HL Deb 19 August 1921 vol 43 cc1057-63

Order of the Day for the Second Reading read.

THE UNDER-SECRETARY OF STATE FOR INDIA (THE EARL OF LYTTON)

My Lords, this Bill. affects a settlement of the claims of the Irish railway companies in respect of the period of Government control. It provides for the payment of £3,000,000 to these companies in three instalments at the dates stated in Clause 1. Clause 2 provides for the distribution of that sum of money and for a full discharge to the Government by the companies of its liabilities to them. Clause 3 places the worked lines, of which there are fifteen, in exactly the same position as they are dealt with in the English Bill, and continues the existing provisions relating to amounts payable to the owning companies, temporarily, until the Council of Ireland makes further provisions.

Moved, That the Bill be now read 2a.—(The Earl of Lytton.)

On Question, Bill read 2a, and committed to a Committee of the Whole House.

Then (Standing Older XXXIX having been suspended), it was moved, That the House do now resolve itself into Committee. —(The Earl of Lytton.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF DONOUGHMORE in the Chair.]

Clauses 1 and 2 agreed to.

Clause 3:

Continuance of provisions of agreement as to worked lines.

3. Clause twelve of the agreement between the Government and the Irish railway companies, as confirmed by, and set forth in the Schedule to, the Irish Railways (Confirmation of Agreement) Act, 1919, which regulates the amount payable to owning companies under working agreements, shall continue in force until the Council of Ireland otherwise provide, as if in that clause after the words"during each year of Government control"there were inserted the words"and thereafter until further provision is made by the Council of Ireland."

LORD KILLANIN moved, at the end of the clause to insert the following proviso: Provided always that this section shall not apply to the Loughrea and Attymon Light Railway or to the Ballinrobe and Claremorris Railway, or to any other light railway worked by any company other than the owning company for a percentage of the gross receipts:

The noble Lord said: This Amendment is somewhat different to the one I forecasted yesterday. It is different, because I have had some discussion with the noble Earl in charge of the measure, who pointed out that my original Amendment would perhaps do more than I intended. Accordingly I have altered it somewhat, and confined it explicitly to the two light railways in Ireland which may be adversely affected by the clause as it stands. I had an opportunity yesterday of making a case for these light railways and I will not repeat what I said then. I have also had the advantage of discussing the matter with the officials at the Ministry of Transport, and, of course, one sees that there are different aspects of the case that can be taken. The net result of my conversations is this. I think it is a great pity that the Ministry of Transport did not consult and discuss this matter with representatives of the ratepayers who are going to be affected by this legislation. Their agreement has not been secured, nor have they been consulted.

If this Bill passes exactly as it is, without any modification at all, I shall consider that the contracting rights of the ratepayers and the equity of their position have not received that consideration and protection which they should receive. These ratepayers, years ago, undertook a financial liability. That liability, unfortunately, became a reality, and for thirty years they have suffered from the fact that they have had to tax themselves in order to supply dividends for these railways. The ratepayers fulfil their portion of the contract, and a number of small farmers in the West of Ireland have suffered immensely owing to this liability becoming a reality.

Now a big change is being made by the Bill in their position. The noble Earl will admit that. These ratepayers think that this change should work somewhat to their benefit. It is notorious that the position in the past has worked to their detriment, and they look naturally, and I think rightly, to their position being considered by the Government, and that at any rate they should be more protected from the losses they have suffered in the past. The noble Earl is anxious to do justice in this matter. He referred in our conversation to the fact that if the change I propose is made the railways would suffer unfair losses, but he has not, I think, sufficiently considered the losses of the ratepayers.

Under the Bill as it now stands what was formerly a liability is going to be stereotyped into a fixed and permanent charge. In the past the liability became a reality, I admit, and they had each year to contribute their share of taxation. But, at least, it was only a financial liability, and in any year it may not have occurred. But now, under this Bill, the liability becomes a fixed and permanent tax on the ratepayers. I would point out to the noble Earl that, so far as I can see, it will remain a fixed charge upon them, no matter how prosperous the railway line becomes in the future. I put that to him, because he knows that in the past this liability depended upon the traffic and prosperity of the railway. Should this line become more prosperous in the future than it has been in the past, the ratepayers will derive no benefit whatever, but will still have to contribute this permanent tax. I consider that the change is very unfair to the ratepayers and, above all, it is unjust that the ratepayers have not been consulted.

I gather from what I saw yesterday at the Ministry of Transport, in the course of our conversation, that had the representatives of the ratepayers been consulted —and they repeatedly asked by correspondence that they should be consulted, and I think they ought to have been invited to a consultation—had those interests which are now at variance and which are liable to be greatly misunderstood been duly consulted, they might have been reconciled. That is my view of the position, and I think it is most unfortunate that the Government did not follow that course. The representatives of the taxpayers not having been consulted, action has been taken over their heads. It may be the right action, but they ought to have had an opportunity of stating their case.

I had a communication yesterday from the official of the Galway County Council who is concerned with this matter to say that he had not yet even been able to see the Bill. In these circumstances I fear that this matter will not be worked smoothly in Ireland. I believe this clause will be opposed. The Galway County Council inform me that they will resist the imposition of this tax, not merely on its merits alone, but on the just ground that they were in no way consulted in the matter, although their rights under the contract, which the. noble Earl admits, are being changed. Such a result as that they should resist this imposition would be most unfortunate. I think it could easily have been avoided, and I deeply regret that the Government did not take into consultation the parties concerned. In that case I believe they could have come to a satisfactory agreement with them before they finally reached a decision. I beg to move.

