HC Deb 14 July 1966 vol 731 cc1884-94

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

11.29 p.m.

Mr. John Rankin (Glasgow, Govan)

I beg to draw the attention of the House to the decision of British Railways to impose a compulsory service charge of 12½ per cent. on all bills at its hotels. I raised this matter in the House on 29th June this year. In reply to my Question the Minister said: What is happening is a rationalisation by which British Transport Hotels are coming into line with the general practice in hotels today."—[Orricint. REPORT, 29th June, 1966; Vol. 730, c. 1785.] I do not find any evidence of this so-called general practice. In some hotels which I have visited the suggested charge is 5 per cent. It is not compulsory, and if the guest so chooses, he may continue using the old method of giving a tip, the amount of which is within his own discretion. In other hotels the charge is 10 per cent., and again it is not compulsory. But British Transport hotels head the list, with a compulsory charge of 12½ per cent.

In my view, there is no legal sanction which permits this alleged general practice. It can be achieved only with the consent of the Minister of Transport so far as British Transport hotels are concerned. In any event, British Transport hotels made no such claim as that put forward by my hon. Friend for this imposition when he replied to me on 29th June, because in the Press statement which was issued it was explained that the charge was imposed to enable better wages to be paid to the staffs. British Transport did not want to raise its price level directly because I assume it would then have been sent to the Prices and Incomes Board where 3½ per cent. is more popular than 12½-, per cent. Nor must one rule out the possibility that, because of its Government attachment, an indirect increase in prices would be more tolerable than a direct one.

But if the precedent set by this publicly-owned service organisation is approved by the Minister of Transport, how can it be reconciled with what this House has done tonight in giving a Second Reading to the Prices and Incomes Bill? If, as my hon. Friend said in his reply to me, there is no illegality involved, then every service industry in Britain can follow the practice of the railway hotels. They can put up their service charges, not their prices, and smile at the provisions of the Bill which we have debated today.

I did not suggest in my Question that the 12½ per cent. increase was illegal. I asked my hon. Friend what legal sanction permitted these charges to become compulsory. Will he tell me now under what legal ruling he is acting in imposing the charges against which I am protesting? So far as I understand, they are a custom which has grown out of the system of tipping which we ourselves in 1945 abolished in the House of Commons because we believed that it was an evil system. In its place, we established a living wage for our employees. Will my hon. Friend say that we got worse service in our dining rooms because of that action? We did not require to take legislative action to abolish the old system in the Members' Dining Room, and while, in my view, no legal issue arises in this matter, a pernicious development is most certainly involved.

My hon. Friend's Department is proving, through a recent decision by British Rail, that the hotels' example will spread. Indeed, it is spreading now. Today every holidaymaker leaving Glasgow must pay a tax or service charge of 5s., merely to have the right to travel on publicly owned railway trains after having bought tickets and paid the publicly advertised fares for the journeys they propose to take. It should be noted that those people, who are travelling by sleeper and who have already paid a reservation charge, will also be required to pay a travel tax of 5s. which, perhaps, will be raised to 7s. 6d. for window seats next year if my right hon. Friend does not have a close look in the meantime at the organisational side of the Scottish Region.

The idea that the numbers travelling on a particular day can be assessed by putting an iniquitous poll tax on each traveller is so archaic that it obviously conceals another purpose. For a good many years the Glasgow holiday crowds have been handled without any trouble by the use of free travel tickets. There was no necessity to change this system. But the Scottish Region needs the money, and this is the way it is seeking to get it. It cannot raise its fares because this would drive more people on to the buses, and it would make itself unpopular with the Secretary of State for Economic Affairs, whose consent it would need for such action. Does my right hon. Friend regard this attempt to sidetrack his efforts to get price increases related to productivity as fair?

Whether we describe a rise in price as a service charge or a control tax, a rise by any other name will be just as severe in its impact on the purses of the people who travel in their hundreds of thousands from the City of Glasgow for a well-earned fortnight's holiday. In addition, it will not help the Government to achieve the policy which they are following and which earlier tonight received the approval of the House.

11.40 p.m.

Mr. Edward M. Taylor (Glasgow, Cathcart)

I am grateful to the hon. Member for Glasgow, Govan (Mr. Rankin) for showing his customary courtesy in allowing an hon. Member who has listened to his remarks an opportunity to intervene in the debate.

I add my full support to what he has said about the control tickets. It is only fair to tell the Minister that in Scotland at the present time there is a feeling of what might be described as a real desperation on the part of the public that, no matter who protests or what public feeling is about what appears to be an indefensible, iniquitous imposition of a holiday tax, nothing is done, and no reasonable answer or explanation is given by British Railways in Scotland.

