Clause 2

HC Deb 14 June 1977 vol 933 cc276-314

GRANTS TO NATIONAL FREIGHT CORPORATION TO MEET CASH-FLOW DEFICIT

Mr. Deputy Speaker

Like the last two amendments, Government Amendment No. 6 and Amendment No. 5 fall in the same place in the Bill, and again it would be convenient to call Amendment No. 5, which makes the largest reduction to the figure of £50 million, to be discussed with Government Amendment No. 6. If Amendment No. 5 is defeated, I shall call Government Amendment No. 6 immediately thereafter for a vote.

Mr. Roger Moate (Faversham)

I beg to move Amendment No. 5, in page 2, line 10 leave out "£50 million" and insert "£25 million".

In Committee the Minister made some helpful comments about a possible reduction in the moneys that would be sought under the Bill for support for the National Freight Corporation. Following that assurance, we tabled this amendment. I note that the Minister has tabled Amendment No. 6 proposing a reduction from £50 million to £30 million and that for the convenience of the House we are debating the two amendments together.

I welcome the Minister's proposal, which, depending upon the information he gives us, we may well find satisfactory. However, I think it right first to look briefly at the background to the corporation's deficit which has resulted in this still substantial request for sums from Parliament. Those sums are required to sustain the deficit of a nationalised industry.

It is a substantial achievement by the Opposition to have secured a significant reduction in public expenditure. I wonder whether the Minister would have tabled his amendment, proposing a reduction of £20 million in public expenditure, but for the Opposition's pressure and argument in Committee. I do not think that the hon. Gentleman will be able to argue on this amendment that the reduction has resulted from improved efforts by the corporation leading to a greater reduction of losses than had been expected. I wish that that were so, but I suspect that the reduction arises far more from technical reasons than from improved performance.

We must look at a background of substantial losses by the corporation over the past three years—£15 million in 1976, £31 million in 1975 and £16 million in 1974. As we established in Committee, and from a study of the annual reports, the major part of those losses resulted from, first, the inherited rail-based companies; secondly, the inherited liabilities of the corporation, with particular reference to the pension schemes and the obligation to make payments for free travel facilities for certain employees and past employees; and, thirdly, the substantial deficits incurred on the corporation's foreign operations. There is another amendment on that subject to be dealt with later.

We were very concerned about the substantial moneys to be paid under the Bill, which are not to be confused with the question of financial reconstruction. We can express our appreciation that the Minister has constantly reiterated that it is not his intention to use these moneys for the purposes of financial reconstruction. We emphasise that not because we wish to make life difficult for the corporation but because, although we believe it to be fundamentally important that we get the structure of the corporation right, it would be wrong for a Bill of this kind to be used to direct funds to the corporation without Parliament's being clear about its future structure.

It would be helpful if the Minister could tell us when we may expect a statement about the NFC's future and the steps needed to reconstruct its financial structure in the way that we have been told is necessary. Perhaps we may expect it in the White Paper to be published in the next week or two, the next month or two, or whenever it emerges. Such a statement would be helpful, because this matter emphasises how unsatisfactory is the Bill.

5.45 p.m.

We know, and the Government accept, that there is fundamentally no case for subsidies of freight operations. There is no case for subsidies of freight operations on British Rail and certainly no case for them on the freight operations of a road-based company. Despite that, and the fact that there is no statutory provision for any deficits to be incurred by the NFC, over the years there has been loss after loss after loss. To fund those losses, payments have been made under the Contingencies Fund without any reference or direct application to this House. The previous Secretary of State, Mr. Anthony Crosland, said that he took a very serious view of deficits incurred for which there was no statutory authority. Despite that statement, there have been frequent payments to British Rail.

There has been a whole period when payments have been made without specific legislative approval. Now, belatedly, we have a Bill initially asking for £50 million to bail out the NFC. I suspect that the length of time it has taken to carry through this legislation has meant that more payments have been made or are about to be made. Because we believe that that is most unsatisfactory and because we suspect that moneys have already been paid, we are most concerned to ensure that the cash limit in the clause is reduced as we have suggested. It would be helpful if the Minister could tell us precisely what amounts have been paid so far by way of support to the corporation and whether any other payments are about to be made.

I said in Committee that I understood that about £25 million had already been paid before the Bill was introduced. We calculated that, with the £50 million proposed in the Bill, about £75 million in subsidy would have been paid to the NFC. The Minister proposes a reduction to £30 million, but even that would make a total of £55 million, and I suspect that other payments have been made, particularly in respect of pensions, in the interim. We are entitled to know the total cash being paid by the Government to support the corporation in the interim period.

These figures are substantial. We tend to become blasé about millions of pounds. It puts the matter in perspective when we remember that the initial grant payable to the corporation in the first five years of its existence totalled £43 million. That was the sum then thought to be needed to put the corporation on a strong financial basis. Now, a few years later, we are asked for amounts well in excess of that. It would be helpful if the Minister could tell us precisely what amounts are needed.

Not all our criticisms of the Bill are criticisms of being asked to subsidise freight operations. We have constantly stressed our awareness of the problems facing the corporation. We do not in any way underestimate the difficulties that the NFC faces in endeavouring to place its operations on a sound and viable footing. We have paid tribute to the efforts by management and unions in the corpora- tion to ensure that in future it operates competitively and on a totally commercial basis in competition with all other road-based organisations.

That has not been easy for it. During a period of recession its rail-based organisations have made considerable losses and it has had to live through a period of considerable uncertainty because of the political debate that has taken place about the future of certain of its subsidiary companies.

Again we pay tribute to the efforts of the NFC. We certainly feel that there is a strong case for the grant payable under this clause to be reduced in the monner in which we have suggested, namely, from £50 million to £25 million. But certainly we are also willing to hear what the Minister has to say in support of reducing it only to £30 million.

The money is only a temporary blood transfusion, as was made clear by the Minister on a number of occasions. As such it is an unsatisfactory way of dealing with an important nationalised industry. We hope very much that in the near future the prospects for the NFC can be put on a sound financial footing and that it can get a clear understanding of where it is heading so that management and employees can work together to ensure that it establishes itself as a strong, viable and commercially competitive haulage organisation.

Mr. Horam

I thank the hon. Member for Faversham (Mr. Moate) for his words, with most of which I would concur, particularly his concluding remarks when he explained that we are talking about only a temporary blood transfusion in the Bill, something which is quite different from the reconstruction which we are proposing to carry out later. I am sure that that reconstruction will be the basis of a sound company, but it is distinctly different from what we are talking about now.

The effect of the Government amendment is to reduce the limit on grant payable to the NFC from £50 million to £30 million. The background to the amendment is similar to that of the corresponding Government amendment on rail freight. The circumstances are well known to the hon. Members who served on the Standing Committee. The figures in the two amendments are similar. The Opposition have now proposed a reduction to £25 million and I am proposing one to £30 million. The reasons for making the two reductions—on rail freight and for the NFC—are different, reflecting in each case the circumstances of the organisations and the nature of the grant. We pay to the NFC a cash flow deficit grant. This is an appropriate form of grant to sustain the corporation for a period while its financial position and prospects are examined and preparations are made for any capital reconstruction which may be necessary.

If we decide on a reconstruction we can hope to introduce the necessary legislation in the next Session of Parliament. I can say nothing at this stage about any statement we may make, because, quite clearly, we have not decided yet when that should be made. The nature of the timetable, however, is fairly clear. There will be legislation in the next Session of Parliament dealing with the financial reconstruction of the NFC, and there will be a statement before that. I cannot say more than that at the moment.