Amendment moved— Clause 3, page 5, line 11, at end insert the said proviso.—(Lord Killanin)

THE EARL OF LYTTON

Your Lordships will remember that the main case for this Amendment was made in your Lordships' House yesterday afternoon by my noble friends, Lord Killanin and Lord Shandon. I was not then able to deal with the point in detail, but I assured Lord Midleton, who made an appeal to me, that I would very carefully consider the matter, and if I were not able to meet Lord Killanin, I should at least state the case of the Government to your Lordships. Though I am afraid I have not been able to meet my two noble friends, they will, I think, admit that I have given a good deal of time and consideration to the point which they have placed before me. I cannot help thinking that I really did go a long way to convince my two noble friends, in the conversation which took place between us yesterday, that there was more substance in the Government's case than they were aware of, and that less injustice was going to be done to those in whom they are interested than they thought. I am disposed to that view, because the main contention of the noble Lord who has just spoken is that it was very regrettable that those on whose behalf he is speaking—namely, the County Council of Galway—were not also present at that interview, and I took that really to mean that, had they been present, they would have been equally convinced of the justice of the case which, as they were not present, it is now my duty to submit for approval to your Lordships.

What is this case which my two noble friends have brought forward? It is the case of a small company which owns a light railway in Ireland, and of another company which works this line for them under an agreement made, I think, in 1886. The company is mentioned in the noble Lord's Amendment, and the agreement provides that. the working company shall pay to the owning company 45 per cent. of the gross receipts of the. line. By another arrangement, in any year in which.such proportion of the gross receipts falls short of 5 per cent. on the share capital of the owning company, that deficit is made good to the owning company by the Galway Comity Council. This proportion of the gross receipts of the company has never, from the beginning; paid the necessary 5 per cent., and the Galway County Council, in carrying out this guarantee, has always had to pay a sum of from £1,000 to £1,600 to the owning company. That, I thin, correctly states the position up to the time of the war.

What happened during the war? The Government took over the Irish railways, as it took over the railways in England, and, as in England, it said to the Irish railways:"For the period of control we will guarantee to von your net receipts of the year That was recognised in Ireland, as well as in England, as a satisfactory arrangement, because the year taken as the datum was, on the whole, a good year for the railway companies. For the first few months, I think even in the first year or two of that arrangement, it was not a bad bargain for the Government. Then came the period when the rise in the cost of labour and materials was so great, in Ireland as in England, and the expenses of the railways were so enormously increased, that they could not pay. Then, by virtue of the Government guarantee, the deficit on the working of the railways had to be paid by the general taxpayers of the country.

In the case of these two companies, the owning company and the Galway County Council were not affected, because, under their guarantee, they were entitled to a proportion of the gross receipts. Had it not been for the guarantee of the Government, the work of the company could not have been carried out under the new conditions, but for a time the working company was able to meet its increased expenses by virtue of the Government guarantee. Then the Government shifted the burden from the general taxpayers to the railway-using public, and authorised the railway companies to increase their charging powers, but it was distinctly understood that that increased charging power was only to meet the increased cost of running, and. was not to give the railway companies a margin for increased dividends and profits. The only effect, therefore, was that the increased working expenses of the company were met no longer by the general taxpayers, but, in the form of increased charges, by the railway users.

Now, what had been the effect of that arrangement upon the two parties who are the subjects of my noble friend's Amendment? —an arrangement which he thinks has unjustly interfered with the contract or bargain between them. The working company has received, in the form of increased charges, a payment to meet its increased running expenses due to the war, and no more, and the owning company now says:"You must give to us 45 per cent. of this increase which has come to you, because it is part of your gross receipts and therefore., under our contract, we are entitled to 45 per cent. of it." See what the effect of that would be in actual figures in this particular case. If my noble friend's contention were admitted, and this Amendment were carried, and 45 per cent. of these increased receipts from extra charges were to go to the owning company, which has done nothing whatever, the owning company would get not 45 per cent. on the basis of the 1913 traffic, but a sum equivalent to the whole receipts of the line on the basis of the 1913 traffic, and the working company would be over £1,600 out of pocket. That is an arrangement which they say would be fair. I think it would be demonstrably unfair.

The noble Lord said that I had not considered the loss to the Galway ratepayers, but there is nothing in this Bill which increases the loss of the Galway ratepayers, or imposes any loss upon them except in so far as it denies to them a right to share in something in which, from the explanation that I have given to your Lordships, they have no right to share.

LORD KILLANIN

Does the noble Earl not consider it a loss to put a fixed charge upon them for the remainder of the contract?

THE EARL OF LYTTON

I am coining to that point. I only wish to make it clear that the Government are not causing any loss to the Galway ratepayers. The Government, by this Bill, are temporarily stabilising the 1913 position, a position which was, when it was made, fair to all parties. In England they have stabilised the arrangement until the amalgamation between the railway companies provided for under the English Railway Bill comes into operation. In Ireland they are stabilising it until the Irish Government, whatever form it may take, makes some other provision. Obviously, this arrangement cannot be satisfactory as a permanent arrangement, and it is only intended as an interim arrangement.

It was impossible for the British Government to include the Irish Railways in the Bill which has just passed. The arrangements for the Irish settlement now rests with the Irish people, and all the Government can do is to say that the interim arrangement shall continue until such time as it is superseded by a Bill on the lines of the English Bill, or some other Bill which the Irish Parliament may decide to introduce. Those are the facts of the case, and I submit that the arrangement, as a temporary one, is fair to all parties, and that the Amendment, if carried, would, according to the figures that I have submitted to your Lordships, not be fair. I hope, therefore, that you will not accept it.

On Question, Amendment negatived.

Clause 3 agreed to.

Remaining clauses agreed to.

House resumed.

Bill reported without amendment, read 3a, and passed.