RAILWAYS (AGREEMENT) BILL. (Hansard, 18 December 1935)

§ LORD TEMPLEMORE
My Lords, this Bill is introduced for the purpose of empowering the Treasury to carry out its part of an agreement which was concluded between the Treasury and the four main line railway companies. Under that agreement, as was announced in the Press on November 5, the railway companies, subject to grants to them of the necessary Parliamentary powers, will put in hand a most extensive programme of reconstruction and improvements at a cost of £29,500,000. It was laid down as 259 a condition by the Government that the works, of which a description is given in the First Schedule of the Bill, should be additional to the normal railway programme and such as could not be undertaken at present on an economic basis by the railways themselves without Government assistance. The form which this assistance takes is a guarantee of the principal and interest of a loan of nominal amount sufficient to raise not more than £26,500,000, which sum will then be re-lent to the railways at the same effective rate of interest as that which will be paid on the guaranteed loan itself. It is the cheapness of this borrowing for the railway companies which makes it possible to bring forward to the immediate present works which otherwise they could not have afforded to carry out probably for several years to come.
The Bill, which contains only two operative clauses and a long Schedule, which itself contains a Schedule, is a somewhat complicated one at first sight, but not so much so when you come to look into it. I think that noble Lords, if they read the Schedule and the Schedule which is attached thereto, will find it exceedingly interesting reading. Clause 1 empowers the Treasury to guarantee the payment of the principal and interest of securities to be issued by a finance company to be formed by the Treasury under Clause 3 of the Agreement which is contained in the Schedule to raise an amount not exceeding £26,500,000. The Bill also authorises payment from the Consolidated Fund of any sums required for fulfilling the Treasury guarantee and the receipt by the Exchequer of any moneys received by way of repayment. These provisions follow the recognised practice in cases of this kind.
Under Clause 2 the Bill also provides for the exemption from Stamp Duty of the Agreement and certain other consequential Agreements to be entered into in terms of Clause 2 (b) of the Agreement. As the law stands Loan Capital Duty might be payable on this Agreement (or any Agreements in variation of it), and then again upon the securities issued as the result of the Agreement. The intention of this exemption is that the railway companies shall not be called upon to pay Loan Capital Duty twice 260 over as a result of the special machinery adopted in this case to implement the arrangements with the Government. The guaranteed securities to be issued by the new company will bear the ordinary Loan Capital Duty of 2s. 6d. per £100, and at the end of the term of the guaranteed loan Capital Duty at the reduced rate of 6d. per £100 will be payable by the railway companies on any stocks issued for the purpose of converting the original borrowings. The terms of this exemption follow exactly the exemption given in the London Passenger Transport (Agreement) Act.
The railway companies in respect of certain of the works to be undertaken will require further statutory powers and they are under obligation in terms of the Agreement to seek those powers in the present Session of Parliament. The total amount of money to be lent to the railway companies is £26,500,000, whereas the total cost of the scheduled works is £29,500,000. The difference of £3,000,000 is represented by money which two of the companies—the London, Midland and Scottish and the Southern—will themselves find from sources other than the guaranteed loan. The machinery adopted in this case, and indeed the Agreement itself, follow very closely the precedent of the London Transport case.
I have explained to the best of my ability the main proposals of the Bill. His Majesty's Government consider this Bill to be a good example of the policy which, I think, was referred to just now by the noble Lord opposite of promoting useful schemes of public work which offer both prospects of providing employment and also of adding to the valuable assets of the country. If your Lordships will look at pages 12 to 14 of the Bill you will be able to judge how very far-reaching these works, additions and improvements are going to be, including as they do the rebuilding of Euston Station, the making of over 400 new steam engines on the two Northern systems, and the building of two railway lines on the Great Western Railway. His Majesty's Government hope very much that a great deal of this work will fall to be done in the special areas. All this will be done, I think it is safe to prophesy, without costing the taxpayers a penny. We hope that this is not the last scheme of the kind. His Majesty's Government look on the works announced in this Bill as a sound means of providing 261 employment and, in addition, of improving and increasing the safety and comfort of the travelling public and the efficient carrying of their goods. I beg to move that this Bill be now read a second time.

