Lords Sitting of 31 May 1962

Preamble
The House met at three of the clock, The LORD MERTHYR on the Woolsack.
Prayers—Read by the Lord Bishop of St. Edmundsbury and Ipswich

THE WHITSUN RECESS
EARL ST. ALDWYN: My Lords, I should like to inform your Lordships that my noble friend Lord Dundee will be making a statement on the Common Market at some suitable moment between 3.30 and 4 o'clock. I should also like to inform your Lordships that dinners will be available between 7 and 8 o'clock. I would further inform your Lordships that we hope to adjourn for the Whitsun Recess on Thursday next and to reassemble on Tuesday, June 26.
LONDON BRIDGE IMPROVEMENTS BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

BUSINESSS OF THE HOUSE
EARL ST. ALDWYN: My Lords, I beg to move the Motion standing in the name of my noble friend Lord Hailsham.
Moved, That leave be given for the Earl of Listowel's Motion (now standing for Thursday the 7th of June next) to be advanced to Wednesday next.—(Earl St. Aldwyn.)
On Question, Motion agreed to, and ordered accordingly.

AGRICULTURAL AND FORESTRY ASSOCIATIONS BILL
House in Committee (according to Order).
House resumed: Bill reported without amendment; Report received.

LOCAL GOVERNMENT (RECORDS) BILL
3.8 p.m.
Order of the Day for the Second Reading read.
BARONESS ELLIOT OF HARWOOD: My Lords, I rise to move the Second Reading of this Bill, which is a Private Member's Bill, introduced in another place by the Member for Circencester and Tewkesbury, Mr. Nicholas Ridley. In another place the Bill had the support of all political Parties: in fact, it was not debated on its Second Reading, the Committee stage took only 35 minutes, and its Third Reading was taken and the Bill was passed on May 18, having been supported by all Members on both sides of the House. To-day, I ask your Lordships to give a Second Reading to this Bill, which I think will be of particular interest to you, since the records of many families here represented go back into the earliest days of our history, and also as many of your Lordships are members of local authorities. The Bill gives opportunities not only to preserve the records for local authority interest, but to enable students to study them and examine them easily.
The Bill is permissive; nothing is compulsory; nor does it interfere with any previous Act allowing records to be kept. But it does encourage local authorities to keep records. Two previous Acts in connection with records are on the Statute Book: the Public Records Act, 1958, which deals with national records as opposed to local records, and the Local Government Act, 1933, which gives local authorities the right to keep and maintain their own records. This has already been done by some authorities but in a somewhat spasmodic way. Under this Bill we seek to provide a regular means of preserving such records, in places suitable for the purpose, accessible to students, archaeologists or other persons who, for one reason or another, want to look for and to search out accurate information from records of the past. We in this country are used to hundreds of years of recorded history and we sometimes, I think, take it all for granted. Whereas other and newer civilisations proudly record their development and their history, we treat it in a somewhat nonchalant way, and vital information may

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perhaps escape the historian of the future by the failure of the people of to-day to keep records.
The clauses of this Bill are quite simple. Under Clause 1 it is possible for local authorities to make records available to anyone wishing to study them; also to catalogue records, arrange exhibitions, lend documents, and in fact to make available to students or scholars or searchers documents and records in their possession. Clause 2 allows the major local authorities to do three things: to buy records which they think will be of value to their local historical collection; to accept gifts of records which individuals may wish to pass on to them for safe keeping and a wider use; and to provide safe keeping for records which may be lent or deposited with them by private people. Clause 3 deals with the formation of committees or sub-committees or joint committees to be responsible for the records in their keeping.
Clause 4 gives powers for financial assistance to be provided by local authorities to persons or organisations that might wish to keep records of their own. It is anticipated that it is the larger local authorities who will have muniment room facilities for keeping records, but it is possible that a library or other body might be the most appropriate body agreed upon by the locality, and this Bill gives power to local authorities to assist such an institution. Clause 5 gives a local authority powers to annul Private Acts, if private powers have been already taken and under the new Bill these private powers are no longer wanted. Clause 6 gives the Minister machinery to enable him to make such an annulment, if he is requested so to do under Clause 5. Clause 7 gives powers to the Master of the Rolls to deposit manorial and tithe documents with local authorities, which at present he has no power to do. He can say where such records must be deposited, but this Bill enables him to include local authorities and various other authorities as recipients of his records.
At this point I might perhaps read to your Lordships a letter which I received from the Master of the Rolls, Lord Denning, who, due to his legal duties, cannot be here this afternoon. After saying that he is sorry he cannot be
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here to-day, Lord Denning writes to me as follows:
"I should like to say how much the Historical Manuscripts Commission (of which I am Chairman) welcomes the Bill. If it is approved, the Bill will do a great deal to improve the preservation of the records of our old manors and our tithes. At the present moment the Master of the Rolls can only direct their transfer to the Public Record Office, the museums and the historical and antiquarian societies, and it would be of the greatest value if authority could be given for their deposit in the County Record Offices and other local Record Offices. Moreover there have been several restrictions on the way in which local authorities may spend their money on the care of records; hitherto they have only been allowed to spend it on their own records, but it would be most helpful if they could be allowed to help with the care of privately owned records: these are the special care of the Historical Manuscripts Commission which would greatly appreciate authority to be given for such help."
Those, my Lords, are Lord Denning's views.
I can only say that I regret that, as a Private Member's Bill, it applies only to England and Wales. I could wish that similar powers were available for both Scotland and Northern Ireland. The Bill, as I said at the beginning, is permissive; there is, in fact, no compulsion about it. But I hope that full advantage will be taken of its provisions. There must be very many fascinating historical accounts lost to us because, in very early days, history was passed from one generation to another by word of mouth, and that is very often inaccurate. The late Sir Lewis Namier introduced new methods of writing the history of Parliament by recording the lives of Members, which shed new light on many historical events. The keeping of records is, I am sure, of vital importance to the recording of history, both now and in the future. We are making history every day, and I am certain we must care for the records that we make ourselves, as well as those that belong to the past. This Bill will help and encourage the keeping of these records, and I very much hope that your Lordships will give it a Second Reading. I beg to move.
Moved, That the Bill be now read 2a.—(Baroness Elliot of Harwood.)
3.18 p.m.
LORD SILKIN: My Lords, I am sure we should all like to thank the noble Lady for having introduced this Bill, and for having done it in so interesting

