§ Debate resumed (according to Order) on the Amendment to the Motion for the Second Reading—namely, That the Bill be read a second time this (lay six months —moved yesterday by Lord Banbury of Southam.
§ EARL BUXTON
My Lords, my excuse for intervening in the debate is that some thirty ears ago I represented a London constituency, and though it is many years since I had to resign my seat before going to South Africa, f still take great interest in London questions. I would like to congratulate the noble Marquess, Lord Londonderry, on the very interesting and very lucid speech he made in opening this debate and in explaining the Bill before your Lordships. He pointed out the gigantic task dealt with by this Bill, and I do not know whether all your Lordships are aware of the enormous problem there is to be decided by the House and by the Board. The area concerned extends twenty-five miles from Charing Cross; it includes 1,800 square miles and no fewer than 9,000,000 or 10,000,000 inhabitants whose daily life depends on transport in this area, and the Board will have to deal with the 974 winding up and co-ordination of no less than seventeen railways or omnibus companies, something like fourteen tramway companies and fifty-eight independent companies which are dealing with omnibuses, tramways and so on. That shows how enormous the question is and how important it is from the London point of view.
I do not think that noble Lords who are opposing this Bill, and perhaps Lord Banbury specially, have quite appreciated what a fundamental change the introduction of the motor has made. It has brought about a totally different. state of affairs in the London traffic area, causing great congestion of traffic and other difficulties and dangers, with which we hope this Bill will deal. Thee growth of that change has been rapid and it becomes necessary at an early clay to deal with the problems presented by the present state of affairs differently. The noble Marquess explained to the House what inquiries have taken place regarding London traffic and how, by dint of Commissions, Committees and other examinations, there has generally grown up a consensus of opinion in favour of the proposal now before the House. If I may be allowed to say so I think, considering the amount of time, trouble, energy and intellect put into this matter, and the amount of energy and trouble which this Bill has had devoted to it, it would be lamentable if your Lordships threw out a measure of such importance to the inhabitants of London. I shall support the Second Reading and I think that my noble friends with whom I usually act will do the same,
Three principles, I think, have emerged: from the various discussions of the past—The first is that it is necessary to coordinate the various author0ities dealing with the traffic question. The second is that this can only be done by means of a central board of some character, and the third is that the board, if it is to be efficient, must be small, consisting of five or seven only. The history of the Bill is rather curious and interesting. Introduced two or three years ago, it was of mixed parentage. It was brought forward by a Labour Government and founded partly on their views, partly on the Yellow Book of the Liberal Party, and partly on what is known as the Blue Report. Unfortunately, it had a bad 975 send-off because Mr. Morrison was so exuberant, so excited, over the introduction of the Bill that he must needs say it was the greatest step forward in Socialism we were likely to have in our time. I do not think the Bill even then was either socialistic or in any sense a Bill of nationalisation. At all events, however, that gave rise to great suspicion. The cloven hoof was seen under every bush, and that phrase nearly killed the Bill of the author of it. There was some amount of justification for the opposition which then took place, apart from any question of Socialism. It was found, when the Bill was examined, that the Ministry of Transport appeared in almost every clause. I think it appeared, giving authority of various sorts, in no fewer than seventy clauses. It was seen also that the members of the Board were to be directly elected by the Minister of Transport, who was also able to dismiss them, under certain conditions, if he chose. He also would have the whole power over facilities for traffic and over fares and other matters affecting traffic.
Those are powers which, in my opinion, ought not to be given to any Department, and still less to a Department like the Ministry of Transport. These were taken to be socialistic views, and it was thought that Mr. Morrison, or the Labour Government, would, if they had the opportunity, practically pack the Board and turn it into a socialistic authority, to the great detriment, as many people thought, of the public at large in London. I think that allegation was a very unfair one to make against Mr. Morrison, and I agree with the Attorney-General who, in Committee on the Bill in another place, said:We all know that Mr. Morrison is a man of great ability and that he took great interest in this particular question. I am sure that lie would have had a single eye to the appointment of the most efficient board that he could discover.I should like to endorse that statement. It is a pity that that sort of personal attack was made on Mr. Morrison, suggesting that he would misuse his power and deliberately pack a board of that sort. I am sure that Mr. Morrison and his colleagues are just as honest men as any of their predecessors or successors, and would never do anything of that sort.
976 However, many members of the House of Commons, and many members of this House, were obsessed with the view that this was a very dangerous socialistic experiment, and this fear and suspicion had to be allayed in some way. The upshot of the matter was this. In the first place, instead of the Ministry of Transport being able to appoint the members of the Board, a body of Trustees named in the Bill was appointed to make that selection. Then the rates were referred to the Railway Rates Tribunal, and the power over facilities was taken from the Ministry of Transport, the position of the Minister was reduced to a shadow and there is no danger of his misusing his position in any way. In other ways Amendments were inserted which have been referred to by the noble Marquess. The Bill had been greatly amended and improved before it came to a. Third Reading in another place. The socialistic question having been laid at rest, and danger of political influence having been eliminated, the other House, where as we know there is a large majority of Conservative members, by an overwhelming majority passed the Third Reading. Only forty-three members voted against it. In those circumstances the House of Lords, I think, would be taking a great responsibility if it threw out a Bill of this nature, after such a Division in the House of Commons.
What were the objections taken yesterday by my noble friend Lord Banbury, and by Lord Mount Temple, to the Bill? Their objections were threefold. They said that this was a step towards nationalisation; that it was a Bill which created a monopoly; and that it was a Bill which allowed compulsory expropriation of property. I have sat in this House and the other House with Lord Banbury for something like forty years, and during the whole of that time I do not think he has ever supported a progressive Bill and one which was, as we thought, for the benefit of the public at large.
§ EARL BUXTON
The noble Lord is quite consistent, because he thinks that every Bill which comes up is bad. He is perfectly consistent in voting against this Bill, but his opposition leaves me cold. I do not think it is very practical 977 opposition, because when I read the Bill I said to myself: "This is a Bill which Lord Banbury will certainly oppose." He is a courageous man, but very nervous too. He always sees lions in the path and is fond of using the argument of the thin end of the wedge. I think yesterday he said that if we passed this Bill, before we knew where we were the whole of our Social Services would be nationalised. I rather hoped that my noble friend was;le last of the Mohicans in this respect, but I am afraid, from what we heard yesterday and I expect we shall hear to-day, that the tribe is larger than we thought it was. Lord Mount. Temple, when he was Minister of Transport, introduced a Bill—an Electricity Bill—which was an absolute monopoly of the most severe type.
§ LORD MOUNT TEMPLE
I think that is hardly in accordance with the facts, because under the Electricity Act all entities remained in the possession of the people who originally owned them, and were not taken over whether their owners liked it or not, as is the case in this Bill.
§ EARL BUXTON
My point is that what is called the grid is an absolute monopoly, covering the whole country, and under that monopoly Bill no less than £380,000,000 has already been spent or is about to be spent.
§ THE SECRETARY OF STATE FOR WAR (VISCOUNT HAILSHAM
May I correct my noble friend? I saw that statement, too, but it is a mistake. I think they added a nought.
§ THE EARL OF CLANWILLIAM
I beg leave to say that this statement was made in The Times, which is never wrong.
§ EARL BUXTON
It does not make any difference to my argument. Lord Mount Temple, when Mr. Wilfrid Ashley, carried through one of the most severe monopoly Bills that has ever been passed. I agreed with the Bill, but whether there has been spent £380,000,000 or £38,000,000 does not matter to my argument. Yesterday the noble Lord denounced monopolies. Apparently one man may steal a horse and another may not look over the fence. The first argument used by my noble friend opposite, and by those speaking yesterday in opposition 978 to the Bill, was that this was a nationalising Bill. The noble Marquess, Lord Londonderry, dealt with that so fully and clearly that I do not think I need say anything more about it, but I would like to endorse what fell from the noble Marquess as to words used by Lord Peel on the Second Reading of the Electricity Bill. This is what he said:What are the tests to show that this is not a nationalising Bill?Somebody, I suppose, probably the noble Lord, Lord Banbury, had said it was a nationalising Bill. He went on:First of all. it does not take one single wage-earner more under the control of the Government. It does not create one single civil servant in excess of those at present: it work.And he might have added that the Transport Board will not be directly a Government Department and therefore no political pressure can be brought to bear. That, I think, disposes of the question of this Bill being a nationalising Bill.
The noble Lords, Lord Banbury and Lord Mount Temple, especially denounced the Bill as creating a monopoly. Of course it creates a monopoly. It is quite clear on the face of it that if this Bill is to be effective at all it must create a monopoly, and if the different authorities are to be co-ordinated and amalgamated there must be effective control in that respect. I do not know whether some confusion does not exist in our minds about monopolies. When we speak of a monopoly we usually have in mind a monopoly by private individuals, a monopoly created not necessarily against the public interest, but primarily for the advantage of certain capitalists whose object it is, by creating a monopoly, to control markets and to obtain profits. That is a perfectly proper proceeding. But the other kind of monopoly which this Bill brings into force is carried on entirely for the benefit of the public. There is no private interest concerned, no private profit to be obtained from it. And that is a monopoly to which I think there is no objection. I should like to say this in answer to my noble friend Lord Banbury. He said you get a lot of men appointed and they do nothing; "they go to sleep" is the phrase he used. On reflection, I think he would be inclined to withdraw such an aspersion on those who 979 will be the members of this Board. They undoubtedly will be men of ability and energy.
§ EARL BUXTON
If my noble friend said he did not say it, I will not press it. But I took down what he said, which was that they would not do much when once appointed.
§ LORD BANBURY OF SOUTHAM
What I said was that all public bodies are more extravagant than private people, and that I repeat. I did not say they did nothing. They do too much.
§ EARL BUXTON
The next point made was that this is an expropriation of private property. Lord Mount Temple said that there was no option for those who are forced to sell; they had to take stock, and there was no question of cash. But the noble Marquess had already said that there was an option, and I am sure that if any question arose upon this point he would make it clear when we came to the Committee stage. It must be plain that if you are going to carry through a Bill of this sort you must have compulsory purchase. Noble Lords have received circulars, I presume—at least I have—from certain private omnibus firms whose argument is that they do not wish to go into this scheme, they wish to be left as they are, and they hope that this House will throw out the Bill. The noble Marquess said yesterday that 95 per cent. of those interested had already come to an agreement with the Ministry of Transport in regard to what they should be paid. It seems to me that this circular was a very strong argument, not against, but in favour of compulsory expropriation, because no one can think it right that if 95 per cent. have come to terms, 5 per cent. should be able to hold up the whole matter and practically kill the Bill. And, after all, there is no injustice done to them, because under the Bill they can go to arbitration. It is specifically stated that they are to have as good terms as any others, and therefore they have no claim to particular consideration. And of course there are plenty of precedents in this matter.
What are the alternatives to this Bill? We can dismiss at once the alternative of handing back to the Ministry of Transport 980 the powers that are taken away from it; nobody would agree to that. It is quite clear also that in dealing with the London Traffic Act and matters of that sort, that would not be effective for the purpose we have in view. The obvious alternative would be to have a municipal body. Undoubtedly if greater London were like Birmingham, a self-contained city which could exercise control, we should be prepared, I think, to hand the matter over to the London County Council. But that is not the case. The London County Council controls only a very small portion of the whole area—I think it is about 117 square miles out of 1,800. The London County Council, therefore, could not undertake the work. Already the area extends over the areas of something like thirteen county boroughs and county councils and it would be impossible for the London County Council to undertake the work, if they desired to do so. It is essential, we all agree, that this Board should be a very small one, and if the various county councils were to be represented upon it it would be a slow and clumsy body, incapable of practical working. Therefore I think we can rule out the question of a municipal alternative.
