BRITISH TRANSPORT COMMISSION (Hansard, 10 March 1960)

§ The Prime Minister (Mr. Harold Macmillan)
With your permission, Mr. Speaker, and that of the House, I will make a statement about the position of the British Transport Commission.
This has to be considered in all its aspects, commercial, financial and social. From the commercial point of view, the expansion of the economy has not led to the recovery in railway earnings which might reasonably have been expected some years ago. The carriage of minerals, including coal, an important traffic for the railways, has gone down. At the same time, there has been an increasing use of road transport in all its forms.
The British Transport Commission's total deficit has increased very rapidly over the last five years and now amounts to some £350 million. For the calendar year 1960 the deficit is estimated at £80 million, which includes interest on 643 British Transport stock. This reflects an operating loss on the railways which, on present performance, is estimated at £45 million, and includes allowance for the 5 per cent. interim addition to wages. In addition to the £80 million, there is the interest on the advances to meet accumulated deficits. This is now running at about £15 million.
The report of the Guillebaud Committee on railwaymen's pay, set up jointly by the Commission and the trades unions, has now been presented to them. The Government have been informed by the Commission that they have proposed that the Report should be studied in the normal negotiating committee of the industry. It is a subject of considerable complexity, for it deals not only with the level of wages but also with the grading of jobs and differential wage rates. The implications on the finances of the British Transport Commission will have to be taken into account by the Government in considering what action to take as regards the present difficulties of the industry.
The Government accept the objective underlying the report of the Guillebaud Committee—that fair and reasonable wages should be paid to those engaged in the industry. At the same time, they feel that others, also, must accept corresponding obligations.
First, the industry must be of a size and pattern suited to modern conditions and prospects. In particular, the railway system must be remodelled to meet current needs, and the modernisation plan must be adapted to this new shape. Those working in the industry must accept this. This is the only way of bringing about conditions in which a fair reward, not only in terms of money, but of satisfaction with their job. can be secured.
Secondly, the public must accept the need for changes in the size and pattern of the industry. This will involve certain sacrifices of convenience, for example, in the reduction of uneconomic services. Some increases will also have to be made in fares and charges, and the Commission intends to take action in this respect as soon as possible. It will also be necessary to examine urgently the question of relieving the industry of restrictions and obligations which limit the Commission's 644 earnings and prevent it from making the best use of its resources.
Thirdly, the Commission must accept a radical alteration of its structure, so as to secure a more effective distribution of functions and a better use of all its assets. Measures of reorganisation should include decentralisation of management so that individual undertakings, including the regions of the British Railways, should as far as practicable, be made fully self-accounting and responsible for the management of their own affairs. The detailed application of these principles to all the Commission's undertakings is a matter of urgency and will be worked out by a special planning board. Legislation, as well as administrative action, will certainly be required. This planning board will be appointed by the Government and will report both to the Government and to the Commission. Meanwhile, the Commission is securing expert advice on the question of regional accounting for the railways.
Finally, there is the problem of finance. Here, there is both a short-term and a long-term problem. In the short-term the problem is to devise interim financial arrangements to enable the railway system to be carried on until the necessary reorganisation can be made effective. The Government are now considering what form these should take. In the long-term the financial arrangements must depend on the size and structure of the undertaking, and must, indeed, form an essential part of the general reorganisation. The life and trade of the nation require a railway system, but it must not be allowed to become an intolerable burden on the national economy.
The Commission, the trade unions, the public and the Government will all have to co-operate in this new approach. I feel sure that they are in the mood to do so.

