HC Deb 13 April 1964 vol 693 cc197-208

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]

11.55 p.m.

Mr. Hugh Delargy (Thurrock)

Some time ago I attended a court of inquiry which was sitting in a building in Soho Square, London. The president of the court sat like a judge in his high seat, with his clerk below him. There was a place for witnesses and a bench of solicitors and barristers. The rest of the room was occupied by members of the general public. At least, that is what I thought at the beginning. I discovered afterwards that there was only one member of the general public there—that is, one person there merely for the purpose of listening—and that was me. All the others were witnesses—about 50 of them.

What was it all about? This court was a licensing authority for road haulage. It had been convened to listen to the applications of a firm which asked permission to use five or six vehicles to transport bulk liquid to various parts of the country. One would imagine that this was rather a simple issue, but it turned out to be far from simple. The hearing lasted three days and, after an interval of several weeks, judgment was given and all the applications were refused. Whether the applications were refused is not part of my case tonight.

I am passing no verdict on the decision of the licensing authority. It is the general procedure with which I am concerned. There were many witnesses. Some of them were in favour of the applications. These were representatives of nationally known firms who were potential customers of the applicant; they wanted their goods to be carried in his vehicles. They came to the court to say so and to give their reasons why they wanted their goods to be carried in these vehicles. There were other witnesses, who objected, and their objection was based mainly on the contention that there were already enough of these vehicles in the country and that to give extra licences would be to exceed the need for these licences. I was surprised and vaguely disturbed by what I heard and saw at this hearing. I was not there all the three days, but I was there for most of the first day. I thought that I would try to find out a little more about the procedure. I discovered in the first place that all of the objectors were engaged in this road haulage business. They were very much engaged in it. One might almost say that there was nobody else in this road haulage business but them. These people who objected all belonged to a comparatively small group of firms—seven or eight—who between them had about 80 per cent. of all these licences.

In other words, this small group of firms control about 80 per cent. of the road haulage in Great Britain. The firms in question are: Bulwark Transport Ltd., Crow Carrying Co., Davis Bros., Harold Wood and Sons, Smith and Robinson, Thomas Allen, and Tyburn Road Services; and sometimes they are joined by Pickfords (British Road Services).

I want to draw the attention of the House to the fact that this group of firms, whenever an application for a licence is made by some firm, usually a small one. outside the group, act together as an organised opposition. They act as a cartel. They immediately engage lawyers. They are extremely wealthy, because these eight firms control scores of other firms in the business. But I have given the names of the main firms concerned. They act as a unified opposition. They engage lawyers and send in their witnesses, who travel all over the country to the various licensing authorities, of which there are 11. Always the same objectors appear before the court. They might almost be described as professional objectors. In the case to which I listened in London, some of the objectors had travelled from as far as the north of England and Scotland.

These firms control about 80 per cent. of the road haulage business—and they intend to keep it that way. Sometimes, however, they do not object; and this is when one of their own members makes an application. Then they adopt a different procedure. They send out to anyone who objects what is known as a withdrawal form—for the withdrawal of objections—which is neatly made out requiring only the signature of the objector. They ask the objector to sign the document in duplicate, one copy for the licensing authority and one for the Road Haulage Association, which this group of firms dominates.

It might be asked why Parliament should interfere. If firms want to fight among themselves about business, should we be surprised? Personally, I have always recognised that big business is like a jungle. What has this got to do with Parliament? It might even be suggested that if this could be proved—and I believe that it can—it would seem that the small firms are being bullied by the big ones. This is what this has to do with Parliament. There is a tendency for this cartel to become almost a monopoly. The firms in question can get together and rig the prices they will charge to carry other people's goods. What interests Parliament even more is this. These licensing tribunals have been set up by Parliament, are partly financed by Parliament, and I submit that they facilitate, and in part finance, the bullying of the small firms by the larger ones.