The other alternative is to have an elected or representative body, but it is difficult to see how you could. In the case of the Electricity Board, for instance, there was no representative body; in the case of the London Water Board it was a very simple matter; whereas the Port of London Authority is partly elective, but there are also great interests, like the shippers and the wharfingers, who are represented. But there would be really no interest that I can see which could properly be represented on such a body as the Transport Board—no corporate bodies which could claim representation. The different transport interests will disappear, and I do not know what other interests there are, except the straphangers, the pedestrians and the motorists, who could ask for personal representation. The Advisory Committee, I think, is to consist of forty-one members, of whom twenty-six will be municipal, and it would be impossible, as the Royal Commission pointed out, to pick out a few members from the number without creating much more discontent than you would remove. It seems to me, 981 therefore, my Lords, that we have to put aside the alternatives which I have suggested—I cannot think of any others which are workable—and we come back to the Bill as it stands. That being so, though personally there are one or two blemishes which may be considered in Committee, I think the Bill as a whole is workable and satisfactory, and one which will be of great advantage to the public at large in London.
But, if I may be allowed just a few minutes more, I should like to say something about the financial side of the Bill. With that part, I confess, I am not altogether satisfied. The noble Marquess in his speech yesterday tried to allay our alarms in regard to this point, and to a certain extent he did so in the explanation which he gave. But as was said yesterday, the position is this. Here is a body with a capital expenditure of £122,000,000; its estimated revenue is £5,800,000 and its surplus on the first objective is about £400,000. That is not a large balance under any circumstances to start a tremendous business of this sort, which undoubtedly will have to increase facilities and incur a great deal of expenditure. It is not a large surplus on which to start.
It was pointed out yesterday, but I do not know that noble Lords are fully aware of it, that the pro forma balance sheet is drawn up by taking the earnings of the three years, 1928, 1929, and 1930, two of them boom years and one of them init a particularly bad year. Naturally since that time the financial circumstances have altered very materially, as we know. Unemployment during those three years was about 1,000,000. There was a considerable increase in our exports, and trade was very satisfactory. Since then unemployment unfortunately has gone up to 3,000,000, the exports have fallen, and we hear from the Chancellor of the Exchequer that this depression may last a very long time. The noble Marquess suggested yesterday it would be unfair to take the bad years and estimate earnings on them. I entirely agree. I have no wish at all to argue that we ought to take the bad years as a basis for this budget; but what I do say is this, that we ought to have taken some bad years as well as good years, we ought to have taken lean years as well as fat years, and to have based our estimate on the five years ending 1932— 982 three good years and two moderately bad years. That would have been a much fairer estimate than the present one.
One or two members yesterday quoted Lord Ashfield's statement to his shareholders the other day. I am not going to repeat it, because I think most noble Lords were present. Every one knows that there is depression, and that there has been a falling off in dividends. They have been falling in the last two years, and the position on which this balance sheet is based is really now clearly out of date. I should think every one of us here would be very glad if our average income during 1928 and 1929 could be taken as our proper income for the purposes of being paid out, but unfortunately our present income is very much less. What I want to emphasise is that the surplus is not really a fair surplus on which to base the finance of this Bill. The £400,000 will undoubtedly be diminished.
One point with which the noble Marquess dealt at some length has considerably relieved my mind in this matter as to how far the Board will be able to carry on without having to reduce facilities or increase fares, and that is in regard to the charge represented by what is called "C" stock; that is, the lowest stock which amounts to £24,000,000 or 125,000,000, on which a certain amount has to be paid. Most of us who have studied the Bill thought that the "C" stock was a guaranteed stock because it says specifically in the Bill, in Clause 3, subsection (4):It shall be the duty of the Board to conduct their undertaking in such manner, and to fix such fares and charges in accordance with the provisions of this Act, as to secure that their revenue shall be sufficient to defray all charges which are by this Act required to he defrayed out of the revenues of the Board.That was thought by most of us to mean that the 5 per cent., on the "C" stock was to be paid in any case, and that if it were not paid the Board would be in default. But according to the noble Marquess the position of the "C" stock is exactly the same as that of the ordinary shares; that is to say, the amount of this dividend will be dependent on the year's receipts. But if there is a default after five years, if they do not pay the standard rate they can bring the matter into the Bankruptcy Court.
§ VISCOUNT HAILSHAM
Will the noble Earl allow me? All they are able to do is to apply to the Court, which then has to take into account the wishes of the stockholders of all sorts.
§ THE EARL OF CLANWILLIAM
May I ask if it is not the case that after the third, fourth, and fifth year if the dividends have not been paid "C" stock shareholders, representing £500,000, can apply for a receiver?
§ EARL BUXTON
I think the position is that the "C" stock is entitled under the Act, as it will be, to 5 per cent. for two years. If in the next five years the Board are unable to pay the full amount of the 5 per cent., then holders of stock to the amount of half a million pounds out of 224,000,000 will be entitled to go to the Court and ask for the receiving order in order to enforce their right. The Court will have to take into account various considerations, but at all events that is the right of the "C" shareholders, and it does differentiate them very much from the ordinary shareholder.
My Lords, I am sorry to be so long but there is one other point I hope you will allow me to make. I have said this question of "C" shares does very much relieve my mind, but there is another point to which I should like to direct the attention of whoever is going to answer for the Government. Not only has this surplus of £400,000 already practically disappeared through the depression of trade and through the limitation of transport services, but in addition, as far as I can understand, there is also a grave omission from the balance sheet altogether. In the first place it does not include, I suppose, the purchase of these private omnibuses, amounting to £5,000,000 or £6,000,000. That, of course, will have to come into the capital account and carry interest. So far as I can see, in the estimate as originally made there is no provision for the increase—a very serious increase—that has taken place in the price of petrol. Not only has the price of petrol gone up, but the tax on petrol has also gone up. I see that Lord Ash. field in his speech the other day said the increased petrol price had cost him something like £300,000 last year, and would be likely to cost more. If that has not been taken into account, and I see no mention of it—I believe in the 984 other House it was said that it had not been taken into account—that is a very large item, and will amount perhaps to £500,000 additional which will have to be met out of the surplus.
Then no provision is made for the sinking fund. It is true that does not come into operation for a little while, still it will have to be met sooner or later. It is also acknowledged that something like £10,000,000 will have to be spent, and at once or very soon, on increasing the tubes and various matters of that sort. There is no provision made for the interest on that, which will amount to a considerable sum. Nor is any provision made for the increased facilities which we may expect will be given. Still less are any provisions made for the less remunerative routes which will, undoubtedly, have to be opened out. There is also the item of the tramways account which I have vainly endeavoured to find in the accounts. The Board takes over all the tramways of fourteen or fifteen municipal authorities, including the tramways of the London County Council, and gives them stock to the amount of their indebtedness still unpaid on account of their tramway systems. That will amount to about £9,500,000, and will carry interest at the rate of 4.per cent. One hopes that may be covered year by year by the receipts from the tramways, but that is a very sanguine view to take. The tramways have not of late had good years. Last year there was a deficit, and you may be sure there will be a continuing deficit as time goes on. I see in the Bill that power is taken by the Board to cease to work these tramways, which will mean not only a deficit but also the loss of the 4½ per cent. on the £8,000,000 concerned. That is a very large item which, as far as I can see, is not met in the balance sheet.
We are told against that that there will be considerable economies which will meet some of this expenditure. I have grave doubts about that. The combine of which Lord Ashfield is Chairman covers the larger part of the full operations, and in his speech the other day he said that not only had they had cuts in the wages but they had economised to the extent of some £300,000 this year in various directions. I should say that in a business carried on as efficiently as that of Lord Ashfield's there are not 985 many gleanings in the field to be got after Lord Ashfield has been over it. I think the amount of economy we can expect will not be very great in this direction. I must apologise for having kept your Lordships so long, but I was rather anxious to make these various points. So far as I am concerned, speaking as an old London member interested in the matter, it seems to me that the Bill is on the right lines. It is to be carried out in a proper way, the appointment of the Board will be satisfactory, and we can only hope that in the result -it will be as satisfactory as this House desires it to be.
My Lords, I rise to support the Second Reading of this Bill, and also to oppose the Motions which are down on the Order Paper. When I listened to the speech of the noble Lord, Lord Banbury, yesterday I was rather surprised, because, knowing as I do that he has been associated with railway management for so many years, I could riot understand how he could find himself holding views so divergent from those held by the railway managements to-day. I believe it is common knowledge that every one of the main line railways is in agreement with this Bill; in fact, more than that, they say a great deal of their future prosperity must: depend upon the passage of the Bill. I cannot understand how my noble friend Lord Banbury, with his, intimate knowledge of and his close association with these matters, was able to get up and make the speech he did yesterday. There is another point in connection with his speech that occurs to me. He referred to the fact that he was a shareholder in the London Underground system——
—and that he knew nothing of what occurred last year when the proposals embodied in this Bill were placed before the shareholders. I am very much surprised that my noble friend should be in that position. It is very unlike the acumen which he has always displayed during his business career. But, having learned that 75 per cent. of the stock holders of the London Underground system had approved of the proposals which are embodied in this 986 Bill, I think he, as one of the minority, should have accepted that decision in the board room and not have come into this House in order to try to change the decision which has been arrived at by the majority of the shareholders of these companies.
§ LORD BANBURY OF SOUTHAM
My noble friend rather misunderstands the position. I was never a shareholder either of the Metropolitan or the Metropolitan District. I have no power to do anything except to accept what the shareholders desire. I was a debenture holder, which is an entirely different thing. I lent money to them under an agreement, and all I object to is that, money having been lent to them under an agreement, that agreement should be broken. It has nothing to do whatever with the shareholders, absolutely nothing.
I think the noble Lord will agree that the debenture holders also and not only the shareholders approved of these proposals?
§ LORD BANBURY OF SOUTHAM
I do not know whether they did or not. That is the point I am trying to make. There is nothing in the agreement to say that a majority of the debenture holders can bind the others—absolutely nothing whatever.
Well, my Lords, I do not think that there would be any advantage in proceeding with this argument, but I still believe that the position is as I have stated it. Now I should like to refer to the speech made by my noble friend Lord Mount Temple, because it seems to me that he has taken up a somewhat illogical attitude on the Bill. He admits that in 1928, when he held the office of Minister of Transport, he supported a Bill which was brought before the House of Commons by the London County Council and Lord Ash-field with the object of co-ordinating transport in London. He states that that Bill was on a voluntary basis, but the principle was the same. The fact remains that that Bill was a Bill with the object of co-ordinating transport in this City whether it was on a voluntary or a compulsory basis.
The noble Lord must realise that times have moved on since then and that it 987 has not been possible to-day to have a Bill upon the voluntary basis on which the Bill was framed at that time. Circumstances have arisen which have made it absolutely necessary to introduce a Bill which has a compulsory basis. I think that my noble friend, with all his knowledge and his intimate acquaintance with the affairs of the Ministry of Transport and the conditions of transport in London, should have been able to move forward with the times, and if he was ready to support a Bill upon a voluntary basis a year and a. half ago he should be able now to find himself in agreement with this Bill. The noble Lord asks why should he move on. I think your Lordships will agree that we have moved very quickly in the last year or two and that we have had to move on to many measures with which we should have been in hearty disagreement two or three years ago, and we shall, no doubt, in the future have to do many things with which we heartily disagree to-day.
I wish also to refer to the speech of my noble friend the Earl of Clanwilliam in which he proposed that the Bill should go before a Select Committee in the event of the Second Reading being passed. He also seemed to me to be in a somewhat curious position. He sat upon the Joint Select Committee. That Committee passed the proposals which are embodied in this Bill by a small majority. I understand that the noble Earl was one of the minority. Now, having sat upon that Select Committee, he seeks to reverse the decision of that Committee, or at any rate asks your Lordships' House to reverse that decision. I do not know what the practice of your Lordships' House has been in the past with regard to membership of Select Committees, but I have always understood that the decisions of Select Committees should be accepted by the members of those Committees.
§ THE EARL OF CLANWILLIAM
May I interrupt my noble friend for one moment? I think he is labouring under a misapprehension. I am not seeking to reverse the decision of the Committee. I simply propose that in the changed circumstances of the time, in view of the changed financial conditions of this country and the world, there should be reconsideration of the financial provisions 988 of the Bill. I have not sought, and I am not seeking, to reverse the decision of the Committee.