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and clear a manner. We all heartily approve of the purpose of this Bill, and I can promise her that we shall not be behind the other place in the expedition with which we shall pass it. I rise in order to raise two small points on the Bill, on which I hope we can obtain some satisfaction from the noble Lord who is going to reply for the Government. The first is that the Bill is not very clear as to which particular local authority in any area will carry out these functions. It is either the county borough, the county council or the district councils, and there may well be some discussion as to which of them will carry out the particular functions.
I would ask the noble Lord who is going to reply whether, if there is any argument about it, there will be an obligation on the part of the county council to discuss the matter with the other local authorities so that it should not be left entirely for the county council to make a decision. I think that that is eminently reasonable and need not involve an amendment of the Bill. I was not proposing to move any Amendment to that purpose, if the noble Lord can give an assurance that that will be the view of the Government, and that he will circularise the county councils and local authorities accordingly. So far as I am concerned, that would be quite satisfactory.
The other point is that this will be of interest to, among others, the legal profession. Solicitors constantly have to make searches in connection with conveyances of property and for other purposes, and it is important that the places where records are kept should be convenient for them. It is also important that, whereas in some cases it is obligatory on the part of the local authorities to permit searches and inspections of documents to be made, in other cases it is quite optional. What the legal profession is concerned about is that it should not be an arbitrary act on the part of local authorities as to whether or not they refuse to permit inspection. Again, it is not a matter which is susceptible to amendment of the Bill, and if the noble Lord can give an assurance that the local authorities will be asked to be reasonable in the exercise of their powers and their discretion, then I think that would satisfy the legal pro-
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fession. I can assure the noble Lady that, so far as we on this side are concerned, we shall not seek to amend this Bill in any way. We are perfectly happy with it, and we congratulate her on having had the opportunity of introducing so interesting and so useful a Bill.
3.21 p.m.
LORD REA: My Lords, if I may, I should like to join in the general welcome given to this most excellent little Bill, and again to thank the noble Lady for her very clear speech which, if I may say so, was of exactly the right length. The only criticism I have of this Bill, and it is quite unimportant, is that, on the face of it, it seems to be far too late, and we should have had it a long time ago. The only question I should like to ask the Minister, if he is able to reply, is this. Although I know it is usual, a clause says:
"This Act shall not extend to Scotland or Northern Ireland."
I am sure he would agree that it would be very useful if it could. Is there any prospect of further legislation in that respect?
3.22 p.m.
LORD MORRISON OF LAMBETH: My Lords, I rise principally because I was the first Chairman, and am presently ex-Chairman, of the Lewisham Archives Committee, where we have sought to gather historical material about the Metropolitan Borough of Lewisham—not only while it was a borough but before it was a borough. We have had a certain amount of success, but we have had some difficulties, because local authorities have various ways and, according to who runs them, they may do a thing or they may not. But we had full cooperation from the Council of the Metropolitan Borough of Lewisham. Therefore, I think that this is a useful Bill and it is desirable that it should pass, with or without amendment. I must sympathise with the noble Lady in the fact that, although she is prominently associated with Scotland, she has not been able to bring Scotland into this Bill, and it is doubtful whether she will be able to do so. That is rough luck. However, what England thinks today, Scotland may or may not think the day after to-morrow; and Northern Ireland as well, although it is more likely in the case of Northern Ireland.

