RAILWAY FREIGHT REBATES BILL. [H.L.] (Hansard, 6 April 1943)

§ THE MINISTER OF WAR TRANSPORT (LORD LEATHERS)

My Lords, this Bill is designed to adapt to war-time conditions a somewhat complicated piece of machinery connected with railway charges. Under the Local Government Act of 1929 and the corresponding enactment extending to Scotland, freight transport hereditaments were relieved from local rates to the extent of 75 per cent. It was the intention of Parliament that the amount of this rate relief should be passed on to certain railway users by way of rebates from carriage charges on selected traffics. The traffics selected were those of the agricultural, coal and iron and steel industries, then in a depressed state. The object was to assist these industries and, by increasing the volume of their traffics carried by rail, indirectly to benefit the railway companies. The Act, 2 therefore, required the railway companies to pay the rate relief into a Railway Freight Rebates Fund, and to allow, from the carriage charges on the selected traffics, rebates at rates fixed annually by the Railway Rates Tribunal.

The annual net revenue of the Fund was to be distributed as to one-fifth to agricultural selected traffics, as to seven-tenths to coal, coke and patent fuel selected traffics, and as to one-tenth to other selected traffics, mainly to iron and steel works. In 1936 substantial reductions were made in the assessments of railway undertakings on the basis of which rate relief had been paid into the Fund during the previous five years, and the railway companies became entitled to reclaim from the Fund some £9,000,000. The result of this would have been that no rebates could be paid for a period of years until this debt had been paid off. To avoid this and to enable the debt to be met, Parliament passed the Railway Freight Rebates Act, 1936. This Act authorized the issue of redeemable stock secured on the Fund, and a sinking fund for repayment by annual instalments. The reduction in railway assessments brought about a very substantial reduction in the revenue available for rebates. The Act accordingly made a drastic reduction in the lists of selected traffics so that one-fifth of the net revenue went to two of the agricultural traffics—milk and live stock—while the balance of four-fifths went to exported coal (including coke and patent fuel) selected traffics. The reduction in the lists of selected traffics does not continue in force after the end of 3 1943 unless continued by orders made by me, and ceases in any event at the end of 1952.

During the war the total carriage charges on milk and live stock traffic have not varied substantially, and the present rebates of one-seventh of the carriage charges compare with one-sixth in 1939. Moreover, the agricultural rebates are still operating broadly in the manner contemplated by Parliament. The fall in coal exports has, however, created an extraordinary position in regard to coal rebates. Before the war the coal rebates were at the rate of 1½d. per ton plus 26½ per cent. of the remainder of the carriage charges. As from 1st December, 1940, the Tribunal increased the rebates to 1½d. per ton plus 75 per cent. of the remainder of the carriage charges. In spite of this increase there was a substantial balance in the Fund at the 30th September, 1941, due partly to under-distribution in coal rebates. At 30th September, 1942, the balance in the Fund had increased by considerably more than had been estimated to £925,000, mainly because of under-distribution in coal rebates. The amount available for coal rebates in the present year was considerably greater than the estimated amount of the carriage charges. It was therefore becoming increasingly difficult to fix coal rebates which would comply with the Statutes. Even rebates of 100 per cent., which would mean, of course, that the traffics would be carried free, would not distribute the whole of the available revenue. The Government therefore decided that legislation was essential.

The Bill suspends the coal rebates until such date as I may appoint, not being later than the end of railway control. The agreement with the railway companies provides that control will be continued for a minimum period of one year after the cessation of hostilities, and that, before control comes to an end, time will be given for the operation of any statutory machinery governing the level of charges. It is impossible, at this stage, to say when the circumstances which justify the suspension of the coal rebates will come to an end. This may be at the cessation of hostilities or may be some little time after, or may even be before, that date. The Bill as drafted would enable me to select the most appropriate time after consultation with the Minister of Fuel and Power. 4 Your Lordships will, no doubt, wish to place some limit on the period, and the end of railway control seems to be the most appropriate limit. Complete suspension of coal rebates is provided for in preference to continuance of the rebates at some stabilized figure during the war. The purpose of the rebates—the stimulation of coal export—and of the carriage by railway of such coal, has ceased to exist under war-time conditions. In addition, the machinery for claiming the rebates is somewhat complicated, involving the filling in of forms and the use of a good deal of clerical labour. War-time conditions have not only rendered this expenditure of man-power undesirable but have also added to the complications. Moreover, the Minister of Fuel and Power is now paying certain subsidies on abnormal transport charges which have had to be incurred by reason of war-time conditions, mainly to reduce the cost to home consumers of coal brought coastwise at relatively high rates.

The Bill provides, therefore, that the money which would have been available for coal rebates shall be paid to the Minister of Fuel and Power to be used by him in such manner as the Treasury may direct. It is intended that part of the money shall be transferred to the Coal Charges Account, substantially to make good the loss incurred by the industry by the suspension of the rebates and so prevent any increases in prices on that account. The remainder will be used in reduction of the cost of the subsidies to which I have just referred. It is not practicable to specify these purposes in the Bill. The precise machinery for making good the loss to the industry will be a matter for negotiation and arrangement, while the subsidies are matters of administrative and not statutory machinery. The intention is, however, as I have stated, and I am able to give a definite undertaking to that effect on behalf of the Government.

Your Lordships will wish to have an indication of the amounts of money involved. Excluding the balance at September 30, 1942, the net revenue of the Fund for the current year, as estimated by the Tribunal, will be about £1,650,000, of which the agricultural appropriate proportion is £330,000, and the coal appropriate proportion is £1,320,000. The balance of £925,000 which was in the 5 Fund at September 30, 1942, adjusted by any amounts paid into or out of the Fund in respect of rate relief for periods before that date, is to be kept in the Fund, and to the extent of not more than the original balance is to be distributed through coal rebates when they are resumed. The balance of £925,000 did not fully reflect the position at September 30, 1942. There were outstanding at that date unquantified amounts due to the companies from the Fund and from the companies to the Fund in respect of over-payments or under-payments of rate relief. In the case of a relatively small sum due to the companies, there is a technical difficulty in the way of payment, and this difficulty is removed by the Bill. The balance and the outstanding amounts will be dealt with together. If the resultant amount is £925,000 or less, it will all go in coal rebates after the war. Under the strict operation of the present statutory provisions, however, part of the adjusted balance would be available for agricultural rebates. To meet this point it is provided that, if the amount is more than £925,000, that sum only will go to coal rebates and the excess will fall into the general balance of the Fund, available for both coal and agricultural rebates.

Disregarding the adjusted balance, the money available for distribution during the period of suspension will go precisely as to one-fifth to the agricultural account for rebates and as to four-fifths to the coal account for transfer to the Minister of Fuel and Power. The accounts will be kept quite separate, and provision is made for reflecting balances in the agricultural and coal accounts at the end of the period in subsequent rebates on the respective traffics. There can thus be no question of one interest benefiting at the expense of the other in respect of the transactions during the period of suspension. I have indicated the principles of this short, but, I am afraid, somewhat technical Bill. The rest of the Bill is machinery. I have demonstrated the urgent need for legislation, and I submit that the Bill provides a practical solution which is fair to all the interests concerned. The position of agricultural rebates is substantially unchanged. The proposals in regard to coal rebates go as near to fulfilling the original intention of the railway freight rebates scheme as is possible in present circumstances. I beg to move that the Bill be read a second time.