Lords Sitting of 15 March 1950

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Earl of Abingdon—Took the Oath.

THE ADDRESS: MESSAGE FROM THE KING
2.35 p.m.
THE EARL OF CLARENDON: My Lords, I have the honour to present a Message front The King, signed with his own hand. It is as follows:
"I have received with great satisfaction the loyal and dutiful expression of your thanks for the Speech with which I have opened the present Session of Parliament."

NEWFOUNDLAND (CONSEQUENTIAL PROVISIONS) BILL [H.L.]
LORD HOLDEN: My Lords, I beg leave to introduce a Bill to provide for repeals and amendments of enactments consequential on Newfoundland becoming part of Canada, and to move that the said Bill be now read a first time.
Moved, That the Bill be now read 1a. —(Lord Holden.)
On Question, Bill read 1a; and to be printed.

DOVER HARBOUR BILL [H.L.]
GLOUCESTER EXTENSION BILL [H.L.]
MERSEY DOCKS AND HARBOUR BOARD BILL [H.L.]
TYNE IMPROVEMENT BILL [H.L.]
WISBECH CORPORATION BILL [H.L.]
Read 2a and committed: the Committees to be proposed by the Committee of Selection.

GATESHEAD AND DISTRICT TRAMWAYS BILL [H.L.]
Read 2a, and referred to the Examiners.

TRANSPORT COMMISSION'S POLICY
2.37 p.m.
LORD TEYNHAM LORD TEYNHAM rose to call attention to the policy of the Transport Commission; and to move for Papers. The noble Lord said: My Lords, I should like in the first place to take this opportunity of congratulating the noble Lord who is to reply for His Majesty's Government on his elevation to the Parliamentary Secretaryship of the Ministry of Transport. I am sure that all your Lordships will now look forward to hearing authoritative statements and information front his Department.
I think it is true to say that the policies of nationalised industries, and particularly of the transport industry, must have a great effect on production costs in industry generally. As your Lordships know, the Transport Commission have recently placed before the Transport Tribunal an application for an increase in their freight rates amounting to some 16 per cent., and I understand that the findings of the Tribunal are already in the hands of the Minister. Yet another application has been made, to raise canal freight rates and dock charges; and in some cases the request is for an increase of as much as 100 per cent. above the rates charged in 1939. I need hardly point out to your Lordships that if these increases are sanctioned by the Minister, they will have a grave effect, not only on the export trade but also on the home market, and will undoubtedly further increase the cost of living. I understand that the price of coal will go up by four shillings a ton and steel will go up by about nine shillings a ton. I suggest that these applications to the Transport Tribunal by the Commission have been put forward without any real constructive programme which might in the future lead to a condition in which the increases would become unnecessary.
I should like to remind His Majesty's Government that an increase in rail charges was made not very long ago—in fact, in the year 1947–when it was estimated that the increases then made would he sufficient to provide revenue for the railways to carry on after nationalisation and be in a more or less solvent state. As we know, the contrary has occurred, and the railways are in fact losing money at the rate of something

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like £500,000 a week, and have a probable accumulated deficit of some £50,000,000 for 1949, rising perhaps to so much as £100,000,000 by 1952. These are certainly very startling and grave figures, and no wonder the Transport Commission wish to raise their charges. I suggest, however, that the proposed increases are not the real answer to the problem and something very much more will have to be done. In the old days, of course, it was the railway shareholders who absorbed the losses in bad times, but now all these shareholders have been swept away and it is the unfortunate taxpayers who have to bear this great burden, which is certainly increasing. I am convinced that the transport system as a whole cannot be expected to work efficiently and pay its way until a real effort is made and railway costs are brought down.
What happens, for example, when railway rates are increased? There is at once an increase in the disparity between railway rates and road charges. This disparity is hound to have the effect of stimulating a diversion of traffic from the railways to the roads, and thus there is a further loss of revenue to the railways. If we are to have a properly balanced transport system, the provision of which is an obligation laid upon the Transport Commission by the Transport Act, I suggest that the railways must become a more efficient and up-to-date method of transport than they are at present. A properly co-ordinated system would be one in which each form of transport was able to render those services for which it was economically and technically best suited. I might put it in another way by saying that each form of transport should cover its full economic costs.
I suggest that the public must be permitted to make full use of the great efficiency and service of road transport, and that road transport should certainly not have to support those parts of the railway service which are in fact obsolete. What are the obsolete parts of the railways system? They are mainly, but not entirely, the many uneconomic branch lines all over the country which in many cases could well be closed down. His Majesty's Government may reply that this work of closing down branch lines is progressing. But is it really progressing fast enough? Perhaps the noble
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Lord who is to reply can give your Lordships to-day some indication of the plans the British Transport Commission have in mind.
We should also like to hear what steps are being taken, for instance, to introduce more mechanical methods of loading and handling, so that a reduction in manpower can be effected. I think I am correct in saying that some 63 per cent. of the costs of running the railways are in wages and salaries. Therefore, in the finances of the railways, the question of man-power is very important. I understand that a reduction of perhaps 10 per cent., or even as much as 15 per cent., could well be carried out without any real loss of efficiency, and it could be spread over a period of, say, two or three years. In these days of full employment it should not be difficult to absorb the men in other employment without causing hardship, and this would assist to build up our productive labour force, a step which is so necessary at the present time. I have little doubt that if those reductions were commenced forthwith we should soon see an improvement in the finances of the railways.
I believe it is unfortunately true that in 1938 550,000 men dealt with 298,000,000 tons, whereas in 1948 650,000 men dealt with only 276,000,000 tons. There has, of course, been a considerable rise in wages on the railways during the last few years. I suggest that it is essential that these rises should be set off by the saving of labour in the ways in which I have mentioned—namely, by closing down uneconomical branch lines and introducing more mechanical methods of loading and handling. I cannot help feeling that a great many other economies could be made in other directions. I suggest that this might be done in the case of standardisation of signalling equipment, and in spare parts for the various mechanical units associated with a railway. I believe that in the one item of steam gauges there are something like sixty-four different fittings. No doubt the Railway Executive have all these matters in mind, but are they getting down to the problem and making real progress in these necessary and important economies?
I hope that His Majesty's Government will initiate a real drive to secure major economies in administration. But we

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must have these economies now, or in a short time, and not in the far distant future. It is true that the Transport Commission have recently outlined the principles to be embodied in a new charges scheme for merchandise, and that scheme is now being examined by trade and industry generally. No doubt this new charges scheme will in time go a long way to level out the rates between road and rail, but it will be a long time, perhaps a period of seven or eight years, before the levelling-out process can become fully effective. What the country wants, and must have, is real economies now. What ever may be said of this new charges scheme, it is bound to have the effect in the end of raising charges on road freight, which in turn will have a detrimental effect on industry generally.
No doubt His Majesty's Government hoped and expected that under nationalisation great economies would be made, and that the Commission would be able to pay their way. There is no indication yet, however, of how the Commission propose to do this, except by a new charges scheme and by pooling the receipts from road and rail services. A few months ago the Minister of Transport, when addressing the Railway Clerks' Association in Bournemouth, said that the real solution of the railway difficulties was in pooling receipts on road and rail services, and that when that had been done British internal transport would be able to pay its way. Does the Minister of Transport really believe that when the finances of road and rail services have been pooled everything in the railways garden will be lovely? The reports and accounts for the year 1948 certainly indicates otherwise. They show that only 3 per cent. of the total receipts represent road haulage activities.
It is true that the take-over of road haulage units under nationalisation has not yet been completed, but I understand that even for the year 1949 the road haulage proportion of receipts is only about 5 per cent. It is clear, I think, that it will be impossible for the nationalised road services to cover to any large extent the losses on the railways. Surely it cannot be that, because the buses of London Transport cover the deficit on the Underground railways, His Majesty's Government think the road services can in time cover the losses on
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main line railways. That simply will not work it cannot be done. Even if road service rates were increased so that exceptionally high profits were earned, it is obvious that they could not make up for the deficit on the railways. I think that is a plan fact. The only real answer to the problem is, of course, higher efficiency on the railways themselves by cutting out all the dead wood and reducing management and running costs. If certain railway branch lines are a strategic necessity to the country, I suggest that they should be kept up by means of a direct subsidy, or perhaps kept in a state of repair on a care-and-maintenance basis. It might also be possible to close down a large number of little-used intermediate stations on the lines that may be kept in being.
It would seem that the Transport Commission, like a number of other nationalised hoards, are expecting to be guaranteed what is really a cost-plus basis for their administration and running. I suggest that if any increases in costs are always automatically passed on to the public, there can be no incentive at all to make any major economies. During the presentation of the Transport Commission's case before the Transport Tribunal recently, one of the witnesses for the Commission blandly stated that small economies might be expected in the near future, and in fact were being carried out now, but that it would be ten years before any major economies would materialise. I have little doubt that if economies on the railways were vigorously put in hand, a great deal would be clone to stein these very great losses which we are now seeing from year to year. Indeed, the Minister of Transport himself said only recently that with such a large undertaking as the railways a very small change could make all the difference between profit and loss.
I understand that in America there is an inter-State Commerce Commission, who investigate the operational efficiency of a railway when any demand is made for an increase in rates and before such increase is granted. It might be worth while considering the setting up of a somewhat similar commission here to make operational audits, not only of the railways but of a good many other nationalised industries. I would suggest that neither the Transport Tribunal nor