Here is another case, as with the 12½ per cent. charge in the hotels where British Railways appear to be considering themselves immune from public criticism. Here is an extra charge introduced solely in Scotland. We ask why it is solely in Scotland. There is no apparent answer. Here is a charge that has been condemned universally by the Scottish Press, by the Scottish Tourist Board, by the Dundee magistrates, and condemned in a Motion signed by half the Members of this House from all parties who represent Scottish constituencies.

What more, precisely, can we do to get this iniquitous holiday tax removed? What precisely should we do? What further avenue is there for public concern to be shown? If Parliament can do nothing about this, if the Minister, as we are told, can really do nothing about it, there is something very wrong with the system. We hope that in this case the Minister can intervene, if not by a general direction, if that is possible, at least by speaking to British Railways about it—and, if that cannot be done, then, as the hon. Gentleman has suggested, by referring the whole matter to the Prices and Incomes Board.

The whole point is that for the sake of the railways, on which we depend so much, we must preserve public good will. How precisely can we hope to maintain public good will if we have measures like this, apparently condemned by all and, in this case, applying to those who, through no fault of their own, are forced to take their holidays at the recognised holiday period. What kind of people are they? They work in the factories and the workshops, which close during the normal summer period. It seems indefensible that these people, going with their families on holiday, should have this extra burden—and particularly that it should be applied only in Scotland.

This is a genuine grievance, We are concerned about the tax itself, but more about the fact that, despite all the public protests, and all the clamour, and all the arguments that this tax is apparently illogical and indefensible, we do not have a clear answer from British Railways. Hon. Members representing these constituents, the Minister, the Press, the Tourist Board—no one appears to have any power at all to do anything. This is a sadly wrong state of affairs, something must be done about it, and I wholeheartedly back the comments so ably made by the hon. Member for Govan.

11.44 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler)

I fully appreciate the anxieties of my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) and the ponnts he has made. I hope to be able to clarify some of the matters to which he has drawn attention, and to answer the criticisms of the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor).

I must first make it quite clear that these are managerial decisions made by British Railways. We must be quite clear in this House that it is as a result of the proceedings of Parliament that national boards have been established to run publicly-owned industries and services; and that as a result of the proceedings and debates in this House it was decided that they should be given a reasonable measure of freedom to make commercial day-to-day decisions. The matters to which my hon. Friend has drawn attention are day-to-day decisions by the Scottish Region of British Railways. The Scottish Region has not had the sanction of the Minister of Transport. It did not require the sanction of the Minister of Transport.

My right hon. Friend is anxious not to keep interfering with matters of management of the British Railways Board, or, indeed, of any other nationalised industry. We want to give them a proper remit with proper terms of reference about how we want our national railways to be run, and to tell them to get on with the job. Therefore, what I say tonight is based upon information which I have received from the Railways Board and the management as to the reasons lying behind these decisions. I hope that I can thereby clarify the matter for my hon. Friend, the hon. Member for Cathcart and the public and get it into perspective.

First, the 12½ per cent. service charge. British Transport Hotels is a wholly-owned subsidiary of British Railways. Its job, on the general principles laid down about nationally-owned industries, is to manage the business and provide the service for the customers. It has decided that in place of the voluntary tipping system it should introduce the service charge, which I am informed, is now becoming general thoughout the hotel industry. I say this because of the criticism made by my hon. Friend.

I have taken advice from the British Travel and Holidays Association and am told that the majority of our hotels, including many of the best known, now operate, in place of the voluntary tipping system, the compulsory service charge. In regard to the point raised by my hon. Friend about legal sanction, there is no question of legality arising here because this is a matter of a voluntary contract between British Transport Hotels and the parties who use its service. There is no legal objection, therefore, to the inclusion of a service charge at a certain rate in the terms of any contract.

What are the economics of this? I am told by the Railways Board that the yield of the voluntary tipping system was £650,000 a year. The expected yield from the compulsory service charge of 12½ per cent. which is now being applied is £1 million a year. Its aim and purpose, as was the case of the voluntary tipping system, is to enable British Transport Hotels to pay more to the staff, and the staff in this case are amongst the lowest paid in the railway industry.

My hon. Friend asked what amount of price increase this represents. Let us take the annual turnover of British Transport Hotels, including the receipts from voluntary tips in the past. It amounted annually to about £10,150,000. Therefore, if the service charge is expressed as a percentage of that figure, it amounts to a price rise of the order of 3 per cent.