I naturally accept my noble friend's explanation. At the same time I would venture to submit that nearly the whole of his speech was devoted to condemning, root and branch, the financial proposals contained in the Bill, and that if this Bill is re-submitted to a Select Committee and the noble Earl's views as expressed yesterday are adopted by that Committee, it will have no other result than to kill the Bill. I believe that my noble friend Lord Jessel, who will speak directly, hopes that if this Bill is re-submitted to a Select Committee the Bill will be killed. The noble Lord will tell us whether that is so when he speaks. I believe that it would be the greatest error of judgment if your Lordships were to decide this afternoon to submit this Bill once more to a Select Committee. After all, the Bill was six months before a Joint Committee appointed by both Houses. There were many negotiations, as the result of which the financial proposals were incorporated in the Bill. Quite recently this Bill passed through the House of Commons by a very large majority.
What would be the result if this Bill were thrown out? I think it is quite certain that it would not he introduced again perhaps for many years, that the whole of the transport of London would remain in the chaotic position in which it is to-day, that the extravagance and over-lapping due to the existing competition in traffic arrangements would continue, and, last but not least, the Underground railways, which are only able at present to continue on their present basis without extension or improvement, would probably ultimately he taken over by the Government in order to enable them to carry out extensions and improvements. Indeed, if this Bill is thrown out I can foresee a far worse measure being introduced in the future, a measure containing far more socialistic proposals than there are in this Bill, and probably the Underground railways being taken over by the State and the cost of them put, not upon the City, but upon the pockets of the tax-payer.
There are many other speakers this afternoon and therefore I do not propose 989 to detain your Lordships. I only wish to add one thing. I was a member of the House of Commons some years ago when the railway companies introduced a Bill to enable them to link up road transport with the railways. The House of Commons would not on that occasion give a majority to that Bill to enable those proposals to be carried out. With what result? To-day the railway companies, after ten years, have received those powers when it is too late, and the railway shareholders to-day are in a parlous position as well as the railways themselves. I think this Bill has a very simple and useful analogy in the history of the main line railways. I believe that unless authority is given now to link up road transport in London and in the vicinity of London with the Underground railways, you will find exactly similar conditions arising in London in regard to the Underground railways and road transport as has arisen in connection with the main line railways and road transport. I propose to support the Second Reading of the Bill and to oppose the appointment of a Select Committee.
§ LORD JESSEL
My Lords, hitherto we have heard nothing but reasoned speeches in support of this Bill. If all the supporters of the Bill relied upon the arguments just adduced I am sure they would agree that the Bill is so bad that it does not bear going before another Select Committee for inquiry into finance. This seems to me the conclusion to be drawn from the noble Viscount's speech—" For goodness sake do not send the Bill to Select Committee because the finance is so bad that it will not bear examination and the House will then be asked to throw it out." I should like to say, in the first place, that that is contrary to what was said by the noble Marquess, Lord Londonderry, when he moved the Second Reading. I listened to the speech of the noble Marquess with the greatest interest, also with very great admiration, because this is a very complicated subject and he went over all the principal points in a marvellous way. In fact, he almost persuaded me that if there were any shares going about of this new "C" stock I should send in an application for them. On re-examination, however, I think this "C" stock should in future be called "C3" stock, because I do not think that the merits claimed for the finance of the Bill are 990 really justified by the financial statements that have been brought before us.
I do not think the noble Marquess in his speech quite did justice to those abortive proposals brought in by the London Electric Railways and the London County Council in 1928. Those proposals nearly passed. It was only an accident in the House of Commons that they did not. They would have been a very useful experiment, though in a rather circumscribed area; at all events they would have shown what could have been done in the way of co-ordination without allowing all these great companies to pass under public control. It has been alleged by the Government, and by many of the supporters of the Government, that there is a vast difference between the Bill introduced by the Socialist Government and the present Bill—that the alterations are so wonderful that they have transformed the measure. As the noble Lord, Lord Banbury of Southam, said yesterday, the name of the Minister is still writ large in this Bill. I think the noble Lord said it was there no fewer than fifty-seven times. I should like to remind your Lordships that the principal difference is the nomination of the Appointing Trustees instead of the Minister.
Who are these Appointing Trustees? They are the Chairman of the London County Council, a representative of the Advisory Committee, the Chairman of London Clearing Bankers, the President of the Law Society and the President of the Institute of Chartered Accountants in England and Wales. It goes on to say in this clause of the Bill thatThe appointments to be made by the Appointing Trustees shall be made after consultation with such persons as they may think fit.With the exception of the first two names, what experience have these gentlemen of London traffic? I do not believe they all live in London. I am told that one of them lives in Bristol. What will happen? I suppose they will get a letter signed by the Minister of Transport and they will travel into the, parlour of the Minister and say: "We-have a Blue Paper or a White Paper-with an official stamp and you ask us to appoint certain gentlemen to look after the transport system of London." Naturally, they will go and consult the Minister. Then there is another point 991 You will find later on that the amount of remuneration is to be settled—by whom? That is a very difficult thing when you are going to engage supermen. It is going to be settled by the Treasury. There again the Government must necessarily have a hand, and that is one of our objections to the Bill.
It has been argued over and over again that this is not socialistic and that it is on an analogy with the Water Board, Electricity Board, and the railway amalgamations. Well, we have discussed that point about electricity and I think the noble Lord, Lord Mount Temple, had the best of the argument. After all, the actual work is done now by the distributing companies which are still, thank goodness, under private enterprise. In regard to the railway amalgamations they also are in the hands of private companies and are doing their best in a very difficult time. In regard to the Water Board in London my noble friend Lord Banbury, who was in the House of Commons with me at the time, said the result was that the water was a great deal dearer. London water, I should think, as regards purity, regularity of supplies, and the way in which the machinery is 'conducted, is extraordinarily good, but whereas at the start the old companies made a million pounds profit, the Water Board made an increasing loss and it was met by a rate levied on the local authorities every year from 1908 to 1921, when an Act was passed allowing an increased scale from 5 per cent., rateable value to 8½ per cent. The result is that charges are higher now in every district; in some cases as much as 10 per cent. even about 1925. That is always the result when you get public control and take things away from individual ownership.
We object to the fact that you are going to do away with the individuality of these various concerns. The small omnibus owners are going to be compensated in cash and that is to be settled by arbitration. That is quite right and fair; but when you get to big omnibus companies like Tillings, who run, I am informed, 600 omnibuses as compared with the 4,500 run by the General Omnibus Company, you are going to do away with the esprit de corps of a great firm, and it does not make for efficient working when you jumble up together all these great enterprises. You find that 992 things are done a great deal better when in private hands than when under public control.
There is another point that has been made a great deal of in this Bill, and that is that by this Bill you are going to get rid of congestion. There are ample powers now to get rid of congestion of traffic. It. is true that a certain number of omnibuses will be taken off the road, but after all a good deal of the congestion is due to the heavy commercial traffic, and that is not going to be touched in the least by this Bill. As regards the railways, the benefit they are going to derive from the Bill is no doubt substantial but, on the other hand, I believe that on looking through. the railway returns you will find that the decrease in receipts is not so much due to loss of passenger traffic as to greatly increased competition from heavy traffic on the roads. That is a point which I think your Lordships should remember. As my noble friend Lord Banbury reminds me, heavy traffic is left entirely out of this Bill.
This Bill is no doubt going to create a monopoly, and I venture to think that a monopoly is an impediment to all future progress. The Minister for Air has been doing some interesting touring all over the world. There is no doubt that aviation will in time come within the range of transport. Within a comparatively short time it will be within the reach of private persons and companies. Only the other day I saw it stated in the newspapers that Sir Alfred Beit was initiating a new company, with millions of capital, to create a large aviation station behind King's Cross, and there is no doubt that other things of that sort will come into being, not within my lifetime, perhaps, but within the lifetime of our younger members, some of whom spoke with such enthusiasm last night for this Bill. I should like to defend London traffic, and especially from the reproach cast upon it by Lord Elibank, particularly in the presence of Lord Ashfield, that it was chaotic. That was no proper tribute to the wonderful organisation that Lord Ashfield carries on, which is the envy of every other capital city on this or the other side of the Atlantic.
There are two other points on which, I wish to speak for a moment. The first is as to the attitude of London towards 993 this question. Lord Mount Temple, when speaking yesterday, rather used a good deal of my powder, but he did point out, and I wish to support him, that all the local authorities, with the exception of about three or four, have protested against this Bill, because they fear that facilities will be reduced and fares increased. They have protested not only for that reason but because they fear that this Board, which very rightly will be looking at the matter from the aspect of transport and, necessarily, of making money, will neglect the great municipal questions of housing, road improvements and town planning, and the other amenities which are necessary in municipal life. Nearly all the boroughs of London and the Metropolitan Joint Standing Committee have passed resolutions, by overwhelming majorities, against the Bill. The London County Council, by its leader in the House of Commons, has spoken very strongly against the Bill, and curiously enough, in contradiction to Earl Buxton, Sir Percy Harris, who for 25 years has been on the London County Council and also is a, member of the House of Commons, not only spoke but voted against the Bill. He is also the leader of the old Progressive and Liberal Party in the L.C.C.
Let us look and see how London members voted, because they, after all, are the important factors in the situation. I do not want to weary the House with figures, but I believe the voting was something like 242 for and 49 against. I have looked into those figures, and, only taking the London view, I think they will show your Lordships that there is some justification for our opposition in this House to the Bill. Only 11 Conservative members voted for the Bill and 13 voted against it out of 49 Conservative members for London. I think 150 members of the House of Commons earlier on signed a petition against this Bill. They did not come along and vote, for many reasons which will be well known to the Government. They remind me rather of the discs you see in the District stations: "See how they run." They did not appear for reasons which often operate in the House of Commons. However, I have stated what is the London view. We are fearful that under this Bill facilities will be taken away, that improvements will be lost sight of, and that fares will be increased.
994 I have in my name on the Paper a Motion to refer this Bill to a Select Committee. This Bill has been before Parliament for some time it is true, but much has happened since it was examined by the Joint Committee of the two Houses. We do not now ask for any great delay. I think all the opponents of the Bill would be satisfied if the Government would grant our request that it should go to a Select Committee, and, as the Chairman of Committees told us yesterday, it is quite in accordance with precedent to have a Select Committee without Counsel to which Petitions may be presented by those who are opposed to the Bill. There are a good many of those opponents. You may sweep aside the objections of these motor car users and hirers, Tillings, and private omnibus companies, but they have all got a grievance and they have not been heard since the changes were made in this Bill. Why should they not be heard? It would take at the very utmost only six weeks or perhaps two months to settle all these things. It is only on the question of finance that we ask for this reference to a Select Committee.
I do beg the Government not to force this Bill through in the way in which they are doing, but to consent to the Motion which my noble friend Lord Clanwilliam and I have put upon the Paper. If the Government prove their case, which they think they can—the noble Marquess in his most eloquent speech yesterday nearly persuaded me to his own view about the "C" stock—then everybody will be content. If, on the other hand, you push this Bill through without any further examination, and it proves a failure, you will pave the way to a great deal of bitterness in London, when fares go up, and you will give every justification to noble Lords opposite, one of whom said in the course of yesterday's debate that he was in favour of nationalising everything, even aeroplanes.
§ LORD ASHFIELD
My Lords, may I say at once it was not my intention to speak in your Lordships' House for the first time upon a matter in which I have a large personal interest, but it has been suggested to me from various quarters that your Lordships would desire to hear from me upon a matter 995 on which I am supposed to have some considerable knowledge and experience. I am therefore laying aside my own personal inclination and will venture to address your Lordships upon some of the more important questions involved in the Bill, and upon some of the more important points which have been raised during the debate in objection to the Bill itself. But when I refer to my personal interests in the companies affected by the Bill, may I explain to your Lordships that when I entered into negotiations with the Minister of Transport I had no financial interest whatever in any of the companies whose interests are affected by the Bill, and that statement remains true to-day? Aside from the few shares which are necessary to qualify me as, a director of the companies concerned, my only interest is in the salary which I receive for my services from the companies with which I am associated. At least in addressing your Lordships I am afforded the opportunity of expressing my sincere thanks and appreciation to the noble Lords who during the debate have referred in such generous terms to my work in connection with London passenger traction.
