned Gentleman will forgive me if I do not comment further on his speech except to say that I, too, have an affection for Crewe.

May I turn to some of the remarks made by the hon. Member for New castle-upon-Tyne, West (Mr. Popplewell)? I hope that I make my remarks in a rather shorter time than he, because, speaking as a fellow back bencher, I thought he was thirty-five minutes late, which was a very bad effort for a railwayman. I thought he should have been on time. During his long oration he appeared to go through many stations without stopping, and because he went on and on the points were completely missed.

I think that everybody in the House and in the country has built into him an affection for the railways. Our fame and might were built on the best railway system in the world. I am frightened that because we all have this affection in our minds we are still looking at the problem of the railways with minds looking backwards. If I might use an analogy, in 1830 most traffic in this country was pulled by horses, All the human transport was by coach and all the goods traffic was pulled by horses. Today if we ever see a horse on the road it is usually facing backwards, in a trailer being towed by a motor vehicle. We talk about putting the cart before the horse and we now have the cart before the horse, because the horse is nearly always in a trailer behind the motor vehicle.

We have therefore watched the change in the pattern of our transportation, and in our thinking we must not get our facts out of order. We must consider whether a modernisation programme for the railways, on the scale which was envisaged, is wise. In the last few days we have had a debate on coal production, and it was clear from the debate that one of the important reasons for the reduction in the consumption of coal, and therefore in the amount of coal transported by the railways, was the increase in the consumption of oil. There we have an analogy between the railways and a new and more modern system of transport. The need for coal will apparently gradually contract and the production of atomic power and oil will expand and its consumption increase. In my opinion, the same comment applies to the railways.

This means that we must approach the railway pattern of this country by trying to visualise what it will be like at the end of the century. I do not think it is much use carrying out a modernisation programme which will be out of date as soon as we have finished it, and I have therefore tried, as far as I can, to see what the pattern of transportation in this country is likely to be by the end of the century. I have also tried to tackle the problem as it would exist if the railways were to fight back.

I think that most people accept that during the next forty years, and perhaps even during the next ten or fifteen years, more and more people, even in this country, will travel by air. Many hon. Members have read an extraordinary article in the Daily Mail this morning about the advent of the Vanguard airliner on the Scottish routes in two years' time. That plane, carrying 135 passengers, will be able to do the trip at a cheaper price than the present second-class rail fare. If that offers quicker, cheaper and cleaner transportation, it will suck traffic on to the airlines. Moreover, in ten or fifteen years' time we may see aircraft with vertical lift and the problem of landing a passenger a long way from his destination will no longer arise. In any event, I am confident that when the passenger reaches the main airport he will be taken very close to his destination by some form of helicopter. There will therefore be a tendency for more people to travel by air.

Let us next consider the motorways. We must face the fact that we are right to build the motorways. I wish that even now the programme were doubled, and I wonder whether we could not transfer some of the capital investment to the road programme. I am sure that we are right in this modern day and age to produce a modern, efficient system of motorways cutting across the country from north to south and from east to west, the length and breadth of Britain. But when we get these motorways, do not let us fool ourselves into thinking that traffic will not be attracted to them. Of course it will. The whole purpose of building them is to provide a more economic and efficient system of getting from A to B. If traffic is to be attracted to them, the tendency will be for less to be attracted to the railways.

What do we see as the railway pattern? It seems to me that we are fairly certain of being able to maintain an efficient and very much-needed railway system in the future around every conurbation and around the great cities for the vast millions of commuters who wish to use that service every day. It would be rather like London Transport, only round Manchester, Liverpool and every one of the big cities and conurbations.

Despite the increased competition of air travel, I think that there is a long-term future in this country, with its long narrow shape, for express traffic north to south. I have in mind anything from Manchester and Liverpool northwards. I believe that for such traffic the railways have a tremendous pull even over air transportation. The passenger can have a full meal while on his journey, and he finds it easier to talk to other passengers if he travels by train. At night he can have a sleeper.

What about merchandise? We must face the fact that an efficient railway system makes its money out of merchandise. I believe my figures are right when I say that at present three-quarters of the railway's revenue is from merchandise and one-quarter from passenger traffic. What will be the merchandise pattern? The hon. Member for Newcastle-upon-Tyne, West told a sad story about the unfair competition from which the railways are suffering because of C licences and other road traffic. People do not buy lorries, costing thousands of pounds, and pay drivers at night rates in order to move goods from A to B unless this proves more economical than the railway system. The cost of railway transportation is not the rail journey itself but getting the goods on to the railway, off the railway, into a trunk and to their destination.

What, in this modernisation programme, are the railways doing to overcome that? My hon. Friend the Member for Truro (Mr. G. Wilson) said that they were overcoming this "disadvantage", as I think he called it, by using containers. The railways will never get the traffic back by using containers. What they could do, and they would then be putting the profit motive in its correct place, would be to provide an efficient system whereby, not at a delay of 24 hours' notice, I could drive a lorry to a goods yards in Manchester, put the lorry on a flat car and go home to bed and have someone pick it up in London the next morning and drive it away. Alternatively, they could arrange for me to be able to drive the lorry on to the flat car, unhook the iron horse, leave the goods on the train, take the iron horse back to its stable and have another iron horse take up the load in London. I may be speaking to the converted. It may be that all this is being done, but, if it is, it is receiving jolly little publicity.

Mr. D. Jones

The hon. Member talks about a single lorry. Does he appreciate that it would take as much manpower and engine power to bring one truck from Manchester to London as to bring 55? If he could persuade 54 of his friends to do the same thing it would be economic to do it.

Mr. Glover

The hon. Member's interruption is very helpful. That, of course, is the object of the exercise. If those flat cars could be produced it should not be necessary, in order to get a lorry on to one, for each lorry to be backed up to the ramp and then driven on. Some system of turntable would have to be evolved on which the lorry could be driven at an angle. If that is already being done, it is receiving very little publicity.

As to the question of modernisation of the railways, many loads which should go by rail go by road because those loads cannot be taken through the tunnels and under some of the railway bridges. In the last two years British Railways have done a magnificent job on the electrification of the line from Manchester to Crewe. Every bridge on the line has been raised, but only sufficiently to allow the installation of a cable and not sufficiently to accommodate a furniture van. I should have thought that if British Railways had been looking to the future, this was an opportunity to get over the problem of the loss of so much traffic in recent years to the railways because it must be a nice tidy load if it is to be taken by rail, whereas a very untidy load can be taken by road. If British Railways will look at these two points we shall make progress.

I know that the closing of branch lines has been discussed before, but I still have not seen any plans to use what I call the rail-car, which would be run on one track of a branch line and not both. The rail-car would travel backwards and forwards on the one line, thereby dispensing with the necessity for signals, except in certain places where there are level crossings.

I want to make it clear that, provided British Railways produce a rail system that will suck back from the roads. by some such transport arrangement as I have been suggesting, and provided that they narrow the investment programme to the sort of railway system that will be needed at a high state of efficiency for the next forty years, they will have my 100 per cent, enthusiastic support.

I should like to say a few words about morale. I am sure that I shall become very unpopular with the hon. Member for Newcastle-upon-Tyne, West by saying that in 1926, during the General Strike, I was a fireman.

Mr. Popplewell

Was the hon. Member out on strike?

Mr. Glover

No, I was a blackleg.

Mr. Popplewell

Disgraceful. Shame.

Mr. Glover

Yes, I pulled the fire out at night and lit it in the morning and I greased the engine. In fact, I did the whole shoot.

Mr. Popplewell

When did the engine break down?

Mr. Glover

We were on the London and North Eastern Railway and were the only ones who never had a breakdown. We were efficient. Anyway, as a result of that experience, I have always had a tremendous affection for British Railways, and I want to talk about morale on the railways. I spend a great deal of time talking to railwaymen, who are a great lot of chaps. People talk about the situation before the war, but it was a great privilege to be employed on the railway system of this country at that time. [An HON. MEMBER: "On low wages."] We want to get back the morale that prevailed then. I am speaking on behalf of the railways. I want more publicity for the job that they are doing. I am mentioning this in the House and I hope that the British Press will take it up.

About three weks ago in Manchester British Railways did one of the finest jobs of engineering that has been done in this county for a very long time. It had been planned originally to close down London Road Station, the main station for the line between Manchester and London, for three weeks for reconstruction work, but eventually the whole job was done in 48 hours over one weekend. Yet the greatest publicity that that wonderful engineering job had was as a result of one poor chap being killed because a crane collapsed. The job should have had wonderful headlines in the newspapers, such as "British Railways Pull it Off—Great Engineering Feat."

Mr. D. Jones

They are too modest.

Mr. Glover

They may be, but that is not how morale is built. One can be too modest. In the Army, if a man wants to build morale he must let the other chap know that he is jolly good and that they will win the battle together. If that is done, one can move mountains.

Reference has been made to diesel engines. One of the prides of the airlines is that a man or a girl knows that he or she is a "helluva" person in smart uniform. These people strut back and forth on and off duty and are jolly proud to belong to the service. We have in the diesel engine a clean machine on which the job could be done in something like an Air Force uniform. Let the man working on it be given a stripe, or be made a captain, and let him have a peaked cap. Make him proud to belong to British Railways. Instead of that, he is compelled to go on driving a clean diesel engine, looking just as he did 30 years ago. If we bring back that pride and we push ahead with the modernisation programme, we shall have once again a railway system which will be the envy of the world, and of which we on both sides of the House can be proud.

7.20 p.m.

Mr. Arthur Holt (Bolton, West)

The hon. Member for Ormskirk (Mr. Glover) was a little off his beat in his last remark, because jeans are now extremely fashionable and the railwaymen are wearing more or less the same type of clothing. I should have thought the men were much more comfortable in this style of clothing inside the closed cab of a diesel car than in the rather cold cab of a steam engine; but that is by the way.

Apart from that, I agreed with a great deal of what the hon. Gentleman said, particularly with his approach to the problem. I thought he let the Minister off rather lightly, but since it is late perhaps he felt that way. I seem to remember that the hon. Gentleman came into the House round about the time that the 1953 Transport Bill became an Act and probably he was in time to help to pass it into law. I cannot believe that when the hon. Gentleman gave the Bill his blessing he visualised that in 1958 there would be a deficit in the region of £85 million. At any rate, I cannot remember that that was one of his arguments for supporting the Bill.

It is no use the present Government and their supporters trying to brush off the statement that, since this change has been made in the approach to the railway system, all we have done is to accumulate larger and larger deficits, which was the main burden of the speech of the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell). It is no great recommendation for the 1953 Act which I supported and which I considered to be a milestone in railway history, so the Government must really do something about it.

I was a little surprised to see the Minister on the Front Bench today. I know it is the line of the Tory Party at the moment to brush off their troubles, such as the disastrous policy in Cyprus, the failure of their free trade policy in Europe, and also their railway policy which has resulted in a deficit of £85 million in one year about which we must not worry too much. It will not do. As I am one of those who from the beginning have supported in this House the idea of a competitive transport system, with the railways doing the job they can do best arid most efficiently, I am anxious to see that this policy is adequately carried out.

