Clause 2.—(EXTENSION OF POWERS TO COMMISSION TO BORROW, AND OF MINISTER TO LEND, TO MEET DEFICITS ON REVENUE ACCOUNT OF BRITISH RAILWAYS.)

HC Deb 21 January 1959 vol 598 cc328-69

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Ernest Davies

As you are aware, Sir Charles, we tabled an Amendment on Clause 2 which, I understand, is out of order because it goes beyond the Money Resolution. It would therefore not be in order to debate the Amendment, but I wish to draw attention to certain aspects of the Clause and matters arising out of it.

The Amendment which we tabled proposed to extend the period during which repayment should take place. As the Clause is now drafted, it is provided that the repayment of any money borrowed to finance deficits shall commence from the seventh year after the deficit has been incurred. When that was agreed upon the prospects for the British Transport Commission were far brighter than they are today, even though we then expressed doubts whether the Commission would be in a position to repay the money seven years after the borrowing took place. However, as I stated, the outlook was then much better than it is today, and in our view it is clear that the Commission will find it extremely difficult to fulfil the estimates in the White Paper, namely, that it can break even by 1962, and we await with great interest the findings of the Minister's Committee which is now reviewing the question of modernisation and seeing what is the earliest possible date when the Commission can break even.

This Clause provides that a further £150 million is to be provided to meet the higher deficits which are being incurred. Incidentally, average interest rates so far have been higher than was estimated when the original Bill was presented to the House. If it was decided that a seven-year period was necessary before repayment should take place when only £250 million was to be borrowed, surely it is obvious that if another £150 million plus interest has to be repaid it would be more helpful to the Commission if that repayment could be made over a longer period.

We therefore regret that no such Amendment to the original Bill was proposed. The position will be impossible for the Commission. During Second Reading I pointed out that not only would the money borrowed for deficits have to be repaid, but that the interest which accumulated on the borrowings would considerably add to the total amount to be repaid.

I then roughly estimated that, in addition to the £400 million which is to be borrowed by 1962 to meet the deficits, another £100 million would have to be borrowed to meet the accumulating interest. I was challenged by the hon. Member for Bedfordshire, South (Mr. Cole) on that figure. I have since recalculated the figure, and I find that the position is even worse than I expected. As these repayments will commence seven years after the first borrowing, which is 1963, by 1970, when repayments on the borrowings will have to take place, the total interest charges, together with the original £400 million, will amount to about £560 million, which will have to be repaid by the Commission commencing in 1963.

If my figures are correct, it is difficult to believe that it will be possible for the Commission to meet this onerous burden out of future profits. The additional interest which the Commission will have to meet is about £30 million. Does the Minister really believe that from 1963 onwards the Commission will be in a position not only to break even on present reckoning and to meet its central charges —and its total deficit was £85 million last year—but will be able to pay a further £30 million in interest charges from 1963 onwards?

10.0 p.m.

I regret that the outlook is so gloomy and appears almost hopeless, but it is only right that the House should face up to the position and that it should not shut its eyes to the fact that we are postponing the day when the Commission will have to meet its liabilities. We are, I think, rather hypocritical in pretending that we are not subsidising the Commission and calling these loans deficit borrowings. We pretend, as it were, that the Commission will one day be able to repay these amounts instead of accepting that, in the long run, these borrowings are almost certain to turn out to be subsidies. I suggest to the Minister, therefore, that in all honesty he ought to inform the House whether he is looking into the matter again and reviewing the position. Does he not believe, with us, that long before repayments are made by the Commission his successor will have to come to the House and present another Transport (Borrowing Powers) Bill in order to write off this amount?

We had a wide debate on Second Reading, and I do not wish to repeat matters which were then canvassed. Since then, however, there has been a further deterioration in the position of the Commission as traffics have continued to decline. Certain other events have occurred which have highlighted the Commission's difficulties. As regards the decline in traffics, the full figures for 1958 have now been published. They reflect the fall in production, particularly in coal and steel, which has so seriously affected the freight carryings of British Railways. During the Second Reading debate, of course, we made the case that the Government were responsible for this state of affairs because of their economic policy of stagnation. To debate that now would be to go rather beyond the normal procedure in Committee.

The fact remains that the decline in traffics during 1958 was very serious indeed. Total freight traffics fell from £407½ million in 1957 to £377¼ million in 1958. In other words, the total freight, parcels and mails carried by British Railways brought in revenue £30¼ million less than during the previous year. Coal carryings alone, because of the fall in production and stocking, fell by practically £6 million, and, as regards minerals, there was a fall of £8½ million as a result of the 11 per cent. fall in steel production. These, of course, account for the two largest carryings on British Railways.

The position is very serious, and it is one which it will be extremely difficult for the Commission to overtake. It will be difficult for the Commission to recapture the traffics, and only through a substantial increase in production, which, unfortunately, does not at the moment look probable, can the Commission expect to increase its carryings. With their greater flexibility, the staff of British Railways are showing that they are far more commercially-minded than hitherto, and, in some cases, British Railways are having some success in obtaining traffics which have been carried by other forms of transport. But a great deal of new traffic must be attracted to the railways in order to overtake the fall which has occurred. Competition is very keen, of course, far too keen in our view. There is an excess of transport facilities and the railways suffer unequal competition from road transport, particularly from the ancillary user, the C licensee.

Bad as is the picture in regard to freights, it is more encouraging in regard to passenger traffics, as the Minister himself pointed out on Second Reading. Yet here again the total figures for 1958 are somewhat disappointing. The total receipts from passenger traffics were just under £20 million. They have fallen, admittedly, by only £137,000 during the year, but they were that amount less in 1958 than they were in 1957. However, in view of the great increase in dieselisation, which has brought in a substantial amount of new traffic, as the Minister pointed out, quoting most interesting figures, during the Second Reading debate, one cannot help being disappointed that the total passenger receipts of the railways were not better during 1958. In other words, if we are, on the one hand, attracting in some directions, there must be traffic which is being lost in others. Why should this be? Why is it that the fall in passenger receipts has taken place and the increase in certain types of traffics has not more than counterbalanced the fall in other directions?

Will the railways be able to recover the traffic? The increase in private transport, private motoring in particular, is bound to affect the railways, but part of the trouble lies in deficiencies in the passenger services of British Railways. It is not the fault of the staff, but there is a fault somewhere which the railways have not been able to overcome in an effort to improve their services sufficiently and provide a reliable service on which passengers can be certain to depend.

For example, the figures for the latest four-weekly period during October, when the weather was not particularly inclement or foggy for that time of year —the worst fogs came in November— show that even in October, although there was a considerable improvement over 1957, only 58 per cent. of the express passenger trains on the Western Region arrived punctually, and that is the region which has the best record of all. The figure was 55 per cent. on the Scottish Region, 54 per cent. on the North-Eastern, 52 per cent. on the London Midland and 47 per cent. on the Eastern Region.

That is not good enough. If only 47 per cent. on one region can arrive on time, the passengers cannot rely on the services and be certain that they will arrive to keep appointments. The public will not tolerate unpunctuality. Nothing is more infuriating than to be let down by a train. These percentage figures mean that in some cases the delays were considerable whereas in others, of course, they were not of any great account.

The present situation must be remedied if the long-distance passenger traffic is to be held and increased, as it must be, if British Railways are to pay their way. They face competition and must, therefore, be on their toes in this respect. Punctuality must be the first priority. The second, of course, is the provision of adequate facilities, which, unfortunately, are sometimes lacking, particularly in regard to refreshment cars.

I have had correspondence with people who have travelled on expresses from Scotland who, when their train has been three hours late, for example, and they have arrived at about mid-day instead of early in the morning, have found no provision for refreshment. People have arrived at Euston at noon without having had any hot drinks on the train after getting up from their sleepers. That may be exceptional, but it occurs from time to time.

I wonder whether some of the reasons for these failures to provide the adequate services are not the economies which are being instituted and which are endangering the maintenance of an adequate public service by British Railways. On Second Reading, the Minister told us that the Commission had increased the £14 million of economies which it had agreed were possible during 1958 to £20 million and the right hon. Gentleman had ascertained through his auditors that those economies were being effected. He then persuaded —I almost said "forced"—the Commission to increase the economies from £20 million in 1958 to £30 million in 1959.