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the Public Accounts Committee is a suitable body to carry out that work. I should like to put this question to His Majesty's Government: Why is the deficit on the railways growing from year to year instead of being reduced? Surely it cannot be suggested that the cost of labour and materials has risen to such an extent since 1947 that a deficit then of some £4,000,000 has now increased in 1949 to about £21,000,000–and may be £30,000,000 in 1950. I believe that they have to look a good deal closer at the actual operation policy of the railways to which I would like to draw your Lordships' attention for a few moments.
It seems that a wrong policy was pursued in relation to passenger mileage during the year 1949. For example, from January to March, 1949, the receipts per passenger train mile showed a drop of 1s. 9d. on the figure for 1948. In round figures that is from about 12s. down to 10s. 3d. Surely that is a warning that the number of passenger trains should not be increased. Yet in April, 1949, the Railway Executive announced an increase of services amounting to no less than 1,200,000 train miles in each four-weekly period between June and September, which is a far greater increase than for the holiday season of the previous year. The result was that the gross receipts did not cover the extra expenses, and in fact were actually below the 1948 level. There we have the answer. It would have been far better to reduce the fares and not increase the trains. It is all very nice to have more trains and more through services all over the country, but the public are so heavily taxed that there is not enough money nowadays to go round to pay for all these wonderful services, and the passenger fares are undoubtedly too high. I wish in no way to belittle the excellent technical men on the Railway Executive, but I suggest that what is badly needed, not only on the Railway Executive but also on the Transport Commission itself, is someone who really understands commercial practice and can determine what parts of the railway can be made to pay and what parts are redundant.
I would like to draw your Lordships' attention for a few moments to the road haulage side of the transport industry. I understand that the Road Haulage
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Executive expect to control something like 30,000 to 40,000 road vehicles when the take-over has been completed. On the other hand, I see that the Railway Executive already control about 12,000 road vehicles which they use for their collection and delivery services. But in the Report of the Transport Commission for 1948, it is stated that not only is there a substantial loss in their operation but that "it is a normal feature of their operation." Surely, if the Railway Executive are unable to make their road services pay, it might be of advantage to hand that side of the business over to the Road Executive to see whether they cannot make it pay. I suggest it would be far better, however, if it were handed back to private enterprise. The real truth, of course, is that this vast and top-heavy transport structure is becoming clogged with centralised control and management. According to some Government statistics recently issued, it appears that the staff of the Road Haulage Executive—perhaps I had better say the British Road Services —has been increased by 2,600 men over and above those people taken over when the various road haulage undertakings were taken over. And so it goes on—more men to control more men, and so on ad infinitum. That is where the losses occur. From time to time we see rather longing eyes directed towards a possible limitation of the "C" licence holders.
I would like to take this opportunity of drawing your Lordships' attention to the recent Report of the International Chamber of Commerce which they made on this subject, which has a considerable bearing on it and which is being sent to the United Nations Organisation. The Report lays down that
"transport for own account should be unrestricted,"
and goes on to say that all the users should enjoy unrestricted freedom of choice among the means of transport. There is no doubt that if publicly-owned transport can offer trade and industry an economic alternative, combined with efficiency and service, they need not be worried about the "C" licence holders. Trade and industry use their own vehicles for only two reasons—one is efficiency and the other is economy—and they ought not to be restricted in any way in their choice of transport.
There is one other point with which I would like to deal, and that is the Transport Commission's proposal to increase the charges at the ex-railway and canal ports. It is true that the proposed charges compare favourably with the principal non-Commission ports, but it is none the less of vital importance in our present financial position that the charges should not be raised unduly. I would say that the proposed increases appear to bear very hardly and unfairly on the coasting traffic; they amount to 20 per cent, of current charges, whereas the other class of traffic has to bear an increase of only 14 per cent. I think it is true to say that all other ports outside the Commission have always applied their increases in respect of coasting vessels equally with other vessels, leaving, the pre-war differentials the same. During the hearing of the application before the Transport Tribunal recently, the Commission were asked whether anything had happened between 1947 and now to justify the changing of the differential fixed in 1947. The reply on behalf of the Commission was that the difference in the financial position of the Commission was a sufficient reason—a rather curious reply, but perhaps just another little squeeze. I would suggest that before this differential is changed, or in fact before any increases in charges are approved, the Minister himself should be satisfied as to whether a smaller increase coupled with greater efficiency and the greater exercise of further economies might not be sufficient to meet the requirements of the Commission. From the point of view of trade and industry it is most regrettable that an increased burden should be incurred at the present critical time in our country's economic situation.
In connection with coastal shipping, I should like to point out that it has always been the practice in the past to include traffic between Great Britain and the whole of Ireland—including Eire—as coming within the coasting basis for the levying of dock charges. I understand that the Transport Commission are not averse from accepting this arrangement and I hope the Minister of Transport will recommend that the coastal shipping differentials in dock charges shall be continued for the whole of Ireland.
In conclusion, I hope the Minister of Transport will give a direction to the
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Transport Commission that a complete plan of major economies on the railways should he prepared forthwith and put into operation at the earliest possible moment. I have no doubt that a policy of decentralisation would go a long way to making any reforms and economies effective. We on this side of the House believe that nothing effective will be done while the members of the Railway Executive are charged with the responsibilities of management and operation on a functional basis and are not in contact with local requirements and conditions; and we suggest that the Transport Commission should be reconstituted as a policy-making body, and management and operation be vested on a commercial basis in a regional board for each of the six railway regions. Then, I think, we shall see some return to efficiency. Above all, I suggest that we have yet to discover a method of protecting the public at large from inefficient management of nationalised industries. Questions in Parliament fail to elucidate the information required, and there is no doubt that the nationalised boards are in many ways becoming a law unto themselves. I hope that His Majesty's Government are giving this matter their fullest consideration, so that Parliament may obtain effective control of these vast undertakings. I beg to move for Papers.
3.3 p.m.
LORD ROCHDALE: My Lords, I propose to speak for only a very short time this afternoon. I should like, first, to follow my noble friend in his first remark and to congratulate the noble Lord, Lord Lucas, on his new position. I wish to talk primarily about freight and to say how timely I think has been the introduction of this Motion by my noble friend particularly because, as he has pointed out, the country—or at any rate industry—now has before it the draft outline of principles which it is proposed should be embodied in a charges scheme for merchandise traffic. At the same time, of course, we have this demand for increased freight rates on the railways. As many of your Lordships foresaw when we were discussing the Transport Bill in 1947, the apparent results of nationalisation so far, at any rate to those who are outside the industries, appear to be far from giving us what the Bill lays down we should have—namely:

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"an efficient, adequate, economical and properly integrated system of public inland transport."
That is what the Bill lays down. But, as my noble friend has pointed out, it may be many years before we get this. One would like to see some tendency in that direction by now, but in all too many cases the tendency is in the opposite direction.
With regard to the proposal to increase by 16⅔ per cent. the railway freight rates, my noble friend gave an instance or two of the effect of this, mentioning it as adding 4s. a ton to the price of coal and 9s. a ton to steel. I understand that one can take the average price of steel as being, at a round figure, £21 a ton. To-day the amount of that £21 represented by transport charges can be taken as 54s. to 55s. That increase of 9s. will put up this charge to 63s. or 64s. This means that no less than 15 per cent. of the cost of steel—if we have this new increase added—will be represented by transport charges. That is a very high percentage.
I do not think that that example by itself gives the full effect of high transport charges in general. If one considers the aggregate of all the transport charges included, shall we say in some finished manufactured product (that is to say, the transport charges that would be included in the carriage of the raw materials going into the product, or such a thing as coal or paint used in its manufacture, the transport charges included in the movement of components taken from firms who specialise in particular components, or from a sub-contractor to the main manufacturer) then, if we take the transport charge included in the delivery of the product, and the railway charges and dock charges and so on, we see that these things add up to a very considerable amount.
In the light of these facts one realises how serious such an increase would be. An increase of 16⅔ per cent. is serious from two points of view. It is serious, first, from the point of view, as my noble friend has said, of our ability to be competitive overseas and secondly, because of the hardship which it must inevitably inflict on a number of firms who have standstill orders on the prices of their products at home. Clearly, the
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losses that we hear of to-day and those which we have been warned about in regard to the future, are something that must be dealt with. If they cannot be 'balanced by economies arising from integration or co-ordination of the various means of transport, then of course, so long as the British Transport Commission exists, they have to be dealt with by increased rates, as has been suggested, or they must be subsidised, either by the taxpayer or in some other way.
Prior to this debate I was re-reading the speeches in the debate which took place in your Lordships' House in May, 1947, when the Second Reading of the Transport Bill was in progress. I was particularly interested to note in the concluding remarks of the noble Lord, Lord Lucas, this statement:
"I beg that … if a subsidy is necessary, it shall … not be found by artificial restrictions placed upon other methods of transport."
I hope I have not misquoted the noble Lord and taken his remarks from their context. I am quoting them because I entirely agree with what the noble Lord said then. To my mind, to place artificial restrictions on what may be more modern, more efficient and cheaper forms of transport in order to bolster up a form of transport where a measure of retrenchment may he necessary would be to take a step in the direction of rigidity and away from progress, a step which in the long run would be bound, in relation to younger countries, where their transport system is not so developed as ours, to lead to a position of disadvantage as regards the industry of the United Kingdom. As I say, I have quoted the noble Lord because I agree with what he has said. I sincerely hope that he still agrees with what he said then, and that he will not fail to force that point of view in his new position.
The question I am going to ask the Minister—and I hope he will give some time to it in his reply—is, what exactly are the Commission's own views of their ability in a reasonable time, by integration and co-ordination, to effect such economies as may make the proposed increased costs unnecessary without weighting artificially the charges of other forms of transport? I hope the noble Lord will say something about that because one's general attitude to the present day losses must inevitably be influenced by the view of the Commission as to their future

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ability to avoid losses. I should like to quote one or two examples which I think are pertinent to this argument. We are told—and perhaps the noble Lord will say whether it is mere rumour or whether it is, in fact, true—that there are upwards of 60,000 operatives on the railways today who could be regarded as redundant. I do not know whether that is true or not, and I hope the noble Lord will give an authoritative statement on it. If it is true, then there is, as my noble friend pointed out, an avenue for the saving of labour.
We hear all too many complaints from traders of one kind and another of delays in the movement of their goods and of damage to their goods. Delays cost not only the customer but also the Commission a great deal, because their capital is tied up needlessly. I heard a case the other day of goods that are regularly sent from Manchester to London. By road they can go whenever required and they reach their destination within about forty-eight hours, whereas by rail they take as often as not anything up to three or four weeks—and I am afraid as often as not they arrive damaged. There was another case—and this is approaching the problem from rather a different angle—of goods going from Manchester to Liverpool. Under private road transport they could be delivered, as a rule, within about twenty-four hours; but the same trader to-day has often to wait six days before his goods are actually collected, let alone delivered at the other end. I admit that these may be just isolated instances and one does not want to pay too much attention to individual cases; but one hears too many of them to think that there is not something in them. I have no wonder whatever that traders prefer to send their goods in their own "C" licence vehicles, in which they can be carried as and when they like at a reasonable cost and—what is even more important, particularly today—without the need for expensive forms of packing. That is a particularly important factor to-day, when softwood is at such a premium and is expensive and difficult to get. Of course, packing wages are high.
Here again I must apologise to the noble Lord, Lord Lucas, because I am going to quote from the same speech that he made in May, 1947. He said:
"I know the growth of 'C' licence transport and I know why it grows enormously—
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because of the relative inefficiency of all alternative forms of transport offered to industry."
That is what he said in 1947. Again, I entirely agree with him. I do not know whether that was true then—it may have been, to some extent—but I am quite sure it is true to-day. Although about two-thirds of the increase in "C" licences has been in the smaller vehicles of thirty cwt. or so, there has also been a substantial increase in the number of heavier vehicles, which is a point pertinent to this particular argument. We hear rumours from time to time that there may be an attack curtailing the "C" licence position in order to encourage more goods transport on to the nationalised railway and road systems. I hope the Minister will say something about that and relieve the anxiety that traders have on this point, because if anything is to be done about cutting down the present increase in the "C" licences, there is only one way in which it can be done, and that is by offering and maintaining such an improved public service that traders would, of their own choice, make the change to the nationalised systems. To do it in any other way would be to take a most unfortunate step. It would be bound to put up costs at a time when, as my noble friend has said, we are being encouraged to try to bring them down.
I come, therefore, to my final point, which I put as a question to the Minister. Taking the long view, what does the Minister regard as the future pattern of our transport system? Does he visualise a system reduced substantially to no more than a relatively—I use the word "relatively" advisedly—small number of long-distance strategic railway arteries, off which all further distribution would be by road, or what does he picture? I am not necessarily suggesting that arrangement. One can in theory see many advantages—a possible reduction in overheads. I think one can also see another important advantage: a reduction in the great problem of road-rail competition, because by this arrangement the railway would have the best chance of competing on terms favourable to itself, and elsewhere one would find like competing with like—road transport with road transport. I think that would get over the problem of road-rail competition with which we are always faced. Of course, if it were overdone there might be

