§ LORD LAMINGTON
My Lords, I beg to ask His Majesty's Government to state what advantages have been derived by the public from the passing of the Act of 1921 for the regulation of railways.
§ THE FIRST COMMISSIONER OF WORKS (VISCOUNT PEEL)
My Lords, the Act of 1921 was generally aimed at securing four important objects. The first was the amalgamation or absorption of the large number of independent railway companies into four large groups, a process which was completed in 1923. 673 The second was the settlement of the claims of the railway companies against the Government arising out of the possession by the Crown of their undertakings during the War. The third was the reorganisation of the charging powers of the companies, and the provision of new machinery for the adjustment of such charges and of differences arising in regard thereto between the companies and the traders and travelling public. The fourth was the provision of machinery for the adjustment by agreement between the companies and their employees of rates of wages and the conditions of employment.
I do not complain that the noble Lord gave me rather short notice of his Question, but I have no doubt that he will not expect me to go in full detail into the whole range of subjects which are included under it. Perhaps I may be allowed, however, to deal rather briefly with three or four of the main points. First, of all, as he will no doubt bear in mind, there were 121 companies, which were amalgamated into four companies. Some of those companies were in a very strong financial position, and some in rather a weak one, and the result has been extremely fortunate, because the stronger have helped the weaker, and without this amalgamation some of those weaker companies would, no doubt, owing to changes brought about by the War, have been in a difficult financial position.
I should like to quote the opinion of Sir Felix Pole, the General Manager of the Great Western Railway, who, referring to the serious financial predicament of the railways at the time, wrote:—Amalgamation was the only solution. It saved the railways.And this amalgamation did not only mean that; the strong railways financially helped the weak. It also meant that economies, which would have been impossible without such amalgamation, became possible. I should like to read what he says on this point:—I can say positively that the grouping has produced added economies and efficiency, and has been of direct benefit to the trader and to the shareholders. By providing greater security of tenure and increased prospects of advancement, it has been directly to the advantage of the employees. The economies effected have been of a substantial character.
§ VISCOUNT PEEL
This is an article on the whole question, it is not confined to the Great Western Railway. Again, in delivering judgment in 1925 upon the allowances to be made under Section 58 of the Railways Act, the Railway Rates Tribunal stated:—We have satisfied ourselves by the examination of witnesses on behalf of the traders and the railway companies that economies of approximately £1,200,000 have already been effected by the railway companies, and we see no reason to doubt the evidence of the witnesses called by the railway companies that further economies of a like amount might be expected to be effected …under certain circumstances which I need not go into. The noble Lord behind me (Viscount Younger of Leckie) shakes his head, but I am only reading from the statement of the Chairman of that Tribunal.
Certain suggestions were made as to the economies that might be effected by the amalgamation of the railways, but your Lordships will bear in mind that economies of this kind cannot bear fruit very rapidly; they must have time to fructify, and for the first few years at any rate they are largely set off by compensation to employees, displaced officials, and other persons. But the amalgamation of these companies into four large companies has enabled substantial economies to be secured in overhead charges. In railway operation also they have been secured mainly by the co-ordination of competing services, the use of alternative routes, the centralisation of control and management, the concentration of repair and renewal workships, and the standardisation of rolling stock, plant and equipment. At the same time the public have benefited directly through the provision of improved rolling stock and the higher standard of maintenance provided by the groups as compared with that afforded by smaller and less prosperous companies before amalgamation. The financial 675 position of the groups has enabled them in some cases to embark upon extensive improvements; for instance, the electrification of the suburban system of the Southern Railway, the development of the areas served by certain companies, and the provision of modern and more economical facilities at the South Wales ports.
Another direction in which the public has benefited is in the re-introduction of cheap passenger train facilities and the reduction of goods rates; and economies from amalgamation have contributed towards making these possible. Sir Felix Pole—if I may quote him again—says that he hasno hesitation at all in saying that but for the economies made possible by the amalgamation we should not have been in a position to make the large reductions in rates and charges that have been since introduced.In reference to that part of the Act which deals with the charging powers of the railway companies, a judicial body, the Railway Rates Tribunal, has been established to deal with those difficulties. The Tribunal is also a court to which traders can take their grievances. Under the Railways Act, the railway companies are entitled, until the new scales are introduced on the "appointed day" to be fixed by the Tribunal, to make such charges as were in force in respect to their railways on August 15, 1921. If no such charges were in force on that date the Tribunal, in case of difference, may determine them. At the same time it exercises jurisdiction over the charges in force and in this capacity has heard and dealt with a number of applications by traders for reductions therein.