Does the Minister really think that the Commission can increase these economies, which have been mounting steadily over the years, by a further £10 million during this year without in any way endangering the public services? Is he confident that the Transport Commission can maintain adequate services on all its undertakings if it is forced to cut down right, left and centre in this way? We see the results of this.

Again, one is bound to ask whether the difficulties which have arisen on London Transport during recent weeks may not be related to the forcing of economies upon the Commission which make it more and more difficult for it to provide adequate services. Last year, the takings even of London Transport, making allowances for the loss that was inevitable as a result of the bus strike, fell by £9 million. Part of that fall and part of the steady drift away from public transport in London, although largely due, no doubt, to the general traffic conditions, is due equally to the insufficient regard which the Commission—or, in this instance, London Transport—can pay at present to the convenience of the passengers. That is to say, it is forced to impose cuts in bus services and on the Underground and to institute other forms of economy which relegate the convenience of passengers below the desire to see that the Commission pays its way. This gives cause for considerable concern.

We all deplore the demonstration sit-down strikes and the direct action which has been taken, because it causes so much inconvenience to other passengers and disrupts the services which follow behind the trains which are held up by these demonstrations. This action is symptomatic of the feeling which exists among many travellers on the Underground that everything is not being done to maintain the services at the high level of efficiency which they have previously come to enjoy and expected to continue.

Heretofore, relations between the drivers, conductors and station staff and the public had always been happy. It is most regrettable that recently, again, I believe, because of forced economies, there has been such a deterioration in these relations that there is almost antagonism between those who use the Underground and those responsible for its operation.

Sit-down strikes are not the answer by any means. The correct procedure is to make complaints to London Transport and, if one is not satisfied, to see whether the consultative machinery cannot be used. It is not good enough merely to inform passengers why detainments have taken place. It is necessary and highly desirable that passengers should be informed through the loudspeaker system, and I am glad that London Transport is now extending the loudspeaker system to a large number of stations. It is rather tardy in doing this, however, and it should have been done long ago. But what is important is not only to inform the passengers, necessary and desirable as that is, but also to remove the causes of these inconveniences.

10.15 p.m.

The main cause is the fact that trains are stopped short of the destination announced. In many cases that is due not to mechanical faults or even to delays which have taken place, for one reason or another, but due to economies made by uncoupling trains. I gather from correspondence that I have received that that has taken place. There is nothing more annoying than to have a train marked with a certain destination and find oneself turned off it short of that destination, often on to a draughty and cold station.

The statutory duty of London Transport Executive as maintained even under the Transport Act, 1953, is to provide an adequate service. I fear that the economies which are being forced upon London Transport are threatening the maintenance of that adequate service and, therefore, making it increasingly difficult for it to fulfil its duties and responsibilities as it is statutorily required to do. I fear that if adequate steps are not taken to ensure that these services are provided there is a danger of a recurrence of those steps recently taken in the form of direct action through sit-down strikes, which are most unfortunate and inconvenient and are not the right way of going about the matter.

There is an assumption in the White Paper on the Modernisation and Re-Equipment of British Railways, on which the estimates were based, that Government policy regarding the framework within which the Commission operates will remain as at present, that is to say, that there will be no structural changes in the organisation of the Transport Commission. If that were departed from, it might well put the Commission in a very serious position and prevent its paying its way as it estimated in the White Paper it would be able to do.

On Second Reading, I drew attention to the fact that Press reports had appeared of a plan which a committee of Tory back-benchers had drawn up for divesting the Commission of many of its ancillary undertakings. Hon. Members opposite denied that that was the case. I accepted the denial that any plan had been put forward formally by their committee, but the hon. Member for Truro (Mr. G. Wilson) admitted that discussions had taken place.

Mr. John Peyton (Yeovil)

The hon. Member attempted to run this hare on Second Reading. I am bound to say, with great deference to you, Sir Charles, that I fail to see how he is in any way justified in bringing this up on the narrow Clause which he is now discussing. I say to the hon. Member now that he is shedding the worst possible light upon his very poor case by bringing up a point of this kind. If, every time a Sunday newspaper cares to air its views and attribute them to a Member of the House, and that attribution is promptly denied, the hon. Member tries to make as much of it as he is doing on this occasion, he reveals, as he persistently does, the absolute poverty of every case that he advances.

Mr. Davies

I thank the hon. Member for Yeovil (Mr. Peyton) for his intervention, because I am about to quote something which makes my case far stronger.

However, I want, first, to explain my reason for raising this point. It is that I am convinced that if the suggestions which have been made by hon. Members opposite were carried through, it would be quite impossible for the Commission to repay its borrowings in the way provided in the Clause, and it would make the sum which we are now voting inadequate to meet the deficits which would be incurred up to 1962. For that reason I consider that the matter is in order, but that is something for the Chair and not for the hon. Member to decide.

What I wanted to say was that hon. Members opposite issued a denial of the Sunday Expressstory. During the Recess, as late as 2nd January, there appeared a story in Motor Transportfrom that magazine's political correspondent, presumably one of the journalists in the Press Gallery. The story was headed: Tory minority's startling plan. Full denationalisation and abolition of licensing. From our Political Correspondent. The story read: A number of Conservative M.P.S who have been examining road transport policy have come to a number of conclusions which, I understand, one of them has sent to the Minister of Transport. It proceeds to recapitulate what was said in previous reports and goes on: The B.T.C. would have to shed many of its ancillary services such as hotels and refreshment services, and either lease or sell outright its shipping and inland waterway services. In this picture the solution is seen to be complete denationalisation of road transport, including road passenger services. That appeared on 2nd January, after the denial of hon. Members opposite, and I therefore feel fully justified in referring to it. I have seen no denial in Motor Transportof that report, nor have I heard any denial.

The Chairman

I think that the hon. Member is getting away from the Clause.

Mr. Davies

As I said, Sir Charles, if this plan were carried through, it would deprive the Transport Commission of those sections of its undertaking which are earning substantial profits and the sum which we are voting would then be made quite inadequate. I would then have to argue that the amount should be substantially increased. However, I have made my point, except to ask the Minister to give the Committee an assurance that he will not give support to any plan which will deprive the Commission—

Mr. Peyton

On a point of order. I hope that you will agree, Sir Charles, that there has been no intervention from this side of the Committee which was out of order, and yet the hon. Member continues to refer to such a plan which is distinguished only by one fact, that it does not exist even in the minds of Members of the Tory Transport Committee, which is nothing to do with the Bill. My hon. Friend is not here to defend such a plan, because it does not exist. The hon. Member is making constant reference to a nonexistent plan and is thus more than usually out of order and grossly irrelevant.

The Chairman

I did suggest to the hon. Member that he had gone a little too far and I thought that he was getting into order and then encouraging the Minister to go out of order when his turn came, which was rather bad of him.

Mr. D. Jones

On a point of order. In its proposals for railways, the British Transport Commission made it crystal clear that there were five assumptions which had to be made if the plan for modernisation was to succeed. The fourth was that Government policy regarding the framework within which the Commission operates would remain as at present. If, therefore, there is a suggestion that the framework within which the Commission is to operate and break even by 1962 is to be altered the Minister should tell us about it.

Mr. Watkinson

At this late hour I can save a lot of excitement if I ask the hon. Member to read the answer which I gave to his Question today, which was not reached orally. It will save him much needless anxiety.

Mr. G. Lindgren (Wellingborough)

Will the Minister equally stop the inferences made by hon. Members opposite which tend to cause the Press to take the line that it is now taking? There is no smoke without fire, and the Press obtains its views from conversations with hon. Members opposite.

Mr. Davies

Irrespective of whether or not there is a plan, I hope that the Minister can give a categorical denial of any intention to interfere with the framework in any way which would contravene the assumption made in the White Paper to which my hon. Friend has just referred.

The denationalisation of road haulage deprived the Commission of a considerable amount of money annually, and its profits fell from £9 million to £2 million. If its ancillary undertakings are disposed of, not only will it harm the Commission but it will take away its profits.

In conclusion, I regret that it is necessary to be rather pessimistic about future prospects. Unfortunately, nothing has occurred since the Second Reading debate to improve that outlook. I am satisfied that the Commission is doing all it can to improve its position and to reach the target which it has been set of breaking even by 1962. We admire it for the steps that it has taken. Certainly deficit financing is the only way of tiding it over, combined with the much more important modernisation which is taking place.