The £50 million grant provided for in the Bill was intended to last from the beginning of 1977 until about the middle of 1978, that is, until this further legislation could be enacted. Of course, we cannot be precise either about how long the grant would last or about how long the legislation processes might take, but the intention was to work to broadly the same time scale in each case.

The reason for proposing a reduced limit is very straight forward. The Bill is no longer to run from 1st January but from enactment, and payments totalling £20 million have been made so far this year which will not count against the limit in the Bill. So it is appropriate to subtract that £20 million so as to leave the provision in the Bill at the same effective level as originally intended.

Let me reply to the hon. Gentleman's specific point about the total of the grant paid to the NFC so far. It is £20 million since the beginning of 1977 and this is not covered by the Bill and is quite separate from it. The sum of £22 million was paid in 1976, and there was no payment in 1975. That makes a total so far, excluding the Bill, of £42 million.

The House will want to know why some £20 million has been made available to the corporation so far this year. It may seem curious that such a relatively large amount of grant has been made necessary. As I explained in Committee, however, since what is being paid to the corporation is a cash flow deficit grant, it does not relate directly to the corporation's performance on revenue account. What has happened is that the corporation's actual cash payments over the first quarter of 1977 have been abnormally heavy. This is due notably to one particular payment which the corporation has made to the British Railways Board of some £10 million in settlement of a long-standing dispute over the NFC's share of the deficiencies in the board's pensions funds. Again I referred to that in Committee.

Mr. Ian Gow (Eastbourne)

Will the Minister say under what statutory authority the £10 million to which he has just referred has been paid?

Mr. Horam

Under the Appropriation Acts.

If this amount is excluded, the amount already paid is quite consistent with the expectation that a further £30 million grant should see the NFC through to the middle of 1978.

There are two further points that I should make. Once again, the £30 million is not an entitlement: it is a provision. The NFC will have to demonstrate its need for it to us before grant is paid, just as it does at present, and I think that I went into detail in Committee about how it must make its case to us.

The existing system of controls on the grant, which I have described, will continue to apply. There is no advantage in reducing this provision below what in our best judgment is necessary to see the corporation through until its finances can be put on an enduring footing. We must now make all possible progress with whatever measures are necessary to this end, and I assure hon. Members that this is what we shall do.

Mr. Gow

It is a rare event that there should be a Bill before the House of Commons which authorises public expenditure of £50 million and which is then amended on Report to authorise the expenditure of only £30 million. That sense of temporary joy which had infected all of my hon. Friends and which must have been scrutinised most closely by the recipient of that famous letter of 15th December last, Dr. Johannes Witteveen, is short lived.

Although it might have been open to some Ministers to present this amendment as showing that the Government are saving £20 million of public money, no such attempt at deception would have been possible from the Under-Secretary. Those of us who had the privilege of serving on the Standing Committee came to respect and admire, and many of us paid constant tribute to, the way in which the Minister conducted this Bill in Committee. It is entirely characteristic of him that he should explain to the House most frankly that although the Government have knocked £20 million off public expenditure by virtue of the amendment, in reality this money has been transferred to the NFC already in this calendar year, if not in this financial year. Therefore the sense of gladness and joy which had affected us, and which no doubt had spread to the headquarters of the International Monetary Fund, was short lived.

6.0 p.m.

When we are considering the allocation of funds to the National Freight Corporation, our minds no doubt go back to last year, when the hon. Member for East-bourne introduced a Bill to de-nationalise the National Freight Corporation. We are entitled to reflect that if that Bill had been passed, it would not have been necessary to debate this Bill at all, because the National Freight Corporation would have either survived or sunk upon the basis of the disciplines of the market place.

What I am very frightened about is that we are now—if we allow this Bill to go forward to Third Reading and send it to another place—propping up a nationalised industry which has been in constant breach of the Act introduced by the Labour Party in 1968. I remind the Under-Secretary of State that, under the terms of the Act introduced by his own Government, there was laid upon the National Freight Corporation, as there was laid upon the National Bus Company, an obligation to break even financially, taking one year with another. That was not an obligation laid upon the National Freight Corporation by my hon. Friend the Member for Sutton Coldfield (Mr. Fowler). That was an obligation laid upon the National Freight Corporation by the precursor of the Government of which the Under-Secretary of State is a member.

Here we are debating the allocation of a further £30 million to the National Freight Corporation—to a corporation which has been in almost continuous breach of the very obligation laid upon it by the Under-Secretary of State's precursor. That is why the House is entitled to look very closely at the proposal to allocate £30 million.

There is something else. The Undersecretary of State, with bated breath, told us a few moments ago that before many months were out, and if he is still occupying that position in the Department of Transport, there would be measures laid before us for the reconstruction of the National Freight Corporation. That reconstruction is long overdue.

There ought to be engraved upon the heart of the Secretary of State for Transport the words which appeared in the 1975 annual report of the National Freight Corporation. This was how the present structure was summed up by the chairman: It"— that is the corporation— has to resort to extra borrowing to service its compulsory 'dividend' on the 100 per cent, loan capital—even in years of bad trading. It has also to borrow further to pay the interest on the interest on earlier borrowings—a bad practice reminiscent of medieval usury. That is how the chairman of the National Freight Corporation in 1975 summed up the financial structure of a nationalised industry. Who appointed the chairman of the National Freight Corporation? It was, of course, the Government.

Perhaps I may give some advice to the Under-Secretary of State. Not so many months ago, seated beside him on the Treasury Bench was a predecessor of the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans)—the present noble Lord, Lord Glenamara. The noble Lord now presides over Cable and Wireless Ltd, and Cable and Wireless Ltd, almost alone among the nationalised industries, made a profit in the year 1975 in excess of £28 million. For the year 1976—although the audited accounts of Cable and Wireless Ltd are not yet available—there was a profit substantially in excess of £28 million.

Here is a suggestion to the Undersecretary of State. Why not transfer the noble Lord from the chairmanship of Cable and Wireless Ltd to the chairmanship of the National Freight Corporation? He is only a part-time chairman of Cable and Wireless Ltd at a salary of £9,080 a year. Surely he could become the part-time acting deputy chairman of the National Freight Corporation. Perhaps then we should not have the need for another Bill, and perhaps then the reconstruction of which the Under-Secretary of State spoke would not become necessary. I offer that suggestion to the Undersecretary of State—that the profit-making Cable and Wireless chairman, who is already serving on a part-time basis, might be allowed to offer his services part time to the National Freight Corporation.

I have referred to the 1975 annual report of the National Freight Corporation. Happily, and in the nick of time, we have presented to us the 1976 annual report. "Dear Secretary of State", wrote the chairman of the National Freight Corporation on 25th April 1977. That is how he began. In the course of his report he said: we look forward to the early implementation of changes in our financial structure ". Those are not my words. Those words come from the chairman himself.

Earlier the chairman recorded this triumphant result. He said: the Corporation's total deficit in 1976 was £15 million, compared with £31 million in the preceding year ". I hope that the Under-Secretary of State will tell the House what is his estimate of the deficit in 1977. It was £31 million in 1975 and £15 million in 1976. What will the deficit be in 1977?

From what is said later in the report we can see how great is the gulf between the world of myth and mythology in which the Government live and the real world inhabited by the noble Lord, Lord Glenamara, and myself. We see how great is that gulf when we read this sentence in the chairman's report. This is what he says: It is no part of the Corporation's philosophy to be subsidised ". That is what the chairman says. How can he write this after a deficit of £31 million in 1975 and £15 million in 1976 and at a time when the Under-Secretary of State, who owns the National Freight Corporation, is introducing a Bill to give another £30 million to the National Freight Corporation? How that can be done without underlining the world of mythology created by nationalisation remains a mystery to my hon. Friends, and even to hon. Members in the Liberal Party.