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disadvantages; but now that we have a single transport system I do think industry is entitled to know the lines along which those responsible for long-term planning are thinking and working to-day. I hope that the Minister will not try to evade the question by saying that it is too early to make any statement, because to my mind that is just what it is not. To the extent that we could be given some assurance that we were in fact working towards something that has the makings of a go-ahead and sound overall system, I personally would be prepared to overlook certain temporary deficiences. I would not overlook bad service nor would I overlook cases of real inefficiency like the two cases I have mentioned, but I would be prepared to overlook a certain measure of financial loss requiring temporary forms of subsidy. Therefore I hope that when the noble Lord replies he will give us an indication of the future —how the Commission see it working out over a considerable number of years ahead.
3.20 p.m.
VISCOUNT LONG: My Lords, I should like to join in thanking my noble friend Lord Teynham for putting this Motion on the Order Paper, and also to add my congratulations to the noble Lord, Lord Lucas, who in his new office will be responding on the Government's behalf. I have given a certain amount of notice to the noble Lord that I should be raising these few points this afternoon. As I understand it—and I speak as one who has been nationalised—in the road transport industry 3,000 firms have already been nationalised, and of that total 2,989 own fewer than twelve vehicles. As I understand it, there are only eleven firms who own more than fifteen vehicles. So what some of us said while the Bill was going through your Lordships' House seems to be true—namely, that this is a poor man's industry which has been seized, like the famous Naboth's vineyard.
Coming to my first point, if my figure is correct, how many of these firms have been fully compensated? I myself went through an extraordinary experience on the day of our board meeting. A most charming gentleman from the Road Haulage Executive walked in and said: "I am afraid I have come here to take
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you over." I said: "That is splendid. No doubt the secretary has my resignation all written out." He said that he had, and I told the Road Haulage Executive man: "I will not waste your time any longer; I will sign it at once." He said: "No, it is not so easy as that. You have got to vote me into the chair first, and then I will receive your resignation." That was my form of compensation; I was not only executed, my Lords; I was my own executioner! Little compensation have we had.
That leads me now to the question of senior men over sixty years of age who have given great service to the road transport industry and who were in positions of executive office. The Act said that they would be considered for a pension or for some form of compensation. It is a curious fact that when I went to various places in the country during the Election I found more than one operator who had met with a similar experience as myself, and who was now trying to fight the Ministry in order to obtain some compensation. It is difficult to judge this question of road haulage because we have no idea what is the working capital of the Executive. All we know is that up to date £25,000,000 has been paid in respect of undertakings who went in voluntarily under the Act. We do not know what else has been spent. Therefore, how can we gauge the liabilities in which this industry may be involved? I would like to ask the noble Lord, first: How many operators of those drawn in have been paid full compensation, and, secondly, how many have been paid only part-compensation? With 2,989 companies, each having their own firm of chartered accountants, it seems to me that it will he a long time before they come to any agreement. I recognise that the noble Lord may find it rather difficult to answer that question.
That brings me to my next point—namely, the question of the token payment. It is true that a part-payment has been paid to some of these companies, yet these companies were all owned by small men whose savings had been put into their business. They owed money to their banks, because they bought their vehicles on hire purchase and were gradually paying off the purchase price. The banks have taken the whole of the part-compensation that these people received, so they are no better off in that

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way. Finally, on this question of compensation, can the noble Lord tell us how much has been paid out in respect of both voluntary and compulsory acquisitions? We can then get on to some figures which will enable us to see what the future holds in store—whether or not these companies are going to pay. I want to give the experience of two companies of which I know, each of which was earning £10,000 a year under free enterprise, and is now under nationalisation making a loss of between £3,000 and £6,000 per month. Those are not isolated instances; they are going on all over the country.
Now I come to the next point—namely, the appointed day for the twenty-five mile radius, which I understand was on February 1 this year. In June, 1949, Sir Cyril Hurcomb said—I am quoting his own words:
"It is our intention that the latitude to issue original permits to continue operation shall be exercised in a manner and in a spirit which will acknowledge the importance of just treatment of the individual haulier and the interests of the trade, as well as the convenience of administration which should be a secondary consideratior."
I have been talking to some operators since February 1; and the position is exactly the reverse. I would like to give some figures on that question and perhaps the noble Lord may be able to give us some information. Out of 13,810 valid applications, 2,160 have already been refused, and of the 8,600 granted many have had their conditions whittled down in a way which makes the licence almost useless. I had personal experience of that in Bristol and Cardiff last week from more than one operator. We are already in the middle of March, and 3,050 cases remain to he decided. That does not reflect very kindly on the authorities, and on the powers referred to by the public relations officer who said, in a letter to The Times yesterday, that the Executive were always asking their regional officers to help wherever they could.
Then we come to the question of managers. I do not want to enter into a great controversy over this question, but I do know that there are many managers today who are only too willing to get back into free enterprise, where they are allowed to keep the wheels revolving for the traders whom they have served for so many years, and whose interests they
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know. Dealing with drivers, I asked the noble Lord in a letter that I wrote to him: Is it a fact that tinder nationalisation long-distance drivers are earning less than they did under free enterprise? Finally, I come to the customers. A good deal has already been said by my noble friends from the point of view of trading, and I know that in the West of England great anxiety is felt by customers and traders as a whole as to whether they are going to get the trade and the service that they received under free enterprise.
Lastly, what has happened about the rate structure? For many years road and rail were endeavouring to come to an agreement, and had the conferences gone on there is not a shadow of doubt that they would have come 10 that agreement. So far as I am aware, a year and a half after the Act has been passed, this matter is still under discussion, and there is still no rate structure produced either by the Road Haulage Executive or the Railways Executive.
I would add just one thing, in conclusion. What is to be the future for the 57,000 operators who to-day are not nationalised? Are they to be gradually forced down by Government control, through nationalisation, to accept a price now, when they have few assets left, or are they, in the future, to be taken over at a breaking-up price because they have not had a square deal from the Transport Commission. Speaking on behalf of the men with whom I have worked for a great number of years, may I say that I hope the noble Lord, Lord Lucas of Chilworth, when he replies will be able to tell us something of what is now in the minds of the Government in order that these men—those whose businesses have been nationalised but who have not yet been paid compensation, and those still left out of the net—may have some ground for hope. In the one case one trusts that they will receive their money in the near future, and not in three years' time, and in the case of those whose businesses have not yet been nationalised, one trusts that they will have a square deal from the various licensing authorities in this country.
3.30 p.m.
LORD HAWKE: My Lords, to begin with, I should like to add my small meed

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of congratulation to the noble Lord, Lord Lucas of Chilworth, who is discharging duties of his new office for the first time in your Lordships' House to-day. But I am sure that my words count as nothing in view of the tremendous demonstration of confidence which the noble Lord has received from his own colleagues. Can a junior Minister ever before have had to support the burden of such a debate as this without having a single helping word from anyone on his own side? Of course, the noble Lord's colleagues have all been going round the country, as I have been; they have spoken to "old-timers" of rail and road and they know in their hearts that nationalisation of transport has been a ghastly failure.
I should like to make a few points of detail before developing my main theme. I notice that the cost of settling claims for losses of goods and damaged goods, as stated in this 1948 Report which we are now considering, was still £3,800,000 or 1½ per cent. of the merchandise receipts. That is a very high ratio. I hope that the results for 1949 will prove to be somewhat better. My next point—and I would beg the noble Lord not to think it frivolous, for it is, not—is that it would delight the hearts of tens of thousands of persons if the higher officials of the Hotels Executive could be made to "live off the land," so to speak, in the Southern Railway buffets for a week. The survivors, I am sure, would see to it that the catering at termini of the Southern Railway was brought up to the standard of that of other railway termini in London.
We sometimes debate the subject of travel in this House, and we are all fully aware that the travel industry is one of our greatest dollar earners and that it also earns us a great quantity of other foreign exchange. The tools of the trade, so to speak, are, in the first instance, hotels. Hotels are very specialised buildings, put up at vast expense for the special purpose of housing visitors. Does it seem sanity that one of our larger hotels in London should at this moment be occupied as offices by the Railway, Road and Hotel Executives? The Marylebone Hotel, I submit, should be given up immediately. If the Executives cannot live in the quarters from which the railways were once run, I commend to their
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attention that enormous Government office which has gone up in the West End of London. Let the British Council remain in their existing hide-outs, and let us put the transport authorities in those new offices near Davis Street.
The Report which we are now considering is for 1948, so it is rather out of date, but from the "green book of fairy tales" (The Monthly Digest of Statistics) it is clear that the railways are going down badly. The merchandise ton-miles are stationary, and the merchandise receipts are down—that means more work for less money. Coach miles are up, passenger receipts are down—again, more work for less money. It may well be that we are right in having an inquest. What is the ideal we want? The ideal is, presumably, a completely dual system with complete consumer choice between road and rail and free competition between the two. We have the existing railway system, which is a complex system with a huge staff for maintaining its assets but with a low cost of movement. On the road, we have a fine road haulage system with lower fixed costs and a higher movement charge. The result is that if the consumer pays a pound to send a ton somewhere, if it goes by rail he is paying, in very rough figures, sixteen shillings to lessen the losses of the railways and four shillings to add to the losses of the road; while if it goes by road the position is reversed. So if the freight goes by the rail it takes sixteen shillings off the taxpayers' loss; if it goes by road it adds sixteen shillings to the taxpayers' loss.
It stands to reason that if convenience was equal, the community would always gain if goods went by rail. The trouble is that convenience is not equal. I am not speaking about convenience in the financial sense, but physical convenience, and the problem we have to face is, can we afford the complete dual facilities? I submit that we cannot. Not only can we not afford the present cost of them, but we are now threatened with an increase in cost, and that we certainly cannot afford. The problem is how to cut these facilities without destroying the element of consumer choice and also that of competition. What we have to do is to reduce the number of people engaged in transport facilities in this country. There are too many at this moment. We