I am fearful that the sums being passed in Committee, and on Third Reading tonight will prove inadequate to meet the deficits which are likely to be incurred by 1962. I hope that I am wrong in this, but I fear that time will show that we are agreeing not to finance deficits out of loans but to make what will turn out to be subsidies to the Commission. I am convinced about this by the very heavy interest charges which increase this sum so substantially.

The Commission is being asked to carry an intolerable burden. Although the Bill is necessary—and we shall not oppose its Third Reading—for the reason that I have given I fear that it will not be many years before it becomes necessary for whoever occupies the Minister's post to ask for further sums, not to be voted in this way but to be either written off capital or granted in the form of a subsidy.

10.30 p.m.

Mr. Lindgren

At this late hour I do not intend to emphasise unduly the excellent points which have been made by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies), but it is essential to reinforce them from the point of view of the hundreds and thousands of men and women who spend their working lives in the industry covered by the borrowing powers which we are discussing. I reinforce them, too, from the point of view that the capital structure of the Transport Commission is unreal.

I grant to hon. Members opposite that they may say that that structure was created, reinforced— or whatever word they like to use—by the Transport Acts of 1947. That is true, but a great deal has happened since 1947, and for purely political, doctrinaire reasons right hon. and hon. Gentlemen opposite have disturbed the structure of transport operation, so that both the capital construction of the Transport Commission and its operational function are now in an entirely different position from that envisaged under the 1947 Act. It was a structure created by the 1947 Act.

The Commission— or any nationalised industry— has a business requirement totally different from that of any other industry. The charge for interest on its capital is a charge to the industry to be borne before the profit and loss is determined. If the requirements of revenue and operational costs were met, and only then had it to be decided whether there was a profit or not, the position might be a little different, but under the present structure the requirement to meet the interest on the capital of the industry comes before the determination whether there is a profit or a loss. I therefore join my hon. Friend the Member for Enfield, East in saying that it is impossible for the Commission to break even by the dates mentioned.

Mr. Leslie Thomas (Canterbury)

Would the hon. Gentleman clarify the point he is making? How have we altered the capital structure of the Commission since we have been in office?

Mr. Lindgren

Not at all. If I did not make myself clear, I am sorry. I was trying to make the point that the capital structure is the same as under the 1947 Act—hon. Gentlemen may have that point—but that what has happened since 1947 is that the functional structure of the Commission has been changed and, also, the co-ordination of the various elements of transport.

It was envisaged that by that co-ordination of road and rail transport the Commission would break even, because of the integration of the various systems of transport. But what has happened? There has been denationalisation of certain of the profitable parts of the transport services; there has been hundreds of thousands of pounds worth of wasteful expenditure on decentralisation; there has been decentralisation of traffic arrangements; the setting up of fresh offices; dispersal of staff from some places and concentration of staff in others. All this has been done because of the purely political, doctrinaire methods determined by the Minister, not by the Commission. Do not forget that the area board traffic arrangements now being established were not the brain-child of the Commission. They were conceived inside the Ministry. The present decentralisation, the empire building, the area boards which were set up, were determined by the Ministry.

Rt. hon. and hon. Members opposite have to determine whether transport is a service or an industry. On the basis of being a service, it can never break even. On the basis of being an industrial undertaking required to show a profit, as I said on Second Reading, only if it undertakes the more profitable sections of transport, road and rail, can it break even if required. My hon. Friend the Member for Enfield, East referred to the recent problems of London Transport. He was correct in saying that a considerable number of them arose from economies which were insisted on by the management of London Transport in an attempt to break even on its revenue accounts.

I shall give a recent instance of the question of transport being a service or an industry. I can give the Minister details of a case concerning road transport, although I do not think it would be fair to mention the organisation concerned by name. It was operating around Lancashire with lorries carrying 40 tons of traffic and got into difficulties in the fog, ice and snow. This road haulier organisation is a very reputable one and operates under the best conditions. The drivers of the three lorries in convoy, finding themselves in difficulties, asked their headquarters in the north-eastern part of England what they should do. They were instructed to call at the nearest railway station which had a goods yard.

That was in Staffordshire and the load was transferred from road to rail. There was the fullest co-operation between the road haulier and the Transport Commission in getting the 40 tons of traffic transferred. I quote that only as an example of an alternative means of transport which was used under very serious conditions which neither the road haulier nor the Commission could control, but it was a service which could operate under those conditions.

There must be a number of hon. Members in the House who, during the last two or three weeks, have undertaken journeys by rail which otherwise they would have made by road. Conditions made it preferable for them to go by rail in the ice, snow or fog. If we are to have these facilities available we have to determine whether or not we are to meet the capital cost of the facilities on the basis of showing a profit year by year or by recognising that transport is a service.

We have to accept the fact, referred to by my hon. Friend, that unless there is capital reconstruction of the Transport Commission it cannot break even. We have to be honest with the public and say that we have to meet it by some form of subsidy, deficiency payment, or some other way. To go on piling up deficits year after year, and charging interest on the deficit which has been created and paid out of capital, is fantastic to the "ninth" degree and is misleading the public. We ought to be honest both with the public who are users of transport and with the workers in the industry.

I am delighted to hear statements by hon. Members opposite—

Mr. Peyton

Reverting to the Second Reading debate, the story put about by the hon. Member for Enfield, East (Mr. Ernest Davies) was denied then as it had been previously denied. The difficulty that hon. Members opposite so persistently and continuously face is that they are unable to accept these words in the meaning that they are clearly intended to bear. The poverty of their case is shown by the fact that they have done everything possible to find something that will bolster up their case.

Mr. Lindgren

I hope the hon. Gentleman will not get too cross. I am speaking on behalf of men and women who are spending their working lives in the industry. It is disturbing to those persons, whether they are in the hotels or in whatever section of the industry they may be, to be unable to get any confirmation of these statements. The hon. Gentleman denied the first statement that was made in the Sunday Express,but these statements are persisted in by very reputable journals.

Mr. Peyton

By whom?

Mr. Lindgren

By journalists who get their information from some source or other.

Hon. Members opposite may say that railway workers, road transport workers, those engaged in refreshment rooms and hotels and in ancillary undertakings of the Transport Commission are suspicious. But they have seen every profitable section of the transport industry being hived off. The only reason why hon. Gentlemen opposite hived off sections of road transport was that road transport was more profitable than rail transport. It was an opportunity to make a profit.

They have seen the handicap put on London Transport in operating their coach services in off-peak times to get revenue from private coach parties. They have been prevented from operating by the 1953 Act. That tends to cause those workers to be even more suspicious than they otherwise would be when they see in the Press statements alleged to have been made by hon. Members opposite.

Mr. R. Gresham Cooke (Twickenham)

It is generally known that the hon. Member for Enfield,East(Mr. Ernest Davies) and other hon. Members opposite are closely associated with Motor Transport,and that the hon. Gentleman is a contributor to it. We ought to have a categorical assurance that hon. Members opposite have not been gossiping with the correspondents and putting these stories about.

Mr. Ernest Davies

Occasionally, I have a signed article in Motor Transport,but I am not its political correspondent and I am not in the confidence of the Tory Transport Committee. This purports to come from the Tory Transport Committee. I can assure the hon. Member that I am absolutely innocent of this story, which I certainly would not propagate.

Mr. Peyton

On a point of order, Sir Gordon. I have raised this point before, but is not this subject enlarging the whole scope of this debate beyond the Clause under discussion? Is it not grossly improper that hon. Members opposite should rake up this old stuff to make a party point which is not relevant to the issue under discussion?

The Deputy-Chairman (Sir Gordon Touche)

I think that the debate has gone a little wide. What journalists say cannot be relevant to this debate.

Mr. Lindgren

If I was the cause of this digression I am very sorry.

But I would say that one of the biggest factors in the effective operation of transport is the worker who carries out the operation. Whether he is the engine driver, the guard, the porter, the ticket collector, the dining car attendant, a receptionist in a hotel, or whether he is employed in some other section of the industry, it is very disturbing when it is continually said in the Press, whether rightly or wrongly, that this or the other section of transport is to be hived off.