The amendment would save £5 million, and I am anxious lest the enactment of this Bill will simply perpetuate the inevitable tendency of the National Freight Corporation to escape from the disciplines of the market place. The National Freight Corporation accounts for only 15 per cent, of the total freight movement in this country. It is in no sense in a monopoly situation at all. No preference is given to the National Frieght Corporation, although great preference is given to British Rail and to the National Bus Corporation. But that is not so with the NFC. In its activities it has to compete openly in the market place.

Where it does not have to compete in the market place is in the provision of capital. That is why we are debating the Bill this afternoon. It is only through Government grants—to use the Under-Secretary's words, which I wrote down—to meet a cash flow deficit that we are able to keep the NFC afloat. I say that it is no business of this House and no business of the Under-Secretary to make taxpayers' money available in grants to the NFC to subsidise a service which is in no need of subsidy.

When the Under-Secretary comes back, as he will, and asks for more money to make up the deficit this year, we shall be driven more and more to the conclusion—and we shall carry Labour Members with us—that the NFC ought to be dismembered and its assets sold and that we ought to remove this burden from the backs of the taxpayers.

Finally, when we are debating these matters the House of Commons ought to remember that it is the trustee for the money the spending of which it allocates in Bills of this kind. We shall shortly be debating another amendment, but I do not think that the Under-Secretary has made out the case for giving another £30 million to the NFC. There is no guarantee at all that this money will be used in the public interest and there is every reason to believe that it will be swallowed up in an NFC set up with the duty to break even but which since it was set up under the Transport Act 1968 has been in almost continuous breach of the solemn statutory duty laid upon it by those who set it up.

Amendment, by leave, withdrawn.

Amendment made: No. 6, in page 2, line 10, leave out '50' and insert '£30'.—[Mr. Horam.]

Mr. Norman Fowler

I beg to move Amendment No. 7, in page 2, line 13, at end insert: 'Provided that no money is paid in respect of any losses made by the National Freight Corporation's foreign operations'. What I have to say on this amendment follows very well the admirable and cogent speech made by my hon. Friend the Member for Eastbourne (Mr. Gow). The purpose of the amendment is not to rake over the ashes of the past. It is to look at what has happened with the National Freight Corporation's foreign operations over the last few years so that we may seek to learn from that experience.

It is now common ground between the parties that subsidies to freight operators are not justifiable. That is certainly our belief, and that is accepted by the Government Front Bench. That was a view first stated by the former right hon. Member for Grimsby, the late Anthony Crosland, when Secretary of State, and accepted by the present Secretary of State, doubtless with the support of his own Back Benches. Whatever may be said about home operations—and my hon. Friend the Member for Eastbourne has just said quite a lot about them—one can seriously dispute that there can be any justification for subsidising the foreign operations of the NFC.

6.15 p.m.

Yet that is precisely what we have been required to do in the past couple of years and what we did to a massive extent in 1976. In 1976 it was announced that the French operations of the NFC were to be closed down. What was remarkable about that announcement was that it was only a little over 12 months after those very French operations had first been started. The decision had been taken by the NFC to go into France. At the beginning of 1975 the NFC announced to the Press that it had bought five companies in France with a total fleet of more than 600 vehicles. Just in a little over 12 months the NFC lost about £12 million, because that is the remarkable total which it managed to lose in that time. The only hope there is for the taxpayer for any return lies in legal action before the French courts.

In some respects what was just as bad was the way in which that loss was presented to the public by the NFC. Referring to its losses in France, the 1975 annual report of the NFC said: It is perhaps fortunate that the experience was gained in a relatively short time scale and decisive action has been possible to contain the position. In fact, the "decisive action" which the NFC referred to was not decisive action at all, but was the closing down of the French operations in toto.

The Secretary of State's own reaction to that loss was no better. During the Second Reading of this Bill, when challenged on the NFC's record overseas, the right hon. Gentleman said: The NFC, although no doubt wiser as a result of its experience, should not be inhibited in the exercise of its business judgment. The right hon. Gentleman went on: Sometimes risks succeed and sometimes they do not, but I see no reason why the public sector should be inhibited in that way."—[Official Report, 20th January 1977; Vol. 924, c. 653.] What this convenient theory surely means is that in this case it was not the NFC which was taking the risk but the taxpayer, who not only took the risk but lost heavily as a result. It was the taxpayer who lost to the tune of £12 million.

The fact is that there is scarcely any company in the private sector road haulage industry that could sustain this scale and size of loss. Nor is it open to the private haulier, whether large or small, who gets into difficulties with a business venture, to come to the Government and ask for help.

Let us for a moment leave aside the large private road haulage companies and take the position of the 80,000 one-vehicle operators of Britain. Many of them have had very real and extreme difficulties during the recession over the past two or three years, but no friendly Government have been on tap to offer them a helping hand; nor would they expect it. What they also would not expect is the Government to pick up the bill for the business mistakes of people who are in competition with them.

I make two further point. First, the NFC was a nationalised undertaking which went to France and sought to rationalise the petro-chemical industry in France. We can argue many things about the NFC and its role, but I do not think that anyone can seriously claim that it is part of the NFC's role to rationalise the French petro-chemical industry.

I wish to ask the Minister what he thinks would happen if a French nationalised concern were to set up in a major way in road haulage in the United Kingdom. How would the Government react—and, indeed, how would the unions react—if it were shown that a foreign industry, in order to establish itself in this country, were undercutting rates with the backing of money from a foreign Government? That was the situation as some people on the other side of the Channel saw it.

I wish to emphasise to the Minister that there has been no questioning of the collapse of the French venture. The NFC caused a great deal of bitterness by its actions among French trade unions—not surprisingly, given the scale of the collapse. Resentment at the effects of the collapse was not confined to French trade unions. It also affected British companies operating in France.

Let me quote a letter written by a firm, Price and Pearce, which conducts operations in France: The unfortunate result of the National Freight Corporation's initiative in France is reflected in the reaction of the French Government and industry to further expansion by British companies in the transport sector. They just do not want it and so the private sector suffers from the mistakes made by its own Government-controlled bodies. There we have the full extent of the disaster that was the result of the intervention of the NFC in France. It went even beyond the loss of public money and affected the livelihood of French trade unionists and the way in which the French Government and industry regarded other British interventions by British industry in France. That is a serious indictment of the situation, and the Government should seriously consider this matter.

I believe that lessons should be learned from this episode. Organisations such as the NFC when operating overseas should start operations in a totally different way. Instead of beginning at the top with the acquisition of five companies and 600 vehicles they should adopt the more moderate and modest approach of the highly successful Transport Development Group in the private sector, which operates in Europe by making a small investment and then seeking to build upon it. It can make no sense to proceed in the way in which this venture took place.

The talks which I have had lead me to believe that at least that lesson has been learned in the NFC. For that reason I may not press this amendment to a vote. However, the Minister should be under no misapprehension about how seriously we regard this incident and the lessons to be drawn from it. The Government should make clear that no further public money will be spent in this way. We have already lost too much money on this venture, it has done too much damage, and there can be no question of a repetition of this sorry tale.

Mr. Horam

This is one of the series of amendments that the Opposition—unsuccessfully—tried to make to the Bill in Committee with a view to excluding various parts of the National Freight Corporation's operations from grant. I then explained in some detail why such amendments were impracticable—because they were inconsistent with the concept of a cash flow deficit grant provided in Clause 2.

Let me seek to clear up some of the questions which, raised in Committee, still trouble the hon. Member for Sutton Coldfield (Mr. Fowler), about losses made by the NFC's European subsidiaries. It is right that we should be as clear as possible about what happened.