LORD MONKSWELL
My Lords, so far as I can judge, this Bill is another step in the direction followed hitherto by His Majesty's Government of forcing down the reward on capital in order to force up the rates of wages. His Majesty's Government are caught in the vicious circle of being obliged to go on paying the working classes of this country wages that they do not earn, and in order to do this they have to force down the reward on capital which in many cases has reached vanishing point. With regard to the Bill itself I think a great deal of useful work undoubtedly can be carried out on the railways. There are a great many developments that can very satisfactorily be carried out; but I should like to say a few words on our old friend, railway electrification, which I see has made its appearance again. We can never have any Bill brought in about railways when the electrifiers are not hard at work. I see, for instance, that the Sheffield and Manchester line is to be electrified. The only advantage I can perceive in that is that it will be very nice to get rid of the smoke in Woodhead tunnel; but that any profit is going to come from it I do not believe. As for the Southern Railway, they go on and on flinging away the shareholders' money, and there is nobody to stop them.
I wonder whether in this matter of electrification the Government have taken any steps whatever to satisfy themselves that railway electrification is satisfactory and economical. I should be very much interested to hear Whether the noble Lord can tell us anything about that. With regard to surface railways—I am not now speaking of underground railways, where electrification is necessary for special reasons—all the information that exists, and it is mostly negative, shows that electrification is one of the most dangerous delusions of modern times. Far the biggest scheme of electrification is that which has been carried out on the Southern Railway. I have so often raised that subject here before that I do not pro 262 pose to say a great deal to your Lordships on it now. I would merely point out that though the directors of the Southern Railway have been asked over and over again by every kind of person, including their shareholders, for full particulars of the financial results of Southern Railway electrification, the railway shareholders have simply been refused information. Odds and ends of carefully selected figures have been published by various Southern Railway officials at public dinners and so on, but really to anybody who knows anything about the subject they prove absolutely nothing whatever. The whole thing is deliberately involved in the deepest possible fog.
As railway and other companies are not as a rule backward in giving particulars of their policy when it has been successful, it is perfectly obvious to everybody who cares to look at the thing from an unprejudiced point of view that the electrification of the Southern Railway is a costly mistake. There is no doubt about it at all, and if the Government are going to lend a lot of money to the railway companies, one of their very first duties before they do so should be to satisfy themselves that the money will be economically and satisfactorily expended. One particular trouble about electrification, as has lately been pointed out in The Engineer, which is one of the most important technical papers, is that it is like the bed of Procrustes. When you once have electrification no developments in other directions are possible because of the enormous capital cost you have already expended. I dare say it would be cheaper, after having expended all this money, to go on working the railway with electricity, but it would be far better to save the money and spend it in developing other and much more satisfactory means of traction.
We are going ahead fast. The Diesel engine, and particularly the steam locomotive, have been improved out of all knowledge within the last year or two. All this will simply be put a dead stop to by this policy of electrification. I hope His Majesty's Government will be very careful before they give their consent to anything of this kind. Above all things I hope that we shall not hear that the railway managers know their own business best. The history of British railways contains incident after 263 incident in which British railway managers have shown that they do not know their own business best. One thing only I need point out, their opposition to block signals and continuous brakes, which no one in his senses at the present day would say was otherwise than hopeless. There are many other instances. I will only draw your Lordships' attention to one, and that is this business of third-class sleeping carriages. It has been a brilliant success, but I do not know for how many years the railway managers flatly refused to have anything to do with it.

§ LORD TEMPLEMORE
My Lords, the noble Lord who has just spoken from the Cross Benches has really used this Motion for the Second Reading of this Bill in order to raise a debate apparently on the iniquities of the electrification of railways, and I really do not think he can expect me to give him an answer on that question to-day.

LORD MONKSWELL
Are you not going to find out about it?

§ LORD TEMPLEMORE
If the noble Lord will give me a chance I am about to answer him. I will, of course, bring what the noble Lord has said to the notice of the proper authorities, and, if he likes to raise the subject again in the new year, no doubt he will get an answer either from myself or from someone else. As regards this Bill, I can only say it is produced by the Government in order to stimulate employment, and the railways, before they embark on any of those projects 264 for which they are going to get guaranteed public money, will have to obtain Parliamentary authority. I think I need say no more on the subject, and I hope that now I may get a Second Reading of the Bill.