I see that the Minister of Pensions and National Insurance has now arrived. Transport workers remember that he referred to those who accepted responsibility as chairmen of the British Transport Commission as "Quislings." If Tory Ministers refer to the chairmen of the Commission as "Quislings," are we really unduly suspicious in taking very seriously attempts by Tory back benchers to undermine the structure of a nationalised industry?

10.45 p.m.

Mr. Peyton

On a point of order, Sir Gordon. I do not wish to raise frequent points of order, but this is the same one. Are we really discussing allegations about "Quislings" now, or are we discussing a rather narrow Clause in a financial Measure? With very great respect, I ask that the hon. Gentleman the Member for Wellingborough (Mr. Lindgren) should have this licence curtailed.

Mr. D. Jones

Further to that point of order. We are discussing deficit financing in the Transport Commission. In 1957, the deficit on the railways amounted to over £57 million, but on the ancillary undertakings there was a surplus of about £3 million, which reduced the deficit to be met from this borrowing by that amount. Surely we should be able to argue that those ancillary services ought to remain with the Commission. If they are hived off, obviously the deficit on the Commission's railway services must increase substantially, and the figures which are put in the Bill about money and time will obviously not be sufficient to meet it.

The Deputy-Chairman

Yes, of course, we can discuss anything about finance. It is not a very narrow Clause; it is a wide Clause. But we cannot really discuss rumours.

Mr. Lindgren

All my digressions have not been of my own making, though I admit that I trail my coat, too.

The point I really want to make is this. The worker in the industry makes a very valuable contribution towards the possible profitability of the industry. Continual suggestions or inferences that sections of the undertaking—the most profitable sections of it, as my hon. Friend the Member for The Hartlepools (Mr. D. Jones) very effectively pointed out in his intervention—are likely to be affected undermine morale among the workers. No one likes to be associated with an industry which is constantly being condemned and blamed for not being profitable. Therefore, the sooner we put the financial structure of the industry on a correct basis, upon which those providing the service can charge a reasonable rate to meet the costs of the service, giving them the opportunity to secure the traffics they need to obtain the revenue, the sooner shall we be likely to reach the chance of breaking even.

Mr. L. Thomas

Is the hon. Gentleman now saying that the Transport Commission should raise charges, either passenger fares or freight rates, so that they should be profitable? His hon. Friend the Member for Enfield, East (Mr. Ernest Davies) was advocating a subsidy.

Mr. Lindgren

The fact is that the present capital structure of the Commission, which has to provide an alternative service for both passenger and freight traffic, having to maintain the permanent ways, the signal boxes, the stations, the yards, and all the rest, and provide a staff, means that it is impossible for the Commission to break even. If it is to be an alternative service to be available as required for both passenger and freight traffics, that must be so.

There are only two alternatives. Either charges must be increased to those who use the service to the extent that its cost will be covered, or we must accept that this high capital provision, which is over and above that which is necessary to meet the existing traffic, must be met by other means. We may call that a deficiency payment, a subsidy, or whatever we like. On the basis of the present structure and of possible traffics, however, it is impossible for the service to break even and render a reasonable service to the public and be available to provide an alternative service to be called upon as and when required both for passengers and for freight.

Major Sir Frank Markham (Buckingham)

I object, naturally, to the way in which the hon. Member for Wellingborough (Mr. Lindgren) has trailed his coat so much in front of us all. I do not want to tread upon the tails of that coat and widen the argument or increase any bitterness, but the hon. Member has left out of his calculations for bringing the railways on to an even keel one important suggestion which, I know, has bean considered both by the Transport Commission and by my right hon. Friend the Minister.

That suggestion is that it is not only a question of whether there shall be a subsidy or higher fares and freights. There is also the establishment of fair, competitive terms for the railways as compared with road services. In the case of the roads, the State takes over the charge for the permanent way, the signalling and the policing.

Mr. Lindgren

And for breakdowns.

Sir F. Markham

And for breakdowns, in some cases.

I have suggested many times that the State should make the permanent way, the signalling and the policing a State charge. If that were done, the railways, in competition with the roads, would stand a fair chance of breaking even. There would once again be that pride in the railways of paying their own way. I hope that both my right hon. Friend and the Commission will come back again to reconsider giving the railways a fair chance in straight-forward conditions with the roads.

Mr. Lindgren

In May, in the last negotiations on wages, the Minister and the Prime Minister promised that they would examine the question of relieving railways of charges which are unfair but which have to be carried, such as roads over bridges, level crossings and the rest, but they have done nothing.

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

I feel that this debate is taking place in an entirely unnatural atmosphere. We will solemnly pass this Bill authorising the Commission to borrow this extra money. At the same time, there are the previous provisions that the cash must be repaid by a certain date, together with the necessary safeguards. Everyone knows that that is fantastic.

Under the present financial structure, it is completely impossible for the Commission to be anywhere near breaking even by 1962 and then, on top of that, to face interest and central charges which, by that time, will be not in the region of £60 million, but, as my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) said, in the region of £90 million to £100 million. That is fantastic. Everyone knows that the Commission will never be able to do it.

We can talk about whether there should be a subsidy or anything else, or whether there should be a reconstruction of the financial arrangements of the Commission. That will have to be undertaken by whoever is in power, and I venture to suggest that it will be our job when we occupy the benches opposite after the next General Election. Therefore, I feel that this is an entirely unnatural debate. We are solemnly to attempt to do all kinds of things, and although I do not want to make a long speech, I do want to refer to certain matters which, in my view, need explaining.

The Clause with which we are now concerned—indeed, the whole Bill—is for the purpose of meeting deficiencies on the revenue account of British Railways. During the Second Reading debate, I asked a number of questions which, in my opinion, were concerned with this matter of increasing the expenditure of the Commission, forcing it still further into the "red. "The Minister referred certain of my questions to the Parliamentary Secretary for reply. I asked, for example, about the new programme for concentrating on the London —Manchester electrification works at the expense of other works.

There was no reply to that, and I sincerely hope that the opportunity will be taken tonight to give me a reply. I hope it will, because if work is to be concentrated on the London—Manchester electrification scheme it must be at the expense of other work; and that will mean a further loss of revenue. Other sections which should be modernised will not be attended to so quickly, and the result will be an increase once more in the Commission's deficiency.

We are entitled to know what work is likely to be retarded by this fit of the Minister to concentrate on one aspect of the programme. It is so typical of the Minister; so typical of the administration of this Government.

Mr. Watkinson

I do not dictate the priorities in the modernisation scheme. That is a matter for the Commission to decide.

Mr. Popplewell

Oh, yes, we have heard that so often; but the directives come from the right hon. Gentleman's side of the House. The Commission has to carry out a policy, and that policy is given by the Minister. The Commission has to try to arrange its programme within that policy.

From time to time we have seen this Government going by fits and starts in the matter of transport policy. First, there was a lot of ballyhoo about a modernisation programme costing £1,200 million. In 1957 the brake was applied, and the Commission was put into difficulties. There have been additional costs imposed on the Commission because work which has been commenced has been retarded. Then, after work has been retarded, the Minister has come along and said,"Go ahead".

The result is that the Commission has incurred an extra cost of £300 million. That is the effect of what has taken place; and yet again the Minister says that certain work will be given priority while other work is retarded. This policy of fits and starts gives the Commission no chance at all. Work commences, and then the brake is put on with the result, as every practical man knows, of increased costs.

11.0 p.m.

Moreover, instead of the Commission getting its undertaking modernised and getting increased revenue by the dates suggested, this leads to a further slackening in that direction. I hope, therefore, that the Minister will tell us what work will be retarded consequent upon concentration on the extension of electrification on the London—Manchester line. It is no use the Minister evading his responsibility and trying to push it on to someone who cannot answer.

The Minister is responsible to the House for the Commission's operations. The Chairman of the Commission cannot come to the House and shelter behind the Minister. This is a question of policy and the 1947 Act lays down that the Minister is responsible for policy and for the directives. Let him, therefore, not try, as he has attempted so often, to shield himself behind the Commission. I asked for the actual cost of operation of the area boards. The Joint Parliamentary Secretary replied that it was about £20,400. That might be the cost of salaries, but everyone knows that that was not the correct answer. I asked not only about salaries but about the expenses involved. I would press for a further reply to that point.