I was looking up something the Minister said only as far back as July last year in the debate on the Annual Report of the British Transport Commission. Bearing in mind the new modernisation programme, the right hon. Gentleman ended his speech by hoping that this would be a turning point in the history of British Railways. He quoted from the Financial Times as follows:

In general, things appear to be going ahead well. Then there was an interesting paragraph which was supposed to give his views. He said:

That may well be held to be a somewhat optimistic view, and I should like to end by saying that that kind of view can only be realised if all goes well."—[OFFICIAL REPORT, 10th July, 1957; Vol. 573, c. 401.] Then there is a whole paragraph of "ifs" —five of them: if modernisation goes according to plan, if the Commission and its suppliers work well together, etc.

This, I suggest, has been the trouble with the policy over British Railways —a too optimistic look at what can be done without making radical changes in policy. The hon. Member for Yeovil (Mr. Peyton) said earlier that if people want to say that the Chairman of the British Transport Commission should resign, they should say it and not nag him. Frankly, I am astonished that the Chairman of the British Transport Commission has not resigned. After all, he is an Army general, and one of the things we would have hoped from him was that he would be tough, that he would have told the Minister exactly what had to be done if he was expected to make both ends meet, which is what he is expected to do by Act of Parliament. He should have told the Minister that, if he would not allow him to carry out that policy because it would raise a lot of political problems for the branch lines and there would be trouble in the House of Commons. He should have said that this was the only way to do it and that if the Minister would not back him up, he would resign. It is because we have not had a clear-cut policy, by which we could know exactly what should be done, that we are in this mess today.

Hon. Members might have a look at the statement which was first published in HANSARD on 5th November. It was made by the Chairman of the British Transport Commission to the Minister. I agree that this was written at the end of September, so it is more than two months old now. The Chairman was prepared even then to accept that the coal receipts would be down temporarily. This has already been altered by figures given in the debate last week, when it was expected that only 200 million tons of coal would be used next year.

Within a matter of two months of saying that because we expected the coal receipts to go up and the general economy to improve there was no reason why there should be a radical alteration of the modernisation programme, in paragraph 33 of the OFFICIAL REPORT the Minister said: First the Commission want to state that nothing has happened to stultify the appreciation of the future prospects of the railways, as set out in the White Paper of 1956."— [OFFICIAL REPORT, 5th November, 1958; Vol. 594, c. 59.] That has already proved to be out of date, and I was extremely glad to hear the Minister at last announce a review of the modernisation scheme and an endeavour to tackle it on a narrower front.

There are four main points we should air and get agreement about. First we must cut out uneconomic activities. It really is no use hon. Members of the official Opposition talking, as they do, about the public need for a planned transport system. What does this mean'? Are they really trying to achieve the same kind of transport system as would be achieved in a competitive one, because if they are not it implies that they intend to subsidise some part of the transport system, in this case the railways. I want to know who is to pay for this because, as one coming from a cotton town, I am tired of paying for other people's benefits. We have our own difficulties in competing against cheap imports from far away countries, and we are not in a position to subsidise transport for country districts, still less for London.

Secondly, I think, and I am glad the Minister agrees, that we require a review of the modernisation scheme in the light of initial experiences and in the light of the present prospects. Now I will say a word about the initial experiences. I was interested when the Minister at last today cited a case where dieselisation has resulted in a line actually producing a surplus. All the information we have had hitherto has been that the use of diesels, either diesel trains or diesel sets, has resulted in increases in revenue and in reductions of losses, but we have not heard previously that it has actually turned a line running at a loss into a profitable one. This is the important thing. I know that the Minister did not say that in so many words. He used the word "surplus". I should be interested to know whether that will cover all overheads.

Mr. D. Jones

What the Minister was saying was that the result of bringing diesel trains into the service between Middlesbrough and Newcastle was to reduce manpower, because one could get more mileage per day out of a single set of diesels than one could get from steam. That is all there is in it. The railway has never been running at a loss. The service has been run at a loss.

Mr. Holt

I am not clearer for that intervention.

In Cmd. 9880, Proposals for the Railways, there is a list of services which have been modernised and where there has been an introduction of diesel multiple unit vehicles. That Report speaks of increases in receipts, some of 100 per cent. and some of 44 per cent. However, it does not give a clue about whether the services have been remotely economical. In paragraph 53 of that White Paper there is a sentence: They will reduce operating costs substantially and bring in additional business". The next paragraph says: These cars are attracting substantial additional business. As yet there is no suggestion that the use of diesel sets will result in turning an unprofitable into a profitable line.

That is the crux of the matter, because we cannot continue to run uneconomic lines. If the imagination of the Commission is now exhausted, and if it has tried everything and still cannot run the line at a profit, there is no alternative but to close the line.

Mr. Lindgren

Here is a service in a rural area available for the transport of agricultural produce and agricultural workers. It has not and cannot run at a profit. Does the hon. Member say that that part of the service should be cut off, irrespective of the fact that to do so would deprive the people in the area of the means of earning a living and would reduce the availability of farm produce?

Mr. Holt

Right out, because the hon. Member is asking me in Bolton to pay for that service.

Mr. Lindgren

What about food?

Mr. Holt

I would have a row of beans and keep some hens in my garden. The hon. Member is asking me to pay for that unprofitable line. I refuse, and he cannot make me, nor the other 165,000 people in Bolton, pay for that line. We have to live in a town which is now full of fog and soot and dirt. People living in the country can enjoy all the delights of the fresh air.

Mr. Lindgren

And unemployment?

Mr. Holt

Fortunately, not very much yet, but enough. We have our own problem, and I see no reason why we should have to compete with Hong Kong—I do not complain about that—and at the same time subsidise the transport of country districts. It is not on.

I do not accept the proposition that if we refuse to subsidise these lines there will be no transport in country districts. That idea comes about because the transport problem is being badly handled. For instance, I go to Anglesey for my holidays. I do not want to see such a place denuded. It is a delightful place for a holiday, and no doubt it is a delightful place in which to reside throughout the year.

One thing required in Anglesey and on the North Welsh coast is a motorway. If there were a motorway from Chester to Holyhead, there would be a backbone of as fine a transport system as one could get. Suitable roads from it would provide holiday resorts and similar places with a far better transport system than they have now. However, if we merely try to modernise out-of-date lines by using odd diesel cars here and there, we will still fail to provide the transport system which is required and, in any case, that will not help places without stations, while the service will not pay at the places where there are stations.

Mr. D. Jones

But the people in Bolton pay taxation for the roads. Apparently, they should not pay for the railways. That is just like Liberal philosophy.

Mr. Holt

The hon. Member should not raise that old hoary argument. The motorist pays in taxation far more towards the cost of roads than is used by the Government in building roads and in keeping them in repair.

Mr. Lindgren

Does the hon. Member suggest that Anglesey should stand on its own in the provision of motorways and not be helped by the taxpayers of Bolton and London? In that case, would the people of Anglesey have any roads?

Mr. Holt

We will not get on to that. That is another old hoary argument. It is suggested that because the Post Office runs on a unified paying system that system should be applied to railways. That is another argument, but not one with which I wish to deal now. A road system can be produced only with taxation, but the people who use the roads in Anglesey come from Bolton and other places as well as Anglesey. However, we are straying from the argument which I wanted to develop.

On the subject of the costs of different forms of transport, we cannot do better than to study some of the figures given in the Report of the Commission for the year ending December, 1950. Some figures are given in diagram No. 12 on page 71, showing the costs of different forms of transport. Main line transport costs in that year for expresses were about one-third of a penny per passenger mile. At that time, a third-class fare from London to Manchester showed about 500 per cent. profit.

That is probably still the answer to aircraft operators who think that the proposed new service between London and Edinburgh may knock express trains for six. It will do so if the main line expresses have to carry uneconomic services in other parts of the country, but if the railways are allowed to compete by bringing down fares on main lines which run at a handsome profit, they will be able to compete with other transport systems, certainly for a while. How long that state of affairs will continue will depend on the speed of the development of the motorway system, but that is another matter.

The average cost of a typical passenger service across country was 2¾d. a mile. The nigger in the woodpile was the branch line services costing 2s. l½d. per passenger mile, while the stopping services on the main line cost 13¾d. per passenger mile. Let us compare those fares with the road services being offered at the time. These figures are still relevant, although a certain amount has to be added for increased costs and inflation. Long-distance coach services were running at a cost of passenger mile. They were more expensive than the main line expresses. The inter-city services of main line double-decker buses were running at two-thirds of 1d. per mile, the country service mixed fleet at 1⅛d per mile, and the urban service single-decker buses at 1⅔d. per mile. In view of those figures it is ridiculous to continue the stopping services on main lines and any branch line services except in a few special cases.

As I said in reply to an earlier interjection, railway stations do not exist in every small village or market town, and these can be properly served only by decent bus services, with the help of an improved road service. All our capital development in country districts should be going into that, and nothing into the railways.

In the review of the modernisation programme which is now to be undertaken by the Commission, it must see that no more capital expenditure is undertaken merely to reduce a loss, but only if it will change a loss into a profit, thereby showing a proper return on the capital expenditure. If we are losing £500 a year on a certain line and that loss is reduced to £400 a year we are still not making a profit. In future we must spend no more money on capital development merely to reduce a loss from £500 to £300, or £200. We must undertake capital development only if it will cut out loss completely and change the undertaking concerned into a profitable one.

As transport arrangements develop in future it is unlikely that things will become any easier for the railways. If anything, our forecast for the railways should be of a pessimistic nature. They are not likely to get a larger proportion of any increased use of transport, whether passenger or freight. On the whole, they will probably have a smaller proportion of the work. But even on the most pessimistic outlook there is still a big job for them to do, and they can do it at a profit. If radical changes are made there is no reason why they should not ultimately comply with the Statute of 1947 and make both ends meet. Whether they will ever be able to do that and wipe off this deficit is another matter.

7.44 p.m.

Sir Spencer Summers (Aylesbury)

If I had to choose between the Socialists, who would make the test one of public convenience, and the hon. Member for Bolton, West (Mr. Holt), who approaches the question from the angle of profitability, I should undoubtedly choose the latter. Nevertheless, I look with some alarm at what would happen if the Government were to take the hon. Member's advice and close down all the rural railway facilities, prevent the long-distance trains from stopping, except at main centres, and cut out all facilities unless they were capable of being run at a profit within a short time. As I want to deal with only a limited aspect of the Commission's affairs, however, I shall not take up any more time in dealing with the speech of the hon. Member for Bolton.

I want to deal with the question of inland waterways. which was the subject of the Bowes Committee's Report, published in July of this year, after the Committee had been examining the question for two and a half years. Although I hope that there will be another opportunity to deal with the main practical recommendations contained in the Report, there is one aspect which is particularly relevant to administration and ownership with which I want to deal now.

I would remind hon. Members that the members of the Committee were unanimous in their practical recommendations but completely and evenly divided on the question of administration and ownership. Half the Committee of eight members was in favour of separating from the Commission responsibility for the Class A, B and C canals, while the other half preferred to leave them under the aegis of the Commission.

Mr. Ernest Davies

In fairness, the hon. Member should state that the Chairman was on the side of leaving the waterways with the Commission.

Sir S. Summers

Whether or not the hon. Member thinks that the views of the Chairman are more important than those of the other seven members I do not know, but the fact that no less than half the Committee took a certain line warrants a study of the matter by hon. Members. I am quite clear that the wiser of the two recommendations made was that which advocated separation from the Commission, and I commend that idea to my right hon. Friend for his study. In doing so I should like him to note that I shall do my best to express views which many hon. Friends of mine have formed as a result of their inquiries into this matter.