The cost of closing the loss-making French subsidiaries was put at £11.4 million in the 1975 annual report and accounts. This comprised £6.4 million accumulated trading losses, plus £5 million additional closure costs. This is a provisional figure and depends on, among other things, the precise outcome of the action which the NFC is now taking in the French courts against the former owners of the Exatrans group of companies. The corporation has stated in its 1976 report, published last month, that this may well prove to be an over-pessimistic figure. The corporation will make any adjustment necessary in future accounts.

The figure of £11.4 million covers only the corporation's French subsidiaries. In addition, NFC has also disposed of a German road haulage subsidiary, Konig and Friedel, which was acquired in 1973. Incidentally, the hon. Gentleman was in error when he said that the French companies were acquired in 1976. The year was 1974.

Mr. Norman Fowler

I said that it was announced in the Press at the begining of 1975. The acquisition took place at the end of 1974.

Mr. Horam

I am glad that we have cleared that matter up. I was under the impression the hon. Gentleman referred to 1976, but we have established that it happened at the end of 1974.

The German companies were acquired in 1973. The German losses were consolidated in the 1974 and 1975 accounts as £0.8 million and £1.2 million. A total provision of £13.4 million has been made in the corporation's accounts in respect of losses and closure costs of all its European subsidiaries. This provision relates mainly to liabilities to British and European banks which financed the original purchases and the companies' subsequent cash requirements.

The Government have taken the view that the NFC must be in a position to meet these liabilities, and all but about £7 million have now been paid off. The final net cash requirement of this part of NFC's business will depend on whether NFC is successful in its current court action in France.

Mr. Moate

Does the Minister agree that the figure of £13.4 million does not include the original acquisition costs of the French or German companies, and that we have not been given the figures in that respect?

Mr. Horam

Off the cuff, I think that it covers the acquisition costs. That is a total figure, although subject to the possibility that the £5 million allocation may be less than that because we do not know what will be the result of the court action in France. The corporation between 1973 and 1974 acquired four groups of businesses on the Continent. They were the West Germany haulage concern of Konig and Friedel; a refrigerated transport company in France, later known as Tempco France; a controlling 51 per cent, share in a French forwarding business, Satco; and several tank haulage companies in France brought together as the Exatrans Group.

The hon. Gentleman, both in Committee and today, tried to suggest that the corporation sought to rationalise the French petro-chemical industry. The size of its stake in the French petro-chemical industry was not such that it could have tried to rationalise that industry. That is not the corporation's main business. Its main business is haulage, which may take in other things such as cold storage and associated matters, but it had only a small share in the French petrochemical industry. Therefore, it is an exaggeration to say that the corporation had any intention of rationalising that industry in the normal industrial meaning of the word.

6.30 p.m.

Mr. Norman Fowler

Subject to correction, those words were not mine, but the actual words used in the original Press statement from the industry itself. Presumably the guidance that was given to the Press came from the NFC.

Mr. Horam

I have no idea where the guidance came from or where the Press reports originated. It is an exaggeration, given the corporation's stake in the French petro-chemical industry, which is a very large industry, to talk of rationalisation.

The three main groups of continental business subsequently failed and were disposed of, and the reasons for the failure were given in the NFC's 1975 report.

The major factor, and one which could not have been foreseen when the plans were being drawn up, was the onset of the very severe recession in Western Europe. In France alone several hundred road haulage concerns were forced out of business. The NFC has acknowledged that the situation was aggravated by local management errors and that some of the companies it had acquired turned out to have been in a very poor state. This is the subject of the current court case affecting the Exatrans group.

I am sure that the hon. Member for Sutton Coldfield is right when he says that many lessons have been learned. I concur with some of his remarks. This was a very bruising experience for all concerned. I have no doubt that the NFC, if it is ever in a position to expand in this way again, will have learned a lot, as will have other firms as well.

These sort of problems are not confined to the nationalised industries. Property speculators and property developers have had similar problems in Paris over the years. It is overly political to say that this is something to do with the nationalised industries. It is something that many companies have experienced, both in the private and public sectors, and, no doubt, they have learned their lessons.

Mr. Norman Fowler

If the Minister intends to use that analogy, will he not agree that the great difference in this case is that the taxpayer has been left to pick up the bill? He talks about the NFC learning lessons. Can we have an assurance that the Government, who play some part in the approval of such overseas investments, also have learned lessons? To put it no higher than this, I hope that they will be extremely cautious before allowing such investment to go ahead again.

Mr. Horam

That implies a view of the Government's relationship with the nationalised industries, and one which I would not necessarily accept. We do not want to interfere with the nationalised industries or their investment programmes. I make that as a general caveat, but, obviously, we would not readily allow the NFC to repeat further adventures of this kind without clear assurances. However, I would stress that one should not suppose that there is between Government—any Government—and the nationalised industries a relationship which means an interference with investment in the way the hon. Member's question implies.

Whether this is right in the general situation is a matter for debate. In this particular case, the NFC was seeking approval for overseas investment, which it must do if the investment is substantial.

Mr. Norman Fowler

But the Government must have a view. In the light of the disaster that we have seen I hope that they will take a very cautious view in the future before permitting a repetition of that disaster. We are not asking for a general view about the investment of nationalised industries. We are asking for specific assurances about a specific case.

Mr. Horam

Certainly we would take an extremely cautious view, and I hope that if the hon. Member is ever in my position he also will take a cautious view. May I remind him that some of these adventures were undertaken when a Conservative Government were in power? I think it is best that we end on this apolitical note.

The hon. Member should get the question of the taxpayers footing the Bill into perspective. The amount of the grant made available to the NFC has been offset in its entirety by a restriction that has been imposed upon the amount of money that the corporation can invest. If one takes the public expenditure exercise on the basis that operated until last autumn, there would have been no increase at all in public expenditure as a result of the action that the Government took. Since last autumn—certainly for this current year—we have a different form of public accounting whereby investment is not inside public expenditure proper. It is distinct from public expenditure. It is worth while bearing in mind that the Government are restricting the amount of money being made available to the corporation for investment to offset the grant that the NFC needs to meet the situation in which it finds itself. This is an example of the attitude we are taking on tiding over a company with taxpayers' money.

In the light of the explanations that I have given about the breakdown of the European activities and the losses made, I hope that the hon. Member for Sutton Coldfield will withdraw the amendment.

Mr. Gow

Despite the urbane words of the Under-Secretary, I hope that my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) will not withdraw his excellent amendment, not least because its excellence was matched only by the excellence of the speech that he made in supporting it. The two taken together should persuade my hon. Friends that it should not be withdrawn.

The effect of Clause 2 and the amendment that we passed a moment ago is to give the Secretary of State the power to transfer £30 million to the NFC at such times and in such conditions as the Secretary of State thinks fit, without further recourse to Parliament. It may be argued that in this day and age a grant of £30 million from the Government to a nationalised industry is not a very large sum and that we should be thankful that it is not even larger.

The amendment moved by my hon. Friend would seek to put a limit on the unlimited powers that the Secretary of State will have if this clause is allowed to pass unamended. The restriction that the amendment seeks to impose is that no part of the £30 million should go in respect of any losses made by the NFC's foreign operations.

There is one preliminary remark that I should like to make, and it is the only slightly unkind one that I shall make about the Under-Secretary. He referred honestly and openly to the accounts of the NFC for 1975-76. The hon. Gentleman was less than frank with the House in one respect only. He did not refer the House to page 17 of the 1975 accounts. Having explained that the total losses made by the National Freight Corporation in its foreign adventures were about £11.4 million—of course, he rightly said that the figure might be a little less than that—he did not refer the House to page 17 of the 1975 accounts. There we read this sentence: The five year plan"— that is, the plan for the foreign operations of the NFC— approved by Government, envisaged cautious but steady progress". The point is that the whole of the NFC's foreign operations were carried out with the prior approval of the Government. The Minister said that there was provision in the accounts for a loss of £11.4 million, though he rightly said that the final figure might be a little less than that.