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

May I help the hon. Member? I am not sure whether he was in the House at the time. The reply I gave was that the expenses are negligible. I believed that I would be able to get actual chapter and verse for them, but I am assured by the Commission that they are, in fact, negligible. I said that in col. 627 of the OFFICIAL REPORT.

Mr. Popplewell

Yes, I have that already marked on my copy of HANSARD, but I do not accept the hon. Gentleman's riding off and saying that the cost is negligible. He mentioned a figure of about £20,400, but the other expenses he rides off and says they are negligible. I do not accept that. I have some knowledge of what is taking place in the areas. One wants to know not only about salaries but about other expenses involved in the operations of the area boards.

How often do the boards meet? It is probably once a month, but we do not know. How often does the chairman meet the board? How often does he matter at, or nag, as it has been put, the respective officers of the various areas? How much time is involved in preparing schemes to meet the wishes of chairmen? What expenses are incurred on motor cars? What types of cars are used? Are these cars used only by chairmen of area boards, or are they used by other people? We are entitled to know these things.

I also asked further in that debate questions about the administrative build-up, the empire building that is taking place, and the many appointments made at salaries outside the rates advertised, and above those paid to the special classes. We know from practical experience that this build-up is not in the best interest of efficient administration of the organisation.

I requested some information in this connection. We are entitled to have it, because all these matters have an important bearing on the Commission's costs. They have also an important bearing on how quickly we can get back to a better state of efficiency within the industry itself. It is not my intention to make a long speech on these points tonight, but I hope that we shall get somewhere and that we shall have some information from the Minister without his trying to shed his responsibility and shelving it on to the Commission. It is the Minister who is responsible to the House of Commons. The money which we are authorising is a fantastic sum. It is entirely his responsibility that this Alice-in-Wonderland finance should have been forced on the Commission. Every practical man knows that there is no possibility of this money being repaid.

Instead of bringing in another Bill of this description, the best thing that the Minister can do is to introduce a Measure which will entirely reorganise the Commission's financial arrangements. The right hon. Gentleman knows that this is a stop-gap and that he will not have to answer when the time comes, because it will be our responsibility, when we are sitting on those benches, to clear up the terrific mess into which the Government have plunged the Commission.

Mr. L. Thomas

I do not propose to detain the Committee at this late hour, but in view of what has been said by the hon. Member for Enfield, East (Mr. Ernest Da vies) and by the hon. Member for Wellingborough (Mr. Lindgren) about the intentions of certain hon. Members on this side of the Committee who are associated with my party's Transport Committee, I must take this first opportunity to deny what was said about a scheme with which my name was associated.

It was a figment of somebody's imagination. To denationalise the railway industry at this time would seriously undermine the country's economy and have serious consequences for the country's communications system. I am sure that that is the view of my hon. Friends whose names were associated with the article. I hope that from now on the suggestions and implications which have been made will cease.

There is no doubt that the British Transport Commission is now bankrupt. It is only the Bill which has saved it. The hon. Member for Enfield, East drew a somewhat gloomy picture of future finances, but I think that he was right to do so. As far as one can gather from the accounts, at present the Commission has a capital structure of about £1,600 million. By the time the modernisation plan has been completed, over fifteen years, the capital structure will be about £3.100 million, or more.

I do not know what the rate of interest on the new capital will be—perhaps the Minister can tell us—and it will obviously vary with day-to-day rates. However, in view of the Commission's present difficulties in meeting its central charges, how much greater will those difficulties be in a few years, with an interest rate considerably higher than the present 3 per cent. which now applies to the bulk of its borrowings—Transport Stock 1978–88—and when rates may be as high as 5 or 5½ per cent.?

I want the Minister to clarify a financial point which I do not understand. The latest date for the redemption of the existing Transport Stock is 1988. At some time or other the new capital investment will have to be funded and put on the market. I think I am correct in saying that under the 1947 Act the redemption charge on the Commission is over ninety years. There is, therefore, a gap between 1988 and 2036.

Mr. Lindgren

The hon. Member will not be here then.

Mr. Thomas

I will not be here, but my children might be. Who bears that redemption charge in the meantime? I am not clear; perhaps my right hon. Friend can help me.

The hon. Member for Enfield, East emphasised the point about deficiency, payments. He said that if the other assets of the Commission did not show a profit this deficit would be even larger. I would recall to his mind the exchange of letters between Sir Brian Robertson and my right hon. Friend, published in the recent White Paper, in which Sir Brian said that the revenue from the other assets would just about be in balance. But what happens if the other assets are not in balance, but show a deficit? Is there to be a further demand upon the Exchequer?

It is all very well for hon. Members opposite to talk about not hiving off this, that and the other, but should the taxpayer be called upon to meet the deficit that accrues in the running of a luxury hotel like Moretonhampstead, Tregenna, or Gleneagles? That is the sort of consideration which must be taken into account.

Mr. Charles A. Howell (Birmingham, Perry Barr)

Can the hon. Member name one hotel that is running at a loss, which the taxpayer will have to pay for?

Mr. Thomas

The hon. Member has missed my point. A considerable number of hotels have been disposed of, and that is a very good thing. I hope that there will be more. I believe that my right hon. Friend has quoted a figure of 17. These hotels have ceased to be an ancillary to the railway. They were built because of the long-distance traffic that they would naturally engender, but 99 per cent. of the people going to these hotels today travel by road. It is that sort of thing that we have to watch.

The hon. Member for Wellingborough talked about the existing capital structure, but he did not suggest any new form of capital structure which should be created. The compensation stock which starts with a fixed, flat ceiling, is quite out of relation to the trading aspects of the whole concern. This great transport industry has trading risks exactly as other trading companies have, and its capital should, therefore, be related to the risks involved. I hope that when the final capital structure of the Commission is evolved there will be a scheme by which the Government can bear some of the risk capital, because I cannot see how this industry, as it is at present, can face the enormous strict capital charge which it will have to meet from approximately 1972 onwards.

11.15 p.m.

My only other point was mentioned by the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) and the hon. Member for Wellingborough, in connection with the existing organisation. I do not believe any railwayman today who has any sense of responsibility of management would like to go back to the old functional organisation of the executive, because if there was one organisation which undermined the morale of the railwayman because it failed to give him the responsibility and authority to which he is entitled, it was that organisation.

I believe that one of the problems in the profitability of this industry is the fact that still today there is not sufficient delegation of authority right down to the lowest possible level.

Mr. Lindgren

Perhaps the hon. Member will take an opportunity, which no doubt the Minister will arrange for him, to visit one of the new line traffic offices which are being built, the staff being shifted here, there and everywhere, and see for himself, if he will not take it from me that this is so, that whole lines are being disorganised to build up this new organisation. The people there will tell him that this is a complete waste of money and thoroughly ineffective. Let the hon. Member ask the staff.

Mr. Thomas

It is nearly thirty years since I left the railways. When one joined that great service—and although it is thirty years since I left there is always a niche in one's heart for one's first love —one always understood that one was joining a service in which one was liable to be moved here and there. I do not think there is any more shifting around than there was in those days. [HON. MEMBERS: "Oh, yes there is."] Labour has to be mobile in this economy in particular.

Lastly, I come to the matter of the commercial approach. It affects profitability. We have been told time and time again that when the passenger services have been modernised, either by dieselisation or complete electrification, the results have been extraordinarily good, and that lines which in the past have shown a loss, or only just saved a loss, are now showing a profit.

Mr. Lindgren

Operationally.

Mr. Thomas

That is fine.

What is happening today? Particularly on those lines which are being modernised, where as a first experience of modernisation we should expect a degree of profit, the Commission is making application to put up its charges.

Mr. Popplewell

Oh, really.

Mr. Thomas

Yes.

Mr. Popplewell

Where?

Mr. Thomas

It is a frightening thought. I would ask the hon. Member to come on my line. It is a frightening thought that there are season ticket holders who are not yet today getting their money's worth. The hon. Member for Enfield, East emphasised the delays. I can assure the hon. Member that one cannot make an appointment in London within half an hour of the scheduled time of any of the trains from the North Kent coast. Any member of the travelling public on those trains can say that is true, and the general manager will admit it. At the time that electrification of that section is due to be completed—it is to be in operation by June—and we are entitled to expect increased profitability, the Commission ask for the right to increase fares. That is not the correct commercial approach which should be made by this great industry.