Mr. H. Wilson
Is it not clear that the Cabinet is still sharply divided on this issue and that that is the reason why, despite the fact that it has all the information necessary to come to a decision, there is so little that is firm that is being put forward today?
Will the right hon. Gentleman take from us at any rate a welcome for the fact that he has resisted pressure from behind him to hive off for private enterprise the more profitable parts of the 645 Commission's activities? I take it that the Prime Minister will be arranging for a full debate on these questions in which the House can take part, but may I ask him two immediate questions?
First, when the right hon. Gentleman refers to decentralisation of management, does he mean administrative decentralisation carried out by the Commission or are the Government flirting with the quite unworkable proposal that we have read about, involving separate, public boards to operate each of the transport regions?
Secondly, would the Prime Minister give us an assurance with regard to the Guillebaud Report—and we welcome what he said on this so far as it goes— that there will be no Government interference with the working of the conciliation machinery in the industry which would prevent the full and early implementation of the Report? Will he also recognise that that can only be done if the Government are proposing a really radical solution and radical reconstruction of the Commission's finances?

§ The Prime Minister
I will try to answer the right hon. Gentleman's questions and pay little regard to the He should not judge the divisions of the Conservative Cabinet by the state of his own party.
These things must be done in order. The first problem, which I believe the House as a whole will accept, is that there should be an amicable settlement of the wages question and all that goes with it. I do not want to say or do anything that would prevent that taking place. After all, this was a Report not to the Government—it was published only last Friday—but to the Commission, and to the unions, arranged for by themselves. I think that by far the best thing is to let that procedure go on, and then we shall have to see what is involved in the short-term finance, which the Government obviously must make available since it does not exist in the resources of the Commission. I think that the main thing is to get that over in an amicable way with the hope held out before all the people, the trade unions more than all, that we may be able to make of this industry something much more satisfactory to all those employed in it.
On the question of the form of the reorganisation, I say quite frankly that I think—and I have studied it a little— 646 that the whole structure does require complete review, without it taking away responsibility from where it ought to be, with those who are in the direct management of these various concerns. Secondly, it tends to become a top-heavy structure which, however good those at the top are, are not really the people to control it effectively.
On the question of finances, I feel that it is right first to consider the problem of short-term finance, that is to say, what is to be done in the next few months or years, and then as part of the reconstruction, and probably as part of the Bill, to consider any long-term reconstruction of capital or change of the whole capital structure.
Lastly—I think that this answers the right hon. Gentleman's point—there are, I believe, assets available which could be handled and used by those most expert in this task. That means, perhaps, that some of the land assets, some of the development assets, should be handed over to a special body acquainted with this, and not left as one of the enormous functions of the Transport Commission today. Beyond that I would not go.

§ Sir R. Nugent
Is my right hon. Friend aware that his statement that he accepts the general objective of the Guillebaud Report will be well-received in all quarters? Is he also aware that the statement of his intention to reconstruct the manangement and introduce a system of regional accounting—the practical step of placing the responsibility on expert shoulders, where it could best rest—will also be well received in all quarters. Will my right hon. Friend, in his consideration of the remodelling of the railway system, to which he referred, bear in mind the very heavy cost of modernisation plus the financing of deficits now resting on the taxpayers' shoulders and accelerate the cutting out of redundant services and installations as rapidly as possible as a matter of urgent priority?

§ The Prime Minister
Yes, Sir. I agree with what my hon. Friend has said. I think that we must try to think of this as something to which we must all contribute. I have said that we believe that there should be fair and reasonable wages for this industry, but I want to leave the details to be discussed in the proper way. If that is so, the men in 647 the industry, from top to bottom, must accept that the Government have a right, since they are now producing the only source of revenue, the tapayer's money, on which the industry can run, to take a much more direct part in the reorganisation of the industry than if it were a prosperous industry. There is that obligation.
The public has to accept that it cannot ask the industry to take on some of the old functions such as fell upon a common carrier, and some of the old restrictions which were quite reasonable when the railways were a monopoly, of which there are signs still, and it must also accept the inconvenience of certain lines being closed and other means of transport being made available.
The Commission must accept that it will help us and all concerned in trying to solve this matter not on theoretical or doctrinaire lines, but in the way that we think can be made the best for everybody concerned.