Would it not have been right and courteous for the Minister at least to have expressed a few words of apology to the House and to the taxpayer for the fact that the scheme to which he or his predecessor gave specific approval—namely, a foreign venture—resulted in a loss of £11.4 million or, possibly, slightly less? It would be salutary for the reputation of this House and for the honour of Ministers if, when something which they approved had cost the taxpayer £11 million-plus, some word of apology were given to the House.

Mr. Horam

I apologise, if, indeed, this Government ought to apologise. It was, however, the former Conservative Government who approved these matters. Therefore, we should look to the Opposition for an apology.

Mr. Gow

I do not think that the hon. Gentleman is right. But, even supposing he is right, that will highlight something to which I shall come later.

The Minister, when commenting on the loss of £11.4 million, said that we should not worry too much about it because losses had been made by other people. That is perfectly true. But there is an important distinction between the public and the private sectors. Any man is free to choose whether to invest his money in a privately-owned industry or enterprise, and he runs the risk that the company may lose his money or may make a reasonable return and even a capital profit on it. The difficulty about the public sector is that none of us has any choice.

The whole philosophy of the Labour Party is that we should not have any choice. Labour Members believe that large sections of the nation's economic and industrial life ought to be transferred to the State. Indeed, that has been happening since that dreadful day—4th March 1974—when the right hon. Member for Huyton (Sir H. Wilson) formed his Administration. Since then the British National Oil Corporation has been set up and has passed into the hands of the State. British Leyland, to the extent of 95 per cent., has passed into the hands of the State. British Aerospace and British Shipbuilders have been set up and have passed into the hands of the State.

Every time we have had a Labour Government, large areas of the nation's industrial and commercial life have passed into the hands of the State. Therefore, the choice available to the public is diminishing. Power, wealth and decision-making have been concentrated more and more in the hands of a few fallible politicians seated upon the Treasury Bench.

That brings me to the Under-Secretary's intervention. Even supposing, although I do not believe that it was the case, that the approval to which reference is made in the 1975 accounts for these foreign operations was given by the Conservative Government, it still underlines the basic point that it ought not to be up to Governments to allow or to disallow commercial and industrial adventures of this kind. If only these operations had been carried on by a company in the private sector, there would be no complaint if the shareholders who had freely decided to invest in the company had lost some or all of their money.

6.45 p.m.

The amendment seeks to restrict and curtail the power of the Secretary of State to use taxpayers' money to bolster up or to meet the losses of the foreign operations of the NFC. Of course, the amendment would also receive the warm support of the Chancellor of the Exchequer, because in his letter of 15th December to Dr. Witteveen, with which the Under-Secretary will be familiar, the right hon. Gentleman wrote: an essential element of the Government's strategy will be a continuing and substantial reduction over the next few years in the share of resources required for the public sector". If the amendment is accepted, it will meet the wishes of the Chancellor of the Exchequer. Who am I to seek to drive a wedge between the Under-Secretary of State and the Chancellor of the Exchequer? We wish to preserve total harmony between Ministers on the Treasury Bench. I do not know whether the hon. Gentleman has had the opportunity of having a discussion with the Chancellor of the Exchequer, but I hope that he has. If he has not been able to have a discussion with his right hon. Friend, has he been on the telephone to Dr. Witteveen, because it was Dr. Witteveen to whom that letter was addressed by the Chancellor? I believe that, with those two very powerful men—the Chancellor of the Exche- quer and the Managing Director of the International Monetary Fund—supporting us and with the support of my hon. Friend the Member for Sutton Coldfield, there can be little doubt that the Government will accept the amendment.

Mr. Norman Fower

The point which concerns me most is whether Dr. Witteveen has a vote in these proceedings.

We voted on this amendment in Committee. I believe that the National Freight Corporation has taken on board the message which is implicit and explicit in the amendment. I believe that the Government have also taken it on board. Clearly, I cannot and will not take responsibility for an investment made at the end of 1974 after nine or 10 months of a Labour Government. Therefore, I do not think that it is appropriate at this stage to force the amendment to a division. However, I hope that the NFC and Sir Daniel Pettit will take on board that an incoming Conservative Government will not approve the kind of investment that we have seen in this instance. I believe that the NFC knows that already. If not, we are underlining it.

In the circumstances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed.

That the Bill be now read the Third time.

6.50 p.m.

Mr. Norman Fowler

I should not have thought that the Minister would have so little to say about his own Bill and that he would be moving it formally, but that shows one aspect of the Government. Doubtless men somewhere are now busy scribbling notes to the Minister that he will use during his intervention later in our proceedings. I see that he already has a note.

Mr. Horam

I was only too anxious to give the hon. Member for Sutton Cold-field (Mr. Fowler) a chance to say something. After the consideration that the Bill was given in Committee, which was unduly lengthy, I am surprised that he has anything further to say.

Mr. Fowler

When the Minister is short in his speeches, it is always a matter for rejoicing on this side. I can certainly confirm that. He has said that the time that the Bill spent in Committee was unduly long, but I should point out that the Committee put the Bill under great and intense scrutiny for which the taxpayer will thank us even if the Minister does not. However, I do not wish to bring the Bill to an end on a note of acrimony.

A point about the Bill that should be taken on board is that it is exceptional. Both sides of the House are now united in the hope and aim that such a Bill should not be necessary again. The essential question and issue of policy here is one of justification for freight subsidy. Is there any justification for freight subsidy? Is it justifiable to subsidise not passenger movement but the movement of goods? Our emphatic view is that there is no such justification for subsidising either rail freight or—and I continue to emphasise this—road freight.

In case there is any doubt, I must also make it clear that that is the declared policy of the Government as well as our view. I hope that when the Minister intervenes he will underline that this remains his policy, because we have seen his vacillation since publication of the consultation document, and we have seen the vacillation of the Secretary of State for the Environment. The Secretary of State seems to be in full retreat from the doctrine contained in the consultation document, and if we are to believe the Observer the right hon. Gentleman has been concerned in an internal issue, if not conflict, over the contents of the White Paper on transport.

There is a need in the consideration of the Bill and of freight subsidies to realise that this is a central issue of public accountability. It is important that there should be public accountability and that British Rail should take on board the fact that we expect to have clear accounts provided for us. That is a matter of enormous importance. The rail industry tends to be judged by the public in passenger terms. I sought to establish this earlier—that the accounts as they are now presented tend to blame too much upon the pasenger industry. Whether or not the Government or British Rail accept that, there is an overwhelming case for saying that the accounts should be better presented than they are now.

We are coming into an era of debate on the Government's transport White Paper. It is of the utmost importance that the maximum amount of information should be available during that debate and the railways debate that will follow. I am optimistic that that view is shared by the British Railways Board.

I wish to make a point about the National Freight Corporation. The corporation had a better year in 1976 than in 1975, but there are some fundamental matters that affect the future of the NFC and its operation. The National Carriers organisation is still losing considerable amounts of money, and there is no question but that the problem must be tackled by either the Government or the NFC.

Of course, we come again to the financial reconstruction of the NFC. In its evidence to the 1973 Select Committee on Nationalised Industries, the NFC described its plans and set out its commercial policy. It said: None of these plans will prevail if we live in a world of subsidy, particularly if this only serves to cushion and sustain inefficient overlaps, obsolescent practices and weak management and we seek to be judged by the same criteria as private industry. We can then aim to be pacemakers in environmental and social matters through our commercial success". We want the NFC to continue with that. We want to see the NFC aiming more to bring about those particular goals, but the goal of living in a world from which subsidy has been totally eliminated has not yet been achieved. In this Bill we wish to ensure that a step is made towards the elimination of freight subsidies in this country.