Mr. Popplewell

I do not think the hon. Member has amplified the argument he was trying to make. He says that with modernisation and dieselisation and increased traffic the Commission is still having to apply to put up charges. Would he not be a little more honest and say the reasons why the Commission is having to put up charges are such reasons as these, that there has been a 550 per cent. increase in sleeper charges, a 245 per cent. increase in the cost of copper tubes, a 470 per cent. increase in the price of brass bars? Would it not be more honest to bring out these increases in costs? Against what? Just over 175 per cent. increase in charges.

Mr. L. Thomas

I am not going through all that; it is too late at night. I think I have made my point on the commercial approach. My final point follows on what the hon. Member has just said. In the light of the changed circumstances the increased requirement in these deficiency payments of £150 million visualises a heavier deficit next year and the year after than that envisaged for 1958, which was £85 million. A complete reappraisal of the whole structure is needed. I hope my right hon. Friend will give a general direction with a view, if necessary, to ensuring that there is a reduction in capital costs, but in any case a complete reappraisal of the whole modernisation plan, which itself will be overwhelming in the next twelve or fifteen years.

Mr. C. A. Howell

It is, perhaps, a tragedy that the discussion of an item of between £250 million and £400 million should come on so late at night, when everyone obviously has to curtail his remarks in deference to others who want to speak. Like the hon. Member for Canterbury (Mr L. Thomas), one has to make part of a statement and cannot elaborate as much as one would like. It is probably one of the absurdities of legislation that we should have so little time to discuss so large an amount of money.

I am rather glad that the hon. Member for Canterbury came on to the commercial side of the matter before he finished his speech. Like him, I have been associated with railways—for thirty-six years. I was also very glad to hear him pay tribute to railwaymen.

He and I ought to pay tribute to railwaymen because both of us to some extent owe them a debt of gratitude and without them, for different reasons, we should not be here. On more than one occasion the Minister of Transport has paid tribute to railwaymen of Britain, particularly to their work in fog and snow. References have been made in the last fortnight to the dense snow we had in 1947.

Those tributes come like salt on the tongue of a railwayman, because we do not know what is to happen. I make no apology for coming back to the question of the Sunday newspaper article which was mentioned. I did not write the article. I have never written an article for any newspaper or periodical without attaching my name to it. I would never write one under a nom de plume.I have written many articles on railway work and they have been published in this country and abroad. I wrote many for the Railway Review,of which for a time I was a director, but I have never written for Modern Transport.This is the first time I have heard it suggested that Modern Transportwas not a responsible periodical, but we heard it suggested opposite that it was some figment of someone's imagination—

Mr. Gresham Cooke

Motor Transport,not Modern Transport.

Mr. L. Thomas

I said that the article in the Sunday Expresswas the figment of someone's imagination.

Mr. Howell

If I got it mixed up, I apologise. I hope that the hon. Members of the Transport Committee opposite will make perfectly clear and have published a repudiation in the same newspaper.

Sir F. Markham

Surely the hon. Member is well aware that repudiation has been made in this House half a dozen times and that the Sunday Expressnever prints categorical denials. The hon. Member ought not to repeat what is no more nor less than a damnable series of lies.

The Deputy-Chairman

Order. I think that we had better get back to the Bill.

Mr. Howell

I apologise, Sir Gordon. I will not return to that matter. We are discussing the extension of power to spend a lot more money. I want to come back to the suspicion of men in the industry. They are entitled to be suspicious after the perpetration of acts by hon. Members opposite in siphoning off that part of the transport industry which is making a profit and leaving the railwayman with low wages to pay for the siphoning off. We cannot expect them to be anything else but suspicious. If they read in Motor Transportthat the Tory Party Transport Committee is considering ways in which they can siphon off some more to their friends, we cannot expect railwaymen to sit down and not say, as they did when the Minister of Transport agreed to setting up these boards, "Here is another batch of non-producers to be paid for."

Mr. Geoffrey Wilson (Truro)

My hon. Friend the Member for Yeovil (Mr. Peyton) is the Chairman of that Transport Committee; I am the Vice-Chairman, and my hon. Friend the Member for Canterbury (Mr. L. Thomas) is the Secretary. We have all three denied in this House that the statement in the Sunday Expresswas an accurate statement of the views of the Conservative Party Transport Committee.

Mr. Howell

May I make it perfectly clear that I accept that. I hope that that is quite clear. I have said so in English that is as perfect as I, with my education, can make it.

What hon. Members opposite will not understand is that railwaymen who have contacted me, and with whom I have worked for thirty-six years, have heard this and have read it, and, naturally, they are suspicious. They are bound to be suspicious. They are suspicious of the Minister of Transport. I will admit that he is the best Minister of Transport that the party opposite has ever produced. I give him credit for that, and I have said so previously. I am not so bigotted in my political views as to withhold credit when I feel it should be given.

I wrote an article in the Railway-Reviewbitterly criticising the appointment of Sir Brian Robertson, but I withdrew that criticism subsequently when, in the course of my trade union career, I had to negotiate with the gentleman. I found that he is a jolly sight better railwayman than many others who had had the job, and he knew what he was talking about. I was primarily responsible for the railway strike in 1953, but it was Sir Brian who stopped it. I give respect where it is due. But I do not think that Sir Brian Robertson or the Minister of Transport are fully conversant with what the Transport Commission is doing with this money.

My hon. Friend the Member for Wellingborough has referred to the reorganisation. If that has got to come out of this money—which immediately puts me in order, Sir Gordon—I want to tell the Minister that many Members on both sides of the House who have any association with the railways are inundated with protests. I refer to such places as Birmingham, Nottingham and Derby. To give an example, the control staff at Burton-on-Trent were moved to Birmingham. That meant uprooting their homes and buying new homes in Birmingham. Those people have now got to move from Birmingham to Derby. Some of the Derby people have got to move to Manchester and some have got to go to Nottingham. The whole section at Derby is to be closed and the people there are moving to Nottingham. Is that to be paid for out of these millions of pounds?

I will withdraw what I have said if the Minister or the Transport Commission can quote one railwayman, either in the traffic grades, the clerical grades, or the supervisory grades—anybody below an official at the top—who has said that in his opinion this can pay its way. Everyone says it cannot pay. It will waste thousands, if not millions, of this money and it will not put one wagon on the road again. It will not get one of us into King's Cross or St. Pancras ten minutes earlier. But it will cost a great deal of money. There is not a railwayman on the job who approves of it or has agreed with it, despite all the consultations which have been arranged in order to try and explain it.

11.30 p.m.

The hon. Gentleman the Member for Canterbury talked about being commercially-minded. It is the commercial side which is responsible for a great deal of the trouble. I am very apprehensive about what will happen to the other millions of pounds if the same attitude of mind prevails in the Transport Commission. The Commission is simply not commercially-minded. I interjected a comment at one point when the hon.

Gentleman was talking about disposing of the hotels. I was in some of the negotiations about certain of the hotels, and the Hotels Executive, as it then was, told us that these hotels were losing money. They were for ever likely to do so. I had to pay through the nose when I stayed at one during the negotiations. One never had decent service there, and they did not cater properly for the people there. But what happened when the Commission sold them? Managers were put in who would cater for the traffic that was there.

One hon. Gentleman said that this is not rail traffic. Of course it is not rail traffic, but this other traffic was there when the Transport Commission had the hotels but it did not cater for it. I am too old in the tooth to be told that anyone would buy hotels if he was not satisfied that he could make a commercial proposition out of them. If other people can make a commercial proposition out of them, so should the Transport Commission, either by putting in managers with a free hand to make them pay or taking off some of the red tape and letting the men there have a go, perhaps recruiting somebody who can do the job.

Let us commercialise the railways. The hon. Member for Canterbury was wrong again when he spoke about dieselisation, or modernisation—I am not sure which it was. I had a meeting with two line superintendents at Birmingham, one from the Western Region and one from the Midland Region. They said at that meeting that not one line was actually making a profit. They were making much more money, but not one of them was yet paying. Things may have changed in the few months since then; I do not know. The fact is that there are very many lines which are not profitable. That is why none of these unprofitable things would ever be siphoned off.