I said that there are 11 licensing tribunals or authorities. They sit in Newcastle-upon-Tyne, Manchester, Nottingham, Cardiff Eastbourne, Edinburgh, Leeds, Birmingham, Cambridge, Bristol and London. To run them—their offices and so on—must be a costly business, I thought some time ago, so I tabled a Question to the Minister of Transport last month and received this written reply: There is no net cost. The total administrative costs of the licensing authorities, including associated costs of enforcement, were £940,000 in 1962–63, but this was offset by revenue of like amount from fees charged for carriers' licences".—[OFFICIAL REPORT, 4th March, 1964; Vol. 690, c. 225.] I am still not clear about the exact meaning of that reply. To be honest, I am in a complete fog over it and I would be grateful if it would be further explained tonight. Does it mean that the Ministry spends £940,000 on these 11 licensing authorities and that the £940,000 is offset by the fees charged to carriers for their licences? If so, does it not mean that the carriers' fees are used to set up the licensing authorities, at the sittings of which these carriers appear to decide who shall and who shall not become carriers? We have a public responsibility in this matter.

Why have I raised this subject tonight? I have not the slightest financial interest in road haulage of any sort, and I do not claim to have any special know- ledge of road haulage. My object is to bring this matter to the attention of the public. Very few people know anything about it; apart from Ministry officials, lawyers who specialise in this type of business and road hauliers, hardly anyone has ever heard about it.

I cannot pretend to have any readymade remedies, but a remedy is badly needed. Perhaps the activities of this cartel of road hauliers might be referred to the Monopolies Commission or to the Restrictive Practices Court. Most certainly, and more urgently, the cartel should be carefully examined by the Geddes Committee, which is still sitting and whose report we await with so much interest. That Committee cannot remain silent on this subject.

What the ideal long-term solution is, one cannot be certain. One imagines that a person of the political persuasion of the Parliamentary Secretary would hold that road haulage should be a free-for-all, that the old law of supply and demand should be observed, that a man should be free to choose whatever vehicles he liked for the transport of his goods, and that all a licensing authority should be required to do would be to ensure that the vehicles were good vehicles and that the firms were of good standing. Someone of a different political outlook might suggest that all road haulage should be brought under a public authority.

A good case could be made out for either solution, but no case at all can be made out for the present system, which involves waste of time and money—public money—and which, at the moment, quite evidently works in favour of this cartel of giant hauliers, very much against the small man, and very much against the public interest. It is high time that an inquiry was made and, pending that inquiry, all this evidence—and I am sure that there is much more of it, although there is no time to go into it now—should be sent to the Geddes Committee.

12.7 a.m.

The Parliamentary Secretary to the Ministry of Transport (Mr. T. G. D. Galbraith)

The hon. Member for Thurrock (Mr. Delargy) has raised a matter of considerable public interest, and he has done so in a comparatively reasonable and thoughtful way; not so much, at least to begin with, in a spirit of criticism as in a spirit of inquiry. He was trying to find out the best thing to do, and probably the easiest way for me to deal with his points is to start by explaining how the present arrangements originated.

As the hon. Gentleman probably knows, the carriers' licensing system was set up ay the Road and Rail Traffic Act, 1933, following the recommendations of the Conference on Rail and Road Transport which was presided over by Sir Arthur Salter, as he then was he is now Lord Salter. The system had two purposes. Its first purpose was to protect the railways—and that purpose will be of interest to the hon. Member in present circumstances—which were burdened then with obligations such as that of common carrier, from unfair competition by road carriers who did not have this obligation of being common carriers. The second purpose was to bring some order and regulation into the public road haulage industry, where some operators paid scant attention to safety or to labour standards.

This system, which started in the 'thirties, has remained substantially unchanged ever since. It was retained during nationalisation for those parts of the industry which were not taken over, and it is now embodied in the Road Traffic Act, 1960. The decision in the original Act to regulate supply in accordance with demand necessarily implied some measure of restraint on full competition, as the hon. Gentleman recognised. The object was to produce an orderly road haulage industry which, in conjunction with the railways and other forms of transport, could provide users of goods transport with a reliable and co-ordinated service. That was the object, and as a safeguard against any monopolistic tendencies—of which the hon. Gentleman is afraid—that might arise, there was, and is, freedom for traders to operate their own vehicles under C licences.

It is interesting to note that road haulage has remained even today, in spite of what the hon. Member has said, predominantly an industry of small units where, within the limits imposed by the licensing system, competition is very fierce indeed. I am told that the average fleet of public hauliers is less than five vehicles. The scale of the industry, therefore, is rather small.

Mr. Delargy

I should have made clear that I am referring to open A licences. I agree that there are plenty of C licenses under which a person can carry his own goods. Whereas the average may be five, six or seven vehicles the firms which I have mentioned have hundreds.