May I, first of all, deal with a point which has been raised by my noble friend Lord Banbury? He explained during the debate yesterday that he was an owner of certain debenture stocks of the Metropolitan District Railway. I may say to your Lordships that not only was a meeting held of the stock holders of that particular class in which the noble Lord is interested. but meetings were also held of all the different classes of securities —debenture holders and shareholders as well—when the provisional agreement which was entered into with the Minister of Transport was placed in detail before those present, and that agreement received the unanimous approval of all of those who were present at that meeting. I may go one stage further and say, for the information of the noble Lord, that prior to that meeting, which took place on May 1, 1931, a communication was sent on April 2, 1931, to every registered holder of all the debenture stocks and the shares of all this group of companies, and in that statement, signed by the secretary of all the companies, there appear these words: 996I am instructed to say that it is open to debenture stockholders who desire so to do to lodge before that date petitions with the proper Parliamentary authorities and to appear in person or by Counsel before the Joint Committee.
§ LORD BANBURY OF SOUTHAM
Of course I accept the statement that a formal notice was sent, though I do not remember it. But there was nothing in this notice, as I understand, to say that the whole of the Metropolitan District Railway 3 per cent. rentcharge would get £66 13s. 4d.
§ LORD ASHFIELD
May I further read this statement? Holders of£100 Metropolitan District Railway 3 percent. Consolidated Rent charge stock will receive £66 13s. 4d. 4½ per cent. 'A' stock.It goes on further to say that so far as these stocks are concerned the income will be unchanged when the transfer is effected and—a point of some importance to the holders—such income will flow from trustee securities.
§ LORD ASHFIELD
It goes on further and describes the date of redemption, which shall take place in 90 years, and may take place in 1985.
§ LORD ASHFIELD
I am only venturing this explanation so that your Lordships may know that every possible step was taken to give the fullest information to all of our security holders so that they might take such steps as they wished to take in defence of their own interests. At least I can give you this assurance, that at the meeting of all these various classes of security holders held on the 1st of May, 1931, we secured a unanimous approval of the provisional agreement between this group of companies and the Ministry of Transport, and that knowledge was passed on to the Joint Select Committee responsible for the Bill.
I will now pass on to a matter which was referred to during the debate yesterday, in particular by my noble friend Lord Mount Temple. I am referring now to the Co-ordination Bills of 1929. As the noble Lord rightly pointed out, those Bills were simply enabling Bills. Their purpose was to secure by an Act 997 of Parliament the removal of any legal difficulties which prevented a financial fusion, a close and complete co-operation and co-ordination, between all of the various passenger transport undertakings operating in the London traffic area——
§ LORD ASHFIELD
——the only exception being, as my noble friend Lord Mount Temple rightly points out, that the suburban and main line railways were not included within the provisions of the Bill. But the Preamble of the Bill, after giving the names of the different companies promoting the measure—the four Underground Railways and the London General Omnibus Company—says they haveconstructed and are working underground and other railways for carrying and dealing with the passenger traffic of the Metropolis and such railways are together with the undertaking of the London General Omnibus Company Limited worked and managed as one passenger transport system with facilities for through and interchange traffic and with a common fund established under powers conferred by the London Electric Railway Companies Facilities Act 1915:And whereas it would be to the public advantage that the transport systems of the above mentioned companies and of any county councils and local authorities companies bodies and persons owning or working railways tramways light railways trolley vehicles or omnibuses within or partly within the London traffic area should be managed and worked in co-ordination with a view to the most efficient and comprehensive means of local passenger services being supplied throughout the London traffic area at fares sufficient to provide from time to time for working expenses efficient maintenance and renewal of the undertakings and a reasonable return on capital.It was that Bill which had the approval of your Lordships' House but which, through fortuitous political circumstances, did not successfully pass through the House of Commons.
Now the point that my noble friend Lord Mount Temple was suggesting yesterday was that if that Bill had succeeded the powers conferred by that Bill and by the Bill of the London County Council would afford the most effective means for dealing with this vital question of London transport; but what those Bills provided for was no more and less than the Bill which is before your Lordships' House to-night, the only 998 difference being that whereas the Coordination Bills proposed to proceed by agreement, the: present Bill proposes to proceed, if necessary, by compulsion.
§ LORD MOUNT TEMPLE
There is a vast difference between an organisation in which the various entities remain in the possession of private people and municipalities and an organisation which takes over everything compulsorily and is really nationalisation.
§ LORD ASHFIELD
If I may venture to correct the noble Lord, the point I was making is this, that if those Bills had succeeded in passing through Parliament the powers conferred by them would have authorised the undertakings concerned in passenger transport to proceed to a complete scheme of financial fusion and common management.
§ LORD ASHFIELD
I agree, by consent. I venture again to make the observation that the only difference between those Bills and the Bill before your Lordships' House is that one proceeded by agreement and the other proposes to proceed, if necessary, by compulsion. The noble Lord in dealing with these Coordination Bills ventured the remark that he was authorised to say by the Government in power at that time, a Conservative Government, that he as Minister of Transport should give approval and help to those Bills. May I point out that if we had succeeded in getting those Bills through Parliament we should then have been in a position, assuming agreement was reached, to proceed to a complete co-ordination, a complete financial fusion and a common management of all the undertakings? The noble Lord in his speech yesterday did not seem to think that if, as a result of this agreement, this complete financial fusion and common management was established, the public need have the slightest fear on the question of fares nor yet upon the suggestion which he made of a possible interference in these services through some arbitrary action of the trades unions concerned; but so far as the Bill now before this House is concerned, if all of these undertakings are brought together, the difference being only that of compulsion as against agreement, though the same objective is reached—a complete amalgamation of all 999 these undertakings—then the public may have the fear of increased fares and the possibility, through a general strike, of all these undertakings being interfered with.
It seems to sue it is upon a very narrow issue he bases this bogey of increased fares and of interference with traffic through the trade unions. I shall have a word or two to say in a few moments on the question of fares, but on this question of any possible interference with the services of the Board, assuming that it is set up, through the action of the trade unions concerned, I may remind your Lordships that at the present time, outside of the Underground group of companies and the tramways owned by the public authorities, there is only remaining in operation in the London traffic areas roughly 200 independent omnibuses, and the same trade unions are dealing with the affairs of the employees of the Underground group of companies as well as the employees of all the publicly-owned tramway undertakings. The suggestion which was made by my noble friend Lord Mount Temple that your Lordships should seriously consider rejecting this Bill, simply on the ground that in the event of a general strike the public would have the advantage of 200 omnibuses as a means for carrying between eleven and twelve millions of passengers a day, seems to me to be rather suggesting that upon so small and trivial an issue this vast question is to be decided. If it should so happen by a great misfortune that we should again experience a general strike so far as London transport is concerned, though I am not prepared to accept that as a possibility simply by reason of the establishment of a public Board to deal with affairs, I venture to suggest to your Lordships that that problem will not he dealt with by having the use of 200 independent omnibuses in operation, but that the most effective means of dealing with the situation will be through the use of the vast number of private cars which are in operation, and by mobilising the vast number of drivers who will be able to drive any kind of vehicle in an emergency.
There is only one other point on this question of compulsion. May I, again, venture to make a comparison between the Co-ordination Bills of 1929 and the Bill which is before your Lordships' 1000 House to-night? Holders of 95 per cent. of the capital involved in all these different passenger transport undertakings have given their assent to this Bill, not an assent given under any pressure, not an assent as a result of any force majeure, but an assent which is given freely because they believe that this Passenger Transport Bill affords the best means for dealing with this tremendous problem of London passenger transport. The few remaining interests, representing only 5 per cent. of the capital, who have not accepted the provisions of the Bill and come to any agreement with the Minister, will receive cash representing the value of their undertakings as determined either by agreement or by an impartial arbitral tribunal set up for the purpose. Alternatively, they of course have the right of taking stock of the Board. As I have said, if they elect they may take cash which would fairly represent the value of their undertaking. I venture to suggest to your Lordships that in a measure of such immense magnitude, where the companies which I am in a large measure responsible for have alone a capital of something over £80,000,000, which, with the capital of all the other undertakings brought into it, would represent something like £120,000,000—I venture to suggest that, having secured that large measure of agreement, it comes very close, very close indeed, to being an agreed Bill.
Now may I address your Lordships for few minutes on the financial provisions of the Bill? I need not say to your Lordships that I am in complete accord with the principle of co-ordination which the Bill provides. It is a policy which I have stated publicly over a period of more than twenty-five years upon many occasions, and it is a policy to which we have given practical effect so far as our resources will allow. But, on this question of the financial provisions of the Bill, when this matter first came to our notice we, being responsible for the interests of a very large body of security holders whose interests amounted roundly to £80,000,000, saw that it was necessary we should give the most careful consideration to the rights of all the security holders.
In so far as this Bill is concerned, it occurred to us that there were three different ways of approaching this question. Obviously, the first method which 1001 would occur to anybody would be that the security holders should be paid out in cash. Well, it did not require very much reflection to convince us that it was impossible to suggest that as a reasonable proposition for the consideration of the Government. For the Government to make an issue of £120,000,000 or more of stock in order to provide the necessary amount of cash to satisfy all the security holders appealed to us as a method for dealing with the matter that was quite unreasonable and impossible. The next method was that of a guarantee. Could we suggest to the Government that the Government itself should be responsible for guaranteeing for all time the principal and interest upon this vast amount of capital? I will not trouble your Lordships with the reasons which prompted us to come to the conclusion that, again, this method was not a practicable one and one that we could fairly put to the Government for their consideration. We therefore came to the third and final plan, and that is really in effect the scheme which is now embodied in the Bill. The noble Marquess who spoke on the Bill yesterday went into this matter in such detail, and gave us so clear an explanation of the financial provisions of the Bill, that I need not detain your Lordships very long in dealing with them.
Briefly it provides that all the fixed interest bearing securities of all the companies shall receive in exchange for their securities an amount of "A" "T.F.A." (that is, Trade Facilities Act, which explains the initials) and "B" Stock of the Board, which will secure to the present security holders the same yield as they are receiving to-day. If, as I have explained previously, the rate of interest to-day is less than that proposed for the Board stock an adjustment is made to meet it—in other words, they get less nominal amount of stock than that which they have to-day but without any change in the yield. So far as those stocks which have a higher yield to-day than that which is provided by the Board's stocks are concerned, there is a proportionate increase in the amount of Board stock which the security holders will receive in order that the same yield may be received from the Board stock as that which they receive to-day. Obviously, it was not very difficult to arrive at an arrangement with the Minister so far as 1002 the fixed interest bearing securities were concerned. Of a total, I think, of £57,000,000 of fixed interest bearing securities only £7,000,000 are due to be redeemed at a date earlier than the date fixed in the Bill. On the other hand, all of the perpetual fixed interest bearing securities of the companies will, under the provisions of the Bill, receive stock which is to be redeemed at different dates.
Our difficulty arose when we came to deal with the ordinary stocks and shares of the company, what might be regarded as the equity stock of this group of companies. We realised quite fully that in this business of ours we could not say to the Government that, whatever the circumstances may be in the future, we can under all circumstances rely upon our shareholders receiving not less than they were receiving at the time when this matter was under discussion. We know. by long experience that there are good times in the London passenger transport business just as there are bad times. We are subject to the effects of trade depression just as other undertakings are. In arriving at an arrangement with the Minister, all that we sought to do was to arrange that the stock called the "C" stock of the Board, which is to be established in exchange for the ordinary shares of the companies, should afford to those who accept this stock in exchange an opportunity in future years of receiving not less than they would have received had the undertakings remained independent of the Board, with a possibility that through this monopoly established by the Board they might secure a little bit more.
On the other hand, the interest upon the "C" stock was limited. It was limited to 5 per cent. for two years, and after that to 5½ per cent. increasing to 6 per cent. if the income of the Board allowed. Our shareholders had prospects of something more than 6 per cent. The vast amount of capital which we have invested in these undertakings had not reached anything like complete fruition. We were entitled to suggest to the Minister that as time went on the earnings of these undertakings would improve—not in all years, but there would be years when the return on capital would be more than 5 or 5,1; or 6 per cent.—and that consideration should be given to that aspect of the problem.