One issue that the Government will have to decide is that of Freightliners Ltd. That organisation is now run with majority control resting with the NFC. I and my hon. Friend the Member for Eastbourne (Mr. Gow) have not always been complimentary about the NFC, or, at least, we have been critical in judging it. However, we agree on one point, and that is that it is better to keep Freightliners under the kind of devolved management that exists in NFC than to move it to British Rail. Whether my hon. Friend the Member for Newbury (Mr. McNair-Wilson), who was a member of the Select Committee, agree with that I do not know. It seems that the Freightliner organisation has made considerable progress during the last year towards viability. That progress should be allowed to continue, but it would be a mistake to mess about and to change the management in order to put that organisation under British Rail. If the benign smile of the Minister means that I am speaking to someone who is already converted, I am glad. I hope and urge that my views on this matter will be accepted.

I also wish to refer to the British Waterways Board, which is also the subject matter of the Bill although it has not been dealt with in great detail either in Committee or on the Floor of the House. The British Waterways Board now comes under the control of the Minister who is responsible for sport. Personally I regard that as a fate considerably worse than death, but I am also concerned about whether that Minister—who doubtless has many notable attributes—has the skill for seeking to run a major freight carrier in this country. That worries me. If the Government are going to deal with this point in the White Paper, I hope that they will take note of the fears of the board and many of its employees that a change of control here would not be in their interests.

We shall give the Bill a Third Reading on the understanding that it is an exceptional measure and that the Government will not continually be coming back seeking more help for the subsidising of freight.

7.0 p.m.

Mr. Gow

I fear that the words with which my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) closed his speech and the hopes that he expressed will not be fulfilled. It has been the constant experience of this House that we express our hope that we shall not have to provide further grants and subventions to public industries and that always those hopes are dashed.

The Transport Act 1968 laid a duty upon British Rail and the National Freight Corporation to break even, taking one year with another. In his first annual report last month Mr. Peter Parker takes the opportunity to set out the exact wording of the Act. He reminds readers of the report, as I remind the House, that British Rail has a duty to secure that the combined revenues of the authority and of their subsidiaries taken together are not less than sufficient to meet their combined charges properly chargeable to revenue account, taking one year with another. I reminded the House earlier that the same duty to break even was laid upon the National Freight Corporation. Yet we are debating a Bill that authorises the making of grants by the Secretary of State to British Rail and the NFC. Why? Because both have been in almost continuous breach of the duty laid upon them by Parliament.

When considering the breaches of the obligation it is relevant to bear in mind the words of Mr. Parker, who was appointed Chairman of the British Railways Board on 12th September last year and who, on 29th September, wrote in an article in The Times: In the 29 years since nationalisation, there have been five Acts of Parliament"— I suppose that it is six now— as well as many changes of policy. There have been 14 Ministers of Transport and I am the seventh chairman. Railways must be one of the starkest examples of the mismatch between politics and economics in Britain since the war. I agree with that analysis. We have seen, as we always see in the publicly owned sector, a mismatch between politics and economics.

That mismatch is perpetuated by the Bill, which authorises grants—not loans—of £60 million and increases borrowing by the British Waterways Board of £8 million. Loans made to public enterprises are not always repaid, and I view these provisions with serious misgivings.

My misgivings are not diminished by the fact that the Minister with responsibility for sport is to be in charge of the British Waterways Board. I should rather see that responsibility given to the Under-Secretary who is to reply to the debate. It is extraordinary that the Minister responsible for sport, who banned the Rhodesian cricketers from coming to my constituency last year, should be responsible for administering waterways. That does not fill me with confidence.

We shall be here again, Mr. Deputy Speaker. You will be presiding when further Bills are brought before us for additional subventions to the publicly-owned industries. This will go on till we have the courage to embark on a realistic programme of de-politicising decisions that have been taken for too long by Ministers when they should have been taken by those who run the industries. I regret the necessity for the Bill and I should have been happy to vote against the Third Reading. I predict that we shall be back before long with another similar measure.

7.7 p.m.

Mr. Michael McNair-Wilson

I sum up my reactions to the Bill by describing it as a rather scrappy and unsatisfactory document. It is scrappy because it asks for more money for three nationalised transport systems without giving adequate information to those of us who have had to judge whether that money should be given. It is inadequate because of the three transport systems. At least one of them has no place in the Department of Transport, and it is hardly reasonable to expect the Under-Secretary to be able to deal effectively with its problems. I am, of course, referring to the British Waterways Board.

It is an unsatisfactory Bill because it relates to three industries, all of which are waiting to hear their fate at the hands of the Government in one or other of the White Papers that we have been expecting since May. It is an unfortunate Bill because, until we know the shape of the transport industry that the Government have in mind, it is difficult to tell whether what the Bill seeks to do is relevant to the problems that it is trying to tackle.

My hon. Friend the Member for Sutton Coldfield (Mr. Fowler) was right to say that the concept of a subsidy for freight must be wrong. It is wrong in any commercial sense. The Bill, however, is about industries that are not run on strictly commercial terms and about industries whose accounting procedures leave such enormous gaps in the information possessed by those running them that they can make only the roughest guesses at the sort of losses being made by the parts of the industries for which the money provided in the Bill is required.

We have spoken already about the rail freight deficit and the question of working out the cost of rail freight. British Rail's 1976 annual report and accounts still do not try to do that. It must be wrong for the House to be trying to assess the value of the Bill on 1975 figures, but we have been forced into that situation.

The question of whether the National Freight Corporation should be allowed to invest overseas or run a Freightliner system involves another transport argument. I do not wish to enter into that tonight. I support the views contained in the Select Committee's report about Freightliners, but to argue that case tonight might bore my colleagues and keep the House too late.

I turn to the British Waterways Board The Select Committee on Nationalised Industries has a peculiar knack of starting an inquiry into a particular industry which is the subject of a White Paper. Hon. Members will not be surprised to learn, therefore, that we are now involved in an inquiry into the British Waterways Board. It is clear that the board is finding it difficult to know whether it will exist in the future. It cannot be sure whether the Government's intentions are that it should consist of a single entity, as at present, whether its amenity canals should be absorbed into the water authorities and the freight operation left separate, or whether the freight operation will be absorbed into the Department of Transport.

In Committee the Minister gave us a clear inkling about the board's future—I hope that the Under-Secretary is listening—and the Minister made it abundantly clear that the increased borrowing powers were to be spread over three or four years. He said that he thought that was the approximate time required from legislation this autumn until the canals could be absorbed into the water authorities. If the Minister looks at the Official Report of the Standing Committee proceedings, he will find that I have not misquoted him.

It is strange that a Minister from a Department should know so accurately the contents of a White Paper from another Department. If I were involved in the British Waterways Board, I should have every reason to feel deeply concerned about how a Minister from the Department of Transport appears to know the exact future of the British Waterways Board. That seems to show incredible insensitivity on the part of the Government. How does the Minister know so precisely how this additional money, to be provided in the borrowing powers of the British Waterways Board, is to be spent?

The House makes its decisions based upon information. It is clear from the amendments we have passed this evening that the Government have either had a chance to consider the strength of the arguments presented by the Opposition in Committee that the sums of money are too great or have looked at their own sums and felt that they should be amended. Either way one does not have much confidence in the original figures or in the figures with which we are now dealing.