Mr. Galbraith

I am not saying that these firms do not have hundreds of vehicles. Nevertheless, this is predominantly an industry of small men. It may be that the hon. Member is considering oil-carrying work and bulk carrying which is a specialist industry. It may be that in that case there are more large firms than there are generally but I have not the figures with me. As we are talking about an industry of small unit;—

Mr. Delargy

The emphasis is on bulk liquid haulage.

Mr. Galbraith

The hon. Member is now saying that he is criticising bulk liquid carrying, but the criticism which he has made so far has been a general criticism of the way in which the licensing authorities operate and the nature and extent of the size of the units in that industry. I ought to tell the hon. Member that the facts as I have them are not the same as his, that is it is predominantly an industry of small not large units.

Mr. Delargy

I based all my case on a hearing of a licensing authority and I said at the beginning that this was a hearing where a firm was applying to carry bulk liquids. My case is about liquid haulage.

Mr. Galbraith

We may agree to differ on this. We shall see from the record whether the hon. Member is right or I am right. He has said that this was an industry of a number of large units. I say that it is one of small units.

The task of administering this system was laid on the chairman of the Traffic Commissioners. These were regional bodies which had been set up earlier to license bus services. As licensing authorities they had an independent quasi-judicial status. A duty was laid upon them to publish all applications to carry goods for hire or reward and to consider objections made by other carriers, including the railways, on the grounds that existing facilities were adequate. About one-third of the objections in many areas are made by the railways and not by other motor firms. For the purpose of hearing applications and objections, the licensing authorities were given power to hold public inquiries and a channel of appeal was provided to an independent tribunal and thence to the courts if necessary.

This gives the historic background to the situation as we find it today. I deal now with some of the specific points that the hon. Member made. He referred to the detail into which objectors entered when opposing an application. It seems to me that there is a real dilemma here. An essential purpose of the licensing system, as I have said, is to regulate the supply of public haulage to the demand. If the licensing authorities are to do this, they must have information about the circumstances surrounding an application to put that extra lorry capacity on to the roads. Furthermore, if they are to come to fair decisions, and, most important, are to be seen to come to fair decisions, this information must inevitably be put before them openly and be subject to full scrutiny and the test of cross-examination by interested parties to the case. It would be extremely difficult to limit the extent of this without running the risk of doing one or other of the parties an injustice, and if inquiries of this kind do occur it is obvious that in the course of time this will enable competing hauliers to acquire a very complete knowledge of one another's operations. But I do not really think that that can be avoided.

The hon. Gentleman also seemed to be suggesting that it was out of place for licensing courts to have legal trappings or for the parties to employ counsel.

Mr. Delargy

I said nothing of the kind.

Mr. Galbraith

The hon. Gentleman said there were a lot of counsel there and, in saying that, I thought he was being critical.

Mr. Delargy

Nonsense. I was merely stating a fact.

Mr. Galbraith

Presumably the hon. Gentleman was stating a fact with which he did not agree.

Mr. Delargy

Certainly not.

Mr. Galbraith

At any rate, this is a criticism which is made sometimes and I intend to take this opportunity which the hon. Gentleman has kindly provided of answering it. The licensing authorities have to follow legal procedure because they pursue the same fundamental aims as the courts—that is, to decide fairly and openly matters where the interests and possibly the evidence of those concerned may conflict. I do not think the hon. Gentleman will criticise me for dealing with something which he has said. Certainly he did not say it tonight, but he wrote an article in the Sunday Citizen in which he referred to this as a "Star Chamber inquiry." I was a little surprised by these words. I know we are all inclined to a little exuberance on a Sunday—

Mr. Delargy

Would the hon. Gentleman quote the entire context?

Mr. Galbraith

I wish the hon. Gentleman would let me finish my speech.

Mr. Delargy

The hon. Gentleman has quoted from my article—

Mr. Galbraith

I am dealing with this article.

Mr. Delargy

The hon. Gentleman has quoted three words.

Mr. Galbraith

The hon. Gentleman said it is a Star Chamber inquiry. I was a little surprised by these words. I turned to Professor Maitland's Constitutional History, and at page 263 I find that he said: Star Chamber was a court of politicians enforcing a policy; not a court of judges administering the law. I think it is quite clear that the Commissioners are more akin to magistrates or judges than politicians and that they are, in fact, administering the law which we passed in this House.