1003 We surrendered that in consideration of what we believe to be the greater security given to our shareholders as the result of the complete amalgamation of the undertakings under the ægis of this public Board. The point I desire to emphasise for con sideration of your Lordships is that our shareholders have never been given any assurance that there was any guarantee of any kind or description attaching to this "C" stock, but that if the earnings of the Board were not sufficient to pay the interest then the Board would pay less. We did give the assurance that, so far as we could see, their fortunes in the future under the Board would not. be less favourable 'than they would have been if they had continued as company undertakings. Therefore the suggestion made during the debate, that the "C" stock holders are entitled to receive and must receive a certain rate of interest upon their stock, is not borne out by any communication which has been made to them and is an arrangement which I have not suggested to the Minister.
The noble Lord, Lord Mount Temple, referred yesterday to the absolute certainty that if this Bill is passed the inevitable effect must be that fares will be increased. The noble Lord has had a considerable experience in transport. During his administration of the Ministry of Transport he must have acquired a very considerable knowledge of this question. I venture to suggest to him that the experience which he gained during that time must have convinced him that the management of these great transport undertakings is not quite so easy as he would have us believe. It is not simply a question of sitting comfortably in your office, of discovering what is the gross amount of income, of determining what are your expenses, of discovering whether the difference between the two is sufficient to pay a reasonable return on the capital, or, if that sum is not sufficient, of then determining by a simple process what should be added to the fares in order that the deficit may be met.
§ LORD MOUNT TEMPLE
May I interrupt my noble friend for a moment? It is simply because I am so satisfied with his present administration of London traffic that I do not want it to go into any other hands.
§ LORD ASHFIELD
I cannot be unmindful of the compliment that the noble Lord has paid me, but I venture to say that I cannot allow personal considerations to interfere in' determining a matter which I believe to be in the best interests of the shareholders whom I represent. The question of fares is very often misunderstood. There seems to be a general belief, as I have already suggested, that fares can be adjusted so as to secure an income adequate to meet the needs of the undertakings. Our life in this industry is not quite so easy as that. Such success as has been achieved by the group of companies over which I preside has been based, firstly, upon what may be described as low fares—in any event, fares which have a direct relation to the economic position from time to time—and secondly, upon the provision of a service which attracts the maximum number of riders. It is a policy of low fares and (shall I say?) an efficient service which brings the largest measure of success.
I would venture to say to your Lordships that if it should happen that I have any part in administering the affairs of the Board to be set up under this Bill, the policy which has been pursued by this group of companies over which I preside is exactly the policy which will be pursued by the Board. I say that not upon personal grounds. I say it because it is the right policy to pursue. The fear which has been expressed because of the years of adversity which have undoubtedly affected the earnings of the transport companies of London, the fear that because of that adversity our income may fall to a point where it will not be possible to meet the full 5 per cent. interest on the "C" stock, and that because of that the Board will proceed to raise fares in London, is absolutely unfounded. My own view is that there is no likelihood of that happening. I suggest to your Lordships, as the result of my experience, that it is extremely doubtful whether any increase on the present scale of fares would substantially add to the income of the Board.
I will now say a word upon the present position, a position which I suggest is the justification for your Lordships giving favourable consideration to this Bill. The companies with which I am associated have spent since the War, upon additions to the Underground 1005 system of railways alone, quite independent of the omnibuses and tramways, or will have spent when the programme upon which we are engaged is complete towards the end of this year, in round figures £26,000,000. Of that £26,000,000 roundly half, which was issued in the earlier years after the War by the sale of debentures of the railway companies concerned, was raised upon the guarantee, both as regards principal and interest, of His Majesty's Government, and approximately the remaining half was also raised by the issue of debentures of the companies concerned, but in this instance, instead of by way of guarantee from His Majesty's Government, it was by way of grants; and for a period of fifteen years the Government will pay to the companies concerned a sum of money which is roundly equivalent to half of the interest charges upon that amount of money. I mention these details so that your Lordships may know that even with all the efficiency with which we are credited, we have not been able in these years out of our own resources and upon our own credit to provide the money necessary for these extensions and improvements.
I have never allowed myself to believe that the travelling public of London would be permanently subsidised at the expense of the general taxpayer. I firmly believe that in this London Passenger Transport Area, with a population which is roundly equivalent to 20 per cent. of the total population of all these Isles, a population which is growing every year —in ten years a place the size of the City of Leeds has been added and last year alone the population increased by over 60,000—by complete co-ordination, by complete fusion of all the different transport agencies and by coming to friendly arrangement with the main line companies in respect of their suburban services, it ought to be possible to provide the facilities which are absolutely necessary for the convenience and comfort of the people residing in this area on a basis of fares which will attract them to the service and without calling on the taxpayers to provide any subsidy.
What is the situation that confronts us at the present time? There is this misfortune associated with our problem, that the population in the County of London is falling. Year by year that population grows less. On the other hand the population 1006 in the outer areas—what is described as the satellite towns—is increasing at an amazing pace. That presents a problem of special difficulty. If you could provide the additional facilities required for this increasing population by the provision of motor omnibuses, the financial problem would be of no consequence whatever. But it is not possible to make provision on that basis. It can only be done not only by the extension of the present system of Underground railways, but also by the electrification of the suburban lines of the main line companies. I put it to your Lordships that it is impossible to suggest to the main line companies or the Underground railways that they should proceed with this programme of expenditure of colossal magnitude, unless there is some assurance that the services will be properly co-ordinated, and that, having spent the money, the roads adjacent to them will not be flooded by competing services.
If I might venture for a moment or two to take the time of your Lordships to give some picture of how I view the future, I would say that the present system of Underground railways would in some places be projected for a certain distance upon the suburban lines of the main lines, which would gradually be electrified, and that in addition there would be built, as found necessary, a completely new underground railway extending from some western point and projected to somewhere in the neighbourhood of Ilford. The problem is not to be solved by simply electrifying the suburban lines, but by the electrification of these lines combined with the extension of the Underground railways and with the construction of an entirely new underground railway. Again we are confronted with the increasing traffic on the Underground lines, a traffic which is already approaching a point of saturation; and the solution to that problem lies in the construction of high-speed lines parallel to the existing lines, such as you find in the City of New York. The further out people live the more the need for speed, and ultimately, as time goes along, we shall find it necessary, in order to bring closer to the centre of London this rapidly developing outlying area, to add a high-speed line which will serve 1007 with the local lines, which will act as feeders to it.
All these things involve very large sums of money and I venture to submit to your Lordships that so long as the present situation continues there is no prospect of any further extensions or improvement to the Underground system—there is no possibility of any extensive scheme of electrification of the suburban lines of the main line companies. It is only by complete fusion of all the interests concerned in this area and by establishing a common management which will have a common policy, directed towards the proper and orderly development of this great system of transport, that it will be found possible to provide the facilities the public require. It is for these reasons I venture to suggest to your Lordships, arising from my knowledge and experience, that I am fully justified in saying to you on this, the first, occasion that I have had the privilege of addressing you, that the Bill before your Lordships' House offers the best means for dealing with these great problems, and so far as I am concerned the Bill has my complete approval.
§ EARL HOWE had the following Motion on the Paper: That the Bill be referred to a Select Committee of five Lords; that the names of the five Lords to form the Select Committee be proposed by the Committee of Selection; that all Petitions against the Bill presented to the House or deposited in the Private Bill Office on or before the 10th of March be referred to the Select Committee, with leave to the Petitioners praying to be heard by Counsel against the Bill to be heard as desired, as also Counsel for the Bill.
§ The noble Earl said: My Lords, it is very difficult, and I can assure your Lordships that I feel very diffident in doing it, to follow one who is recognised all over the world as probably the greatest expert the world has ever known on the subject on which he has just addressed your Lordships' House. I listened to his remarks with the same amount of interest with which I am sure all your Lordships must have listened to the noble Lord, but when I approach this problem of the London Passenger Transport Bill I do so not so much from the point of view of the stock holder or the shareholder, but 1008 from the same point of view as the noble Earl, Lord Buxton. He spoke from the point of view of a London member and his experience as such, and that is the point of view I take in approaching this problem. I sat for eleven years in the House of Commons as Member of Parliament for one of the great dormitory constituencies in London and the one great problem for the people who live in that and all similar constituencies is of course the same as confronts all of us, how are we going to live on the scale of remuneration we get, and if our means of transport, of access to and from our work, is going to cost us so much more per day, how are we going to pay for it?
§ Lord Ashfield termed it a bogey, this fear that there might be a rise in the cost of fares. I listened with the greatest attention to what he said about it, but we have been furnished with a White Paper, the Report by Sir William McLintock on the financial provisions of this Bill, and so far as I can make out—I do not pretend to be an expert—the balance on the right side allowed for in the financial provisions of the Bill is:0159,000. Those figures were got out, as has been pointed out by several speakers, in 1930, but the world has moved on since then, and if the financial position or calculations upon which Sir William McLintock drew up his statement have varied since then, surely it will affect the position of his statement. To show how some of the conditions have altered —and this is a matter which, so far as I can understand, was not touched upon by the noble Marquess when moving the Second Reading of the Bill—take, for instance, the cost of fuel. I believe it is true to say that the London General Omnibus Company consumes about 4,000,000 gallons of fuel a year.
§ EARL HOWE
On the basis of the figure I have been given, what is the effect? On April 28, 1931, there was a tax of 2d. put on fuel. On September 11 there followed another 2d. of tax. On September 14 of last year the cost of fuel was raised by no less than 3d. Petrol is now 4d. per gallon more than it was on the day when Sir William McLintock got out the White Paper. So far as I can make out the effect of this additional taxation, 1009 and of the rise in the cost of fuel, means an additional sum of £500,000 for these services beyond that for which he had reckoned in his White Paper. Therefore, it there is only a balance of £159,000 on the right side, very considerable economies will have to be realised to make up the difference between £159,000 and the 1500,000 I have just mentioned. Then, since 1930, there have been great falls in receipts. The falls in receipts of the Underground, Metropolitan, and London County Council trams, when added together, come to a sum of over £1,000,000. Therefore I feel, in spite of what Lord Ashfield has said, that there is a prima faciecase for examining afresh the financial provisions on which this Bill is based.
It is all very well to look at it from the point of view of the stock holder and the shareholder, but I beg your Lordships to look at it from the point of view of the black-coated worker in the constituencies adjacent to London, who fears that the fares which he has to pay in getting to and from his work may go up. It is really no bogey, even on the basis of present figures, but supposing the cost of fuel should rise still further. There is no guarantee that it will not. Supposing that the remuneration of the employees has to be increased for some reason or other. These things will affect the finance of the Bill, and if there is only a very narrow margin I submit that, whatever economies are possible, it will not be possible to balance the accounts.
I have a Motion on the Paper to recommit the whole Bill. In that respect my proposal differs from that of the noble Earl, Lord Clanwilliam, and I should like for a second to explain why I have placed on the Paper a proposal to recommit the whole Bill. It seemed to me that if the Select Committee was only going to examine the Financial provisions it might possibly be somewhat too narrow a limit. It might cramp the style of the Committee. There are so many provisions in this Bill, and so many clauses, and so many of them have indirect, even if not direct, bearing on finance, that it seemed to me it would be better to give the Select Committee a freer hand. I do not know whether the Motion put before you by Lord Clanwilliam would enable the select Committee to examine anything 1010 except Part III, and yet there are many provisions in Part II which have very direct bearing upon finance.
§ THE EARL OF CLANWILLIAM
May I tell my noble friend that my Motion does refer purely to Part III, which contains the financial provisions?
§ EARL HOWE
But there are many clauses in Part II which refer to finance. For instance, Clause 20, "Power of the Board to lease or sell surplus lands"; Clause 26, "Road service fares and charges of the Board"; Clause 27, "Fares in force on appointed day"; Clause 29, "Revision of fares of the Board"; and it seemed to me that it would be well if the Select Committee could have power to examine Part II as well as Part III. That is why I wanted to give the Select Committee a little more power. Then I thought that possibly by allowing the whole Bill to be gone into, instead of one particular Part, it might be possible to avoid long debates in this House on the Committee stage. I thought that the hearing of Counsel and the cross-examination of witnesses might be of value to the Select Committee in making their Report, and that if, for instance, further expenditure was incurred, if it avoided disaster in so big a scheme it might be money well spent. If it is the general view of the House that this Motion of mine is perhaps redundant, I myself should be quite prepared to support the Motion of the noble Earl, Lord Clanwilliam, referring this matter of the financial provisions to a Select Committee.