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can use the direct method of regimentation. His Majesty's Government may prefer that. I think the right methods to use are indirect, methods. Hew are we going to do this? First of all, traffic, I think, can be classed into three different kinds. The first kind is that which clearly can be dealt with best on the road: the second is the kind that can best be dealt with on the rail; and the third is a sort which comes in a "no man's land" between the two, that is, traffic of a mixed character. I maintain that what we should do is to examine the rail position so as to cut out as much as possible of the facilities which we are now offering for traffic which really could much better go by the road. To do that there is the possibility of closing a few branches, but not very many. On the other hand, it is possible to close down a large number of stations except for the purpose of signalling points and picking-up points for passengers to be carried in rail cars to the nearest junctions with their tickets sold and collected on the rail cars. That would provide very substantial economies.
Then, of course, the railways are paying far too much for the type of coal which they are receiving. If the railways were enabled to get the coal which they wanted they could save several million pounds a year. With regard to works, my impression is that there is a considerable degree of extravagance at the present moment. Wherever I go I see small works being carried on which are not strictly necessary to carry on the railways. The matter is referred to in the Report. The Transport Commission appear to think that in due course it will be necessary to rebuild the stations. I submit that it is a great fallacy to suppose that the modernisation and rebuilding of stations will collect any more passengers. The things which bring passengers are cheap fares and fast trains.
To-day there are 650,000 men employed on the railways, whereas before the war there were 550,000. The difference is accounted for by the Commission by reason of holidays, shorter hours and deferred maintenance. Deferred maintenance will not be with us much longer. Surely we are not going to be content with using the same number of people to do the same work as they did before the war. In America immense strides have been made in mechanisation of permanent way maintenance, improved painting methods and
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so on. It would be grossly wrong to assume that we need as many men as we had before the war to run the railways. I submit that the railways should be given the target of reducing their staff within five years to the number that ran them before the war, and even then I should not be content with that during the following five years. If we did that, we should be able to pay the men who remained a better rate of pay.
A new rates structure is required, of course. Not that we want more total money taken out of the pockets of the public; that is precisely what we do not want; but we do not mind if it is taken from somebody not paying it at the moment instead of from those who are. In other words, the railways, who have always had a raw deal in their rates structure, should be enabled to modernise and rationalise it. In the aggregate our aim should be a transport system as good as the one we have to-day with a little less consumer choice but competitive over wider ranges at a total cost not exceeding the total cost of road and rail to-day. Having rationalised the rail, the resulting lower rail charges will keep off the road traffic not really economical to send by road. What are the objections to this policy? First of all, there will be strategic objections. If there are, let us face up to them and pay a subsidy for keeping open uneconomic lines. It has always been done in India; why should we not do it here? Secondly, there is redundancy. No political Party has promised that every man should keep exactly the same job for ever. In any case, the railways recruit vast numbers every year and this question can largely be dealt with by the policy of suspending recruitment. I think the objection we are most likely to have is that it is just plainly impossible. I believe that is the answer the noble Lord opposite is going to give to my noble friend Lord Rochdale. I do not believe in impossibilities. It has been proved time and again that we can do the sort of things that the Railway Executive will say are impossible. This is rationalisation, and this is what I maintain we want.
What are the alternatives? The only alternative I can see is what is known as co-ordination, which means putting up the fares on the roads. To a railway man co-ordination means the elimination of road competition. I do not consort with

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road men so I do not know what it means to them, but possibly it means something of the same sort. If there is a tussle between road and rail, as dog does not eat dog the net result will be that they will split the traffic so as to make a comfortable living for all. Charges will go up and all will have money for their pet little schemes. The sky is the limit to the amount of money which can be spent, and plausibly spent, on transport. Nationalisation has removed the spur to efficiency and the curb on expenditure, and we must have both the spur and the check. Internal competition is the thing to spur efficiency and refusal to grant increase of fares is the curb to expenditure. For the time being, provided their house is really being put in order, I think we should be perfectly justified in providing a diminishing subsidy. This is undoubtedly the hard road, but I think it is the only road which in the end can bring good out of nationalisation. If we do not start them quickly on the hard road, the transport industry will be run for the benefit of the transport industry and not for the benefit of the consumers.
3.47 p.m.
LORD SANDHURST: My Lords, I have great pleasure in re-echoing what has been said several times now in congratulating, the noble Lord, Lord Lucas of Chilworth, on his new post. I hope that now that we have at the Ministry of Transport somebody who knows something about roads, something may be done about them. I have taken the liberty of giving the noble Lord notice of three points which I want to raise this afternoon. I am sure we shall have adequate replies to all of them, but I am not sure that I shall be satisfied with the replies when I hear them. The first question I want to ask is: What is the attitude of the British Transport Commission to what, from the point of view of the railways, I might almost call poaching, and what, from the point of view of the coach owners, is coach competition for traffic? There was a recent case of a coach owner who applied for permission to run a coach between Melton Mowbray and Great Yarmouth. There is a railway between Melton Mowbray and Great Yarmouth, the old Midland and Great Northern Railway, and in the days before the First World War there used to be quite a good service. When I was
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living at Melton Mowbray, just after the First World War, it was hardly running a service at all, and it took most of the day to get from one place to the other. What it is doing to-day I do not know. In opposing the application for a coach licence, the lawyer who was representing the Commission thought that the point had been reached
"when the court must say to the public, ' The trains are there; you must use them, as there are enough coaches on the road'."
If there are enough coaches available to be put on the road and it is the objection of the Road Transport Commission that has prevented their being there, that statement takes on rather a different view, at least in the eyes of the general public.
The Commission have been approached about their attitude towards that statement and their reply is so ingenious and cleverly worded that it has been taken in several different ways. I should like to know exactly what the reply means. The final paragraph of the reply, which has been published in the Press, said:
"The Commission desire to dissociate themselves from the suggestion that their policy is to oblige the public to use the rail services without regard for alternative facilities, whether or not the latter are operated by the Commission. The various transport services for which the Commission are responsible are subject to competition, and in any event the freedom of the public and traders to use those forms of transport best suited to their needs is safeguarded under the Act. Freedom of choice, however, is not to be confused with wasteful duplication of parallel services, and it has always been the function of the Licensing Authorities, who are not connected with the Commission, to consider that aspect of coach operators' applications. On such occasions it is usual and, indeed, essential to the national interest, to draw the attention of the Licensing Authority to the availability of rail services which could take the same traffic, including the special through excursion facilities which are offered during the holiday season."
After reading that, I cannot make up my mind what the attitude of the Commission is going to be.
The second point about which I want to speak is the question of the issue of new "B" transport licences, and the increase of fleets of existing transport licensees. The "B" licence, as your Lordships know, is a sort of hybrid—it is partly a "C" and partly an "A" licence. A man is granted a "B" licence when he wants mainly to carry his own goods but for the sake of economy wants to be able to carry other people's as well.

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The "B" licensee is that wise man who is trying to get the best of all worlds. There are some 30,000 "B" licensees. What will the attitude of the Commission be when these people apply for new licences, or the renewal of their existing licences? The "C" licensee, as your Lordships know, carries his own goods only, and he does it because it is the most economical and efficient method. By carrying other peoples' goods, and possibly taking a return load where he otherwise would not have one, and by filling up with a load when he has vacant space, an operator would naturally decrease his costs and increase his efficiency. If the Transport Commission are to oppose that type of licence, I take the view that they will oppose the most economical form of transport there is. Admittedly they cannot hope to compete with that kind of operator, because in normal circumstances their lorries will not be available at the short notice which is often given; and they will not be able to comply with the essential requirement of the "C" portion of that licence.
My third point is the "sticky" question of the supply of new vehicles. As some of your Lordships know, owing to the financial state of this country an edict has gone forth that the supply of commercial vehicles during the present year is to be cut by over 25 per cent. compared with the number supplied last year. The British Road Authority are obviously the biggest user of road transport in this country. When it comes to their going to the manufacturer, he will naturally feel: "I have got to look after these fellows. They will probably own all the haulage in the near future, and if I do not look after them now they will give the orders to somebody else in future." There may be a tendency on the part of the manufacturer to give undue priority to the Transport Commission. I would like to know whether there is any step that can be taken, or is being taken, to see that when the country greengrocer applies for his 30 cwt. van, or the farmer applies for his 3-ton or bigger lorry, they take their proper place in the queue and are not pushed out of it by the big national organisation. I feel that is an important point, because all over the country to-day the small man's vehicles are geting into a worse state, owing to the fact that they cannot be replaced, and also, in a certain number of cases—
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though not a material number—owing to the state of the roads in the districts where they have to operate. I should like to know whether any steps are taken to safeguard the small private individual. May I, in conclusion, apologise in advance, in case I have to run away before the noble Lord replies, but unfortunately the debate took me rather by surprise, and I had already made an engagement.
3.55 p.m.
LORD WOLVERTON: My Lords, I am sure we are all obliged to my noble friend Lord Teynham for having put down this Motion, because this matter is of the utmost importance. I would like to congratulate the new Parliamentary Secretary to the Ministry of Transport on his appointment. I wish to make one point about the railways. I do so because for many generations up to nationalisation my family were connected with the great British railways—my great-grandfather was the first Chairman of the old London and North-Western Railway. Like many other noble Lords, I am gravely concerned at the great deterioration of the British Railways in the last two years, and also about their financial position. It is absolutely vital that these main lines should carry on in an efficient state, for they still carry the all-important heavy minerals for this country.
I do not want to cast any undue reflection on the present administration, but in my view the Railway Executive is too big and top-heavy. I agree entirely with what my noble friends Lord Teynham and Lord Hawke have said, and I feel that the only way to secure proper control of the situation is to break down this enormous structure. Undoubtedly something will have to be done in that respect, and I shall be pleased to hear from the noble Lord opposite what are the Transport Commission's plans. Either we shall be faced with a definite subsidy on the railways for many years, or they will deteriorate so far as maintenance is concerned. I do not think any country can allow that. Even when we have this co-ordination I do not think the road transport system will be able efficiently to carry the losses of the rail transport system, because costs have risen enormously on road transport, as well as on the railways. Therefore, if road transport is to be kept in an efficient state, and if new

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lorries are to he bought and proper maintenance given, there will be very little money left with which to subsidise the railways. In all earnestness I ask the Minister what the Transport Commission propose to do about this matter.
3.59 p.m.
LORD GIFFORD: My Lords, I would like to say a few words this afternoon about the policy of the British Transport Commission in relation to passenger road transport. I find myself in some difficulty in this regard, because if one judges the Transport Commission by what they have done, I think we can offer them our congratulations. In the words of Gilbert, they
"have done nothing in particular, and done it very well."
At the moment, they have left a very efficient and well-run industry alone. But there are signs that this admirable policy, which suits both the fare-paying public and many local authorities in the country who are quite efficiently running their own transport systems, is not going to continue. One of the most ominous signs of what is about to happen is with regard to the fares in the London Passenger Transport area. I would venture to remind your Lordships that in this area the bus fares are already higher than anywhere else in the British Isles. Where you usually pay 1d. outside the London area, in the London area you pay 1½d., and where in other parts of England you pay 2d., in the London area you pay 4d. In addition Ito that there are no return fares in the London area. But are we going to stop at that? Oh, dear, no! In October next the 2½d. fare is going up to 3d., and in twenty-two out of the twenty-five stages fares for longer distances are being raised. For instance, the 1s. 3d. fare will go up to 1 s. 6d., and the 2s. 1d. fare will go up to 2s. 6d.
When we talk about the London Passenger Transport area, we are apt to think of popping on a bus from here to Victoria or to Waterloo, but many of us who live in the Home Counties know that the tentacles of London Passenger Transport reach out a very long way. This will greatly affect the farmer's wife going into her local town, because she will have to pay a much higher fare than she does at present. The only excuse
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given by the Transport Commission for the increase is that it is to "iron out anomalies," whatever that may mean. To my mind it can mean nothing else but giving support to the tubes and British Railways. Instead of using the expression "iron out anomalies," I should say that the right phrase is that it is "raking in the halfpennies." I think it is absolutely certain that there can be no reason for these proposed increases, except to offset the deficit at present arising on the railways. If a private company wants to raise its fares it has to go to those much maligned people, the Traffic Commissioners, and it has to show that its undertaking is running at a loss before it has any hope of getting an agreement to raise fares. I venture to remind your Lordships that in this House we made several attempts to make amendments to the Act so that the British Transport Commission should also be subject to the Traffic Commissioners and have to justify the raising of fares. But in spite of those amendments being strongly pressed, they were resisted by the Government.
We come back again and again to the crucial point: Should fares in one form of transport be artificially raised to subsidise another form of transport which is running at a loss? It is interesting to note, as I think the noble Lord, Lord Teynham, briefly mentioned, that this problem is not one which is being faced only in this country. It is regarded as of such great importance that it is a problem in which the United Nations have taken a considerable interest. In fact, U.N.O. recently called for a report to be prepared by the International Chamber of Commerce and it is shortly to be submitted at Lake Success. This report gives the basic principles which a detailed scheme for the co-ordination of inland transport should follow if the scheme is to be run in the long run for the benefit of the country as a whole. Here are a few of the main conclusions of this report.
"That the user should enjoy unrestricted freedom of choice among the means of transport."
It does not look as if the British Transport Commission is subscribing to that maxim, because, as the noble Lord, Lord Sandhurst, has already said, their solicitor at Nottingham—I admit there has been some explanation since—says "the trains are there and you must use them."