The public tend to regard our canals as another carrying device open to the Commission as an alternative to rail or road, In fact, the management of the canals is far more of an engineering than a carrying job. In support of that view I want to quote two brief extracts from the Report. They are to be found on pages 83 and 85. The first one, which is Recommendation (3), says: The British Transport Commission were created by statute as a transport authority: they are predominantly carriers on a very big scale. Not only are their waterways a minute part of their undertaking, but within the Waterways Division the carrying operations are a trivial element. In Recommendation (11), after contrasting the engineering aspects of waterway administration with that of the normal type of carrier—the roads and railways—the Committee states: But for the waterways, construction, maintenance and management for navigation and other uses is a substantial engineering business in its own right, while redevelopment is a planning and land agency business. What I am seeking to bring out in the first instance is that this task is quite unlike that which normally falls to be discharged by the Commission. If I am right in saying that we should pause to reflect who will provide the subsidy for the inland waterways. The Report makes it clear that the inland waterways have never paid and that they have never had their costs made up from other sections of the Commission.

Reference has been made, rather loosely, to the public having to pay. In fact, it is the travelling public which has been paying for the losses on the canals. Were the responsibility for these canals removed from the Commission and dealt with quite separately, it would not be the travelling public which would meet such subsidy as is inevitable—so we are advised—but the general public, in other words, the taxpayers. I think that an important distinction which should be made.

This section of its undertaking, different as it is from the normal task discharged by the Commission, must in the long run suffer if its is dependent upon the benevolence of the British Transport Commission. When one notes that the carrying fleet of the Commission on inland waterways is 41,000 tons and compares that with the carrying fleet of 16 million tons on the railways proper, one is quickly seized of the fact that a very small part of the normal carrying task is represented by operations on the canals.

Mr. Lindgren

The hon. Member has referred to the tonnage capacity owned by the Commission. He will be aware that privately-owned carrying capacity on the canals is considerably more and that has been carried on since nationalisation.

Sir S. Summers

That is true and I am not disputing the fact. I said that that part of the Commission's carrying fleet is trifling when compared with its carrying capacity on land. I made no reference to the comparison between the capacity of the Commission and that of private enterprise operating on the canals.

I am not suggesting that because the canals have been under its control all this time the Commission has deliberately allowed a possible competitor to the railways to depreciate. But it is not without significance that the Bowes Committee states that the canals have long been a decaying monument to unfulfilled statutory duties. That is not a very good advertisement for allowing such responsibility to continue.

In the Bowes Committee's Report it is made quite plain that provided the Class A canals are not given a share of the capital to service which it may be argued that they should receive, those types of canals should be capable of providing enough surplus to maintain their own waterways. It has equally been made clear that the Class B waterways can never be expected to earn a surplus sufficient to maintain their own waterways. Indeed, it is almost inevitable that they will make a loss, and that a subsidy will be called for. I should have thought it more satisfactory from the point of view of everyone were those canals made a separate undertaking, so that the public could see precisely what was the amount of such a subsidy, rather than that it should be obscured by being part and parcel of the Commission's figures.

My right hon. Friend expressed his determination that there should be no subsidy paid to the Commission. If that be so, I do not see that he can do other than support my suggestion for separating from it one of the sections of the undertaking which inevitably will have to receive a subsidy, as is made clear by the Report of the Bowes Committee. I hope also that I may have support from hon. Members opposite for this suggestion. If, as we heard earlier, they regret that the Commission should have profitable sections of business taken from it, the implication is that hon. Members opposite would welcome the removal of unprofitable sections of the Commission's undertaking. If the removal of profitable sections makes the task of the Commission more difficult, the removal of unprofitable sections would make that task easier, and so I look forward to the support of hon. Members opposite.

It is my opinion that were the canals separated from the Commission, there would be a much better prospect of attracting fresh sources of revenue for the inland waterways than if they remain part and parcel of a railway system which from time to time comes under public criticism. There is, in my opinion, great scope for increasing the revenue to be derived from fishing interests in this country. There is a large number of people whose hobby is fishing in the canals. The hon. Member for Rotherham (Mr. Jack Jones) is a notable figure among such people and I wish him luck in that regard. I should have thought that many who are keen on that form of sport would be willing to pay a modest sum annually for the right to fish anywhere on the waters operated by an independent organisation.

Reference is made to the "re-development" of the Class C waterways. That is rather a strange word but perhaps it is used for want of a better. There is a tendency to underestimate the great complications inherent in the task of solving all the legal obligations and rights associated with them. That task may well take a long time. The operation of these canals is again completely unrelated to any of the normal functions of the Commission.

One of the points made by that section of the Bowes Committee, which included the Chairman, and which was against separation, was that it would be more expensive to the operators of the canals were they separated, because no longer would there be access to such services provided by the Commission as the legal service, and maybe the establishments branch, and so on. On the other hand, the section of the Committee in favour of separation believed that it would be cheaper were the canals to stand on their own as a separate organisation with its own services as and when they were needed. I do not think there is much force in the argument that the canals would suffer in this way by being separated from the Commission.

There are three points in the recommendations which I support to which I wish to refer, and about which I am by no means happy, although I am fully convinced that the canals should be separated from the Commission. It is suggested that were an independent waterways corporation set up, it should take over the carrying functions on water from the Commission. Were it thought better to do so, I do not see why the Commission should not continue to be responsible for carrying, even though the waterways belonged to a separate organisation. It does not necessarily follow that if we remove the waterways from the control of the Commission, automatically we have also to remove the carrying functions now carried out by the Commission.

It is assumed in the Bowers Report that were a separate corporation established it would, as it were, be responsible to, or at any rate its members would be appointed by, the Minister of Transport and Civil Aviation. As it is inevitable that there would be a close connection with local authorities, might not it be better if it were responsible to the Minister of Housing and Local Government rather than the Minister of Transport? I do not feel qualified to pronounce on that point, but I ask that it be noted in case other aspects of this responsibility become even more important than they would appear at first sight.

I am not at all sure that it is right to think in terms of separating these canals from the Commission without taking from them a corresponding amount of stock which would of course have to be serviced. It is said that the B canals will have to have a subsidy, and that such subsidy would have to be greater if the waterways were separated and the servicing of the stock had also to be undertaken. At the same time it seems hard on the Commission to take away some of its assets and to leave intact all the servicing of the capital. I hope that further thought will be given to that aspect of the recommendations.

I am sure many people are anxious that action should follow the publication of this Report. Precisely because the constitutional, administrative and ownership aspect must to a large extent govern how that action is taken, I felt it not out of place to ventilate this topic in this debate. I am sure that many will welcome it if the Government can give an assurance, as recommended in this Report, that there will be twenty-five years of assured future for these canals which are regarded as viable in themselves. It would give confidence to those who build fleets and use them if they knew that that amount of support for the main plan of the Report was forthcoming.

I have no doubt that detailed legislation will be required to do justice to this task. I am equally sure that we shall be told that there is no time for more legislation in this Session. If it is as complicated as most of us think it will be, I see no reason why instructions should not be given for legislation to be drafted which, in twelve months' time or more, could be brought before this House. There will have to be consultations with local authorities and others, but if the Government could announce their intention that when the legislation is ready there will be separation of these canals from the Commission all the planning could be done. I see no reason why in the meantime the Commission should not be regarded as caretakers for the waterways until that legislation is completed and the separation proposed in the Report becomes a practical proposition.

I do not expect the Joint Parliamentary Secretary to comment on this at any length, or indeed at all, when he replies to the debate, but I hope he will do me and my hon. Friends the courtesy of studying what I have had to say and advise us in due course whether we have influenced him in the way we would wish.

8.4 p.m.

Mr. David Jones (The Hartlepools)

I hope that the hon. Member for Aylesbury (Sir S. Summers) will forgive me not following him into the ramifications of the British canal system, except to say two things. First, if the railway historians of the last fifty or sixty years are to be believed, the private enterprisers in railways bought up the majority of the canals primarily for the purpose of letting them fall into disuse so that they should not compete with the then developing railways.

Every historian who has written about the railways points to the fact that one of the first things that were done—the Great Western Railway was no exception—was to take over the canals and let them decay. As my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) has said, it was a poor bag of assets which the British Transport Commission received when it took over the canals on 1st January, 1948.

Sir S. Summers

Does the hon. Member realise that reference to history supports my proposition that the canals should be separated from the rest of the undertakings?

Mr. Jones

I am not prepared to quarrel with the hon. Member now, except to say that if the canals are to be developed for social and community purposes that ought to be the responsibility of a body other than the Transport Commission. I do not believe that the Commission ought to be saddled with the responsibility of making provision for fishing or for sailing on the canals for pleasure.

The Commission is a commercial concern and ought to confine itself to commercial work. In the meantime, coal, sand, ballast gravel and other things can be carried at a slower speed on the canals than on the roads or railways. I believe that it would be far better, in many instances, for that to be done than to clutter up the highways with 5-ton lorries. The canals could be used, and ought to be used, to convey that traffic. If they are to be used for that function, I do not think that they ought to be competitive with but complementary to the main railway transport arteries of the country. Beyond that, I do not quarrel with anything that the hon. Member said.

In listening to the Minister introducing the Bill it seemed to me that history never teaches him a lesson.

Mr. John Hynd (Sheffield, Attercliffe)

He does not know any history. That is the trouble.

Mr. Jones

In 1956, when the right hon. Gentleman introduced the Railway (Finances) Bill, some of us suggested, on 3rd December of that year, that, having regard to the circumstances then prevailing, the £250 million would not be sufficient. I remember the Minister telling us then that he was proposing to introduce the best parts of private enterprise into this nationalised system, to make it a success. Was it his idea of success when he was making those statements that the kind of services he was injecting into the system would find the Commission in 1958 with a deficit of £85 million?

I remember suggesting, in 1955, when the present Minister of Pensions and National Insurance was in charge of the Transport (Borrowing Powers) Bill, that as a result of the way in which the position was developing the deficit of the Commission would, in a short time, be about £200 million. If we take the £70 million which was not in the Transport (Borrowing Powers) Bill, and the £85 million anticipated for this year, the total figure by the end of 1958 will be about £280 million. All of it has to be serviced by interest. Yet, on three separate occasions, there has been deliberate interference by the Government in the business of the Commission of earning its keep.

The Minister cannot have it both ways. In his letter to the Chairman of the Transport Commission, as stated in the second paragraph on page 15 of the White Paper, he said: In the Government's view it would be reasonable to assume that the present phase in the economy is temporary and that a future expansion of economic activity is to be expected. Does the right hon. Gentleman really believe that or not? Does he really believe that the economy of the country will recover—and reading the debate on the coal industry in the House a week or so ago does not lead one to be very optimistic about it—to such an extent that we shall require a railway system somewhat similar in size to the system that we have at present? The right hon. Gentleman has told us this afternoon that although the Commission has already stated that it proposes, in 1959, to make economies amounting to £20 million, he has suggested that that process should be speeded up to the extent of £30 million.