The Commission has cut down the traffic so that there are fewer trains to run. Presumably, we must have the same amount of traffic. Will this give decent comfort for the passengers? I will give the Minister one example. I hope he will forgive me if I do not mention the names and details, because the matter is at the moment sub judice,but I think I am entitled to give him an idea of the facts. A Sunday excursion was put on the main line. At the second stop, a rather large station, the train was full. After it left, an irate passenger went to the guard's van and told the guard that he and his wife had first-class tickets but could not find first-class seats. The passenger said that he was convinced that there were second-class passengers riding in the first-class seats.

The first-class coach was the second coach from the engine and the guard's van was the eleventh. To placate the irate passenger, the guard, as a good, commercially-minded railway man, walked through the whole of that train, despite the fact that many people were standing in the corridors, to the first-class coach. He inquired politely whether all the passengers there held first-class tickets. Out of the whole coach, he found two passengers who had second-class tickets. He asked them if they would vacate their seats because there were first-class passengers standing, and they said that they would not; they were prepared to pay the first-class fare.

The hon. Member for Canterbury, who has had railway experience, knows that if passengers are prepared to pay, there is no one with authority to eject them. But what happened? The guard said, "I am sorry; I cannot turn them out, but, if you like, I will try and find two seats in the second class". Doing something which the Transport Commission will not issue an order for—I know this from correspondence with the Commission—he asked passengers in an adjacent compartment to lift the arms between the second-class seats and find two places for these two irate passengers.

Immediately afterwards the passenger wrote to the superintendent and said that the guard was guilty of a gross neglect of duty, first, for not turning out the second-class passengers and, secondly, for not taking the excess fare from them. That shows the ignorance of the public, whom the Transport Commission does not try to educate. The guard had no authority to turn out the passengers or to take their excess fare, because he would not know the charge and he would not have an excess fare book.

That illustrates the ignorance of the public and the lack of advertising by the Commission. This caused my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) to make one of the same errors that many people make in London concerning the dispute on the Underground. He said that when a train stops at a station, people have a sit-down strike because, very often, it is a question of the economies affecting the train. My hon. Friend can correct me if I am wrong, but that was how I understood him.

Economies in transport are not made while a train is running. That is a question of the control and occupation of the line, what we call line occupation.

Mr. Ernest Davies

What I said was that one had suspicions that certain of the economies being made by London Transport were responsible for the greater inconvenience which the passengers are suffering. One instance was the uncoupling of trains. Today certain trains are not run all the way through to their destination because savings can be made if they are cut short. They are uncoupled at certain stations to save power and so on, and that is a result of the economies.

Mr. Howell

That is exactly what I thought my hon. Friend said, and I hope to convince him that he is wrong. These economies are not made whilst a train is running. If a train is to terminate at a different station for economy reasons the driver and the guard know when they start the journey and the destination will be given on the train, showing that it is going only to a certain point.

Changes are made only when, as a result of line occupation, a train in, say, the up direction becomes late, with the result that there are insufficient down trains to take all the traffic in that direction. Only a small explanation is needed to make the public understand. We can visualise what happens. A train has to go from the terminus at one end of the line to the terminus at the other end and then come back, or it must be turned back before it gets to the terminus. If it becomes so late in its running in the one direction that it cannot keep time and crowds of people are waiting to go in the opposite direction, obviously it is good railway business to pull the train out from the down direction and send it back in the up direction to take the waiting traffic.

My objection is that the Transport Commission does not try to tell the public what is happening. The best thing that the Minister could do is to hand this part of transport over to the Milk Marketing Board. If it goes on much longer with its advertisements with the little lions and has film stars to advertise for it, we shall soon be egg-bound, as the railways are becoming fog-bound. [An HON. MEMBER: "Egg bound, or milk bound?"]. I should have said the Egg Marketing Board. I apologise for getting mixed up.

Apart from advertising the excursions, the Commission gives the impression to the public that it could not care less. That is not the way to get the confidence of the people. I cannot recall a time since the nationalisation of railways when the Commission's prestige has been as low as it is now. It may be that the London Transport sit-down strikes are making matters worse. It may be that the elimination by the Commission of certain trains which people have used for years upsets the public, but I have been on sufficient committees concerned with the closure of branch lines to realise that the Commission does not tell the people why these things are necessary in the same way as it shows pictures to explain, for example, the Barking reorganisation, what it is intended to do and its progress.

The hon. Member for Canterbury has spoken about it being impossible to make an appointment with less than half-an-hour's margin for trains from the North Kent coast. Passengers blame the staff, and people travelling on the Underground also have been blaming the staff. I submit, however, that they are blaming the wrong people. It is the management who should be blamed. When people are delayed the first thought is often to take it out on the staff; the reaction is to take it out of the man on the job. I would prefer that the public wrote to the Commission, although I have seen letters claiming that it is no use complaining to the Commission because all one gets in return is a plausible apology.

The Minister has a responsibility. He has told my hon. Friend the Member for Newcastle-on-Tyne, West (Mr. Popplewell) that he cannot give directives to the Commission about which priorities it should choose. The Commission is responsible to the Minister, who has only to indicate what it is he wants, and I hope that after tonight's discussion he will say to the Commission, "You have a job to do and, if you do not want to alienate the good will of the passenger, then you must give a better explanation about delays than are given now. "Instead of spending millions of pounds on reorganising the railwaymen. I suggest that it would be much better if the Commission reorganised its commercial and advertising departments.

Mr. Watkinson

The whole House must be very grateful to the Chair for having allowed so wide a debate on this Clause, but it is, I think, in lieu of a debate on Third Reading.

I will try as quickly as I can to traverse the ground which has been covered tonight, and I would say at the outset that perhaps the most important matter raised was that by the hon. Member for Enfield, East (Mr. Ernest Davies) on the question of the "break-even point." The reappraisal of the Commission of what is needed—carried out with the help of some of its customers—will take account of that fact. I think that the Commission has been wise to have views expressed by the Federation of British Industries, the Chambers of Commerce, the National Union of Manufacturers, and so on, but it was foreseen when we introduced the original Transport (Borrowing Powers) Act that to look ahead for a number of years was something which would give flexibility to the terminal date and to the terms of repayment.

Perhaps the House has forgotten that the terms of repayment were left in a flexible state. The amount of repayment up to the seventh year was a matter left to the Commission, with power to make a token repayment if it was thought that that was all it could do, and at the end of the seventh year, after the initial repayment at the Commission's discretion, the matter was left with the Ministry and the Treasury to decide.

Mr. Ernest Davies

The right hon. Gentleman says that the Commission had to make a token repayment up to the seventh year. Is that correct?

Mr. Watkinson

Yes; and this whole question of repayments was deliberately left in a flexible way in the sense that the matter could be looked at in the light of developing circumstances. There was never any attempt to lay down an arbitrary system of repayment. The date 1961–62 was not selected by the Government.

11.45 p.m.

It was a duty put forward by the Commission, as part of its prospectus on which the House advances it very large sums of money, to cover its deficits until it thought it would reach its break-even point. It is also fair to the Commission to say that up to the end of 1957 it was on target, and it is only the drop in coal and steel contracts—which certainly in the case of steel will come back—that has put the Commission out on the basis on which it said it would break even in 1961–62.

I do not think it is for me to be optimistic or pessimistic at this point, but it is for me to tell the House that the forecasts made by the Chairman when he wrote to me as to the final outturn of 1958 have been remarkably accurate. They have not been falsified by events. Indeed, they have been almost exactly right. As the House will recollect, we took steps to ensure that there is not a loss to competition. Indeed, the Commission is winning more of the coal traffic that is available. Perhaps it is a sidelight, as my hon. Friend the Member for Canterbury (Mr. L. Thomas) said, that, as most hon. Members know, the gain which oil had over coal was after the price of coal had been raised to a high level, which made oil more attractive. Perhaps there is a lesson there for the railways. With the coming of the motor car and intense competition, one can price oneself out of the market only too easily today.

As I said, however, it is not my job to be either optimistic or pessimistic about the future. It is for the Commission to forecast about its future. It is only fair to say that for the passenger side, in the latter part of 1958, against the corresponding periods in 1957, the figures are, for example, for the four weeks to 7th September, 1958, .5 million up on the previous year, for the four weeks ending 5th October 6 million, for the four weeks to 2nd November .3 million, and then .1 million up for the four weeks ending 30th November, and 1.8 million up for the four weeks up to 28th December. In other words, on the passenger side, where modernisation has had its first impact, there is a definite and ascertainable improvement. Whether that will hold next year or what the position will be is not for me to say, but the Commission's own gauge has been so far the basis for the Government's financial arrangements and it remains. If it comes to a need for a reappraisal, it is up to the Commission to tell the Government and the country, but that position has not been reached yet.