The hon. Gentleman may, however, be interested to know that the Franks Committee on Administrative Tribunals and Enquiries examined the working of the goods licensing courts in 1957 and made no recommendations for changing their procedure. The licensing authorities nowadays conduct their business under the continual scrutiny of the Council on Tribunals set up under the Tribunals and Inquiries Act, 1958, and the Council has never criticised their proceedings which, I think, is a very considerable tribute to the way in which they carry out their duties.

It is perfectly true that the Salter Conference hoped that legal representation would not be necessary, but as the licensing system is based on an Act of Parliament, legal interpretation, it seems to me, is unavoidable. Indeed, this is recognised by the fact that there is an appeal to the courts. When one remembers that considerable sums of money may be involved, it would surely he quite wrong to restrict the manner in which applicants or objectors could be represented. A man, after all, might be a very good haulier but a poor advocate. Nevertheless an applicant is, of course, free to present his own case if he wishes, and I know that licensing authorities take particular pains to assist, so far as is proper, those who choose to do this.

Another suggestion that the hon. Gentleman made was that hauliers in particular fields may establish a ring—he did not actually use the word "ring", but I think that is what he intended; he used another word which escapes my memory for the moment—

Mr. Delargy


Mr. Galbraith

Yes, a cartel—by agreeing to make concerted objections to the entry of newcomers, but they do not make these objections to each other's applications. I do not deny for a moment that this is a possibility, but it is a possibility which is inherent in almost any scheme for restricting entry to an industry. It is important to remember that, whatever the weight of objections to an application may be, the prime consideration to which the licensing authority must have regard under the Act is the public interest as represented primarily by the interests of the users of transport, not the suppliers.

It follows, therefore, that an application will by no means be refused merely because numerous objections against it are lodged by competing operators. This is a point which I should like the hon. Gentleman to accept.

The hon. Gentleman asked also about the expense of the system. He has put down some Parliamentary Questions on the subject. I hope that I shall be able to deal with this matter satisfactorily. The administrative costs amount to just under £1 million a year, but this is not all attributable to the operation of the licensing courts as such. As I said earlier, licensing is concerned with safety as well as with supply and demand, and an important element in the cost is the salary of the safety enforcement staff. This comes to nearly £200,000 a year. However, the hon. Gentleman will be glad to know that the licensing system is self-financing and that the fees cover all the costs. There is no charge at all to public funds because of the work which the licensing courts do.

To sum up, Parliament has given the licensing authorities a difficult task to do and—I think that the hon. Gentleman probably recognises this—they carry it out conscientiously and capably. There can be little doubt that they and their predecessors have served the country very well over the past thirty years. Whether the time has now come when the system which they administer should be changed is another matter.

As the House knows—the hon. Gentleman referred to this in his speech—my right hon. Friend the Minister of Transport last year appointed a small but high-level independent committee under the chairmanship of Lord Geddes to examine this matter. The committee is still taking evidence, and it is too early yet to say when it will report because this is a very complicated matter. In the meantime, the hon. Gentleman will not expect me tonight to prejudice in any way what the committee may say either about the fundamentals of the system or about the methods by which it is currently administered by the licensing authorities, since all these matters lie fairly and squarely within the terms of reference of the committee.

However, it will be clear to anyone who has followed the evidence so far put to the committee and which has been subsequently published that there exists a very wide diversity of views among responsible and knowledgeable people about carriers' licensing. Some people think that licensing should be abolished altogether. Others think that the present system should be maintained but should be fundamentally changed. Others yet again think that the system has stood the test of time and it should be left substantially undisturbed. Some think that it has become too legally set. I apologise to the hon. Gentleman if I got him wrong, but I thought that this was his view. Anyway, if he does not take this view, it is a view which many people hold, that the system has become too set in legal form.

However, in spite of this, I have seen no evidence which has challenged the fairness and personal competence of the licensing authorities in administering the system within the framework laid down for them by Parliament. It is true that the licensing authorities themselves enjoy the confidence and respect of those with whom they deal to a very marked extent.

Whatever, therefore, comes out of the Geddes Committee report—and because it is still sitting I cannot make any comment on the various views I have mentioned tonight and about which the Committee may have something to say—there is one thing in which we can all take pride, and that is our general agreement on the fairness with which the Licensing Courts—

The Question having been proposed after Ten o'clock on Monday evening and the debate having continued for half an hour, Mr. SPEAKER, adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at twenty-five minutes past Twelve o'clock.