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I think it is a good and useful Bill. As the noble Lady said, it is permissive: it does not seek to coerce local authorities, and I think that that is right. There is one point which worried me for a moment, and that is the power of the Minister, on the application of the local authority, to amend or repeal existing legislation which is not consistent with the provisions of this Bill. However, when I consulted my noble friend Lord Silkin he told me that there is a precedent, and that he, at any rate, made one precedent in the Town and Country Planning Act to exactly the same effect. So I decided I would drop that potato and not pursue it. As I have said, I think this is quite a useful Bill, and the noble Lady has expounded it very well. She has done better on this occasion than she could possibly have done with the Local Authorities (Admission of the Press) Bill on which I had some controversy with her earlier. I agree with my noble friend Lord Silkin that it is a Bill to which we can certainly give general support.
3.25 p.m.
THE EARL OF IDDESLEIGH: My Lords, while congratulating the noble Lady on introducing the Bill, I observe that it does not say anything specific about the physical preservation of the records, and I was wondering whether the noble Lady was quite satisfied that that was not necessary. I am speaking from experience. Twelve years ago I opened up my family muniments room which was underground, unventilated, and a most pokey and unpleasant place in every respect. The first thing that happened was that I fell through the stairs, Which were rotten with dry rot. I then opened up the japanned deed boxes in which the records were kept, and the most appalling smell of fungus greeted my nostrils. I found that some of my records, the paper ones, were irretrievably decayed; and the records on parchment had to be specially treated.
I notice that under Clause 4 (1) (b), the local authority may authorise expenditure on records Which are kept not under the local authority's own control. I was wondering Whether the noble Lady, or Her Majesty's Government, saw some need for an Amendment to ensure that it was a condition of any expenditure of public money that proper physical
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conditions were maintained for the preservation of records in those places.
3.26 p.m.
VISCOUNT COLVILLE OF CULROSS: My Lords, I should like to put in one word on this Bill, on behalf of the parish councils, because it would appear from the form of Clause 2 (4) that they are not to come within its scope. This is, however, not so. Parish councils have for some time had the power to deposit their records, and so their inclusion in this Bill is not necessary. However, all I would say is that, they have been urged for some time by the National Association of Parish Councils to deposit their records with the county archivist; and this has proved to be most valuable, in that some extremely interesting records have emerged. I therefore welcome the extension of this principle to other councils in the local government circle, and I welcome the Bill.
3.27 p.m.
LORD DENHAM: My Lords, Her Majesty's Government welcome this Bill. It is purely permissive in its operation, in that it gives local authorities some useful new powers but no compulsory powers, and it lays on them no new duties. My noble friend Lady Elliot of Harwood has explained the provisions of the Bill, and so I will not detain your Lordships by again going into the details, except to answer one or two specific questions that have been put to me.
The noble Lord, Lord Silkin, raised a point about consultation under Clause 2 (6). The question that the noble Lord asked me was whether an undertaking could be given that county councils would consult with other authorities before coming to any decision. As I understand it, the county councils do not come to a decision but the Minister does, and I know there is a certain amount of unease, which has been expressed by the County Councils Association, because the Minister might exercise his power conferred by Clause 2 (6) to give a county district power to buy records or accept them as a gift or on deposit without reference to the county council of the county in which that district lies. The County Councils Association were anxious that a requirement to this effect should be written into the Bill. But my right honourable friend was a