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"That transport for own account should be unrestricted."
Of course, that means what we call in this country "C" licence transport. Although it is perfectly true that at the moment "C" licences are unrestricted, there have been many veiled threats recently about the rising number of "C" licences and so forth.
"That healthy but not wasteful competition should be encouraged among different forms of transport."
I do not think that the British Transport Commission are very much in favour of that one. Their maxim seems to be to take over the lot.
"That nothing should be done to hinder the development of any particular form of transport in order to provide artificial support for any other form of transport."
Well, they are going precisely against that maxim in this recent raising of the London Transport bus fares. The last maxim which I shall quote is:
"If in the interests of defence or national welfare it is necessary to maintain certain forms of transport at the minimum level, the losses on those operations should not throw additional charges on transport users as such, but they should be nationally borne."
Those are tome of the suggestions which are being put before the United Nations, and I submit that the Transport Commissioners should give them very serious consideration, because I feel that their present policy runs counter to practically everyone of them.
4.8 p.m.
LORD SEMPILL: My Lords, I join with noble Lords who have already spoken in thanking ray noble friend Lord Teynham for initiating this very important debate. It will give your Lordships the first opportunity of hearing the noble Lord, Lord Lucas, address his very practical mind to these vital problems surrounding the rail transport system. With other noble Lords who have spoken I congratulate him on achieving this new office.
Those of us who have had something to do with or followed the problems which arose in 1921, when the railway grouping system was brought about, will realise the magnitude of the problems which face the Transport Commission to-day—that of rationalising the entire railway system of the country. What this plan is, and the number of decades it will take to implement, the noble Lord will no doubt tell us. Answers to many
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questions which have been asked by noble Lords who have participated in this debate will no doubt also be given. One might also ask —I expect it will come out in the noble Lord's reply—when, for example, will bogie railway wagons of 40-tons capacity, and more, be available for coal and mineral traffic? Great economies would naturally result therefrom, but obviously such wagons cannot be brought into use until adequate loading and unloading facilities are available. The whole question of transport, whether it be rail transport or road transport, or any other method, is of an importance which cannot be over-stressed.
Perhaps some of your Lordships will remember a report that was issued on this question of transport in the last year of President Hoover's Administration in the United States. Quoting from memory, I believe I am accurate in saying that it was discovered in the United States that 73 per cent. of the cost of the average article purchased represents movement—either movement of the coal from the face into the truck, or movement by road, rail, water, or air. That Committee was set up about sixteen years ago. This figure of 73 per cent. shows the tremendous importance of increasing the efficiency of the rail and other transport systems as rapidly as possible.
Some of your Lordships may have had the opportunity of reading a report which has just been issued by the Minister of Supply—the Lemon Report—The Standardisation of Engineering Products. In Appendix II there are some pointed references to the railway system, and matters that have been brought out in the debate to-day are touched upon. If there is not a complete plan already available for the rationalisation of the entire system, would it not be a useful thing to invite that Committee to sit again and expand its recommendations? The chairman, Sir Ernest Lemon, is technically and practically a man with vast experience in design and of the railways of this and other countries. For many years he was Vice-President for Operations and Commerce of the L.M.S. I would also ask the noble Lord, Lord Lucas, whether he will give some thought to the æsthetic side of these matters, as for example the new colour scheme. This scheme of cream tops with red bottoms is extremely unlovely and completely unpractical. Could the noble Lord not excite the interest of

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the College of Heralds and get them to work on an insignia for rolling stock? The Commission could then obliterate those unnecessary words "British Railways" and/or the uncomfortable lion who seems to be neither rampant nor couchant. Something should be done. At any rate, if the noble Lord will expand and act on the æsthetic as well as the engineering and practical side, we shall all be grateful to him.
4.13 p.m.
VISCOUNT BRIDGEMAN: My Lords, I think we shall all agree that this debate has been a useful one. I should like to join in the succession created by my noble friends and to congratulate the noble Lord, Lord Lucas, on his elevation to his present office. I should like also to say how sure we feel that he will give expert and sympathetic attention to all the points raised—and there have been a good many—this afternoon. My noble friend Lord Swinton, who I am sorry to say is unwell to-day, was to have spoken at this stage of the debate. I know we shall all hope that he will soon be restored to health and be able to take his place on this Bench again. Your Lordships may have noticed that the team of speakers from these Benches following my noble friend, Lord Teynham, have been, by and large, the same team that helped to deal with the Transport Act during its passage as a Bill through Parliament in 1947. Therefore they have all been watching this building up of nationalised transport and have been looking, I do not doubt, to see whether the fears that were expressed at the time were or were not justified.
I am not going to follow a number of my noble friends in the detailed points which they have put up. Lord Long. Lord Sandhurst and Lord Sempill have all made points of detail with which I am sure the noble Lord, Lord Lucas, will deal in his own time. This debate has centred round the railways more than any other form of transport, I think, because the underlying fear and apprehension felt on these Benches is the apprehension that other and more profitable forms of transport will be drawn into the orbit of nationalisation in order to subsidise the railways consequent on their having made a loss. They feel, moreover, that this business of paying for the losses on our transport will have
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adverse effects on industry as a whole—and just at a time when those adverse effects cannot be afforded. That, I think, is the over-all picture, so far as the railways go.
Lord Gifford issued a warning to us just now—and I was glad to hear him quote some proceedings of U.N.O. which, I am sure, lend a great deal of point to this debate. In I947, quite apart from the political considerations of the nationalisation of transport, the economic advantage was claimed that by integration (that was the word used) we should achieve a cheaper and more efficient form of transport in the national interest. The word "integration" at that time was very popular, because in many people's minds it denoted something which we all knew had been a great success and which had largely contributed to the winning of the war—namely, the dovetailing and interleaving of British and American Staffs under General Eisenhower's command. Whether that word turns out to have the same significance in the case of transport, I am not so certain. The scheme represented by the word "integration" was an economic scheme and, as my noble friend Lord Hawke said, it was intended to tackle the operating problems of these different types of transport in such a way that we should improve their efficiency and cut out redundant methods—without undue extravagance on the one side and without undue interference with the consumer's freedom on the other; it was to achieve the greater economy, efficiency and speed regarded as suitable to the general economic development which was expected by His Majesty's Government when they took office in 1945. So far, we cannot be at all certain that this has happened. The taking over of these two forms of transport—road haulage and passenger transport—is still in process, and therefore I do not propose to-day to try to pick too many holes in what is being done. At the same time I am bound to say that if we do not hear something satisfactory this day next year I may have something to say.
On the other hand, the railways have been nationalised long enough, I think, for my noble friends to make some perfectly fair comment. Rates have had to be increased, but railway speeds have not. The timing of trains, both passenger

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and goods, has not improved. There is still redundancy in the matter of staff, and all sorts of things like the closing of redundant lines, or using them solely for goods purposes or keeping them on a care-and-maintenance basis for strategic reasons. Here I will make the interjection that, if any form of transport is to be given up for strategic reasons, the cost of that should fall on the Service Votes and should not be mixed up with the operation of transport which, whether it is nationalised or not nationalised, ought to be a commercial undertaking. I say that in passing.
But to come back to the railways, my noble friends are perfectly justified in saying that, whether or not these advantages from integration are going to come, they have not come yet. As the noble Lord, Lord Sempill, said, painting the trains red and cream or devising a new lion (who, I can tell Lord Sempill, is statant), or even improving station gardens or train food—all those things are froth on the surface, and none of them affects the big problems of the railways. What is plain is that the railways are now incurring a very heavy loss indeed, whatever the cause may be. The loss is being incurred, and there will no doubt be a great temptation to those in charge to try to meet it by raising railway rates and by pulling in the profits on passenger transport and on road haulage to try to subsidise the losses on the railways—all done in the sacred names of harmonisation, integration or mutualisation, or what you like. If that happens, it will affect more than just this problem of transport that we are considering this afternoon—because, as the noble Lord, Lord Sempill, has indicated, 73 per cent. of everything we do is transport. Transport and the cost of transport affect every industry in this country, and affect all of us. Therefore, if higher rates are to be the order of the day, and if there is to be no escape from higher railway rates by using lower road haulage rates, then sooner or later the cost of production is bound to go up.
That, in its turn, unless I am greatly mistaken, is bound to lead to a demand for higher wages. And at the same time as all this happens the incentive which competition always produces, and which monopoly always stifles, will be taken away, as the noble Lords, Lord Hawke
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and Lord Rochdale, have so rightly pointed out. Therefore, instead of combating the infiltration by our handling of our transport system, we run the risk at this time of encouraging it. It is from that point of view that we must look at this whole problem, because now that some systems of transport are nationalised, and others are going to be nationalised, the Government are the trustees, just as they are the trustees of the value of the pound.
What are we going to do? We all spend a good deal of time pointing out the difficulties and the "jam" in which we are, but it would be a mistake if any impression were gained from this debate that we had no positive remedy. For my own part, I think that the quickest results in tackling this problem can probably be obtained by studying the set-up. If we go back to the debates in 1947, we shall all remember that my noble friends threw a great deal of doubt on the setup under which transport was to be run: the Ministry of Transport lying at the back, but with a card of re-entry into every hand if they wanted it; then the Transport Commission, then the Railway Executive or the Road Haulage Executive, or what you will, until you get down at fourth remove to the railway region or the organisation of the passenger road car company, or its counterpart of road haulage in the docks. I talk about railways for a moment now, but the same applies to other forms of transport. It is in the railway region that we see the focal point for operating.
As I ventured to say just now, integration is largely a question of operating efficiency. That has been found in time past, and certainly since the Act of 1921. It was in the railway region that you could combine a fairly broad view of policy with detailed control by specialists, and one of the things which the Transport Act has done is to break away from that and bring the specialists one level higher up to the Railway Executive, if not indeed to the Transport Commission. I believe that that change in organisation has more to do with the frustrations and the failures which have been expressed by my noble friends behind me than anything else that one might mention. We have a mixture, and a very undesirable Mixture, between executive action, which is the business of the specialists, and policy-making which, by and large, is the busi-