Of the relations between the companies and their employees it may fairly be claimed that the machinery set up by the Act has minimised friction and has been beneficial to all parties, including the public. Many difficulties have been settled by the Central and National Wages Boards which might otherwise have occasioned serious trouble.
As regards the general relationship between the railways and the public under the new conditions, time of course has to be allowed for overcoming the difficulties of transition and enabling the benefits of the changes to be realised. If I may quote another railway authority, 676 Sir Ralph Wedgwood, General Manager of the London and North Eastern Railway, wrote in 1922:—The grouping system will for many years be on its trial, and it may be expected that the new companies will be correspondingly, sensitive to public opinion. Many areas will still enjoy the doubtful advantage of competition in its old form, and all will benefit from that healthier form of competition which will be the natural outcome of the new territorial organisation of the railways—the competition in facilities and efficiency between one railway and another, each using every effort to develop the revenue-earning capacity of the geographical area which it serves.Of the relations between the public and the railways under the Act, Sir Ralph Wedgwood also wrote thatone may conclude, therefore, that the relations of the railways to the trading and travelling public have been placed on a footing more hopeful than has been known before. A principle has been laid down which does substantial justice to both sides, and a tribunal has been established to which both sides may look for a broad and equitable hearing,and he went on to express the view that the proposals as to groupingwill ensure that the fullest advantage is ultimately taken of the changed outlook, both for the benefit of the railways and of the public.I hope that my noble friend will be content with that very brief answer on a very large subject, bearing in mind the fact that I received notice of it only yesterday.
§ EARL BEAUCHAMP
My Lords, I hope that neither the noble Lord who asked the Question nor the noble Viscount who has just sat down will misunderstand me when I say how much I regret that this discussion is inadequate to the importance of the topic: indeed, I think I might say that I have the support of the noble Viscount who has just sat down. Those of us who attend regularly in this House will remember that we had a very important, and interesting discussion about twelve months ago upon this very subject—the general conduct of the railways—and that the question as to whether the amalgamation had been useful or not was raised and discussed. I had hoped that either during the present sittings or, and still better, during the early part of next year when this House is not so busy we might have another discussion.
§ VISCOUNT YOUNGER OF LECKIE
Was not that entirely about the speed of trains and not about this question?
§ EARL BEAUCHAMP
The other subject came up. As I say, I hoped that we might have another discussion bearing upon this larger question and that we should have been able to find out what was the opinion, from the point of view of His Majesty's Government, from the point of view of the railways and from the point of view of the public, as to the general results of amalgamation. I must confess that I feel somewhat sceptical as to the advantages to the public from the amalgamation. But hardly like to go into this question without notice, and it may be better to postpone the matter to a day when we may have an opportunity of going into it with some fullness. In the meantime, although we let the matter go without saying anything further upon it, I hope the noble Viscount will not think that our silence involves any agreement with the idea that the amalgamation has been of real advantage to the general interests concerned.
§ LORD LAMINGTON
My Lords, I have been travelling about a good deal lately and have been trying to find out what advantages have accrued to the public from this amalgamation of the railways. No doubt other people have also been trying to find that out. The general idea seems to be that it has been very disastrous to the finest system of railways in the world. The present time, of course, when the railways are suffering from the effects of the coal strike and so on, is not a fair basis of comparison, but I understand that the amalgamation has reduced the benefits the public previously had.
I agree as to the shortness of the notice given, but I think that the answer of the noble Viscount to my Question will serve as a basis for future discussion. When he enumerated the advantages which have accrued in some cases to the railway servants from the amalgamation by the setting up of certain boards to adjudicate on wages questions, I was reminded of a statement made the other day by Mr. J. H. Thomas that since the General Strike there were 45,000 railwaymen unemployed and 200,000 railwaymen working but three days a week. That, of course, was owing very largely to the 678 General Strike, but I imagine that the amalgamation of the railways has done a great deal to produce unemployment and that the interference of the Government by means of Acts of Parliament dealing with hours and labour and rates of wages has also had some effect.