If the correspondence in Cmd. Paper 585 is read carefully, it will be found that in paragraph 14 the Chairman of the Commission has already said that about £6 million of the wages claim made earlier in this year is already to be met by savings to be made in administration, although, when Cmd. Paper 9880, "Proposals for the Railways," was put forward, we were told there, in paragraphs 34 and 47, that the net effect over the interim period of the modernisation of the railway system would be to save approximately £3 million at the end of six years. One therefore assumes that the Commission is already in the process of saving that £3 million which was envisaged in paragraph 59 on pages 21 and 22 of Cmd. Paper 9880.

In paragraph 14 of the White Paper, dealing with the correspondence between the Minister of Transport and the Chairman of the Commission, the Commission has there said that it is to save £6 million of the £10 million which the wages claim is estimated to cost by administrative action, which, I presume, means savings mainly on staff. If we follow out the correspondence further, we find that in paragraph 35, the Chairman of the Commission says, in sub-paragraph (a): I can go no further than say that we shall take as our target a reduction of £20m. per annum in addition to economies already in operation, which would yield several millions of pounds more in 1959 than in 1958. If that paragraph means anything at all, it means that the Commission has already made savings to the extent of £9 million a year, and that it anticipates making another £20 million savings during 1959, making a total of £29 million. Then we have the Minister of Transport saying that he is pressing the Commission to make a further reduction of £10 million. I suggest to the House that this reduction can only be made by substantially contracting the existing railway system.

If, therefore, the Minister is right when he says that this recession in traffic is temporary, does it not mean that if we return to the degree of productivity which we reasonably believe ought to be achieved, we shall find ourselves with production which cannot be carried by the railways, because the staff will have been dispersed to the four corners of the country and will not be available for the job?

If, in those circumstances, that kind of thing is done, the House ought to be told quite frankly what the Minister means. Does he mean that he does not really expect the economy of the country to increase to such an extent as to restore to the Transport Commission the freight charges which it has lost by this contraction over the present year? We ought to be told quite frankly what exactly the Minister does mean.

I noticed that the Minister, in one of the taunting moments which he favours at that Box, suggested to the Opposition that we ought to tell him what the Opposition's policy is on C licences. I suggest that the Joint Parliamentary Secretary, in replying, ought to tell us what the Government's policy is for a start. When, after the next General Election, my right hon. and hon. Friends occupy the Front Bench opposite, we shall be perfectly happy to tell the House and the country at the earliest possible moment what we shall do about C licences.

In the meantime, I would call attention to the fact that in 1948 and 1949 the parrot cry from the hon. Members opposite, when they were on these benches, was that the number of C licence vehicles was increasing because businessmen did not like nationalisation, that they did not like a Labour Government. We had the evidence from the Minister of Transport this afternoon that the number of C licence vehicles has increased by more than 750,000 and that the bulk of them are more than 2½ tons unladen weight.

Mr. Gresham Cooke

No, less than 2½ tons.

Mr. Jones

No. There has been an increase in the total number of C licence vehicles to nearly 1,100,000, and the greater proportion of them since 1951 have been vehicles of 2½ tons unladen weight and over than vehicles of 2½ tons and less—quite a reversal of the situation in the years preceding 1950 and 1951, when the bulk of the extension of C licences related to the smaller vehicles— the milk vans, the butcher's lorry, and so forth. Therefore, the increase in the number of C licence vehicles of 2½ tons unladen weight and over has been by a bigger proportion during the tenure of office of a Conservative Government than ever before.

Mr. Gresham Cooke rose—

Mr. Jones

I am sorry, but I cannot give way.

I want to turn to some of the matters dealt with by the hon. Member for Yeovil (Mr. Peyton). [HON. MEMBERS: "Where is he?"] Well, he made his speech, and he has gone.

The hon. Member for Yeovil also had something to say about C licences, and he sought to prove that the recession in this country was due in the main to the world recession. Even if it were true, and I do not accept the theory that the recession in heavy industries in this country has been due to a world recession, I would say that it has been due as much to the policy pursued by a Conservative Government as it has to any other single cause. We know what happened, deliberately, during the closing months of the year; indeed, we had a famous resignation in December, 1957, as a consequence. We know that the policy of the credit squeeze pursued by the Conservative Party then had as much responsibility for the recession in trade as any other cause. The Government cannot now ride away on the fact that the Transport Commission finds itself in its present circumstances other than as a direct consequence of the policy pursued by the Government, of which the Minister of Transport is a member.

My hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen) raised the question of unemployment in the Commission's workshops. He complained, rightly, that large orders are being placed with private firms, whereas many men are being dismissed from various railway workshops throughout the country. Large numbers of them are skilled men. They are middle-aged and approaching old age. Many will not be able to seek employment in other industries.

It is true that towards the end of 1956 the Chairman of the Transport Commission stated that it was the Commission's policy at that time to maintain full employment and to keep a full order book within the railway workshops. We now understand, however, that as the result of circumstances over which the Commission claims it has no control— the intervention of unseen factors beyond the Commission's control, involving cuts in capital and revenue expenditure, and a slowing down of industrial activity—the whole position has changed.

In other words, the responsibility for the unemployment in the railway industry and for the dismissals from the railway workshops lies directly at the door of the Minister of Transport, who cut the capital expenditure available to the railways in 1957 and 1958. I know that he restored it in May, 1958, but he cut it in 1957. As a result, the railways were not able to undertake in their workshops anything like the work that was put out to private firms.

The reason. I suspect, is that orders have already been placed in the outside shops for large quantities of equipment and that despite the cut in capital expenditure imposed upon it by the Minister, the Commission was unable to cancel any of its orders to the private firms. All the burden of the reduced capital expenditure had to be borne by the railway workshops. That is the consequence of the action taken by the Minister in October last year. However he might try now to shuffle off his responsibility for disorganising production and delaying the implementation of the modernisation plan, the blame must rest fairly and squarely on the right hon. Gentleman's shoulders.

We shall not, of course, oppose the Bill. If, however, the Minister had been more prone to accept advice from other people, and if he was not so fond of attacking the trade unions as he did in a speech to his constituents at Woking, reported in the Sunday Times of 7th September, he might possibly get more co-operation from the unions than he can expect.

Mr. Watkinson

Perhaps the hon. Member will be kind enough to read out any words I used attacking the trade unions.

Mr. Jones

Certainly. I quote: Mr. Watkinson, Minister of Transport and Civil Aviation, speaking to his constituents at Woking, Surrey, yesterday said that trade union movement leaders appeared to wish to live in the past. 'Their desire to revive long-out-moded political controversies may be their way of escaping the hard realities of the present; it is a singularly unfortunate approach for an industrial nation like ours…' Does the Minister expect to get the cooperation of trade union leaders when he uses that kind of language? If so, he is living in a bigger fool's paradise than even I gave him credit for.

The right hon. Gentleman must remember that there are two sides to this industry and that without the cooperation of both sides, success is impossible. It is no use his coming to the House and using honey words to the trade union leaders and to the Commission when, in the speech to which my hon. Friend the Member for Enfield. East (Mr. Ernest Davies) has referred, he says at Dorking, as reported on 8th November: Let me make it plain that I am in no sense attacking or criticising those who work in or control these industries. I believe that the men who work in these industries, and perhaps some of their leaders, too, if they felt free to speak, would also say what a failure nationalisation, as a method of running great industries has been.

Mr. Watkinson

Hear, hear

Mr. Jones

If the Minister believed that, why did he not take his courage in both hands and denationalise the industry? He cannot have it both ways. Either he should introduce a Bill to denationalise the railways, or he should resign because he has failed.

8.26 p.m.

Mr. John Howard (Southampton, Test)

I am not proposing to follow the hon. Member for The Hartlepools (Mr. D. Jones), for the simple reason that I want to make an entirely distinct point about the position of coastal shipping. I do not propose to detain the House for many minutes. My right hon. Friend the Minister referred briefly in his opening speech to the position of coastal shipping. He will recall that during the Committee stage of the Transport (Railway Finances) Act, 1957, he said, in effect, that the loans given under that Act were to tide over the Commission in difficulties connected with the railway side and were not to be used to undercut coastwise shipping rates. My right hon. Friend said at the same time that there was a clear undertaking from the Chairman of the Transport Commission and that that undertaking gave adequate protection to the coastal shipping industry.

I hope that tonight my right hon. Friend will give similar assurances about the substantially increased facilities which are to be given by this new Bill. I particularly hope that he will be able to do so, because the Bill not only increases the amount which may be provided from the Exchequer to meet the deficiency on the railway revenue account for the six years 1956 to 1962, but it also authorises an increase in the ordinary borrowing powers of the Commission.

At present, coastal shipping carries 36 million tons of dry cargo every year. In addition, it carries a considerable quantity of oil, for which, unfortunately, no figures are available. In the case of dry cargo, expressed in ton miles, the contribution which coastal shipping is making to the carrying capacity of the whole of the internal transport system is the equivalent of about one-third of the tonnage miles carried on the railway system.

The House will agree that this is a considerable contribution, and it is also important to remember that coastwise shipping is a valuable alternative form of transport, and has strategic merits in a national emergency. Coastal shipping costs the Government nothing. It operates in active competition, not only with rail and road transport but also with ships of other flags, particularly the Dutch motor ships, which have—quite correctly—the full right to compete in the coastwise trade.

With that in mind, it is disconcerting to look at the number of vessels now engaged in the trade. The number, regrettably, is diminishing. In June, 1952, there were 930 vessels, but in June, 1957. there were only 803. The deadweight tonnage was 1,113,000 tons in 1952, against only 1,083,000 tons in 1957. I do not propose to inflict the pre-war figures on the House, but that comparison would show an even greater diminution in vessels and tonnage.

If this trend continues, it must be a cause of concern, because it is clearly the numbers of the smaller vessels that are diminishing, and they are particularly valuable as a strategic reserve in a national emergency. Parliament has already recognised the importance of coastwise shipping by setting up, under the Transport Act, 1947, a coastal shipping advisory committee. The object of that committee is to give such advice to the Minister as will secure an efficient coastal shipping service and to see that it is maintained to the extent necessary for the national interest.

I am also anxious about the Commission's intentions with regard to its steamer services, particularly where those are operated in competition with independent shipowners, such as on the Irish cross-Channel run, and in the near-Continental trade. To what extent does the Commission intend to use its borrowing powers to strengthen its steamer services in areas where private capital is already available for any expansion required?

In particular, does it intend so to increase the number of its vehicle-carrying ferry ships as to enable them to compete with such privately-operated ferries as the Townsend ferry service between Dover and Calais, or—and this is nearer to my constituency—the private-enterprise ferry service running between Southampton and Cowes?

The Red Funnel Steamers of Southampton have only within the last two weeks launched a new "roll on roll off" ferry. The capital has been provided by the company, and it is quite clear that the service is meeting a need. I hope that there is no intention of diverting any public capital to provide competition where private enterprise has provided a much-needed service for the transportation of private cars, commercial vehicles and passengers.

I ask my right hon. Friend the Minister to give an absolute assurance that, by this Bill, the Commission's ship services will not be covered by the increased borrowing powers it seeks.

8.34 p.m.

Mr. G. Lindgren (Wellingborough)

I should like to bring the House back to what I believe to be the fundamentals of transport. Transport is a service. Listening to hon. Members opposite—and I was about to say something that I should not about the speech of the hon. Member for Bolton, West (Mr. Holt)—one would think that we could deal with it on an industrial basis just as if we were manufacturers making bolts and nuts or boots and shoes.