I have no shares and no interest whatever in the undertakings. I look at the matter entirely from the point of view of the average member of the public, who is, of course, over-awed by the immense size of the Bill, who does not know how far it will go, and who has grave doubts about its finance. The argument about Socialism does not impress me in the least. The point is what is best for the travelling public; and, if it should turn out that the finance of this Bill is unsound and ill-conceived, and eventually a great deficit results, necessitating the intervention of the State, the reduction of services or, worst of all, an increase of fares, then I am perfectly certain that we shall have failed in our duty as a revising Chamber by not having passed 1011 the Motion of the noble Earl. I do not think that that Motion, if passed, will in any way interfere with the Bill, but it will restore to a great extent the confidence of the country in the Bill and in the Government.
§ THE MARQUESS OF READING
My Lords, may I at the outset congratulate my noble friend Lord Ashfield on the very remarkable speech which he has made to your Lordships? As I listened to him I am sure the same thought must have gone through the minds of many of your Lordships—namely, how striking it was in dealing with a matter of this character that we should have the opportunity in this House, as we so often find, of hearing one who is the greatest expert in the country on his own subject and who is capable of giving the exposition to which we have listened. My other reflection was—again, I think, shared by your Lordships—one of deep regret that my noble friend has not thought fit to address us before. To me it was a great surprise to hear from him that this was the first time that he has addressed your Lordships' House. I think his speech will perhaps rank with another memorable speech in another House as a great maiden speech.
My noble friend has said so much about this Bill, and with such knowledge, such insight and lucidity, that the various points upon which I desired to address your Lordships I pass from entirely. I wish to make no observation generally speaking on the Second Reading of the Bill, except to say that I approach it from the standpoint of all your Lordships; my object is merely to ascertain what is the best advantage of the public. I have no interest of any kind in the various railways referred to. Of course, we all have a distaste for the creation of a monopoly, especially by Act of Parliament. Whether "monopoly" is the right word I do not know, but it has been used and conveys what we mean. Although that is so, I have come to the conclusion that, having regard to the history of these railways, of the difficulties of dealing with the traffic, of the absolute necessity of creating some machinery which would enable the railways to be developed further, your Lordships should not be deterred by the use of that word from voting for the Bill.
1012 What impressed me very much in my noble friend's speech, and what has been in my mind from the start, and what I am sure has impressed many of your Lordships who are so interested in housing and in the removal of slums, was that here you have one opportunity of realising the object at which you aim. If you enlarge the area of London by giving better facilities and speeding up the trains, and thus enable men and women to get to their work from greater distances, you will provide with better housing and better conditions those people who at present, on account of their work, have to live under distressing circumstances in this area.
The only argument that I wish to address to your Lordships relates to the Motion of my noble friends Lord Clanwilliam 'and Lord Jessel, which is not directed against the Second Reading, which, I gather from the speeches that have been made, is assured. I am not going into the financial position, certainly not after what Lord Ashfield has said, but I do ask your Lordships to bear in mind what would happen if you should be induced by some specious and plausible arguments to think it desirable to have a further inquiry by a Select Committee into the financial provisions of the Bill. To do that would be, first of all, to postpone the operation of the Bill, and I cannot help thinking that it must destroy the Bill absolutely. What would happen? Think for a minute. We are not dealing with public funds, we are not dealing with the money which the public is to pay, or which the local ratepayer has to pay; we are dealing with funds which are the subject of agreement among shareholders and debenture holders, 95 per cent. of whom have come to an agreement among themselves 'after the most careful analysis and investigation as to what they would wish. What would happen if you sent this Bill to a Select Committee to consider the financial clauses?
I think my noble friend who moved the Second Reading of the Bill in a forcible speech told us that finance is the essence of this Bill, and so it is. What we are asked to do, therefore, is to refer the essence of this Bill to a Select Committee after all that has already happened, all the investigations that have taken place, all the meetings and the consideration by various Govern- 1013 ments that have had the Bill before them. The result of such an inquiry would be to re-open all these agreements, which have been made with infinite difficulty, as everybody must know who has attempted to come to such agreement; and that would be to rut an end to the whole Bill, and to leave the matter in chaos again, to leave it for future reorganisation and reconstruction—if you can find anyone with patience enough to begin all over again. May I make this observation? The noble Earl, Lord Clanwilliam, introduce I the Motion in a way that commended itself so much to me that I thought of past experience when I sat as a Judge, and when I used to say to myself: "Do not be misled by his pleasant way of putting it." And after he had spoken for a few moments I saw how right I had been to be on my guard. He said that this is a question, if your Lordships agree, of only two or three days. My noble friend Lord Jessel supports his Motion and I see he nods assent, but may I remind Lord Jessel that when he spoke not so many minutes ago his view was six weeks or two months'?
§ THE MARQUESS OF READING
Yes, the noble Earl spoke first, and indeed it is worthy of observation that, having interpreted the point which the noble Earl made, the noble Lord who supports him, after listening to the debate, has come to the conclusion that it must take at least six weeks or two months. Let me make this final observation. Both are wrong in their anticipation. If you once get into this discussion, it is not a question of six weeks or two months but very much longer.
§ THE MARQUESS OF READING
If there is a question of hearing Counsel I agree that will lengthen the period; but what I desire to impress upon your Lordships—and it is my main reason for addressing you—is that this House should not be misled by any such proposition, and that we should realise that when we are voting for a Select Committee we are really voting against the Bill. Do not let us be tempted, though this does not apply so much to this House where we have not got constituents; but in another House I 1014 have seen, and many of your Lordships have seen, devices of this kind sometimes resorted to for the purpose of defeating a measure which the House knows quite well cannot be defeated by a direct vote. Therefore, all I would say to your Lordships is, do not be misled by this proposal. I hope your Lordships will by a large majority support the Second Reading, and reject any Motion that may come forward for a Select Committee. Pass this Bill, which I verily believe is in the interests of the great travelling public of London, and do let us remember, as I know your Lordships will, that when we are talking of that travelling public it is the poorer people who are most concerned. It is they who most require the facilities and who stand most to benefit. If we can only do this, if by opening the way to increasing the opportunities, even of raising money, and of carrying out a policy of keeping down fares as the main policy upon which the railways must be run, I would ask your Lordships in the public interest to give effect to the Motion for the Second Reading.
§ LORD PLENDER
My Lords, before I refer to certain provisions of the Bill that is before your Lordships' House may I be allowed to make a personal statement? My firm has acted as auditors to the Underground Electric Railways Company since its formation, and in conjunction with other firms has served as auditors to some of the controlled companies; but I personally have never attended to such work as the duties have been fulfilled by other partners. I had intended to make reference to certain aspects of the Bill other than the financial provisions, but at this late hour I shall probably be consulting your Lordships' convenience if I refrain from doing so.
The parties to the Bill in the first part of the Third Schedule and certain other Schedules have, I understand, agreed terms. Meetings have been held of the various security holders, and the necessary resolutions favouring the proposals have been passed by the requisite majorities provided under the Trust Deeds or Articles of Association. The majority bind the minority, as is invariably the case, and if a dissentient did not wish to exchange his security he was, and is, at liberty to sell, or he can petition against the Bill. It is true that 1015 in some cases a prior security holder will receive a reduced capital sum, but by the raising of the rate of interest he is put in possession of the same income, and it is further true that stocks at present irredeemable become repayable on terms, but not before very many years have passed. These redemption provisions will be for the benefit of the Board and therefore of profit to the public, and if any person dissents, as I have said, he has the remedy in his own hands to sell his stock.
Much has been said of the net revenue surplus being somewhat small, having regard to the capital, after the interest on the prior charges has been provided for. This surplus is estimated to be £1,620,000, but it is clearly stated in the Command Paper, and it is an important statement, that this figure does not reflect any anticipated economies as the result of unification. It is easy to say that economies do not arise in all unification schemes, but each case must be judged on its merits, and those persons connected with the management of the tube railways and the omnibuses affected believe that they can be realised in large measure. I prefer to accept their considered opinions. It is believed by those competent to judge that the unification of the transport facilities of London will increase the facilities without raising fares. But if higher rates and charges should be essential, they are, in my opinion, not likely to hit the travelling public harder than, or as hard as, the raising of present charges by existing undertakings, who may have to resort to increased charges if under conditions ruling from time to time they are found to be unremunerative. But, as a practical proposition, raising of charges is not resorted to unless absolutely necessary, because it has been found by experience that it affects quite seriously the numbers of people using the tubes and omnibuses.
It is unfortunately the case that the gross and net receipts have fallen since 1930, but the experience of these companies is not isolated. The years 1931 and 1932 were poor years in business, but that is no reason why the estimates in the White Paper are unreasonable as a basis for the future. It would be far more unreasonable to base prospects on two admittedly lean years and to fix the capitalisation accordingly, and so alter the terms of the Bill. If, on the other hand, 1016 the net receipts since 1930 had shown an improvement on the estimate it would not be a justification for an improved offer to the present stock holders. The capitalisation once fixed is unalterable; the net revenue is constantly changing, and, if I may be allowed to say so to your Lordships, I refuse to subscribe to the view that the stabilisation of income for capitalisation purposes should be based on 03' affected by a period of unprecedented bad trade.
The "C" stock is an equity stock with a limitation of yield, and the holders of the securities for which "C" stock is to be exchanged have agreed the terms. Interest is only payable to the extent of the revenue available under subsection (7) of Clause 39 of the Bill and is not cumulative. If default took place in paying the interest as prescribed on the "C" stock no action can be taken until after five years, and then not without meetings of the holders of such stock being held on request, by the holders of 5 per cent. of the nominal amount of stock outstanding, and meetings also of prior security holders must be held, so that all views may be put before the Court. Then, and only then, if a receiver be applied for, the Courts decide the issue after reviewing the whole facts and considering the best interests of the undertaking. The appointment is by no means automatic. The optional powers of redemption of the "C" stock given to the Board after 1953 may prove of great value in that the stock with its prescribed rates of interests may be retired, if the then conditions are favourable, by the issue of stock carrying possibly lower rates of interest. This would enure to the benefit of the public.
There is one other aspect of the finance which is not unimportant. The companies as units could not in all probability raise the capital for necessary extensions which must come if facilities are to be afforded by quick transit in the rapidly growing areas where the population is expanding. This difficulty is not new, and it has been found that capital could be raised by the Underground Electric Company as a holding company which its subsidiaries could not individually arrange. And this difficulty is becoming more aggravated as capital requirements grow, which will be inevitable. The Board, with its large 1017 resources, its greater possibility of development, and. the higher profits being earned under a unified control, will be able to do what cannot be done under the present régime.
If this Bill as a whole, or for a part oily, goes to a Select Committee of your Lordships' House, what will happen? If the Committee, supported by your Lordships' House, disturbed in ally way the capital structure which, let me remind your Lordships, is a bargain entered into, it would undoubtedly kill the Bill, as it would not be practicable to take the proposals back to the many classes of security holders asking them to amend terms which they have already agreed upon, holding fresh meetings and reopening negotiations with the main line railways and local authorities. The labour of years would be destroyed, the hopes of better conditions and improvements in traffic control and facilities would be long delayed, and the public would suffer. I venture with humility but in all earnestness to ask your Lordships to pause before such a step as recommittal of the Bill is taken. I have considered this Bill most carefully and most impartially, and I commend it in all sincerity to the favourable consideration of your Lordships.
§ VISCOUNT CHURCHILL
My Lords, I shall not detain the House for more than a few minutes in putting before you the position of the main line companies with regard to this Bill. Firstly, the urgent necessity for some scheme of regulating and co-ordinating the traffic in the London area in order to remedy the congestion and to prevent utter chaos in the future was so evident to everyone for a long time that this Bill has been the result. Secondly, no scheme of the sort would be complete which did not embrace the main line companies, over whose lines a very large volume of traffic passes in the London traffic area. And, most important from our point of view, unless London traffic is properly regulated by some such scheme as this no main line companies can possibly spend any large sums of money for the improvement of facilities to the public in the district, such as electrification or anything of the sort. We believe that the present occasion is most opportune and should be taken advantage of, because if nothing is done now the matter will 1018 be shelved probably for many years, and the condition of things will be far worse and more difficult to deal with in the future. I do, therefore, sincerely hope that your Lordships will give this Bill a Second Reading, and also in every way facilitate its rapid progress into law so that this very trying and urgent problem should be dealt with without further delay.