In regard to what was said by the noble Viscount on the advantages of centralisation, I was told the other day by a friend about the delay in the appointment of a stationmaster to a roadside station in Scotland. A recommendation was made a month ago that a particular man should be appointed but the recommendation went to Derby and was there still. That was one result of centralisation. I cannot believe that such an overwhelming concern as the group consisting of the London and North Western Railway and other railways serving Scotland tended either to the efficiency of the railway itself or to the general convenience of the public. It is perfectly impossible that a body of men in Derby can really take proper cognisance of what is required in the several localities served by that railway system.
I will not say more at the moment than that to my mind the amalgamation of the railway companies has deleteriously affected the working of our railway system, and I hope that when the Electricity (Supply) Bill comes up for discussion your Lordships who are present will bear in mind that Government interference and Government control always more or less spell disaster. I may say that the process of amalgamation was begun long before these Acts were passed in cases where it was realised that no injury would be done to railway management and where it was seen that some advantage was to be derived in the way of settling vexed questions arising out of competition. I am not a railway director—I wish I were—but I understood that the companies' representatives did come together to discuss matters advantageous to the working of the railways and, indirectly, to the benefit of the public.
§ VISCOUNT YOUNGER OF LECKIE
My Lords, I wish to say only a word about this matter. I think the noble Viscount has made the best possible case in answering this Question. There is no doubt whatever that there have been considerable 679 advantages, certainly in the group with which I am acquainted, because of the grouping of the four railway systems which it includes. In many respects there have been advantages in the grouping of railway systems. But what I wanted to hear was where the economies had arisen. The extravagant promises of economies that were made when the Railways Bill was brought in have not only not been fulfilled but they never can be fulfilled. It is ridiculous to suppose that the millions of pounds which it was promised would be Saved by the amalgamations will ever mature. They never can. It is obvious why that is so. So far as I can see, all you escape from are the salaries of a few of the higher officials whose duties were, of course, co-ordinated, and instead of having four general managers you have, in the case of my group, only one But you had to compensate very heavily those who were dispossessed and so far as the saving of their salaries is concerned it does not amount to anything like the compensation which has been paid to them. Unquestionably, in the longitudinal system of grouping which was referred to by my noble friend, there must be much greater difficulties than in the case of the Southern Railway where the grouping is natural and effective and embraces all the Continental traffic. But the economies are very wide of the mark which was suggested. I am afraid you will never see the economies that were promised, or anything like them.
§ LORD BANBURY OF SOUTHAM
My Lords, my noble friend Lord Peel has, with his usual ability, made an extraordinarily able answer to an extremely difficult Question. He has taken the Great Western Railway as one of the instances which shows that amalgamation has succeeded. But the Great Western Railway never amalgamated; it is the one railway that was not amalgamated. What the Great Western Railway really did was to get a few small branch lines (which it had been trying 680 to get for a number of years) on very favourable terms. It has done very well because it has not amalgamated and, therefore, the argument of my noble friend, to those who have some knowledge of the facts, is not a very convincing one. My noble friend Viscount Younger of Leckie says that the economies have not been realised. I remember in another place Sir Eric Geddes, on the Second Reading of the Bill, saying that good authorities put the economies which would result at something like £40,000,000 a year.
§ LORD BANBURY OF SOUTHAM
He said good authorities put it at£40,000,000 and then said that he thought the economies would be between £20,000,000 and £40,000,000. He put them at £20,000,000 at the lowest, and did not quite agree with other people who said they would be £40,000,000. He thought that at any rate they would fall between those two sums. I was then a member of the House of Commons and I ventured to say there would be no economies of any sort or kind, and I still, with all due deference to what my noble friend says, say there have been no economies. My noble friend mentioned an instance of a million and a quarter having been saved, but he did not say whether it was a million and a quarter saved in one year or in the whole of the seven years. My noble friend as a railway director thoroughly understands the financial operations of the companies and all he has to do is to look at the reports of the various railway companies and see how much they have taken from their reserves to pay dividends. He will see at once that amalgamation, at any rate from the point of view of the shareholders, has not been a success. I am sure my noble friend will agree that you cannot go on paying dividends from your reserves for more than a certain time.
§ House adjourned at a quarter past six o'clock.