I am grateful to the Under-Secretary of State for accepting the official Opposition's amendment about a statement to the House if any further grants are required. The House has a right to information. I have said that before. I hope that the Minister will try to persuade the chairmen of all the nationalised industries for which he has a responsibility to make their annual reports more understandable to ordinary people. We have a responsibility for seeing that the taxpayer is not taken for a ride or forced to pay for the frivilous extravagances of nationalised industry chairmen who decide, in a flight of fancy, to invest in an undertaking which is unlikely to be successful. However, the chairmen must also realise that they have a responsibility to try to assess to profitability or otherwise of any part or sector of the industries that they are running.

I shall conclude my speech by quoting words from the British Railways Board's Annual Report and Accounts 1976. I do so because I have a great admiration for Mr. Peter Parker and because I think that he is setting a new example. On page 15, under the heading "Avoidable cost approach", the reports states: Although the basic facility cost will have to be met by the business as a whole, or otherwise supported (e.g., Government support for rail infrastructure), this separate identification of costs unique to sectors ensures a high level of certainty in profit assessment. It is therefore well suited to businesses with a high proportion of indirect joint costs, such as the railways. If those rules had applied some years ago I doubt whether the Bill would have been required. As it is, I add my fervent hope that we shall not have to see anything like it again.

7.17 p.m.

Mr. Moate

Despite the hope of my hon. Friends that we shall not see the like of this Bill again, on the balance of probabilities I share the expectation of my hon. Friend the Member for Eastbourne (Mr. Gow) that we shall be here again. That pessimism springs from the nature of the Bill and from the fact that we are talking about the deficits of nationalised industries incurred in what should be ordinary commercial operations.

These deficits arise from the nature of the animal about which we are talking. It springs from the relationship between nationalised industries and the Government and is because nationalised industries are not subject to the same financial constraints as private enterprise. The operators of nationalised industries, whether they are from British Rail or the National Freight Corporation, know that finally, when their backs are against the wall, they can and will be bailed out by Government.

If we enter another period of recession, one can foresee, for example, that managers of British Rail or the National Freight Corporation will again make decisions not to charge commercial prices in order to keep certain sections of their businesses going. They would do that because they know that they will be bailed out by the Government. I cannot see any way out of that situation. That is why we are here today talking about subsidies.

The Government have reduced subsidies to about £60 million. That is only part of the story which involves the expenditure of £200 million in freight subsidies in the last three years. The Government do not believe in subsidising freight. On that there is common ground between the Government and the Opposition. We all agreed that there is no case for subsidising freight.

The present Secretary of State is determined that freight subsidies should be phased out. He has our total support. It has never been Parliament's wish that freight should be subsidised, and yet here we are spending £200 million of taxpayers' money on subsidising freight operations over a three-year period. If we consider that in the language of priorities, which we understand is the language of Socialism, we must consider what that £200 million could have been better spent on. Let us think of the hospitals that it would have built, or the overseas aid towards which it could have been directed. However, for three years these two industries, despite the total lack of any statutory provision, have run up major losses to the tune of nearly £200 million.

I fear that as long as we have this relationship between the State and major commercial activities there will always be the danger of their lapsing once again into unfortunate practices, and coming back again to the Government and Parliament for more money, in the certain knowledge that they will be bailed out at the end. Therefore, I regret that I have to share the pessimistic approach rather than the optimistic approach expressed by my hon. Friend the Member for Newbury (Mr. McNair-Wilson).

My hon. Friend—here I agree totally with him—described the Bill as scrappy and inadequate. He cited as one example of that the fact that at the tail end of the Bill, almost as an afterthought, it was decided to include the British Waterways Board. I personally think that that was almost offensive to that board. It is rather indicative of the fact that the board seems to have been treated as the poor relation over many years by Government Departments.

As the board is a Department of the Environment responsibility, it seems inappropriate that it should be in a Transport Bill. It seems even more inappropriate that it should be under the control, as my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) pointed out, of the Minister responsible for sport. Now we understand that it is proposed by the Government—I hope that this intention will not be carried into effect—that it should be transferred to the proposed National Water Authority.

The present Minister responsible for sport is the right hon. Member for Birmingham, Small Heath (Mr. Howell). I presume that the Minister in charge of the water authority will be the Minister for drought—also the right hon. Member for Small Heath. Therefore, while it would be quite inappropriate for a freight operation—I believe the lifeblood of the canals to be their freight activities—to be submerged in a National Water Authority, there is little hope for the board in any change of Minister, because from sport to drought does not offer much hope for the British Waterways Board, which has made a strong case for remaining an independent and viable organisation.

It would be helpful if the Minister could tell us when he winds up the debate, as there is genuine confusion on this point, whether the future of the British Waterways Board is to be dealt with in the water White Paper, which I believe we are awaiting, or in the transport White Paper, which I understand we are also awaiting. Perhaps he might even honour us with the date when we might expect the transport White Paper to be approved by the Cabinet and published for the world to see at long last.

I emphasise again that the Bill is the culmination of nearly £200 million of freight subsidies. I only wish that that were the end of the losses. If hon. Members dispute the figure of £200 million, they will recall that that was the figure confirmed by the Under-Secretary of State for the Environment, the hon. Member for Manchester, Gorton (Mr. Marks), on Second Reading.

One thing that we gleaned in Committee was certain information about the allocation of costs by British Rail. I should like to dwell on that for a moment. I think that there has been universal agreement that there should be a greater breakdown of British Rail's costs and greater publication of them. If the Government are to move towards a situation in which more and more sectors of British Rail have to give information about their true costs—as the Government have declared they intend—be it Inter-City or commuter or other services, we must have better figures so that the public can judge the true costs.

It is my belief that at present the concealment of the true costs on the freight operations is working to the detriment of the commuter. Taking the 1975 figures, we know that track and signalling costs of British Rail amounted to well over £300 million. The proportion of revenue that came from freight was nearly 50 per cent. of total British Rail revenue, yet the Minister told us—this was new information that we have not had previously in the accounts—that only £50 million of those track and signalling costs was being allocated to freight. Some 20 per cent. was being borne by freight, which produced nearly 50 per cent. of the revenue. Therefore, there is undoubtedly a very substantial hidden subsidy.

In future, the true costs should be borne by freight, or we should move towards such a situation, or at least the accounts should publish the actual breakdown of track and signalling costs between freight and passenger services.

We also learned something regarding certain segments of the freight operations, particularly steel carryings and coal carryings. Again, we are not to be told whether they are in profit or in loss. However, they represent such a substantial proportion of British Rail's earnings that it can only be helpful for the public to know whether those carryings for other nationalised industries are being borne at a profit or a loss.

Mr. Hairy Cowans (Newcastle upon Tyne, Central)

Would not the hon. Gentleman concede that, whether or not freight was run, a large amount of the track would still have to be there? Would he not also concede that it is right and proper that a higher proportion of the track costs should go on the passenger side due to the safety factors that must exist on that side but not necessarily on the freight side?

Mr. Moate

There is no disagreement between us on that. It is a question of what is a fair percentage. I do not think that the Government, even in their consultation document, have attempted to disguise the fact that there was a hidden subsidy for freight. Even allowing for the fact that higher costs have to be borne by the more sophisticated needs of the passenger sector, the 20 per cent.—£50 million—share in 1975 was certainly not a fair proportion of track and signalling costs for freight. If we are to reach a situation in which the commuter will have to be faced with higher fares to meet his true costs, he is entitled to say that freight should carry its true costs and that the figures should be published in full.

I turn briefly to the question of the National Freight Corporation, and I link this to the other point that I have made. In the long term, I cannot see how the relationship between the Government and the NFC, or between the Govern- ment and any nationalised industry, can ultimately result in a business being able to operate subject to the same disciplines and financial constraints as a private enterprise concern.