If the industry is a service, as I think it is, the function of which is to move goods and persons from place to place with speed and safety at the lowest possible cost, we ought to look at it from the point of view of how best we can render that service to industry and to the population. We ought to be considering how we can move these goods and persons by the most economic and efficient means.

Before I entered this House, in common with a number of hon. Members on this side. I earned my living as a railwayman. It is remarkable that every speaker from this side of the House has had some knowledge of the subject that we have been talking about. All that we have had from the other side is airy-fairy nonsense from persons who are supposed to have had educational opportunities and to possess business acumen, but on the subject of transport that does not seem to have gone very far.

The fundamentals of transport are the same whether one is dealing with road, rail, sea or air. Its main purpose is the moving of goods and persons by the best possible means. Although I have been a railwayman, I am not so foolish as to say that there is not a considerable amount of traffic which should go by road, and it is equally true that the air services are now obviously a competitor for transport over long distances, such as from London to Glasgow. If we are to move people from place to place by the most effective, efficient and economic means, we can only do that by an integrated service. We have to weigh up which is the most suitable vehicle available for the transport of the goods. etc., to be carried.

The problem of transport, particularly in regard to the railways, has been deliberately created by the Government. They started it, as has been said before, by taking away the road section of transport in which the greatest profit was likely to arise. I cannot understand the Liberal idea that because there are only a few people in the Island of Shetland or in a remote part of Wales we cannot provide them with a service unless that particular little locality can carry the full cost of the service. That was the philosophy put to the House by the hon. Member for Bolton, West. The obvious thing in transport is to use all the services necessary and where there is a possibility, as there is bound to be in certain cases, of carrying goods and persons with a greater degree of profit than in other cases, those cases should be balanced.

We are dealing today with the problem of the railways, which arises very largely because of the denationalisation of road transport, as a result of which the cream of the traffic, easy handling and the highest freight rates go automatically to the road hauliers, leaving the railways as common carriers of the traffic which has lower freight rates, is difficult to handle and has no possibility of making a profit. When the two were brought together under the 1947 Act there was the possibility of breaking even.

The Minister talked a lot of nonsense this afternoon about the railways and appealing to railwaymen. May I say as a railwayman and an official of a railway trade union that the railwaymen have not the slightest confidence in him as Minister of Transport. They very much resent his attitude towards the railways and towards the present Chairman of the British Transport Commission. I was concerned as a voluntary trade union official with the wage negotiations last May, when the Chairman of the British Transport Commission then had to say, "Well gentlemen. I have gone as far as I can go. We shall have to adjourn this meeting in order that I may consult somewhere else." That was almost treating the Chairman of the Commission as an office boy rather than as an official carrying the responsibility of Chairman of the B.T.C.

The Minister spoke today about a lot of things which he knows are not likely to be realised. As railway trade unions, we told him during the early stages of the modernisation programme that under the present administration it would be impossible to break even by 1962. With all the facilities which are now being granted to the railways for modernisation—as railwaymen, we are glad that these facilities are being given—it may be possible to bring the railways to a higher standard of efficiency, but that alone will not enable them to break even. Can we allow traffic to be carried by private operators under C licences in the way that it is? I make no bones about it. We cannot develop the railways to the point at which they are likely to break even unless we restrict C licences.

I will remind the Minister of what is happening today. A private industrialist, for example, operates a fleet of five or six lorries. There are times—Christmas time is an instance—when he has a surplus of goods which he cannot carry in his own vehicles. He then says to the railways, "I have here a surplus of traffic. I have promised to deliver it in two days' time. Come and collect it and deliver it". British industrialists and manufacturers operating with C licences expect our transport system, with all the capital involved, the track, signal boxes, stations, goods yards, marshalling yards, wagons and all the rest, to be available at their beck and call, to be made use of like an old coat taken from behind the door, as and when they wish.

The Minister said that it was his pride that the railways were able to run in fog and could carry passengers that the airlines could not carry because they could not operate in such conditions from the airports. If the railways are to be maintained in order to meet emergencies caused by fog, heavy traffic and the like, and we expect them to carry all the capital costs, how can they ever be a paying proposition? If, on the one hand, we are to operate our transport system, and if we wish it to have the capital necessary to revive it and bring it to a high level of efficiency, we must, on the other hand, ensure that the amount of traffic is sufficient to enable it to meet its costs.

The railways cannot operate on the basis of just being there to pick up and carry anything that other people do not want. Although the Minister spoke about greater freedom of charges, there is still only regional freedom. There is not really national freedom in charges. Moreover, as I have said, the railways will not have the necessary amount of traffic unless the operations of C licence holders are restricted.

The railways are still common carriers. Is the position not fantastic? Manufacturers and even road hauliers can work and operate and then, when they have traffic which they do not want: to carry, because it is difficult or unclean to handle, they can say to the railways, "We do not want to take this. You must come along and take it". If the railways are to operate satisfactorily, it must be done on some other basis.

Mr. Cole

I am sure that the hon. Gentleman would not wish to misrepresent the point which my right hon. Friend made about the carriage of air passengers. This was a case where the passengers could not travel by air because of fog. If one wants to give a service to the public, surely, one must take them by another means.

Mr. Lindgren

I agree. I have said that one ought to carry the goods and passengers by the best available means, but we cannot expect the railway system to be operated on a basis of being used only as and when it is required.

Mr. Popplewell

On a foggy day.

Mr. Cole

Does the hon. Member for Wellingborough mean that these passengers should not be carried?

Mr. Lindgren

I agree that they should be carried. Part of the function of the railways is to be an alternative system, but the Minister, hon. Members opposite and, in particular, the hon. Member for Bolton, West say that every functional operation must show a profit. There is a national value to be placed upon a railway system, too. There was much discussion last night about the foolhardy escapade of the Government at Suez which brought this country to the verge of ruin.

Mr. Watkinson

It brought disgrace to the hon. Member's party.

Mr. Lindgren

The country will take a different view. The Government would have been in a sorry state had they not been able to transfer traffic from road to rail in an emergency. If it is all right to have concentration centres for goods and to carry goods long distance by rail in a time of crisis, such as that created by the Government over Suez. should we not also realise that the service must be paid for if we are to have it available for such times?

Mr. Donald Wade (Huddersfield, West)

How is it to be paid for?

Mr. Lindgren

There are two ways of paying for it. First, we as railwaymen could make a profitable job of the railways if we carried only those goods and persons whose carriage showed a profit to us. If we cut out all the dead weight we could show a profit. The first people to shout in that event would be manufacturers and hon. Members opposite. If the railways were run at a profit by conducting only those operations which showed a profit, it would bring the industry of this country to a standstill.

The alternative way in which we could pay for the service, in view of the peculiar circumstances of railway operation, is to recognise that if we are to have a service ready to take the surplus from road transport and available as an alternative means of transport in times of difficulty and distress the country must pay something towards the cost of the system. Whatever we like to call it, it is a subsidy. I have been quite frank about this. The Parliamentary Secretary, for whom we have much more regard than we have for the Minister, was associated with the farming industry, and I have never seen him and his friends in a dejected state because they were receiving subsidies. They are rendering a service to the nation in an industry which cannot show a profit in an industrial society when it is paying industrial wages and providing good industrial conditions for its workers.

If we in the railways have to provide an effective and an efficient service, with all the disadvantages of also providing a service which is on tap and of carrying the capital responsibility, with decreased traffic, then the nation must bear some part of the burden. There are only two ways. Modernisation, rationalisation, electrification and any other sort of "ation" will not make the railways in this country, on their own, a profitable undertaking, except in one of these two ways.

As a result of the Minister's actions in the early months of this year, which culminated in the agreement arrived at in May, we as railwaymen are prepared to play our part inside the industry. But we are not prepared to subsidise industrialists by accepting a lower standard in rates of pay, salaries and conditions of service. If there must be a subsidy, it must not be at the expense of conditions of employment.

Reference has been made in the debate to the pride taken in the railways in the days before the war. There certainly was some pride taken in the job that was being done, but in fact conditions were pretty bad. I remember on one occasion in St. Pancras meeting a woman whom I knew and saying "Hello, Esther, is your husband working?" She replied, "Yes, he has just had a job on the North London". I said, "That's good." She replied, "Yes, its starvation but its regular."

Those were the conditions on the railways before the war, and we shall not tolerate those conditions again. We in the railway trade unions have already shown that we are prepared to co-operate with the British Transport Commission in providing as efficient a service as possible. We have co-operated in mechanisation schemes to the extent that staffs have been considerably reduced.

I want to pay a compliment to the top management of the Commission. The fullest co-operation at that level in providing full information and taking part in joint consultation. That co-operation on the railways is as good as any to be found in any other industry and is better than that found in many. We have no complaints whatever about top-level management. They are prepared to discuss things well before schemes of management and rationalisation are likely to be put into operation. They are prepared to talk about the effect on staffs, and to accept our views, but that does not always apply all the way down the scale. However, the top-level management are doing their best, as are we in the trade unions, to educate the middle stratum of management to co-operate equally.

The Minister spoke about area boards. Since 1951, when the present Government came to power, there has been one reorganisation after another. Many hundreds of thousands of pounds have been wasted in my own union on salaries and other things as a result of men being engaged on successive reorganisation schemes. If we had been allowed to put as much energy into obtaining traffic as we have been forced to spend on airy-fairy ideological aims by various Ministers of Transport we would have made much greater progress by now. The various reorganisation schemes are costing the Commission many thousands of pounds a year in unnecessary expenditure. Men are moved from one part of the country to another. Though the Commission is quite humane in carrying out these operations, the fact remains that they cost a considerable amount of money. We resent being used for political purposes by the present Minister and having the industry continually disturbed.

The position of railway capital was bad enough without the further imposition of the modernisation plan. There must be a reconstruction of capital which will provide a fair return. If this were not a nationalised industry, a capital reconstruction would not be considered wrong. Private industry is doing this every day, so why should we not have reconstruction of capital for the British Transport Commission? Railway workers are prepared to play their part but up to now they have been hampered, hamstrung and upset, and their morale has been destroyed by this Government for purely political, ideological reasons.

8.56 p.m.

Mr. G. R. Strauss (Vauxhall)

The debate today has ranged over an unusually wide area. We all expected to hear speeches from hon. Members about the railways and their financial difficulties. We have had speeches about sea transport; one hon. Member jumped the gun and gave us an interesting talk about the recommendations of the Bowes Committee; and we have had speeches on many other subjects rather remotely connected with transport. The Bill before us has received the support of every hon. Member, and I think there is general agreement that the finances of the railways have now reached a critical stage which not only makes it imperative that they be given immediate relief from the borrowing limitations imposed on them by the Government, but that there should be the most careful consideration of their long-term prospects.

The causes of the immediate difficulty are well known. There never was any chance that the £250 million set by the Government as the maximum amount the Commission was permitted to borrow from the Ministry of Transport to meet revenue deficits during modernisation would be sufficient. The figure of £250 million was put forward by Sir Brian Robertson as the one which was likely to be required by the end of the modernisation plan if, but only if, in effect, money remained stable—this meant no increases in wages—and economic activity continued to increase during the whole period of modernisation.