As I have said, this has been done by British Transport Hotels, as many other hotels have done it, because it is becoming general to charge something between a 10 and 15 per cent. service charge in place of the tips, and the money will be used to benefit the staff. The staff in this case have not had any wage increase this year. The revenue that is raised from the imposition of this charge is to provide for a better living standard for the staff, which will now be guaranteed to them by means of the service charge instead of its depending upon the customers' generosity. That is why this charge has had to be raised, and those are the answers to the criticisms by my hon. Friend on the ground of legality and the extent of the price rise.

I turn to the question of the so-called seat control charge, which has been mentioned to me by a number of hon. Members. I have made a point of studying some of the criticisms in the Scottish Press about this position. As my hon. Friend has said, British Railways Scottish Region has this year introduced a system of making a 5s. charge, which it calls a seat control charge, levied on certain sections of railway users at certain times and in certain places, which, I know, has provoked widespread criticism in Scotland.

I again want to put the matter into perspective on the basis of the information given to me by the British Railways Board. The 5s. control charge is introduced this year for only nine days in the year and at seven Scottish stations. The charge is introduced because of past experience of the crush which has occurred amongst those who are making for the most popular holiday resorts. On these nine designated days the charge is applied to all who travel from the seven designated stations, whatever kinds of trains they use.

The purpose is to avoid having standing passengers on the trains. The tickets are issued to ensure that not more passengers are admitted to the platforms than there are seats on the train. Therefore, the control ticket is introduced for the purpose of guaranteeing a seat somewhere on the train—not a specified seat, which is obtained by making the specified reservation. These tickets ensure that there is a seat somewhere on the train for every passenger who enters the platform. I am informed that the system has been in operation in the Scottish Region on certain days in previous years, but without the imposition of any extra charge.

What is the purpose of introducing the extra charge? Let me be perfectly frank, on the basis of the information given to me by the Scottish Region. It is to discourage people from using what have hitherto been the most popular trains, in the hope of spreading the passengers over a greater number of trains. It is to introduce a disincentive to people to require space which has previously been inadequate, the demand having caused in the past a crush of standing passengers on certain days on certain trains. It was hoped that, to avoid the extra scharge, people would make their demand for train travel on other days.

Mr. Rankin

I realise that my hon. Friend has a brief and that he must follow it. He will understand that in Scotland the great mass of the people who are travelling today made their holiday arrangements long ago, before any 5s. tax was imposed. Therefore, his argument is just not relevant to the case which has been put to him tonight.

Mr. Swingler

That sounds a very fair point. As my hon. Friend rightly says, I am speaking from a brief, from information supplied to me during the course of today. I wanted the most up-to-date information from the Scottish Region. I am informed that the proposal to introduce this charge for the tickets, whch previously had been issued without charge, was given wide publicity throughout Scotland in February of this year so that people should be precisely forewarned that now, on these nine days at these seven stations, they might expect to be confronted with the demand for 5s. for a seat control ticket so that British Railways in Scotland could organise travel in this way. This is the information I am given about the purpose of the system. I am putting it to the House as fairly as I can. The purpose is to try to provide greater comfort on trains by avoiding having passengers crowded in the corridors and ensuring that no more passengers get on to the platform than there are seats available on the train. Quite deliberately it was to introduce a financial disincentive to people to travel on certain days by certain trains by making it a little more expensive for them to do so.

I was about to give a modest crumb of comfort to my hon. Friend. I am so informed—this may be of interest throughout Scotland—that the imposition of this charge is experimental. It has been introduced experimentally by British Railways for this year precisely in order that they may examine what effectiveness this has in achieving the purpose of exercising control over the number of passengers going on to the platform for certain trains. The Railways Board will be examining the practical results and criticisms made and will take a decision for the future on the basis of that experience.

It is quite understandable that the introduction of such a system should meet with a substantial volume of criticism just as it is usual that announcements made on railway platforms or in the Press at certain times of the year are taken notice of only at the time when people come up against them and against the charges. Whatever hon. Members may think of the merits and demerits of the system, the intention of the railway management to try to get a better spread of traffic and to ensure a higher standard of comfort on the trains for those travelling to and from most popular holiday resorts, is an intention which should be applauded. It is quite right that the management should experiment with different ways and means of trying to influence the choice of times and dates for travel to and from resorts and to avoid the terrible crushes and discomforts on trains experienced by so many people, especially those with large families when going on holiday.

I reiterate that these are decisions of the national railway management. My hon. Friend rightly said that they are decisions of the Scottish Region. On the basis of things with which they want to experiment in order to judge the results, I am sure that they will take note—

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

Adjourned at one minute to Twelve o'clock.