Perhaps my hon. Friend the Member for Canterbury will allow me to discuss long-term finance at an earlier hour some other time, which I should be happy to do; but on the general issue whether the Commission is becoming overburdened, although I do not entirely accept his view that it is bankrupt, it is certainly in the hands of its bankers, meaning the Government. But this is a business with a £750 million turnover a year. Therefore, it should not be alarming to us if we find ourselves talking in rather big figures when we discuss its present and future.

It is the Commission's own wish, as it is the Government's wish, that as it is in the hands of the country, which is really its bankers, it should be subject to stiff financial discipline. This is not some form of bullying the Commission. It is the Commission's wish, as it is the Government's, and, indeed, I think the wish of all sensible people, that in that situation the Commission should have firm financial discipline as the spur to get itself out of its difficulties by its own efforts. It is only right and honest.

Unpunctuality worries us all and does affect the financial position. One cannot go through a vast electrifying and modernisation plan and keep an exact scale of punctuality. It may be that the Commission would have been wiser—it is the business of the Commission and not mine—to have altered its timetables to less exacting schedules. However, that is a matter for the Commission. The reason for the unpunctuality, nevertheless, is the modernisation plan itself. Absolute punctuality figures as quoted by the hon. Member for Enfield, East are not an entirely fair test. If those long-distance trains which are five or ten minutes late are disregarded, the figures of unpunctuality are materially reduced.

There are economies which hon. Members are fond of criticising as being things which prevent the Commission doing what it wishes to do. Hon. Members with those views should read the modernisation plan again. They will see that this cutting down was always part of the plan. All we are doing is to ask the Commission, and the Commission has agreed, to do it more quickly. This pruning away of the railway services, this narrowing down of the front, is not some new idea suddenly thought up by the Government. It is part of the original modernisation plan produced by the Commission itself. All the Commission is doing is trying to do it more quickly. I am grateful to the hon. Member for Birmingham, Perry Barr (Mr. C. Howell) for his compliment which was—

Mr. D. Jones

May I interrupt?

Mr. Watkinson

No, not until I have finished my argument— nearer the truth. It is absolute nonsense to say that any of the difficulties with the Underground or with the railway services as a whole are due to cuts in capital expenditure. The fact is, in the words of the Chairman of the Commission himself, at the moment the Commission has all the capital money it can use.

I am dealing with two matters; first, the economies are those laid down in the original modernisation plan and are not some new idea suddenly thought up; secondly, deficiencies in services, whether Underground or railways, are nothing to do with the fact that the Commission has had its capital investment cut. The reverse is true. The Commission, it says, has all the capital investment which it can use at present. There is therefore no reason for saying that the Commission's task has been made more difficult. On the contrary, I am amazed at the ingratitude of hon. Members opposite for the fact that these large sums, which politically could be more easily spent on roads, for example, are still being put into the railways so that the railways should have every chance to give a properly efficient and modern service.

Mr. Ernest Davies

The Minister must have misunderstood some of the argument from this side of the Committee. It was never suggested that the cuts in capital expenditure were affecting the operations of British Railways or London Transport. My argument was that the economies being forced on London Transport made it cut down its services. Those are the economies affecting services. Nobody has suggested that it is a matter of capital expenditure, which we support.

Mr. Watkinson

I am very glad to hear it, but no economies have been forced on London Transport. London Transport is responsible to the British Transport Commission, not to me. Planned economies are things which London Transport settles with the Commission and not with me or any other member of the Government.

Mr. Lindgren

May I interrupt?

Mr. Watkinson

No, not until I have finished my argument.

The difficulties on the bus services are entirely due to the departure of the customer after the bus strike. That is the hard fact in that case, as I said at the time.

Mr. Lindgren

Will not the right hon. Gentleman agree that as a result of agreement after wage negotiations last May, resulting in an increase in costs of 3 per cent., the Commission had to achieve certain economies? Did not the achievement of those economies have a certain effect on efficiency?

Mr. D. Jones

The right hon. Gentleman said that the contraction of the railway system was nothing to do with him; it was a matter for the Commission. But did he not say during the Second Reading debate that he was asking the Chairman of the Commission to increase the £20 million saving that the Commission seeks to make in 1959, in spite of the fact that it has already saved the £3 million which it said it would in the document entitled "Proposals for Railways"? The Chairman of the Commission admits in his letter to the Minister that it has saved, in economies, £6 million of the wages increase earlier last year and that it hopes, in addition, to save a further £20 million in 1959 by contraction. In the Second Reading debate the Minister said he was asking the Commission to raise that to £30 million. Is not that contracting?

Mr. Watkinson

That is quite so; that is exactly what I said. All I am asking the Commission to do is to achieve a great deal more quickly than originally envisaged the contraction in the industry set out in the modernisation plan. Nobody who has studied the situation from an unbiased point of view has ever said anything else but that the future of the railways lies in a much smaller, much more efficient, and much more modern system. Those people who oppose that are doing the greatest possible disservice to the railwaymen that it is possible for anybody to do.

I will sum up by saying that I am glad that the Opposition are not opposing the Bill, because on its provisions for modernisation rests the whole hope of railwaymen for the future. Any railwayman who believes in his job—as they all do—accepts that as true, and I am glad to hear from the hon. Member for Enfield, East, that hon. Members opposite accept that the Government are doing a very good job in providing this very large sum of capital to try to put the railways on their feet.

We argued out the question of deficit financing in the Second Reading debate, and I would only add that if in the early years after the last war this House had been worrying about modernisation instead of nationalisation, a great deal of the present difficulty would not have arisen.

I would sum up the difference in our respective approach by saying that we hear a lot about monopoly and subsidy from hon. Members opposite, but I want to make it quite plain that the Government believe that the consumer should have the right to choose the kind of transport which he thinks best fits his needs and cuts his costs. The Opposition believe the State should dictate that choice for him. We reject that entirely, and we believe that we are doing the very best we can as a Government to put the railways on their feet and to make them into a modern, efficient and streamlined service, and the very best for the sake of the country and the men who work so selflessly for the railways. I am glad that the Bill will be passed, because it is a necessary step to that desirable end.

Mr. D. Jones

I would not have intervened if it were not for the cheap political gibe which the Minister made towards the end of his speech. It does not behove the right hon. Gentleman to talk about nationalising or modernising the railways in the years from 1945 to 1950. I would remind him that his Government have been in power since 1951. We are now in 1959, nearly eight years later. In the first year following the end of the war, when the railways were privately owned, their deficit was more than £ 60 million. In the years of war, when the control was on, the Government reaped nearly £250 million in excess charges on the railways, made by carrying Government traffic, it is true. The railwaymen suffered as a consequence.

The Minister now says that what the House should have engaged in in 1945 was the modernisation of the railways. Either he speaks with his tongue in his cheek or he does not appreciate what the economic circumstances of this country were in 1945. If the railways had not been nationalised in 1947 the modernisation programme at present would not have been possible.

12 midnight.

I do not want to detain Members by repeating some of the figures my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) gave on Second Reading, but we know the kind of return which in the years before the war when the railways were allowed to decay the shareholders got, and we know the kind of conditions in which the railwaymen worked in the years immediately before the war. When the war was over the restitution of the economic life of this country was of fundamental importance, and to bring the railways under public ownership was the only possible means of modernising them.

If the question is about modernising them between 1945 and 1950, will the right hon. Gentleman say what the Conservative Government were doing between 1951 and 1955? It ill behoves him to make that kind of gibe at the end of his speech, when he himself is a member of the party which has been in Government since 1951. Since that time the deficits of the railways have got worse with each successive year. The right hon. Gentleman told us once that what he was seeking to do in the Ministry was to inject the best principles of private ownership into this nationalised industry. Did he mean by that an increasing deficit each year until seven years after his party took power the railways were £85 million in the red? Of that, £13 million is entirely due to the economic policy which has been pursued by the right hon. Gentleman's Government. It ill becomes him, even at this late hour, to make that gibe.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Bill reported, without Amendment; read the Third time and passed.