No one except the Government thought that those two conditions, especially the two together, would be possible. We said at the time that they could not be fulfilled. We urged the Ministry—I did so myself in several speeches in Committee and on the Floor of the House—to increase the figure from £250 million to something more realistic. I suggested, to quote my own words, "a margin of a substantial amount". The Minister was adamant. He said this was enough and that it was necessary to apply a "financial discipline" on the Commission—very favourite words of his. Indeed, the fact that he has submitted this Bill today is an acknowledgement of his error of a year ago.

It is important, however, to establish beyond doubt the fact that tie British Transport Commission is in no way to blame for its present precarious financial situation. The heavy falls of receipts in all railway systems throughout Europe and North America is well known. Nearly all of them work at a loss. The reasons are the same everywhere. Although more people are travelling and more goods are being transported, more and more of the traffic is going by road. The financial position of British Railways is not exceptional, but typical.

Moreover, throughout its existence the British Transport Commission has made praiseworthy efforts to overcome its financial difficulties by increasing efficiency, and the story of its achievements in doing that has been told year by year in its Annual Reports. It is a pity that more people do not appreciate what it has done, because it is a remarkable success story. I am referring at the moment to the period before the launching of the modernisation scheme when, on every test of efficiency, striking progress was made.

Great credit must be given to the Commission, too, for the drive with which it has launched the modernisation scheme and for the rapid progress which has been made. All the information which we have bears testimony to that, and I have not heard any suggestion from anybody—even from those who are most ready, for political or other reasons, to criticise the Commission—of there being any difference of opinion on that score.

The situation today is that while our railways are sound and have able leadership, first-class technicians and loyal employees, and while the plans to modernise the system are far-reaching and likely to be effective, the Commission is faced with adverse factors beyond its control. That keeps it and all those associated with it in a constant state of crisis and unsettlement making the whole future of the railways uncertain.

What, if anything, can be done by Parliament or the Government to change that situation? That is the major problem which confronts us today. Of course, we cannot stop the erosion of rail traffic by road traffic; nevertheless, a great deal can be done by the Government to improve the atmosphere, if the Government are so minded. But it will mean a drastic change in the attitude which the present Government have adopted towards this problem from the beginning.

Looking back over the years, it is true to say that the Government have pursued a policy of blowing hot and cold, sometimes concurrently, if that is possible, and sometimes consecutively, a cold breath after each hot breath. Let us consider their activities in the past, not so much to draw any political moral, but to enable us to appreciate realistically their proven attitude towards the Commission and the railways, and from that their likely attitude in the future.

In the early days, reflecting the general views of the Conservative Party, the Government regarded the Commission with open disfavour, on political grounds; and although they were not able to go so far as to return the railways to private enterprise, they proceeded to prune the Commission as quickly as possible of a major section of its road haulage interests, although, or perhaps because, these were showing considerable promise of making good profits—indeed, in 1953, they were making almost £9 million a year.

Incidentally, it is extraordinarily interesting to note the statements made in the Press recently, and confirmed by some hon. Members today, that at least some Conservative Members have been considering pursuing that policy and cutting off even further the Commission's remunerative services. We have been told that they have been seriously considering taking away from the Commission the hotels and catering services which pay, and possibly even carrying out some form of denationalisation of the railway system.

I realise that that is not the policy of the Minister, but it is apparently the policy of some of his supporters, and is typical of the spirit of the Conservative Party. It is the transfer of the more lucrative enterprises of the Commission to private exploitation, leaving the public to carry the burden of the more unprofitable enterprises.

We know that on more than one occasion during this period the Government have frustrated the Commission in its decision to raise charges when the Commission considered this to be desirable on commercial grounds, and, indeed, when those increases were endorsed by the Transport Tribunal. The amount of money involved was not very large—£17 million a year on one occasion—and is admittedly insufficient to have any decisive effect on the Commission's present financial position. But in preventing the Commission from taking the action it wished to take to raise more money the Government were displaying a wholly unco-operative and almost hostile attitude.

Then, shortly after blowing hot and authorising the modernisation plan, with the heavy capital commitments involved, the Government imposed a cut on the capital expenditure of the Commission which, to put it no higher, impeded it in its endeavours to get on with the plan. We have heard little about that today from the benches opposite and, naturally enough, nothing from the Minister of Transport. But it should be recalled to the House that after the Government had endorsed this plan and said they were anxious to see it realised as soon as possible, they stepped in and stopped the Commission doing many things it wanted to do and could do quickly.

On 18th December, 1957, in answer to a Question put by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) the Minister said:

It will not now be possible to accelerate by as much as was hoped the programmes for main line diesel locomotives, for some rolling stock and for station improvements. The programme for the fitting of continuous brakes to some mineral wagons has also had to be slowed down."—[OFFICIAL REPORT, 18th December, 1957; Vol. 580, c. 410–11.] The Minister went on to say that the Commission still hoped to complete its programme by the published date. That meant, in effect, that if the retardation had not been imposed the Commission might have been able to complete its plan at an earlier date.

The Minister of Transport on this occasion thwarted and discouraged the Commission from carrying out activities which the Government themselves originally impelled it to undertake. As my hon. Friend the Member for Enfield, East has said, many quotations could be given from the Annual Report of the Commission showing how, over a large field of modernisation activities upon which the Commission had embarked, it was held up by the capital cuts imposed by the Government.

All these interferences in the proper commercial activities of the Commission, and in the plans which it had made to improve and modernise itself, were actions on the part of a Government who profess that interferences of that sort are wrong, and that the Commission must conduct its affairs in a business-like way.

These are the words of the Minister of Transport when he indicated the attitude of the Government to the railways. It is the view of the Government that this industry should,

… 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."—[OFFICIAL REPORT, 22nd January, 1956; Vol. 563, c. 146.] If ever there was an example of an industry subject to political pressures and directions and thwarted and impeded from doing what it considered commercially desirable it is provided by the British Transport Commission in its relations with the Minister. There could not be a better example.

Mr. Peyton

Surely the right hon. Gentleman will accept that a Labour Government were the first to put this industry into the arena of party warfare?

Mr. Strauss

Had the hon. Gentleman recalled the political activities and public agitation by the railways in the 1930s, the demands that the Government should interfere by legislation, the "square deal" campaign and the demands for political action to rescue the railway system, he would not have made that comment.

I wish to ask the Joint Parliamentary Secretary what action the Government propose to take after all their promises and undertakings to the Commission about relieving the railways of the heavy burden of maintaining road bridges over the railways. In May of this year the Minister wrote to Sir Brian Robertson indicating sympathy with the view that this burden should be removed and saying that the Government would look into the problem. It was understood by everyone that the Government would do something about it.

Mr. Lindgren

In the wage settlement negotiations last May it was part of the bargain regarding economies that the Commission would accept 3 per cent. and that the Government would relieve it of the burden of maintaining the road bridges, station approaches, level crossings, etc.

Mr. Strauss

I was referring to the statements made in connection with the negotiations. I have previously asked the Minister what was happening and he said he hoped to make a statement soon. The promise was given seven months ago and it is time that the Government gave us an answer. I hope that we shall get it tonight.

The Government have blown hot and cold over the Commission's affairs and have interfered, frequently and unwisely, in matters which the Commission should properly decide for itself. Today we are increasing the borrowing powers of the Commission. That information was conveyed in a letter to Sir Brian Robertson which I think was couched in singularly unfriendly and reproving words. The Economist described the letter as a reproof. Referring to the appointment of auditors by the Minister to see whether the Commission was losing business because it was not getting its fair share of the available traffic, the Economist stated:

The Ministry watchdog has moved in, and some will think in a notably invidious way. All this, and the constant references in the Minister's communications to the Commission and in his statements to this House to the need for discipline—by which he means, so far as one can gather, ordering and restricting the Commission in many of its activities, in opposition to the commercial judgment of its members—indicates a type of behaviour towards the Commission which is not healthy or desirable and which does not bring about the best results. Indeed, the behaviour of the Minister might be compared with that of a "nanny" towards a naughty and irresponsible child which she feels necessary to slap down every now and again.

What should be the attitude of the Government to bring about a healthy situation and prosperity in the railway industry? What should they do? First, I suggest that, in place of the suspicion and reluctant support which largely characterises the Minister's activities today, there should be recognition that the transformation of our railway system into a modern, efficient organisation that will serve the country's needs and pay its employees good wages is an overriding urgent national necessity; that all the resources needed for this should be provided without fear of cutbacks, and that those responsible for this great operation who have already given proof of their capacity should be treated with confidence and trusted; and their bona fides should not be inquired into every few months.

I suggest that there should be full recognition that the objective of a good up-to-date railway system must in the national interest be achieved whether it is viable or not. While every effort should be made to make it viable, this must not be done at the expense of services which are required by industry or the travelling public. When the Minister says, as he did today, that he has told the Transport Commission that it must increase its economies next year from the agreed £20 million to £30 million, without indicating how that is to be done, his approach to this matter is an exceedingly dangerous one.

Economies do not mean cutting down wages. We know that there is a good case for an increase in wages. Economies mean cutting down the services further. For the Minister to say that the services must be cut and for him then to leave the responsibility to other people to say where they should be made—without making a case to the Commission that it is desirable to cut any, or whether in fact any can be cut without doing considerable damage to the public or the industry—is a nonsensical way to behave.

We will know that the cutting of such services next year by the extra £10 million economy imposed by the Minister will not be the responsibility of the Commission. They might be contrary to the will of the Commission. They have been imposed by the Minister without any knowledge of what can or should be done. The Commission has to carry out the economies and no doubt the public and the industry will suffer.

The Minister seems to have abandoned the idea altogether that the transport system of this country is a national service. It is a service first. It should be made remunerative if possible, but, even if it cannot be made remunerative, we must have a first-class railway system. To cut services, maybe vital ones, for economy sake is the wrong way to proceed.

I suggest that it is nonsense for the Minister to come forward every now and then and bluff. He told us a few months ago, when it was clear that the Commission was getting into difficulties with its railways finance, that the Government would not increase beyond £250 million the amount they were prepared to lend the Commission to carry it over its difficulties. We all knew that was bluff and that if the necessity arose the right hon. Gentleman would have to do more. Today he has had to do it. He had no option. Today he told us—I forget his exact words, but they came to this—that he intends to insist that the Commission fulfils its financial obligations on the dates which have been laid down, that is 1962.

Mr. Watkinson

They are not the words I used at all. I shall not argue now with the right hon. Member, but perhaps he will be kind enough to read HANSARD, where he will see that my words did not mean anything of the sort. On the general question of the Commission, I think he will find that what I have said does not bear the connotation he has put on it.

Mr. Strauss

I will read the right hon. Gentleman's words willingly.

Mr. Lindgren

No one would believe the Minister of Transport.

Mr. Strauss

I am certain that the right hon. Gentleman said the Government are determined to stand by the fulfilment of the plan on the dates which are laid down. I think the right hon. Gentleman used words to that effect.

Mr. Peyton

The right hon. Member for Vauxhall (Mr. Strauss) has a bad memory.

Mr. Strauss

No. However, I will read what the Minister said tomorrow.

Mr. Watkinson

May I say what was said? What I said was that, pending this re-assessment of the modernisation plan, both the Commission and the Government stick to the date in 1961-62 as laid down by the Commission itself, and never by the Government.