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ness of people with broader views. So the specialists have been brought up on to the Railway Executive and, at the same time, the part-time directors, who were a feature of our railways particularly but also of other concerns which are affected by this debate, have been replaced by advisory councils.
I am absolutely certain that that is a change for the worse. There have been a good many hard words said about part-time directors, but part-time directors brought an outside view to these problems, just as properly chosen members of the advisory councils will bring an outside view. But whereas advisory councils have no real status beyond a mention in the Act, and can be put aside at any time, a director has powers and duties under the Companies Act which he is bound to discharge. I believe that there again the change, small though it may look on paper, is one which is having a fundamental effect for the worse. I make those suggestions because I think they are right, and because I am certain that they tie up with a number of the difficulties which my noble friend has mentioned. In particular, I feel that this set-up has had a great deal to do with the delays which were mentioned by the noble Viscount, Lord Long, in dealing with the rate structure. That seems to me to be the gist of the arguments which have been put forward from these Benches.
We are now engaged in moving over transport from what has been described as the "private enterprise sector" to the "nationalised sector." I use those words, so to speak, in inverted commas, because they are words which have been invented of late years, I think partly by public relations experts in order to try to "condition" the public—again I use the word in inverted commas—into accepting this process of nationalisation as something which is inevitable in its gradualness and something which ought to be accepted as a matter of course, whereas, as we think, it is a thing to be scrutinised unrelentingly and opposed more often than not. However, this is going on, and as it goes on, if we are right in the views that we have expressed, so we shall go not only from the private enterprise sector into the nationalised sector, but from the profit-making sector into the loss-making sector. Industries which up to now have paid their way and not merely have been no
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charge to taxpayers but have paid dividends to a number of taxpayers as shareholders, will move into the red sector; they will become liabilities, not only because sooner or later they will have to be subsidised from taxes, but because they are making a most unwelcome and disagreeable contribution to the inflation which, I am sorry to say, seems still to be going on.
My Lords, these are not like battles of long ago—things that have been settled; spilt milk which must not be cried over. A great many of them are matters which are still in transition, and although this afternoon we have tried to base our arguments on what we think is the crux of the matter—namely, operating efficiency —there comes a point where the political aspect cannot be left entirely out of mind. The political aspect, as I see it, is this: that although it is perfectly true that the Transport Act is on the Statute Book, it would he over-simplifying the matter for us to say that, because that is so, therefore we must go through with it to the bitter end, whether or not it makes sense in 1950. Seeing that there is still time to prevent some of our industries moving from the profit sector into the loss sector, let us look at the matter realistically and with an open mind, and let us apply ourselves to what I think is the real task—namely, to see to it that our transport system assists in the creation of wealth instead of joins in the procession to bankruptcy.
4.32 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD LUCAS OF CHILWORTH): My Lords, may I first of all respectfully acknowledge the very charming personal references which all noble Lords who have addressed the House this afternoon have made? They have certainly not forgotten to put their horseshoes in their bouquets. They must have a very high opinion of any small ability I possess, because they have plied me with very many questions; but I intend to do my best to answer them. I am grateful to the noble Lord, Lord Teynham, for putting this Motion down on the Order Paper. We welcome this debate. I will go so far as to say that we look upon it as a great compliment that transport should be chosen by noble Lords opposite as the subject for the first Motion to be placed on the

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Order Paper in this Parliament. We welcome it because it affords an opportunity. not only to report considerable progress, but to allay some of the fears and apprehensions which have been expressed by noble Lords this afternoon.
I am not going to weary your Lordships by going over the ground covered by the First Annual Report of the British Transport Commission. I expect most noble Lords have studied it with care. To those who have not yet had the time, I would commend it to their especial study, because I think most noble Lords will agree that it is one of the most impressive Parliamentary Papers of recent years. Neither do I think it would be proper this afternoon, in my attempt to give your Lordships as much information as I can, to anticipate the publication of the Second Annual Report of the British Transport Commission, or any debate which might follow its publication, either in your Lordships' House or in another place.
LORD HAWKE: Could the noble Lord give us some idea when it will be published?
LORD LUCAS OF CHILWORTH: The only guide I have is the date when the last Report was published. I think I am right in saying that the Report of 1948 was published in July, 1949; so I can only conclude that the Report for 1949 may be published some time in July, 1950. But I can say that 1949 has been a year of considerable progress, in spite of some very grave difficulties, not the least of which is the restriction upon capital investment. I want to deal with that subject first of all, because I do not think it is appreciated in the country how our railways have suffered from the restriction on capital investment. Expenditure on new works and improvements on the railways and London Transport, excluding buses and expenditure on running repairs and maintenance of permanent ways, was only £65,000,000 in 1948 and only £70,000,000 in 1949; and the provision for 1950 is approximately only 10 per cent. more. This allows for very little new building work. It is required to meet increased cost on essential maintenance and renewals, and to provide additional wagons for the transport of coal. That absorbs practically the whole amount, and there is no doubt that this
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restriction has hampered the railways very considerably.
I am going to give your Lordships just a few figures to illustrate the seriousness of this matter. The figure of 400 new locomotives represents the bare minimum necessary to keep the stock in sound condition. The present stock of locomotives is 19,875, and experience shows that an annual replacement of a little over 2 per cent. is required. The average replacement life of locomotives has had to be extended from 33½ years to 40 years, and the position now is worse than it was before the war. Your Lordships will know that the use of old and out-of-date locomotives increases the working expenditure and the cost of repairs. Turning to coaches, I may say that the recent passenger carriage stock of over 40,00C vehicles includes more than 8,000 carriages over 35 years old, and, since September, 1948, £320,000 has had to be spent on heavy repairs to 700 carriages 40 to 50 years old in order to give them a further three to six years of service life. The present stock is quite inadequate to meet the demands on it, and the capacity is still below that of 1939. I feel sure your Lordships will be the first to appreciate that these are very powerful contributory factors in discouraging passenger traffic and preventing the development of business. The restriction on capital investment precludes any extensive replacement.
The wagon position, to which the noble Lord, Lord Sempill, referred, is even more serious, owing largely to the poor state of the ex-privately owned wagon fleet, which amounted to 500,000 wagons. It was so bad that the scrapping rate has substantially exceeded the rate of new building. Even now, this stock includes about 100,000 wagons which are not economically repairable; and despite every effort to obtain new wagons and to build wagons of higher capacity, there is a risk of shortage by the autumn, and urgent research is taking place on means of improving turn-round time and speeding-up repair arrangements. Operating stock of wagons has fallen from 1,218,136 on January 1, 1948 to 1,109,802 at the present time, in spite of the continued uneconomic repair of old wagons, many of which have to go into the workshops as often as four times a year. I have given your Lordships those figures as an illustration of the handicap

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which the British Railways system is suffering, under the restriction on capital investment. I make no complaint about that restriction, but I think your Lordships should have those figures.
Now I would like to touch upon some of the points which have been raised in the debate, notably those brought up by the noble Viscount, Lord Long. Before doing so I would like to thank him for the courtesy which he has shown me—his usual courtesy, I may say—in giving me prior notice of the matters with which he was going to deal. He will, of course, appreciate that I acknowledge his kindness with special gratitude on this occasion. I would deal first with the issues of British Transport Stock. The total of British Transport Stock in issue on December 31, 1949, was approximately £1,159,000,000. The increase over the figures at the end of 1948 is accounted for by the purchase of the Tilling minority interests (£6,000,000) and the Scottish Motor Traction (£11,500,000), and the acquisition of road haulage undertakings (£9,500,000). The bus companies of which the Commission now have complete control operate 13,307 vehicles. The companies still retain their separate identities; they are not merged in the Commission and their services and fares are still subject to the road services licence procedure of the Road Traffic Act, 1930. That is a matter to which I shall return later. The number of vehicles operated by companies in which the Commission have a substantial minority interest is approximately 10,000. Perhaps here I should give the noble Viscount, Lord Long, this information. The number of bus undertakings that have been acquired by voluntary negotiation—as the noble Viscount knows, all bus undertakings have to be acquired by voluntary acquisition; there is no compulsory acquisition—is eleven. The principal ones are Tillings, Scottish Motor Traction, Midland Counties, and the Red and White group. In every case, payments have been made in accordance with the terms agreed. Perhaps, now, I may also answer another point which the noble Viscount raised—that about curtailment of services taken over. The British Transport Commission have no knowledge of any curtailment in any case.
VISCOUNT LONG: If I give the noble Lord an example will he have it looked into?
LORD LUCAS OF CHILWORTH: I shall be only too delighted to do so.
Further purchases of road passenger businesses are planned where suitable terms can be negotiated. With regard to road haulage, the number of undertakings acquired is 2,038–there are a few notices of acquisition out at the present time, but the acquisition has not in fact taken place. The fleet of vehicles at present numbers 34,339. The noble Viscount asked me a further question about the total number of road haulage businesses that have been taken over since nationalisation became operative. I have just given him the answer to that. It is estimated that when compulsory acquisition is complete, more than 40,000 vehicles will have been taken over. It will be seen that in respect of road haulage, the acquisition process is now virtually complete and all notices of transfer have been served except in only a few cases which may go to arbitration.
The noble Viscount asked me what was the number of operators who have been fully and completely paid up. This is a highly technical question. I could give noble Lords quite a long dissertation upon it, and I must say that I cannot marry my figures with those of the noble Viscount. There was a Treasury instruction that British Transport Stock should be issued only once every six months. The Commission realised that that was causing hardship and the noble Viscount has drawn attention to it. Briefly, quite a number of operators have been paid. I do not know how many cases there are where partial payment has been made, but there are about 1,069 cases of provisional ascertainment. The noble Viscount will realise that we cannot move until the acquired firms' accountants give us the necessary figures. The noble Viscount may rest assured that there is no hardship due to delay, because there is not a long delay in payment. Payment is made from the time of the acquisition and interest is paid in full over the interim period up to the date when acquisition actually takes place. As I have said, this is a very complex matter, and perhaps it would be for the convenience of your Lordships if I discussed the details with the noble Viscount on some other occasion. I have