The example that I use to illustrate the point is that of the foreign operations of the NFC, covered so effectively by my hon. Friend the Member for Sutton Coldfield. It may be true that future Governments will be much more cautious, and that if they are approached by the NFC or any other body to take risks abroad they will be much more cautious. However, I cannot really believe that the NFC or any other body can operate truly with freedom and a sense of responsibility, risking its own cash, as a private entrepreneur would, when it knows that the Government are breathing down the neck of the board. Those bodies cannot take the right commercial decision when they go in, and they probably would not take the right commercial decision when they were forced to come out after making losses.

Here we are faced with very substantial losses in the NFC area, arising partly from road-based operations, losses which other private enterprise concerns could not possibly have sustained over this period, yet we have a Labour Party that has a commitment to a greater extension of nationalisation in the road haulage industry. That commitment was contained in its manifesto. We have not had a formal repudiation of it from the Minister, although he may tell us that today and actually clear away that bit of debris and say finally that the Labour Party has abandoned its belief that there ought to be further nationalisation of the road haulage industry.

However, faced with this record in the one area in which we have nationalised road haulage, in which we cannot really control loss-making situations, the Labour Party is still committed to a further extension of nationalisation.

It seems to me that we are coming to the end of a rather sad and sorry story. The taxpayer will be poorer to the tune of some £200 million as a result of the way in which the present Government, for three and a half years, have managed the freight operations in the State sector. By and large, that £200 million has not been the subject of specific parliamentary approval. It has been paid out under other parliamentary means, under the Contingencies Fund or the Appropriation Acts. I do not think that anyone would regard that as satisfactory.

Earlier we were told that there was some urgency because the National Freight Corporation in particular was running short of money. Surely it is an indictment of the Government's management of their own programme that it is now five months since Second Reading. We spent only three weeks in Committee, and yet five months later the Bill has not even gone to another place.

After three years of mismanagement we have witnessed a dismal performance in respect of parliamentary business management, and the taxpayer is £200 million the poorer. We have decided not to oppose the Bill on Third Reading. That being so, the Government may express their gratitude for our assistance. All in all, it is a rather sad and sorry story.

7.30 p.m.

Mr. Horam

A number of hon. Members have expressed their desire that we should not see the like of this Bill again. I suspect that that may be a rather rash expression. It would be especially rash if a Conservative Government were forced to introduce such a measure despite vehement opposition from their Back Benchers and, possibly, even the resignation from such a Government of the hon. Member for Eastbourne (Mr. Gow). I know how principled the hon. Gentleman is on these issues and I acknowledge the strength of his feelings.

Surely no man could eat such a vast volume of words, witty though some of those words have been, including several references to Dr. Witteveen and various others. Even to attempt to eat such a vast volume would cause the most acute indigestion. If such a stage were reached, I think that the hon. Gentleman would be compelled to resign. He could cultivate his garden in Eastbourne and look askance at, and perhaps make some critical speeches of, a Conservative Government. Let us hope that the hon. Gentleman will never have the opportunity to criticise a Conservative Government. I profoundly share the hope that has been expressed by many that we do not see the like of this sort of Bill again.

I shall reply briefly to the debate and answer the questions put by the hon. Members for Newbury (Mr. McNairWilson) and for Faversham (Mr. Moate) about the future of the British Waterways Board. In essence, the board will not be a subject for the transport White Paper. It is within the responsibilities of my right hon. Friend the Minister of State, Department of the Environment, who has responsibilities for sport. I am sure that when my right hon. Friend's White Paper is produced there will be considerable mention in it of the British Waterways Board.

The present division of responsibilities makes a great deal of sense. More revenue is gained by the board from selling water than from its commercial cargocarrying activities on its canals. Apart from all other considerations, if a strictly economic criterion is taken it is clear that the board should be within a water authority and under the same general supervision as the inland waterways, whether they be inland rivers or canals.

If Opposition Members consider these matters, I am sure they will concede that there is a great deal of rational common sense behind the division that has been made. I am certainly not anxious to add the British Waterways Board to my responsibilities. I have quite enough to do with the Driver and Vehicle Licensing Centre and various other matters.

I thought that I was diplomatically vague about the provision for the British Waterways Board over the next three or four years. I did not intend to be precise. Opposition Members would be flattering me if it were suggested that I have extensive knowledge of its future provision and over how many years it will extend. I was stating what I knew to be the case. My knowledge is not as extensive as has been implied. Indeed, it is not my responsibility. I cannot go very much further than I was prepared to go in Committee.

Mr. Michael McNair-Wilson

Is the hon. Gentleman prepared to say that there is no intention for the Department of Transport to take over the commercial side of the British Waterways Board?

Mr. Horam

There is no such intention. I am happy with the present allocation of responsibilities, as I have no doubt is my right hon. Friend the Minister of State, Department of the Environment. If that were not so, my right hon. Friend would not have laboured so long and lovingly on the water White Paper, which I presume my right hon. Friend the Secretary of State for the Environment will be producing shortly.

There has been general consensus on two matters. First, it is accepted that there is no justification for freight subsidies. Secondly, it is accepted that it is extremely important that any Government—I hope that this will apply to the hon. Member for Sutton Coldfield (Mr. Fowler) if he ever assumes Government responsibilities—take a stringent view of public accountability——

Mr. Norman Fowler

Not "if": "when".

Mr. Horam

That is a debatable matter. Perhaps we should not debate it at this stage. I hope that if the Conservative Party is ever returned to Government again, the Government who are formed will follow up their spokesmen's words in Committee and on Report. I hope that they will demonstrate that they mean what they say about public accountability. I have meant what I have said. I am glad to see the hon. Member for Newbury nodding in agreement.

I hope it is accepted that I took a reasonably informative posture in Committee. We are now in possession of a number of facts that previously were not generally known. I intend to continue to require nationalised industries to be as forthcoming as possible in the interests of proper House of Commons supervision of taxpayers' money, which is extremely important in itself, quite apart from the need for a compiling of general information that will be of interest to commuters and others who will be using British Rail services.

I take exception to the remarks of the hon. Member for Faversham (Mr. Moate) about the concealment of true costs and hidden subsidies. We are all agreed that we want a proper allocation of costs. It is one thing to have sensible information provided for the general benefit of the public and quite another thing to have systems of accounting and a consideration of profits that make management sense. The justification for the avoidable cost basis of accounting in respect of freight is that it makes management sense. Indeed, the hon. Member for Newbury quoted from the report of the British Railways Board which justifies that form of accounting.

I am sure that if Opposition hon. Members consider it further they will see the sense of that form of accounting. It has been evolving sensibly over a number of years. If ever they come into Government, I am sure that they will not want to change the accounting system when so much progress has been made. We do not necessarily make progress by continually changing the basis of accounting. We make progress by trying to improve a sensible system.

The present system may not be perfect and it may not meet all needs. It is not as revealing as it might be in some respects. However, it makes good management sense. We should take that point of view very seriously. The hon. Member for Faversham should drop talking about the concealment of true costs and hidden subsidies. I understand what he is trying to get at, but I do not think that he is on the right wicket.

Mr. Moate

Does not the Minister agree that his own consultation paper used the phrase "a hidden subsidy"? That was my simple point—that, if there is a hidden subsidy, almost by definition it benefits the freight operations by an exceptionally favourable interpretation of an accounting procedure which in other respects may be sensible.

Mr. Horam

I am glad that the hon. Gentleman concedes that it may in other respects be sensible. That is my point.

I should like to finish on agreements, not disagreements. We agree about the lack of justification for a freight subsidy and on the rigour with which we should approach these topics and the need for adequate public accountability. The discussions on the Bill have certainly demonstrated the importance of both those points.

Question put and agreed to.

Bill accordingly read the Third time and passed.