Mr. Strauss

I do not think that those were the right hon. Gentleman's exact words, but I am willing to accept what he says. He really implied today that, if the Commission did not carry out the obligations which are laid upon it, the Government would regard the matter as a breach of the undertaking, and serious consequential action would be taken, suggesting that more money might not be available.

Anyway, the point I am making is that, having embarked upon a modernisation plan, whatever the Commission succeeds in doing or does not succeed in doing, if its losses continue to increase instead of diminish because of falls in traffics, any Government will have to go on modernising the railways and providing the money for it. It is no use pretending that there is any alternative before any Government of whatever party. It has got to be done.

I therefore suggest that the Government should make it perfectly plain, that whatever happens the general strategy of modernisation which has been carefully worked out should proceed, and be enabled to proceed smoothly, without the intervention of recurring crises arising from external events or from any strict adherence to specific dates or financial results related to those dates. This is the attitude that should be adopted by the Government to the railways. They should give the Transport Commission the green light to go ahead with all possible energy, to guarantee it against any sporadic interruptions and set-backs They should stop nagging at those in charge of the operations and expressing distrust of their ability to carry out what they have undertaken to do, or putting in auditors every now and again to verify the Commission's statements.

Expressions of goodwill on behalf of the Government, accompanied by acts of frustration or indications of lack of confidence, are not good enough. That will not engender the right spirit among those, either in the senior or junior ranks of the organization, who have to accomplish the task that the nation has set them. But, given the whole-hearted support of the Government, I have very little doubt that all employees, from the most important technicians to those who work more humbly on the lines, will acquit themselves with credit and to the great benefit of the nation as a whole.

9.24 p.m.

Mr. S. Storey (Stretford)

I understand that during the course of this debate a rather serious railway accident has occurred at Urmston, in my constituency. May I ask my hon. Friend the Joint Parliamentary Secretary whether, in the course of his reply to the debate, he can give the House the latest information which is available?

9.25 p.m.

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

My right hon. Friend and I have just heard that at Urmston, at 6.19 p.m. today, the 5.30 p.m. train from Liverpool Central to Manchester Central ran into a road crane which had fallen on to the line at Moss Lane Bridge. The engine and five coaches were derailed. The engine overturned on its side and both lines were blocked. I regret to say that two passengers were killed and 30 injured, of whom 10 were seriously injured. On behalf of the Government and of all Members on this side of the House, I would like to express my sympathy with the relatives of those who were killed and with the injured and their families.

Mr. G. R. Strauss

My colleagues on this side, of course, wish to associate ourselves most sincerely with what the Parliamentary Secretary has said.

Mr. Nugent

I knew that the right hon. Gentleman would wish to say that. I felt that he would prefer to say it himself. We send our good wishes to the injured and to their families.

This has certainly been a wide-ranging debate, but I can say that my right hon. Friend and I have been studying this subject not only for weeks, but for months, in consultation with our advisers and with the Transport Commission itself. I can truthfully say that there is no point raised in the debate, from either side of the House, that we have not pondered over before we came here today.

We bring this Bill to the House with all deliberation. I acknowledge, with thanks to the right hon. Member for Vauxhall (Mr. G. R. Strauss) and his hon. Friends, the fact that it is the Opposition's intention to give the Bill an unopposed Second Reading. There are, however, certain opinions which have been expressed from the other side with which I do not entirely agree. It would be surprising if I did.

It has been a relief to me to hear that nobody has contended that we could possibly do without a railway system. Thus it follows logically that we should have a fully modernised, efficient system just as soon as we can. Therefore, we can as a House reaffirm the decision taken in 1955 to modernise our railways.

I turn now to the main points that were raised in the debate. My hon. Friend the Member for Aylesbury (Sir S. Summers) spoke about inland waterways. I listened with great interest to his intervention. My right hon. Friend. and I have for some time been considering carefully the many recommendations, and, indeed, implications, which flow from the Bowes Report. I confirm my hon. Friend's suggestion that great complication also flow from those recommendations. My right hon. Friend and I will take into account the views expressed by my hon. Friend. My right hon. Friend hopes to make a statement about this important matter soon after the House resumes after the Christmas Recess.

I must say a word in reply to the hon. Members for The Hartlepools (Mr. D. Jones) and Wellingborough (Mr. Lindgren), both of whom decided to make this an occasion for a personal attack on my right hon. Friend. It is difficult to see how that could help the debate, or the important issues that we have before us. Both hon. Members told the House that the railwaymen and themselves had no confidence in my right hon. Friend.

Mr. Lindgren

Hear, hear.

Mr. Nugent

I rebut that completely. My right hon. Friend has a most distinguished record as Minister of Transport. It is largely due to him that the modernisation programme is going on at all.

Today, we come to the House asking for approval of £600 million for fresh capital expenditure and an extra £150 million for the deficit financing, and hon. Members on the other side get up and say that my right hon. Friend is sabotaging the railways. I have never heard such nonsense.

Mr. D. Jones rose—

Mr. Nugent

I shall not give way until I have finished. This was a personal attack and a very unfair one. It is a most difficult job for the Minister of Transport to hold the right balance between his duties to the Transport Commission and his duties to the House, the country and the taxpayers, who have to find the money. I should like to put it on record that in the two years I have been at the Ministry of Transport, I have been full of admiration for the way my right hon. Friend does the job, and I reject completely the attacks that the two hon. Members have made.

Mr. D. Jones

I would have been very surprised if the Parliamentary Secretary had not rushed to the defence of his right hon. Friend, but if his right hon. Friend does not want to have repeated in the House the stupid speeches he makes in the country he should not make them.

Mr. Nugent

I would only say to the hon. Members opposite that they should themselves try to live in the spirit that they advocate other people should live in.

Mr. Lindgren

The trade unions have always been prepared to work in conjunction with the Minister, but when he treats the Chairman of the Commission and—the Commission—as an office boy, the trade unions will give the Chairman their first support, not the Minister.

Mr. Nugent

Let me now turn to the issues raised in the debate. The two main lines of comment that have emerged from right hon. and hon. Members opposite have been, first, that the Commission has been handicapped by inadequate or unsympathetic Government action; and, secondly, there has been the very important question whether the prospects of the railways justify the money provided in the Bill. This query was particularly developed by the hon. Member for Bolton, West (Mr. Holt), and by my hon. Friend the Member for Truro (Mr. G. Wilson).

I must deal, first, with the major point, made by the hon. Member for Enfield, East (Mr. Ernest Davies) and developed by his hon. Friend the Member for The Hartlepools, who contended that it was the Government's action and policy that were the Commission's primary handicap —that is, the Government's policy of disinflation last autumn. I am sure that it would be out of place—and it would probably be out of order—for me to go very far in this matter, but I want to say this, because it is relevant to the whole debate and to what hon. Members opposite have said.

All hon. Members recognise that, basically, the economic health of the country depends on a favourable balance of trade, with a margin wide enough to replenish our gold reserves and finance our overseas investments. On this depends not only the value of the £ sterling, but also the jobs and standards of life of the whole community. To ignore this basic necessity quickly leads to disaster, and right hon. and hon. Members opposite cannot have such short memories as not to recollect what happened in 1951.

The Government's financial policy in the past year, in so effectively restoring this balance, has provided a sheet anchor for our economy in the face of a recession which has spread throughout the world. Internal reflation can help only so long as this cornerstone of the economy is preserved. Past experience indicates that this House would be highly unlikely to be debating at all tonight the provision of these very large sums of money had we not followed such policies, for the very simple reason that our national finances would not be strong enough now to carry the very big extra burden that we are asking the House to put on them.

The Labour Party's policy for transport was dealt with very fully by the hon. Member for Enfield, East, by the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) and, indeed, by implication, by most hon. Members opposite who have spoken. I should like to say just a word in reply to the Opposition's political argument. They are opposed to the present structure of the transport industry, where the road and rail services compete together and the traders and the industrialists can take their choice of which they want. As I understand, the Labour Party advocates a system where road haulage is nationalised and C licences are controlled—

Mr. Ernest Davies

Long distance.

Mr. Nugent

The hon. Gentleman gave us the benefit of his ideas by saying that these might be restricted by weight or by distance.

I was asked what our policy was. Our policy on C licences is to leave them free. We think that they play an essential part in industry, and we do not see how industry can carry on without them. What I gathered from hon. Members opposite was that they would achieve integration and bring about a co-ordination of road and rail transport.

I concede that, in theory, this throws up an attractive picture whereby road and rail transport would somehow both be used to the best economic extent. We know from experience that that really does not happen. Arbitrary decisions are taken which have the effect of clipping the wings of road transport to give rail an artificial advantage. That is surely a policy which cannot be but disadvantageous to industry as a whole. Ask any industrialist in the country, including the Co-operative Wholesale Society, whether he would like this policy and he will answer very quickly—and the reply will probably be unprintable. Why? Because this is bound to lead to less efficient service and higher costs.

I quite accept that hon. Members opposite feel strongly on these matters. Indeed, as I listened to the hon. Gentleman the Member for Newcastle-upon-Tyne, West and heard the fervency in his voice, I realised that he felt very strongly on this matter. It all depends on the point of view. To hon. Members opposite it looks one way and to hon. Members on this side it looks another. Things are different depending on how one looks at them.

I noticed that a paper yesterday stated that when we read the Soviet official history of the United Kingdom we discover that the Socialists nationalised industry to strengthen the capitalist system. That will be a surprise to hon. Members opposite. It depends on how one looks at it.

I want to leave the House in no doubt at all that so far as we are concerned we feel that the policy of the Labour Party is one which would be sacrificing the general interests of the nation for the benefit of the railway system. That is the economics of Bedlam. I say quite definitely that our policy is the reverse. We believe that the right thing to do is to modernise the railways so that they can serve the nation, and not the other way round. I think that the Commission welcome this prospect.

Turning to the question of regional autonomy, I was asked by the hon. Member for Newcastle-upon-Tyne, West a number of questions on which he was joined by the hon. Gentleman the Member for Wellingborough. The hon. Member for Newcastle-upon-Tyne, West also risked the remark that he was open to be convinced that this had a value. I hope that he will be convinced when I have answered him. First, the area boards were set up on the initiative of the Transport Commission itself—[HON. MEMBERS: "No."]—and the Chairman of the Transport Commission has asked me to say that from this Box tonight.

Mr. Popplewell

The Chairman of the Transport Commission may have done, but we all know the history. The Government decided on area boards and gave the Commission a directive to that effect. It is quite correct that the Commission established the area boards—after the directive.

Mr. Nugent

The hon. Member really must not make his speech again. I am stating a fact for the record.

There are about 40 members on the six area boards and the total fees paid to them is £20,429, so if they are "jobs for the boys" they are not very remunerative ones. The expenses are negligible. I personally have been around the country and met the area boards, and I think that we are very lucky to have such distinguished, public-spirited men to play their part in the regions. Their functions, except for major policy, finance, rolling stock and national wages agreements, which rest with the B.T.C. cover all the administration in the regions and that is their responsibility. They are now playing a very active part and are doing most valuable work not only in the direct administration of the regions, but also in their contacts with industry and in improving the relations between the railways and industry.