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given your Lordships the broad outline and I do not wish to trespass too much on the time and patience of the House.
I now come nearer to the heart of this debate. This is connected with the word "integration," which was used by the noble Viscount, Lord Bridgeman, and concerns the area schemes. Part IV of the Transport Act did not directly nationalise road passenger transport but provided in Section 63 (1) that the Commission could at any time prepare and submit to the Minister a scheme for him to approve for the co-ordination of the passenger transport services serving the area. Towards the end of 1948, the Commission took preliminary steps towards the preparation of an area scheme for the Northern Area of England comprising the counties of Northumberland, Durham and parts of the North Riding. Subsequently, in August, 1949, they made public an outline of their proposals and obtained the views of those interests which they were required by the Act to consult. At the end of January this year they submitted to the Minister the scheme prepared by them in the light of the consultations which they had had, and this scheme is now being studied. The time for making objections to my right honourable friend has not yet arrived, and as he will be in a quasi-judicial position I do not think I will make any comment upon the schemes at the present moment. The subsequent procedure is that if my right honourable friend approves a scheme submitted by the Commission, after consideration by them of any observation which he may put to them on the scheme as first submitted, it will be published in the form of a draft order. Objections will then be invited. If objections are made and not withdrawn, a public inquiry will be held. If objections are sustained after the inquiry, the order will have to be subject to special Parliamentary procedure.
The Commission have already had informal discussions with local authorities in the Eastern area about the merits of devising a scheme for that area. The Commission have pointed out that they have control of the four largest passenger transport undertakings in the area, and that perhaps that offers an opportunity for integration in an area scheme. But at the present time it is simply for the
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Commission to decide whether they go on with it. The point I would impress on your Lordships is that although under the Transport Act the Commission have the responsibility of promoting "a properly integrated system of public inland transport," the task of preparing schemes is a very complicated one. For example, the preparation of the Northern Area scheme has entailed the close scrutiny of one hundred Acts of Parliament in order to take account of the statutory rights of autnorities.
The noble Lord, Lord Rochdale, quoted what I said with that strict accuracy which I have, always associated with him. I am not yet a sufficiently old politician to have arrived at the stage when I have to eat the words which I uttered years ago. I do not budge one jot from what I said then. When the noble Lord asks me what is the pattern of transport, I would reply that I am not a crystal-gazer. I do not know. Schemes must be formulated, and the noble Lord, with his wide experience, will know the likelihood of objections which will have to be considered. But integration will have to take place. I thought that the noble Lord, Lord Hawke, in his valuable contribution to this debate, came very near to the heart of the problem. Some noble Lords talked about integration and economy and then went on to belabour freedom of choice. We cannot have 100 per cent. of both, and what is the best combination has yet to be found out.
I should like to say something about a question which I know is very close to the hearts of noble Lords in this House in connection with any nationalised industry—that is, decentralisation. For road haulage, the country is divided into eight divisions, containing 3l districts. In the division the aim of the Executive is to achieve the maximum devolution of responsibility for day-to-day operations and to leave the group manager, who is in charge of 150 vehicles, the direct contact with the customer whom it is his personal responsibility to satisfy. The group is again broken down to units of an average of 18 vehicles, as opposed to an average of two and half under the old "A" and "B" licence scheme. The lowest unit in the road haulage organisation is 18, and I think that is sufficient decentralisation to satisfy even the most critical. I think the Road.

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Haulage Executive are to be congratulated upon an excellent job done in a very short space of time.
The noble Lord, Lord Sandhurst, asked me two questions. I would ask him to allow me to deal privately with his question on "B" licences and the extension of freights, upon which the noble Viscount also touched. I will go into all the details with the noble Lord, but I think it would be wearisome for me to do so this afternoon. The noble Lord's second question was whether the Commission had any priority for new vehicles. The answer is, none whatsoever. They buy them from the manufacturers, in some cases through the distributive trade, in exactly the same way as any other customer. They have no priority and they seek none.
I should like to touch on one subject that has not been mentioned this afternoon, but which I think is worth mentioning because it has considerable public interest. It is the amalgamation of the police forces of the various railways, and what is being done to deal with the terrible problem of pilferage on the railways. Amalgamation has been going on steadily and has reached an advanced stage. The pilferage problem has received the urgent attention of the Railway Executive and the progress made in this is best illustrated by a few figures. In the three months ending September 30, 1948, £928,489 was paid against claims for losses; in the equivalent period in 1949, £607,626 was paid—a reduction of 35 per cent. By the end of September, 1949, 1,029 security schemes were in operation for the protection of "vulnerable traffics," which is a polite term for black market goods. In this limited field payments for the period I mention were £87,286, the lowest figure yet recorded, and 58 per cent. below the 1948 figure. I think this is a remarkable achievement. For the twelve months ended December 31, 1949, the total payments for goods lost, stolen or pilfered were £1,728,986, against payments in 1948 amounting to £2,778,367–a reduction of more than £1,000,000. I think that reflects the greatest credit upon the reorganisation of the railway police forces and the security measures which they have taken.
The noble Lord, Lord Teynham, made a great point of the decentralisation of
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the railways. The organisation is being streamlined right down, so far as possible. Branch lines are being closed down, but the saving up to the present has not been great. Integration has gone on over the whole railway system. The noble Lord asks for integration and economy and describes the present railway system as being top heavy, but the only alternative he put forward was to suggest that the top should be multiplied six times. The noble Lord wanted six regional boards for the raiways. Frankly, I cannot imagine a more top-heavy structure than that.
LORD TEYNHAM: The Government are in fact doing that with the coal industry, which has Area Boards with autonomy.
LORD LUCAS OF CHILWORTH: Let me shoulder the responsibility for the transport industry and not have to answer for any other. The noble Lord, Lord Teynham, made some comparison between the number of employees in road transport to-day and the number before nationalisation, and said that there had been a great increase. I should appreciate it if the noble Lord could tell me later his authority for that, because there are no figures of an authoritative character of the number employed in road transport before the war and no comparable figures to-day.
Perhaps your Lordships would like me to mention the position of the transport users' consultative committees. The Central Committee has been set up and the Scottish Committee, the Welsh Committee and the London Committee are all in being. As your Lordships know, the Minister may give directions to the Commission upon matters submitted to him by these consultative committees. The first annual report of the Central Committee has been submitted to my right honourable friend; it is now being printed, and will be laid before Parliament and be on sale to the public. The Coastal Shipping Advisory Committee is in active operation.
I now come to the burden of this debate, which I think is what is worrying most noble Lords—namely, the matter of charges. I would first of all refresh your Lordships' memories. Section 3 (4) of the Act requires that all business of the Commission shall form one undertaking,

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and charges the Commission with the duty of making their revenue cover expenditure properly chargeable to revenue, taking one year with another. Section 76 of the Act requires the Commission to submit to the Transport Tribunal draft schemes for determining charges in respect of their principal services. The ComtiVssion represented to the Minister in 1949 that the period of two years was insufficient, and the Minister, under his powers, extended the period to August, 1951, at the same time informing them that he felt strongly that the preparation of all the draft charges schemes should be pressed forward with the minimum delay. Since February, 1948, a charges committee, under Sir William Wood, has been hard at work, and has been in consultation with those affected by such schemes in order that the largest measure of agreement may be arrived at upon the principles involved before any case is submitted to the Tribunal. In December, 1949, the Commission published the draft outline of the principles which they proposed to embody in the charges scheme for merchandise traffic, and discussions are taking place with trading organisations and interests prior to the submission of the draft scheme to the Tribunal.
I would commend this booklet to the attention of noble Lords. These are the proposed principles upon which the charges schemes of the Commission will be based. The Commission have submitted to the Transport Tribunal a draft London area scheme as a first step in the discharge of their duty under Section 76 of the Act. They have applied for an Order confirming the scheme, specifying October 1, 1950, as the date from which it shall come into force. I am not going to weary your Lordships with the details—they have been published, and they will eventually appear before the Commission—but I think I should say in reply to the noble Lord, Lord Gifford, that the integration of London Transport is a special problem. When one thinks of the millions that have to be moved in London at peak hours one realises that it is one of the biggest transport problems of the world, and the principle always has been to integrate the charges between the buses and the tubes. No one form of transport, either bus or Underground, could attempt to carry the
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whole of the traffic that has to be moved in London between the hours of half-past four and half-past six at night.
It will probably be for your Lordships' convenience if I state quite clearly what is the position of the Transport Tribunal and the position of the Minister and the Commission vis-à-vis that Tribunal. Charges schemes must be submitted to the Tribunal by the Commission. The schemes do not require the approval of the Minister or of Parliament. The decision of the Tribunal is final, and it is arrived at after public inquiry. The only right that the Minster has is to be heard at the proceedings. This is the procedure which is to be followed when the draft London area scheme is considered by the Tribunal: the Tribunal will decide, and when they have decided, that is the end.
Section 82 of the Transport Act authorises my right honourable friend to increase charges pending the submission of charges schemes to the Tribunal, provided that before making any regulations he shall consult with and consider the advice of the permanent members of the Transport Tribunal acting as a consultative committee. Section 82 of the Transport Act was designed to meet just such an emergency as has arisen, and it is under that Section that the Commission applied to my right honourable friend in November, 1949, to make regulations authorising an increase in certain of their charges. The proceedings before the Tribunal, as noble Lords know, lasted thirteen days. Twenty-eight bodies, representative of all interests affected, were heard, and their cases were argued by learned counsel, including such eminent personalities of the Bar as Sir Walter Monckton, K.C., and Mr. Lionel Heald, K.C. Verbatim reports of the proceedings were printed and published, and the committee have submitted two Reports to the Minister. The first, dated February 6, deals with the application in respect of railway charges, and the second, dated February 16, deals with that relating to dock and canal charges. The two reports will be published by the Minister in the immediate future. The recommendation of the Tribunal, acting in its capacity as a consultative committee, is that the application of the Commission should be granted. My

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right honourable friend is now considering the reports and the recommendations in the light of their implications.
I have already stated to your Lordships the requirements of the Act, which charges the Commission with the duty of making their revenue cover expenditure properly chargeable to revenue, taking one year with another. The Commission were reluctant to avail themselves of the conditions of Section 82 of the Act, but were forced to do so when the net revenue deficiency showed signs of growing. The Commission's deficit for the year 1948 was £4,700,000, and the deficit estimated for 1949 is about £20,700,000, making a total deficit for the two years of £25,500,000. The Commission estimated that with their charges remaining as they are, even taking into consideration the economies in expenditure which can be made, and the revenue anticipated, the deficiency at the end of 1950 will be £30,000,000. Therefore, the accumulated deficit at the end of 1950 is likely to be between£50,000,000 and £60,000,000. The representatives of the Commission who supported the case before the Tribunal were subjected to examination and cross-examination by counsel and others for four days, the chief criticism being that the estimated economies were insufficient and that the future revenue had been underestimated.
Before making any comment on the question of economies, I think I can properly make two valid points. The first is this: the nationalised transport industry is the only nationalised industry that has its prices fixed by an independent Tribunal. Unlike coal, gas or electricity, it has to make its case in public, and is subjected to close and, one might almost say, fierce examination by all interested parties. The decision rests with the Tribunal when charges schemes are submitted, and with the Minister, on the advice of the Tribunal, in cases like the present application. I make no complaints about the procedure. Parliament in its wisdom decided that that should be the way. I think we have a right to assume that in thirteen days of fierce argument everything worth saying and every criticism worth levelling has been made and levelled, and yet the Tribunal decided that the Commission had made its case.
The railway charges which produce the bulk of the Commission's gross revenue
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are now in general only 55 per cent. above the pre-war charges, and the proposed increase would bring them to just over 80 per cent., whereas on weighted average their labour and material costs are about 120 per cent. above pre-war. This, and this alone, is the primary reason for the present unbalanced state of their net revenue. Every main commodity which the Railway Executive have to purchase is higher than pre-war by anything from 105 per cent., at one end of the scale, to 633 per cent., at the other. I will give a few examples: Coal, 180 per cont.; iron and steel, 105 per cent.; non-ferrous metals, 136 per cent.: timber in general, 291 per cent., and timber for sleepers and crossings, 344 per cent. Noble Lords have argued from that side of the House, and I have argued from this side of the House, that the yardstick of efficiency is cost and price. I am not disposed to argue that it is not. But if railway freight rates are measured by that yardstick they are one of the cheapest, if not the cheapest, commodity in this country to-day. The iron and steel industry, which is held up by noble Lords opposite, and by a lot of people in this country, as the acme of efficiency of private industry, are charging the railways 105 per cent. more for their steel than they did before the war, and yet the railway freight rates have been increased only 55 per cent. The anticipated extra revenue which the railways will get by this proposed increase is £26,300,000. The increase over pre-war years that the British Transport Commission have to pay for coal is £23,500,000.
Those are the facts, and they are stubborn facts when you come to consider the position. I do not intend for one moment to gloss over the very serious repercussions which this increase—if my right honourable friend in his wisdom agrees to it—will have upon this country's economy, but there are two points which I think have to be considered. The first is: How long can the Commission be denied the right of fulfilling their statutory obligations, and for how long and by how much can we allow this deficit to grow? The second question we have to ask ourselves is: If the Commission are right in their forecast that an integrated charges scheme—which is a colossal task doing away with literally millions of exceptional rates—cannot be formulated until 1952, what will be the effect upon such a charges scheme of a deficit which might