§ Mr. Benn
Will the right hon. Gentleman tell the House whether he has in mind that the valuable assets of the Commission, for example, the sites it now owns in large cities, should be developed by the Commission itself in the interests of the finances of the Commission or a successor public body, or whether he has in mind hiving them off for private industry?

§ The Prime Minister
I think that all this has to be studied. I am bound to say that some of these ought to be sold. After all, the Treasury is owed £350 million. I have no doubt—it may be exaggerated; I think that the right hon. Gentleman opposite himself referred to it—that there are certain parts of land and other things which are not now necessary, or where cheaper land could be made available, and some of these profitable assets could be sold. How it is to be done is a matter for study. I would say that the people likely to be employed to do this are those most expert in these matters.

§ Mr. Cooper
Is my right hon. Friend aware that his statement will be greeted with much satisfaction throughout the country? May I ask him two questions? First, is the proposed legislation to come forward during the present Session, or 648 when? Secondly, will he make it clear that the Guillebaud Report refers to the railways only and is not a general signal for an all-round increase of wages?

§ The Prime Minister
The whole House, and all the trade union world, have accepted that the railways have been in a rather exceptional position, to which the Report refers, and none of us, after all that we have gained in the stability of prices, wants to set off something that will lead to a great wage price spiral again. Of course, it is very difficult. We want to work quickly. I want to get a certain number of men charged with this job. Some of it can be done administratively, but I am convinced that it will be necessary to have legislation, and in my view it would not be possible to hope to get that legislation introduced until the autumn.

§ Mr. Collick
Does the Prime Minister realise the consternation which will be felt among railwaymen about some parts of his statement, particularly those parts in which the right hon. Gentleman once again envisages the reorganisation of British Railways? Is he not aware that we have already had three schemes for the reorganisation of railways from the Government since they have been in office, and that all the time the railway-men have been left high and dry? Does the right hon. Gentleman appreciate the need for speed to get the Guillebaud recommendations accepted? Unless these recommendations are operated quickly, the one certain thing is that we shall lose more and more highly skilled operating railwaymen whom we can ill afford to lose, and that, therefore, speed is the essence of this matter.
May I say one other word on the point or reorganisation? [HON. MEMBERS:" Speech."] I am asking the Prime Minister a question. I do not accept the need for it, but if there is to be any result from reorganisation, the one—perhaps the only—case there is for it is to put the railways under the direction of experienced railwaymen. If that is done, there may be some hope, but for the rest there is very little indeed.

§ The Prime Minister
I appreciate what the hon. Gentleman has said and I hope that he will find that we are really in agreement. Obviously, the first thing is to get the wage question 649 agreed. That we hope to get done quickly. I say again, however, that if the Government are to advance very large additional sums of money, which they must do whatever the agreement is, then there is an obligation upon everybody—I will not put it higher than this —to approach the other problems with a fair and open mind.

§ Mr. Manuel
The right hon. Gentleman did the same for private industry.

§ The Prime Minister
That is all I ask. I believe that that will appeal to the men in the railway industry. I know a little about it; I was in it for many years myself. I believe that we want to make people feel not only that they have a fair wage, but that all concerned, right from the higher management down to the men, are in an industry of which there is a fair chance of making a good show. It breaks one's heart to see an industry piling up deficits year after year. Men want to be in an industry which has a chance of really making a show.

§ Mr. Peyton
May I ask my right hon. Friend whether he is in a position to say what is the extent of the commitment of public funds involved, particularly long-term finance?

§ The Prime Minister
My right hon. Friend the Chancellor of the Exchequer will deal with the short-term finance when he has to make specific proposals and we know what they are and what we have to carry. Long-term finance and any question of capital reorganisation, about which the right hon. Gentleman opposite has spoken, would be more appropriate in the general reorganisation and would almost certainly require legislation.