I assure the House that the Commission itself is very well satisfied with the development that has been made there. If the hon. Gentleman has any evidence of irregularities, and would care to send it to my right hon. Friend or myself, we will very readily look into it and take any action that is appropriate.

Mr. Popplewell

I did not use the word "irregularity". I referred to administrative expenses within the areas. I do not want it to be thought that I used the word "irregularity".

Mr. Nugent

I am very glad to hear the hon. Gentleman's correction. I understood him to say that some of these board members had connections with firms—

Mr. Popplewell

No; I asked a question.

Mr. Nugent

I am very glad that I had the wrong impression.

I wish to leave no doubt in anyone's mind that both the Commission and the Government believe that these boards are serving a very valuable purpose indeed. I hope that the House will give a fair judgment of the value they are giving. We certainly intend to encourage their development.

I come now to the vexed question of capital for modernisation, which we have discussed on more than one occasion. Our policy has been to give the Commission the maximum available for its modernisation, and the only time when it has had any cut at all was last autumn. The history was, as my right hon. Friend said, that, as was stated in the White Paper of 1956, the Commission asked for £135 million and £140 million for 1958 and 1959 respectively. Its revised request, in the autumn of last year, was for £151 million and £148 million. The actual Government allowance made in the autumn of last year was £145 million for both years. There was, therefore, a cut of £6 million on 1958 and a cut of £3 million on 1959.

Looking back over the financial conditions of last year, with which I have already dealt, I would say that this was a very small cut indeed that the Commission was asked to make, considering the great financial pressure upon us and the very important national stakes which were then in danger. It is really a tribute to my right hon. Friend that the Commission was given such a very large part of what it needed.

Mr. Ernest Davies

Is it not a fact that the figures that the hon. Gentleman has quoted were the figures of the cut-back on the original programme which the Commission had, but then the Commission found it possible to accelerate the programme and was in process of accelerating it? The real cuts were on the accelerated programme, and they were substantially more than the figures he has given.

Mr. G. R. Strauss

£25 million to £30 million.

Mr. Nugent

We have had this argument before, as right hon. and hon. Gentlemen know. I gave the facts during the debate last April.

The regions were, so to speak, getting up steam to put in requests for a larger amount, but those requests had not reached the Commission at the time it made its request for an allowance of £151 million. It was not until some weeks later, after the actual amount had been settled with the Government, that the Commission was aware of the acceleration that the regions had made. It really cannot be laid at the door of the Government. It was an entirely domestic affair within the Commission, and it is really quite unfair to say that it was on the Government's account that the figure was reduced as the hon. Member for Enfield, East suggests.

A further £25 million were added in April this year, to be spread over the two years 1958–59, and a further £8 million have now been added this autumn. The final total is £178 million for next year, which is about £30 million above the Commission's actual request. I really think that right hon. and hon. Gentlemen opposite are being a little ungenerous about what has been done when they say that my right hon. Friend has not given the Commission an adequate deal in this matter. He really has done very well and given the Commission all that it can possibly spend.

Turning now to questions about Government interference, I should not like to make too much of these points. I think that the right hon. Gentleman the Member for Vauxhall put them in their proper perspective when he said that their effect is marginal. It is always difficult to equate the necessities of national policy with the necessities of policy within the Commission, but the effect of the 1956 action was no more than marginal in the total picture, and it was temporary. The same, of course, is true about the sale of the vehicles. The hon. Gentleman the Member for Enfield, East selected the highest profit figure of £8.9 million, which was made in 1953. In 1952. the figure was only £1.7 million.

Mr. Lindgren

It was a developing service.

Mr. Nugent

The year before that, it was £3.3 million. The hon. Gentleman has compared it with the lowest figure made since denationalisation. In fact, in 1957, it went up again to £2.8 million. The broad effect is a difference of, perhaps, £3 million or £4 million at the outside, and it is really marginal in the total.

Mr. Lindgren

No.

Mr. Nugent

A certain amount has been said about the commercial freedom of the Commission, and I agree that it is of first importance that the Commission should have commercial freedom and that it should be in a position to compete freely with the road services and be without the handicaps which it has had in days gone by. The point was made that the Commission has the common carrier obligation, and it is true that there may still be some theoretical point in that, but, in fact, since the 1957 charges scheme the Commission has been virtually free. The scheme which it has now made takes account of such matters as loadability, and the Commission is restricted only by a ceiling of what is called "reasonable". It can, therefore, make charges for uneconomic freights which ensure that it is not carrying things it does not wish to carry.

Mr. Lindgren

A number of manufacturers whom I will not name, but whom I could name, have their full loads carried by C licence vehicles, but their empty package cases have to be taken back by the railways under the common carrier obligation.

Mr. Nugent

But the railways can now make such charges as they like. If hon. Members look again at the letters between the Chairman of the Commission and my right hon. Friend they will see this point. If they will look at paragraph 26 (b), about freight traffic, they will see that the Commission considers that an overall emergency increase might yield temporary advantages only to be succeeded by permanent disadvantages. The Commission's policy is to hold down their freight charges in order to encourage traffic. The Chairman has said to my right hon. Friend and myself that he regards the position as satisfactory and that he has all the freedom on freight services which he requires.

As for passenger services, the Chairman is now awaiting the judgment of the Tribunal on the present application, but it cannot be said that either the Government or anybody else is unfairly holding this back or opposing it. My right hon. Friend fairly made the point that a very large number of Socialist-controlled local authorities are opposing this application, but so are Tory-controlled local authorities, and there is nothing in that at all.

The Chairman has also said that he does not contemplate any general increase in passenger fares in the next six months. I do not think that there is any evidence to show that the Commission is being unfairly handicapped in making charges.

I should like to reply to the last main point which I mentioned—whether the prospects of the railways justify the money provided in the Bill. My right hon. Friend has told the House that the Commission is now engaged on the detailed review of the modernisation programme; and I am sure that that is right. It would not be right to ask the House to vote these very large sums unless the Commission were making this complete review. Conditions have changed very considerably in the last two or three years and it is only sense to make that complete review and to see whether the modernisation scheme is right.

That, after all, is the 64 dollar question: is the modernisation plan correctly designed to fit the conditions of the second half of the twentieth century? This will give the Commission a chance to consider that, and when it is done we shall see the report here, and both the Commission and ourselves can take a fresh view of it. The Commission's modernisation plan sets its solvency target for 1961–62 and, as my right hon. Friend has said, that still stands. I sincerely hope that the Commission will still make it, but, in any event, it now has a chance to look at the whole matter afresh.

On the credit side, I should like to repeat the point about the auditor's certificate which my right hon. Friend mentioned. That shows that, despite the high deficit which the Commission now has, in the short run the Commission's position is not due either to faulty judgment in assessing its prospects or to inability to carry out its plans. I think that the Commission is entitled to some measure of confidence on this count.

Again, the passenger services are, I think, distinctly encouraging. Hon. Members opposite who have a good deal of experience of the railways will, of course, realise that it is easier, or, rather, it is quicker, to bring about improvements in passenger services than it is with freight. Certainly, the Commission has done that, and it is encouraging to see that the rather more attractive services that electrification and diesel can give just tip the scale and win extra passengers.

My right hon. Friend referred to rather impressive figures of the improvements which have been brought about. I have three other figures which I should like to give to the House. The figure for the four weeks of November, 1958, compared with 1957, shows an increase in revenue on the passenger side of £0.3 million. The two previous four-weekly periods show an increase of £0.6 million and £0.5 million respectively. The diesel sets will be doubled over the next two years, and there is a very big programme of main line diesel locomotives coming on. Therefore, there is every prospect that these results are only the beginning of something quite substantial in improvements on the passenger side. It is encouraging to see that that extra attraction and improvement in service tip the scale, and it is reasonable to expect that when the freight side can offer a comparable degree of improvement we shall obtain equally good results.

Freight, of course, is the key to the problem. Freight is responsible for nearly two-thirds of the total revenue of the railways, and it is in this field that the greatest difficulties and uncertainties still remain. The modernisation of the freight service is a far more difficult job. It depends on a number of factors, the main one being that locomotives have to be changed from steam to diesel or electric. That is relatively easy, but it takes time. Wagons have to be changed from loose coupling to close coupling with continuous brakes. That is a very long and difficult business. Marshalling yards have to be concentrated, redesigned and modernised, freight terminals concentrated and re-equipped to handle a comprehensive container service. All these are vital links in the chain. Each involves a mass of technical problems which have taken time to solve. It takes an immense amount of work to make these arrangements and a great deal of time to get them into operation. But the Commission is going ahead. While waiting for the completion of all these measures it is pressing on to make the fullest use of the already improved services that it can now offer.

By grouping commercial and operating functions at regional and local level, the Commission has made it possible for the man who meets the potential customer for rail freight to offer the maximum adjustment of services to meet the customer's needs and to use the maximum discretion in settling the rate to be charged for that particular freight. These are the right steps in a policy of aggressive selling and there are already signs of good results. As to subsidisation, the Commission has to repay its loans to cover deficits with interest. Therefore, there is no subsidisation of any kind.

As to the reduction in staffs that is going on. the total wastage from all causes in 1957 was 80,000. The reduction of staff in the past twelve months has been of the order of 20,000. That gives a good deal of elbow room to the Commission in the staff reductions which it has to make. Unfortunately, they are not always in the right place geographically, or in the right grade, but the Commission is doing its utmost to make these adjustments without causing real redundancies, and that applies to the workshops as well. I have noted the anxiety expressed on this point by the hon. and learned Member for Crewe (Mr. Scholefield Allen) and I will look into it. As to cutting down in workshops, as far as possible the Commission has evenly spread out the work between outside workshops and the Commission's workshops. In the coming year they hope to keep the total number of redundancies amongst the staff to about 1,000 out of some 120,000. Therefore, I ask the House to accept that that is not a very large figure.

The charge that the Commission is being handicapped by the Government does not stand up to examination. On the contrary, the House must give us the credit, because it is we who are making the modernisation possible, and it is that which is the salvation of the railways. In the Bill we are asking the House for the means to continue to finance the Commission's modernisation plan and the current deficit, on the understanding that the House will see the revised plan next spring and that commitments will not go beyond this in the meantime.

The Commission has supplied a good deal of evidence which my right hon. Friend and I have given the House today to show that their unshaken confidence in the future of the railways is justified, and I ask the House to give due weight to that. I believe that the balance is firmly in favour of giving the Bill a Second Reading.

Finally, may I say that it is on the railwaymen themselves, from the board room of the Commission to the footplate and the platform, that success ultimately depends. 'The great tradition of British engineers pioneering the railways in the last century gives confidence that again, in the second half of the twentieth century, they will find the answers to the perplexing problems that now confront the railways. I would like it to go out from this House that it is our common hope that they will succeed. That is why we are here today, voting for these large sums of money. We confidently look to them to turn our hopes into realities, so I confidently ask the House to give a Second Reading to the Bill.

Mr. Lindgren

May I ask the hon. Gentleman a question? I did not interrupt his peroration. He referred to the freedom of the Commission on commercial charges. May we therefore take it that there will be no more Ministerial interference with wage negotiations with the Commission? May we have an answer? It is fundamental to the morale of railwaymen.

Mr. Nugent rose—

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Colonel J. H. Harrison.]

Committee upon Monday next.