§ LORD PONSONBY OF SHULBREDE
My Lords, on the rare occasions on which I find myself voting for the Government I run a certain risk, because my support of the Government may harden the opposition against it on the other side of the House. But I do not think there is going to be that risk to-day, partly because during the two days' debate we have had it is very clear what the majority of your Lordships' think; and, secondly, because my support will be both tepid and brief. I have an interest in this Bill because I was at the Ministry of Transport when my right honourable friend Mr. Herbert Morrison first brought about the original negotiations. I do not for a moment want to suggest that I have any share in the parentage of the Bill. Mr. Morrison was the parent of the original Bill, and I was merely a parent's assistant. That Bill has been transformed, and the Bill now before your Lordships' House is by no means the same measure.
I think, if I may say so, that the noble Marquess in moving the Second Reading of this Bill did a most useful service in covering the ground so fully and so clearly. After all, the noble Marquess, from his position, is chiefly concerned with celestial and not with terrestrial transport, and a Minister who is responsible in your Lordships' House for another Department always has a difficult task. But I do think we owe a debt of gratitude to him for the way he covered the whole ground in opening m-6 debate. The opposition came from the noble Lord, Lord Banbury. The noble Lord, with his undiminished youthful impetuosity, always comes forward and with great courage opposes what he thinks wrong, but I would have liked to warn him beforehand that if he was going to cross swords with the noble Lord, Lord Ashfield, his own personal stock would be very much lower in your Lordships' House. After all, there is 1019 very little for anybody to add in support of the Bill after the masterly survey made by the noble Lord, Lord Ashfield. Lord Ashfield is a man of few words and of rare speech. He is a man of action. He does things and does not talk about them. But when he does talk he makes us all listen because he talks with great authority.
I think that the debate has shown that your Lordships are fully aware that unless this measure is brought into law there will be a chaotic situation with regard to London traffic. I was very much surprised to hear the noble Lord, Lord Mount Temple, who has been Minister of Transport, say that the subject of London traffic is in a very satisfactory condition. The methods of traffic in this City have advanced enormously, and thanks to the noble Lord, Lord Ashfield, are in such a state as to be in advance of perhaps any other city in the world. But organisation and co-ordination of these methods is necessary in order to give them full expression, and unless that is done we shall find with the increasing traffic, the increasing population, the increasing number of mechanically propelled vehicles, congestion and chaos will be brought into our streets which will be very detrimental to the whole life of the City. Therefore, it is because of the necessity of co-ordination, and the necessity of some central body being set up which shall look after the interests of the public and the interests of the travelling public, that this Bill is such a very great necessity.
The difference between the opinions of those with whom I am associated and those of noble Lords opposite arises in the direction, not in the organisation, of the body that is to be set up to direct this great enterprise. Very little has been said on that and I will only detain your Lordships a very few moments to say why I disagree. The Appointing Trustees are to be the Chairman of the London County Council, which is obviously a right choice, and the Chairman of the London and Home Counties Traffic Advisory Committee, which is also an obvious choice. Then there is to be the Chairman of the Committee of London Clearing Bankers. Why? The President of the Law Society. Why? The President of the Institute of Chartered Accountants. Why? Why not the Grand Lama of Tibet? There is 1020 absolutely no justification for these appointments. It has been referred to in another place as a choice which has no rhyme or reason in it. It is simply the fear that your Lordships have, the fear that the Government have of putting up anything which can be described as Socialism. That fear has run through almost every speech during the course of this debate.
Let me reassure your Lordships. There is no Socialism in this Bill. That is precisely why I find fault with it. If you have unified ownership, if you have a unified service, if you have a body controlling a vast enterprise of this sort and if you have public ownership, you ought to have full public control. Why there should be this mistrust of Ministers of the Crown with Parliament to watch them, I cannot imagine. Until you get. that, I am perfectly convinced that this enterprise will very likely not succeed as it ought. The same mistake was made with the Electricity Commissioners, and there is no doubt that if my right honourable friend Mr. Morrison had remained at the Ministry of Transport longer he would have undertaken to see that that service was nationalised. That is the only method by which you can get real control and the real vigilance which comes from public ownership.
When my right honourable friend Sir Stafford Cripps, in another place, said that in time Socialism would have to take over these various enterprises, the learned Attorney-General laughed and said he looked forward to the advent of Socialism in the same way as he looked forward to the day when the sun would be extinguished and we should be turned into icicles. I think that was rather a rash prophecy. In these days of change it is very unwise to prophesy. We live in days when there are floods, and I can assure your Lordships that a few more results like Rotherham may make the Government embankments crumble completely. I will not prophesy the date at which this vast enterprise will become a great public concern run for the people by the people's representatives, run on lines where private profit will be eliminated, with the public vigilant so that the whole working is carried out to their satisfaction. In the meanwhile I shall certainly vote for the Second Reading of this Bill, and I hope that the noble and 1021 learned Viscount the Leader of the House, when he replies to the debate, will show that to send this Bill to a. Select Committee would be equivalent to killing it.
§ VISCOUNT HAILSHAM
My Lords, at this very late hour of the evening and after the exhaustive speeches which we have heard from people who are far more competent than I am to express an opinion on this Bill, it is only a matter of courtesy to my critics which induces me to trouble your Lordships at all. I hope your Lordships will forgive me if I tell you in a few words what the procedure is going to be, and then refer to one or two specific questions raised in the discussion and expose one or two rather glaring fallacies which underlay some of the arguments of those opposed to the Bill. As to procedure, I do not know whether a Division will be challenged on the Second Reading, but I rather gather that it will not. In that event the Division would be taken on the Motion of my noble friend the Earl of Clanwilliam, tint the Bill be referred to a Select Committee. I shall invite your Lordships, as the noble Lord opposite thought I might, to vote against that Motion because, as he and my noble arid learned friend the Marquess of Reading pointed out, to vote for that Motion is really to kill the Bill.
§ THE EARL OF CLANWILLIAM
May I say that that is far from my intention? I explained that when I spoke.
§ VISCOUNT HAILSHAM
I accept that without any qualification at all, but I was going to point out to my noble friend that, although I entirely accept his statement that his motive is not to kill the Bill, that is not true of any of those who have spoken in support of his Motion. They have all declared that their object is to kill the Bill, and I cannot help wondering whether, when he sees the company in which he finds himself, he will not begin to think that he has made a mistake.
§ VISCOUNT HAILSHAM
So you see how evil communications corrupt good manners. I am not going to recapitulate the problem which had to be solved, the congestion of the streets, the urgent need 1022 of tube railways to take traffic underground, the complete stoppage of all development because capital could not be raised, the impossibility of carrying on without some co-ordination, the impossibility of co-ordination without giving some central authority some kind of monopoly in the area of central London. I am not going to re-explain to your Lordships what was put so very clearly yesterday by my noble friend as to the method by which the Government deals with the problem—the method, that is, of obtaining an agreement of substantially all those who are interested in carrying on the work of catering for the traffic of London, of arranging that they shall continue to be the owners of the traffic system of London, that the amounts they shall severally get are the amounts they have severally agreed to take, that the few dissenting undertakers shall have the option of being bought out in cash, and that the undertakings so centralised shall be carried on with a monopoly in the centre of London and with certain travelling facilities in the suburbs. One of the most remarkable features about the Bill is the amount of agreement which it has been possible to obtain between very divergent interests on a matter of extraordinary complexity and difficulty.
What are the objections? First we have the old bogey that this is Socialism. Nothing like trying to give a dog a bad name if you want to hang him! Well, is it Socialism? What is Socialism? Sometimes it may be described as State ownership, and certainly that is not what the Bill provides, because the State has no interest in the property amalgamated. It has not a penny interest; no liabilities in loss and no share in profits. The only financial interest the State has is that by this scheme it may be possible to carry out developments which cannot at present be carried out except at the cost of the taxpayer. But there is another form of Socialism—that of State management. That form undoubtedly existed in the original form. The Minister nominated the Board. He might choose, if he wished, five or six of his own Socialist colleagues and make them the Board. The, Minister was the person to whom, appeals had to go on questions of rates and facilities, and the Minister could, if he chose, use his powers to carry on the management, although the ownership remained with 1023 private individuals. But the whole of that has been swept away.
To-day the Minister has no voice in selecting the Board. The noble Lord, Lord Banbury, complained that he could dismiss people. So he can—for incapacity, but he has to consult the Appointing Trustees and when a person is dismissed he does not replace him. That was introduced by the overwhelming wish of the House of Commons on a private Member's Amendment, and it cannot be said to give the Minister any sort of control over the Appointing Trustees or the Traffic Board. The power he had in regard to appeal against the decisions of the Board has been taken away and these appeals now go to the Railway Rates Tribunal, an impartial and judicial body. I do not think we need trouble about Socialism. Said the noble Lord, Lord Mount Temple: "Here is a State monopoly." Well, it is a monopoly, but not a State monopoly because the State has nothing to do with carrying it on; and it is a monopoly because every body who has reported on traffic conditions in London has agreed that it is hopeless to try to get any measure of improvement until you get some measure of monopoly.
Beyond that attack, which has almost become a term of vulgar abuse, the great interest of the critics of this Bill has been in its financial provisions, and with regard to the finances one or two questions have been addressed to me which I will try to answer. The noble Lord, Lord Banbury, began by saying that the Board, or those the Board will represent, are paying far too much for these concerns and he quoted Lord Ashfield, who had pointed out the difficulties of competition and of suburban trade which lessened the demand for traffic facilities. Having proved that we were paying too much the noble Lord complained that it was sheer robbery to give that amount to the people who were getting it.
§ LORD BANBURY OF SOUTHAM
There was a mistake in the OFFICIAL REPORT which I have corrected.* What I said was, and I repeat it, that the taking away from the debenture holders of their £100 stock and giving them £66 in return, and then the power to pay that off at £66—that was robbery. I repeated this before Lord Ashfield and he agreed 1024 just now in private conversation—that those people invested their money under an Act of Parliament; that there is nothing in that Act of Parliament which says that a majority can bind a minority. Nothing can alter the security they got under that Act of Parliament except another Act of Parliament. I do not believe that in the history of this country, except possibly under Oliver Cromwell, was there ever a proposal to take money from the person who has invested it in such circumstances.
§ VISCOUNT HAILSHAM
I am glad to know that my misapprehension was shared by the OFFICIAL REPORT, but I accept what the noble Lord says as being what he intended. Let me deal with what he says. His proposal really is that one or two who happen to have taken part of a small or large issue of debentures, which may represent merely a decimal per cent., can hold up the wish of every other debenture holder and stop a scheme which may be essential for the interests of all. When one remembers the way in which the Courts are constantly asked to call meetings of debenture holders to ascertain their wishes and how constantly schemes are given effect to in spite of the wishes of an obstructive minority, I am astonished at the noble Lord's allegation, but I am glad to think that things have not turned out quite so badly as he would have us believe. The noble Lord said that irredeemable stock had been changed to redeemable and he would one day only get £66 for his £100. He forgot that it could not be for fifty-three years and might not be for ninety years, and no one but the noble Lord would be so sanguine as to expect that he would have to present the bill. He also forgot that the maximum price of this irredeemable stock during two years before the plan went through had never gone up to the price at which it is going to be redeemed, that it varied from a maximum of 64 to a minimum of 55, and that the moment the scheme went. through it went up nine or ten points; so that I congratulate the noble Lord on his having obtained by means of "sheer robbery" that amount more for his stock. I wish somebody would rob me on the same terms.