§ Mr. Proctor
Does the Prime Minister realise that his statement that the Government contemplate reorganising the Transport Commission will be accepted with mixed feelings by the railwaymen and many others? Does he realise that the policy of Her Majesty's Government so far has been to sell the prosperous and keep the bankrupt as regards this industry? As the right hon. Gentleman has informed the House that he proposes to set up a body to advise the Commission and the Government on the future of the railways, could he give a guarantee that the body in question will be impartial as far as possible?

§ The Prime Minister
The body will be impartial, and it will advise the Government. The chairman and the Commission have told me that they will do everything they can to help it. It will consult the trade unions. When it comes to the proposals, we shall have to take the full responsibility, but I say again, and I say it sincerely with real affection for the railways, that we must try to get the highest agreement that is possible. We must agree that if fair and reasonable wages are to be paid, which I think is right, in an industry which is losing as much money as this, everybody is under an obligation, in return, to play their part in any form of reorganisation which may help it to do better.

§ Mr. K. Lewis
Since the Prime Minister has said that he hopes to regionalise the railways and reduce them to smaller units, is he aware that this will be received with great acclamation and hope in the county of Rutland, in the expectation that he may be able to persuade other of his colleagues in the Government to pursue the same policy in the future?

§ Mr. Steele
Is the Prime Minister aware that the railways are probably the most reorganised organisation in this country and that this has been going on since 1920, when I first joined the ser-vice? Is the right hon. Gentleman also aware that I cannot understand why he tries to bring a complicated solution to a simple problem? The simple problem is that the railways will never pay and that the railwaymen want more money. Though the problem is large in size, that is what we have to face. Can the right hon. Gentleman say what is in the mind of the Government in respect of trying to ascertain the profitability of each area? This can only be done by the re-introduction of the old railway clearing house system, which was a failure before. That would be not only unwise, but would be expensive and would require a great deal more sacrifice to carry out.

§ The Prime Minister
I remember that system very well. That is why an expert committee is already at work discussing the possibilities of separate accounting. It may be found to be impossible, I hope not, but it has great advantages, because it is the way in which many great industries are run. It gives to the management and to all others concerned 651 in their particular jobs a sense of reality. It gives them an opportunity of seeing the effect and it makes it much more easy to do uneconomic things, should it be decided that these should be done for good social purposes.
Also, it makes it much easier for Parliament to say, "All right, we agree to that. We cannot blame the management because there is a loss since the management has told us that certain lines cannot be run at a profit". If we want something done, then at least we cannot put upon the management the obloquy of having operated at a loss. There are great advantages, if it can be achieved, in a sense of pride in the various organisations.
As for the hon. Gentleman's statement that this is a simple problem, I wish that he was right. To say that the railways must always be run at a loss, and that the men must be paid more money, would be, I should have thought, a very defeatist view for those who believe in general nationalisation.

§ Mr. Speaker
Order. The House imposes on the Chair a very difficult duty. We have another statement to come and there must come a time—

§ Mr. Gaitskell
In view of the fact that very many hon. Members have not been able to ask questions and raise issues, may I ask the Leader of the House whether the Government will find time for an early debate?

§ The Prime Minister
I would like to consult the Leader of the House. In the ordinary way, my right hon. Friend will consult with the Leader of the Opposition, because that is not my affair. I do not want to shirk a debate, but may I ask the right hon. Gentleman seriously to consider the question of a debate in the light of the developments of the next few days which may arise out of the hope of a good solution of the immediate wage problem? I would like that to be in the mind of the right hon. Gentleman, because it sometimes happens that it is more convenient if we can succeed in the first stages before we enter into the wider affairs. I am sure that he will bear that in mind, as he always has done, in situations of this kind.

§ Mr. Gaitskell
I would certainly bear that in mind. I do not think it necessary that we should, in the course of debate, get involved in wage negotiations, but many other issues apart from that could usefully be discussed.