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have amounted by that date to £100,000,000? Those are very stern questions, and they require equally stern answers. It is no good burking the issue. I do not propose to make any comment upon the suggestions of the noble Lords, Lord Hawke, and Lord Rochdale, as to whether it would not be better to subsidise. I think that requires a lot of very careful thought, and I and my right honourable friend will study the observations of the two noble Lords with the greatest interest.
LORD HAWKE: I should not like to go down on record as having advocated the subsidy without the qualification which I gave, which was: provided that there seemed genuine prospect that the railways really were rationalising.
LORD LUCAS OF CHILWORTH: Quite so. As I have said, the main criticism, both before the Tribunal and in your Lordships' House this afternoon, has been that the budget of economy is too low while the revenue forecast is not high enough. This may well be true, but I think the Commission are prudent. In my lifetime I have made many expenditure budgets and forecast many revenues. In the event, it has never failed that the expenditure has exceeded the budget and the revenue has never reached the forecast.
One of the main criticisms upon economy was levelled at staff reduction, which again was dealt with this afternoon. It was pointed out—noble Lords have underlined this—that, compared with 1938, railway staff had increased from 572,000 to 649,000. It should not be forgotten that reduction in standard hours of work and the increase in annual leave, negotiated with the unions, has meant an overall increase of staff estimated by the Commission to be about 12½ per cent., or between 70,000 and 77,000. In an industrial factory, when you work a five day week you can shut your factory up for two days. When you work the equivalent on the railways of this country you cannot shut the country's transport system down for two days. I think that has to be taken into consideration. It should not be forgotten that a considerable number of staff are still engaged in overtaking war-time arrears of maintenance work, and there is no comparable employment before the war to
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measure against this work. But I can give your Lordships this information: that after a detailed investigation into the minimum needs of the railways, a redundancy programme was put in hand in the latter part of 1948, which to date has resulted in the withdrawal of some 29,000 men and women from the railway services.
While on the question of charges, may I turn to the point which the noble Lord, Lord Teynham, has made: How is it going to affect the docks? I think the point to bear in mind when considering the repercussions on dock traffic is that the general level of charges in United Kingdom docks other than those of the Commission was in most cases in excess of the charges now in force at Commission docks, and the increases now proposed will bring the charges at the Commission docks more into relation to those in force at other docks but still materially less than those on coastwise traffic in force at these docks. In considering the relationship between the proposed increase at the Commission docks and other docks, it is well to bear in mind that before the war charges in operation at the independent docks were fully economic, while those in force at the docks which are now operated by the Commission were not economic. In other words, they were subsidised out of the general railway revenue.
LORD TEYNHAM: Except Southampton docks.
LORD LUCAS OF OHILWORTH: That may be. Southampton is an exceptional town in many ways and it may be so in this respect. While I admit that the Commission have to look upon the whole of their activities as one business they feel that docks should make a greaten contribution to the general revenue. The, main complaint of the coasting trade to the proposed increase is not so much on the increased cost to the coasting trade as upon the fact that the proposals bring an increase of 20 per cent. on coastwise charges, whereas upon other vessels and cargoes the proposed increase is only 14.3 per cent. This relationship was the subject of advice from the Charges Consultative Committee in their report of November 15, 1946. They advise this differential, and the relationship between the two is being maintained. It is not

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being altered. The noble Lord asked whether voyages to Eire ports should not in future be treated as coastwise shipping. I can inform him that that is one of the main recommendations of the Tribunal, and it will receive, together with other recommendations, the consideration of my right honourable friend. With reference to the charges of 16⅔ per cent. on canals, it is not proposed to apply the increase universally, since in the view of the Commission this would not be practicable.
As I have already pointed out, road passenger fares are regulated by the licensing authorities, of which there are eleven covering the whole country. All road passenger vehicles controlled by the Commission are run under the identity of individual firms, who have to make their own case to the authorities for increases. From that direction we cannot see any possible increase in revenue. The criticism was offered that passenger rail fares should be subjected to increase, but the Commission hold the view that a further increase in such fares would not only fail to produce more revenue, but would probably result in less. I agree with the noble Lord's suggestion that what we want is increased revenue from the inducement of special fares for special journeys on special occasions.
Several noble Lords have mentioned one question, and I have sensed what is in their minds—namely, that there is going to be a curtailment in the future of what Lord Teynham called freedom of choice. Freedom of choice is generally provided for in the Act, and the same principle is embodied in effect in the draft principles for a freight charges scheme which has been published and which I have already mentioned. But freedom of choice, as the noble Lord, Lord Sandhurst, rightly said—and it was underlined by Lord Hawke—is not to be confused with wasteful duplication of parallel services. Integration means economy of operation, and perhaps if we realise that, we shall realise what integration really means. The whole purpose of Parliament in passing the Transport Act was to integrate the transport system of this country. I should like to give your Lordships three figures on this subject of freedom of choice. Independent hauliers operating "A" and "B" licences to-day operate 129,460 vehicles.
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The British Transport Commission operate 47,776 vehicles. "C" licence operators operate 672,301 vehicles—these are the figures for December, 31, 1949. "C" licences at the end of December, 1945, were 306,443. Not only is there freedom of choice, but that freedom is being exercised.
My final point is one which the noble Lord, Lord Teynham, also made his last point, and that is in regard to Parliamentary control. It is clearly desirable that a public undertaking providing essential services and operating on the scale of the Commission should be subject to the oversight of Parliament. But it was clearly never the intention of Parliament to interfere in the day-to-day management of the national transport system. The noble Viscount, Lord Bridgeman, said my right honourable friend has all the cards. But they are marked cards, and Parliament marked them—and very effectively. The Minister can interfere only in matters which are clearly laid down in the Act as coming within his sphere. I am not going to say that in between total indifference and Parliamentary interference we have found yet the true mean. I do not think we have. I am not certain that the way to find it is the way proposed by Lord Teynham. I have some knowledge of this matter, and if the noble Lord has the opportunity he should try to think of the answer to this question: How would it be proposed to integrate the road and rail services of the United States of America? I should very much like to know what the answer is to that question.
I believe we have to solve the question whether there is sufficient public control over the general course of the Commission's affairs, as distinct from "accountability," under the various procedures laid down in the Act. This is a subject which is continually exercising the mind of my right honourable friend. I think the critics seem to lose sight of the amount of publicity which is given to the activities of the Commission. If the Annual Reports of the future take the form of the First Annual Report—and I see no reason why they should not—they will provide a mine of information. The Commission also publish every four weeks a statistical bulletin which sets out an analysis of receipts for every class of traffic and service, full details of staff employed and rolling stock engaged, together with a variety of operating statistics

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which, expertly studied, measure the trend of various efficiencies. Few industries give so much information about their activities. It is organised on the best industrial lines. A running internal audit has been instituted, according to the best commercial practice, and finally there is the Transport Tribunal, a unique instrument. No other industry has to suffer it. The nationalised transport industry has to bend to its will.
I am grateful to noble Lords for according me such courtesy and showing such patience. I have tried to give your Lordships the facts. I have tried not to offer your Lordships an apologia for anything that has happened. I trust that the noble Lords will not read anything I have said as showing a spirit of complacency. We are far from being 100 per cent. efficient. I think we are getting along the road. Perhaps the noble Viscount, Lord Bridgeman, who has threatened to have another attack in twelve months' time—
VISCOUNT BRIDGEMAN: Another inquest!
LORD LUCAS OF CHILWORTH:—will be able to give us some more advice. I thank noble Lords very much for their constructive contributions. I apologise if I have not answered in detail every question I have been asked, but I will personally do so afterwards if desired. I hope that in the next debate we have on this subject I shall be able to report as much progress as I think I have been able to on this occasion
5.32 p.m.
LORD TEYNHAM: My Lords, in the first place I should like to join with the noble Lord in saying that the Report of the Transport Commission for 1948 has been excellently produced and is very informative indeed. It is true that the railways have suffered some restriction of capital investment, but even that restriction does not entirely account for the enormous losses which they have suffered during the last two years. I pointed out earlier in the debate this wrong passenger train policy which was adopted—
LORD LUCAS OF CHILWORTH: If I may intervene for a moment, I think what I said was that the main reason for a deficit was a 120 per cent. increase in the cost of the materials which they purchase.
LORD TEYNHAM: I will not quarrel with the noble Lord over the question of the main reason, but it certainly was a reason. I should next like to refer to the bus undertakings. The noble Lord said that eleven bus undertakings had been acquired. No area schemes have been put into operation, and one may assume that these buses are being bought out merely to stifle competition. The Road Executive need not go to the Transport Tribunal in order to put up their fares. The noble Lord also spoke about decentralisation. He mentioned decentralisation in road haulage, which I think is quite good: it has been brought down to a unit of eighteen vehicles. But he did not say very much about decentralisation of the railways. The point I am trying to make is that the Railway Executive is composed of a number of efficient functional men, and for that reason there is not proper decentralisation.
Then the noble Lord asked me where I obtained the figures about the increase in the road services organisation—I think I mentioned a figure of 2,600. My figures were taken from the monthly transport statistics, a copy of which the noble Lord himself held up to me a few minutes ago. As regards dock charges, I am not clear on this point of the differential. Apparently the differential was fixed in 1947 at 20 per cent. The other traffics are to pay 14 per cent. while the coastal traffic will continue to pay 20 per cent. Would the noble Lord for a moment make that clear to me?
LORD LUCAS OF CHILWORTH: I am afraid that I cannot make it any clearer than I have done, unless I go into all the figures, I will give the noble Lord a copy of all the figures, how they work out and how they affect the position.
LORD TEYNHAM: I was very disappointed that the noble Lord put forward on behalf of the Transport Commission no plan for railway economies. It makes one think a little that the Transport Commission really have no plan at all. I hope that the noble Lord will suggest to his Minister—and perhaps the Minister might see fit to give the Transport Commission a direction, as he can do under the Act—that they should at once prepare a full scheme of economy which will show major savings. I hope something

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will be be done in that direction. In the hope that this will be done, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.