I turn from that criticism to my noble friend Earl Clanwilliam. I cannot help thinking that he has a little misunder- 1025 stood the wording of the scheme. He has said that there was only a margin of £159,000 and that is not enough; but then that is not the margin: it is £1,620,000 which is available first for paying dividends on the "C" stock, which are now limited to five per cent. and hereafter to six per cent., and beyond that to the provision of the necessary reserves. Inasmucth as the "C" stockholders are the people who have hitherto been the ordinary shareholders, I cannot imagine why it should be said that shareholders whose dividends to-day are contingent upon the profits of each year should complain when they are told that their dividends in the future are equally to depend upon the profits.
§ THE EARL OF CLANWILLIAM
May I ask how the noble and learned Viscount arrives at the figure of £1,620,000?
§ VISCOUNT HAILSHAM
I arrive at it by the process of reading. "Balance available for interest on C 'stock and Reserve Fund, £1,620,020." I left out the £20.
§ VISCOUNT HAILSHAM
Obviously the balance available for interest on the "C" stock is calculated before you have paid the "C" stock. Further than that, my noble friend Lord Howe comes and says that this will not do, because there is £1,000,000 lost in gross receipts even in 1930. That fallacy was exposed in the House of Commons. These are not the figures of 1930 bat of the three years average of the years 1928, 1929 and 1930, and that makes a difference at once of £600,000. That was exposed in the House of Commons, but I think my noble friend cannot have read the Third Reading debate. Then he said that we have not allowed for the increased cost of petrol, which has gone up by £500,000. It is true that we have not allowed for such an increase, but the net result is that whereas the cost of running an omnibus was in 1930 13.72d., in 1932 it was 13.24d. So there has been a reduction in the cost of running instead of the enormous increase of 2500,000 expected.
Then Lord Clanwilliam made a similar mistake. He quoted from Lord Ash-field's speech to show that the number of passengers had dropped by 75,000,000, but the figure on which we calculated is 1026 not the figure for 1930 but the three years average, 1928 to 1930, and if you compare the figure of 1932 with the average of the three years you find, riot a drop of 75,000,000 but an increase of 34,000,000. I do not think I need trouble very much to justify the taking of the average of 1928 to 1030. In a decade of depression such as we are going through there is not going to be the same profit year by year as can be worked out on a. three years average, but I think it is true to say that passenger traffic has been less affected than goods traffic. I do not think that the effect of the depression will be felt so severely in the case of passengers as in the case of goods. That it is felt nobody will dispute, but when you are calculating, as you are here, what is the amount to give to the shareholders of the existing traffic facilities of London for giving up their profit and taking interest in the shape of one form or other of stock, it would be grossly unjust, and almost that "sheer robbery" that Lord Banbury claims, if we were to take a year of admittedly extreme depression and say to them: "You shall never be allowed to get more in the future out of this undertaking than you can got in the very worst year known for years past."
It would have been difficult to take, as has been suggested by Lord Buxton, five years instead of three, because the results of 1931 and 1932 were not known when the agreements were made, but I have done a rough sum from which I find that if you took five years you would still have a surplus sufficient to pay 5 per cent. on the "C" stock. Lord Buxton also asked one or two other questions to which I think it would be convenient I should answer. He asked me why there was no allowance made for the payment of those who are dissenting undertakers, and have to be bought out? The answer is that there is allowance made. The figure of the "A," "B" and "C" stock includes an estimate for those cases. He said that no allowance is made for the price of petrol; I hope I have answered that. Then he said there was no sinking fund. True, but there is provision for renewal and maintenance of the undertaking, and since we cannot redeem for a good many years it was thought to be unnecessary to put on the top of that an allowance for sinking fund, especially 1027 in view of the fact that the reserve will pile up and possibly form a sinking fund.
He also said that there was no provision for interest on the £10,000,000 which the Board is empowered to borrow. True, nor is there any allowance for the return that may be expected from the £10,000,000, but I trust that the Board will not spend £10,000,000 on building fresh undertakings unless they see good prospects of a return resulting from it. Then he said that tramways were omitted, but he will find that the whole amount of the "L.A." stock given for the tramways is included, and the interest on it forms part of the sum calculated in arriving at the balance available: "On £9,554,000 4½ per cent. L.A.' stock, £429,930." I hope that that answers the questions which he was good enough to address to me, and will relieve any anxiety felt on those scores. I said that to adopt this Motion to send the Bill to a Select Committee would be to kill the Bill, and I said it for this reason, that supposing you send it to a Select Committee I do not know whether it is going to spend three days or three months or the six months of Lord Howe.
§ VISCOUNT HAILSHAM
It might even spend the sort of time spent on the financial provisions by Lord Clanwilliam himself, because I find that when Sir William McLintock was examined his evidence covered 288 pages, or 576 double columns, of the Report, and there were 3,461 questions: even without the assistance of Counsel I think it would be a good long time before we finally passed the financial provisions. If the Committee approved of those provisions all would be well, but if they come back to us and say this or that undertaking might have a little more or less, how are you going to give that effect? These provisions have been agreed upon with a large number of undertakings, each of which has agreed to accept this or that stock out of a total. You cannot upset such an arrangement without upsetting the whole. Six years have elapsed since the so-called Blue Report warned the country that this was a matter of the greatest possible urgency, which would brook no delay, and even now we have not got the Bill in operation. Can you wonder then that the Government will resist as strenuously 1028 as they can a proposal which, if adopted, would put this measure outside the range of practical politics for a generation to come?
For myself I am not ashamed to be dubbed a Socialist in the company of such men as Sir Robert Home, Sir Henry Jackson, and Sir Philip Cunliffe-Lister in the other House, or of such men in this House as my noble friend Lord Londonderry, my noble friend Lord Radnor, who made a speech which I wish had had a larger audience last night, and my noble friend Lord Monck, who made a maiden effort which I think it is no idle compliment to say was one of the most graceful maiden speeches to which I have listened in this House. I leave out such staunch Liberals and individualists as the noble Earl, Lord Buxton, and the noble Marquess, Lord Reading, but after all, that is not a bad company in which to find myself—on this issue. I am not ashamed to be advocating the soundness of a measure which is sponsored by such members of your Lordships' House as my noble friends Lord Ashfield, Lord Faring-don, Lord Churchill and Lord Plender, with all that wealth of expert knowledge which has been poured out during the last two days, coming, some of it, from what are admitted even by the opponents of this measure to be the very highest authorities in this country on the subject with which they dealt. For myself I believe that this measure is one which is conservative in its structure, which is financially sound in its basis, which is urgently needed for the traffic of London, which is supported by the vast majority of those persons whose business it is to look after the traffic of London, and which is urgently called for alike in the interests of the stock holders of private undertakings and of those black-coated workers for whom my noble friend Lord Howe purported to speak. I hope that your Lordships will give this measure a Second Reading, and that you will refuse to send it to any Select Committee.
§ LORD BANBURY OF SOUTHAM
My Lords, at this late hour I will not put the House to the trouble of two Divisions. I will not withdraw my Amendment, but I will allow it to be negatived.
§ On Question, Amendment negatived, and Bill read 2a accordingly.
§ THE EARL OF CLANWILLIAM, who had given Notice that he would move 1029 that the Bill be referred to a Select Committee to examine and report upon its financial provisions, said: My Lords, I beg to move.
§ THE LORD CHANCELLLOR (VISCOUNT SANKEY)
Before I put this Motion, may I ask the noble Earl, Lord Howe, whether he intends to move his Motion.
§ Moved, That the Bill be referred to a Select Committee to examine and report upon its financial provisions.—(The Earl of Clanwilliam.)
§ On Question, Whether the Motion shall be agreed to 7
§ Their Lordships divided:—Contents, 13; Not-Contents, 155.1029
|Cottenham, E.||Carrington, L.||Morris, L.|
|Howe, E.||Clanwilliam, L. (E. Clanwilliam.) [Teller.]||Mount Temple, L.|
|Bertie of Thame, V. [Teller.]||Illingworth, L.||Rankeillour, L.|
|Jessel, L.||Redesdale, L.|
|Banbury of Southam, L.|
|Canterbury, L. Abp.||Hambleden, V.||Harris, L.|
|Hood, V.||Hawke, L.|
|Sankey, V. (L. Chancellor.)||Mersey, V.||Hayter, L.|
|Wimborne, V.||Hindlip, L.|
|Argyll, D.||Howard of Glossop, L.|
|Marlborough, D.||London, L. Bp.||Hunsdon of Hunsdon, L.|
|Wellington, D.||Winchester, L. Bp.||Inverforth, L.|
|Bath, M.||Aberdare, L.||Kenmare, L. (E. Kenmare.]|
|Bristol, M.||Abinger, L.||Ker, L. (M. Lothian)|
|Camden, M.||Addington, L.||Kilmaine, L.|
|Dufferin and Ava, M.||Alvingham, L,||Kinnaird, L.|
|Exeter, M.||Ampthill, L.||Lawrence, L.|
|Reading, M.||Amulree, L.||Loch, L.|
|Zetland, M.||Armstrong, L.||Luke, L.|
|Arnold, L.||Macmillan, L.|
|Shaftesbury, E. (L. Steward.)||Ashfield, L.||Marshall of Chipstead, L.|
|Cromer, E. (L. Chamberlain.)||Askwith, L.||Meldrum, L. (M. Huntly.)|
|Albemarle, E.||Auckland, L.||Mendip, L. (V. Clifden.)|
|Balfour, E.||Balfour of Burleigh, L.||Merrivale, L.|
|Buxton, E.||Bayford, L.||Mildmay of Flete, L.|
|Cavan, E.||Berwick, L.||Monck, L. (V. Monck.)|
|Cranbrook, E.||Biddulph, L.||Monckton, L. (V. Galway.)|
|De La Warr, E.||Butler, L. (E. Carrick.)||Monkswell, L.|
|Denbigh, E.||Camrose, L.||Monson, L.|
|Dudley, E.||Carnock, L.||Monteagle, L. (M. Sligo.)|
|Halsbury, E.||Castlemaine, L.||Monteagle of Brandon, L.|
|Iddesleigh, E.||Charnwood, L.||Moyne, L.|
|Iveagh, E.||Chaworth, L. (E. Meath.)||Newton, L.|
|Lucan, E. [Teller.]||Chesham, L.||Oriel, L. (V. Massereene.)|
|Lytton, E.||Clements, L. (E. Leitrim.)||Ormathwaite, L.|
|Malmesbury, E.||Clwyd, L.||Ormonde, L. (M. Ormonde.)|
|Midleton, E.||Cornwallis, L.||Plender, L.|
|Mount Edgcumbe, E.||Cottesloe, L.||Ponsonby of Shulbrede, L.|
|Munster, E.||Danesfort, L.||Rathcreedan, L.|
|Plymouth, E.||Daryngton, L.||Rayleigh, L.|
|Radnor, E.||Delamere, L.||Rhayader, L.|
|Bathes, E.||Desborough, L.||Ritchie of Dundee, L.|
|Sandwich, E.||Dickinson, L.||Rochester, L.|
|Selborne, E.||Dynevor, L.||Runciman, L.|
|Strafford, E.||Douglas, L. (E. Home.)||Russell of Liverpool, L.|
|Strange, E. (D. Atholl.)||Ebbisham, L.||Sinclair, L.|
|Vane, E. (M. Londonderry.)||Ellenborough, L.||Stanmore, L.|
|Elphinstone, L.||Stonehaven, L.|
|Astor, V.||Ernle, L.||Strathcona and Mount Royal,L.|
|Bridgeman, V.||Erskine, L.|
|Cecil of Chelwood, V.||Fairfax of Cameron, L.||Swaythling, L.|
|Chaplin, V.||Faringdon, L.||Templemore, L.|
|Churchill, V.||Foxford, L. (E. Limeriek.)||Trent, L,|
|Elibank, V.||Gage, L. (V. Gage.) [Teller.]||Treowen, L.|
|Esher V.||Greville, L.||Wargrave, L.|
|FitzAlan of Derwent, V.||Grinstead, L. (E. Enniskillen.)||Waring, L.|
|Goschen, V.||Weir, L.|
|Grey of Fallodon, V.||Hanworth, L.||Wharton, L.|
|Hailsham, V.||Hare, L. (E. Listowel.)|
§ Resolved in the negative, and Motion disagreed to accordingly.
§ Bill referred to a Committee of the Whole House.