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little reluctant to do this, on the ground that this was not the only consultation which would be made. But I will give this undertaking, that the Minister would never exercise his power to confer the additional functions on a county district without first consulting the county council and taking their views into account in reaching his decision.
LORD MORRISON OF LAMBETH: My Lords, will the noble Lord forgive me for intervening? May I ask him whether this means that the Minister can give a direction on particular pieces of work or records? Or is it a power that he proposes to exercise, to give a direction that a county council or, on the other hand, an urban district council or a non-county borough shall be excluded from exercising any powers under this Bill?—because it seems to me to be rather high power for a Minister of the Crown to take on a matter which might be better dealt with by friendly consultation between the various authorities concerned.
LORD DENHAM: No, my Lords. As I understand it, the Minister's direction does not refer to any particular document or series of documents, but to the particular local authority which should have power to keep them under this Bill. That is where the Minister's direction comes.
The second point about which the noble Lord, Lord Silkin, was concerned is a point that has been raised by the Law Society, who are worried about Clause 1 (1) (a), which enables a local authority to
"make provision for enabling persons, with or without charge and subject to such conditions as the authority may determine, to inspect the records and to make or obtain copies thereof."
I should like to make it clear that this Bill does not in fact change the existing law at all. Any records kept by a local authority which, before this Bill, they were required to show must still be shown. Any records which, before this Bill, they could show if they wished to and in respect of which they could make conditions, they can still show if they
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wish to and they can still make those conditions. The noble Lord, Lord Rea, asked me about Scotland being covered by this Bill. I shall pass on his views to my noble friend who speaks for Scotland. I think those are all the points specifically on Government policy that have been raised on this Bill. The Bill has been welcomed by all interests concerned, and Her Majesty's Government commend it to your Lordships and hope you will give it a Second Reading.
3.33 p.m.
BARONESS ELLIOT OF HARWOOD: My Lords, may I answer the point made by the noble Earl, Lord Iddesleigh, about private records? One of the good things about this Bill, I think, is that it makes it possible for assistance to be given through local authorities to records kept in private families, and I do not think that the unfortunate conditions that the noble Earl has described, in which his own family records are kept, need apply again if this Bill becomes law. The object of the Bill is to make the best possible use of all these records, and to keep them in the best possible way. I think the reason why it has been suggested that the larger local authorities should be the prime keepers of these records is that they will have greater facilities for organising and keeping muniment rooms, and so on. But there may be other places for keeping them which will prove to have facilities better than, or at any rate, just as good as, those of the local authority—I am thinking, for instance, of a university or a great central library—and in that case they will also be included. I hope very much that this will mark a step forward in the keeping of records in our country.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

MELVILLE TRUST ORDER CONFIRMATION BILL
Brought from the Commons; read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act, 1936) deemed to have been read 2a, and reported from the Committee.

TRANSPORT BILL
3.35 p.m.
Order of the Day for the House to be again in Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Mills.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 18 [Financial duty of Boards]:
THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD CHESHAM): I beg to move.
Amendment moved—
Page 18, line 32, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
Clause 18, as amended, agreed to.
Clause 19 [Borrowing powers of Boards]:
LORD CHESHAM: These are two further "Waterways" Amendments. I beg to move them both.
Amendments moved—
Page 19, line 45, leave out ("Inland Waterways Authority") and insert ("British Waterways Board).
Page 20, line 19, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendments agreed to.
Clause 19, as amended, agreed to.
Clauses 20 to 22 agreed to.
Clause 23:
Special provision for Inland Waterways Authority
23.—(1) The Minister may, with the approval of the Treasury, out of money provided by Parliament make grants to the Inland Waterways Authority to meet any deficit on their revenue account arising during the period of five years beginning with the vesting date.
LORD CHESHAM: I beg to move.
Amendment moved—
Page 22, line 41, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
LORD SHEPHERD: We are in some difficulties this afternoon. My noble friend Lord Lucan, in whose name this Amendment appears on the Paper, is, fortunately for him but unfortunately for us, in Rhodesia, where he is celebrating a major family event. My noble friend Lord Stonham, whom I asked to move this Amendment, unfortunately cannot be here until later on. It is an Amendment of some importance, and I therefore do not propose to discuss it now, or Amendment No. 81, but we will raise them on Report stage.
However, before sitting down, I would say that on my way to the House I noted newspaper bills to the effect that there had been a major rail disaster on the Continent; and, since we are dealing with a Transport Bill, I thought it would be appropriate if we were to express our very great regret that there should have been a loss of nearly 60 lives on the Continent in this rail disaster. This, perhaps, is the price that has to be paid for fast travel, but when it does it is very heavy, whether it is in this country or elsewhere.
Amendment moved—
Page 22, line 43, leave out ("five") and insert ("ten").—(Lord Shepherd.)
THE MINISTER WITHOUT PORTFOLIO (LORD MILLS): With your Lordships permission, I should like to associate myself with the sympathy expressed by the noble Lord, Lord Shepherd.
LORD SHEPHERD: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD CHESHAM: I beg to move.
Amendment moved—
Page 23, line 2, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
LORD MILLS: In order that the Foreign Secretary may make a statement, I beg to move that the House do now resume.
Moved, That the House do now resume.—(Lord Mills.)
On Question, Motion agreed to and House resumed accordingly.

BRUSSELS NEGOTIATIONS AND THE COMMON MARKET
3.40 p.m.
THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE EARL OF HOME): My Lords, with the permission of the House, I wish to repeat a statement being made by the Lord Privy Seal in another place on the progress of the Brussels negotiations. I again intend to publish in the OFFICIAL REPORT a more detailed account of the latest developments.
On May 16 the Lord Privy Seal said that the last Ministerial meeting marked the end of the first stage: the way was open for the negotiation of solutions. Of course, the House will understand that any agreement on the solution of individual elements in the negotiations remains subject to overall agreement. The momentum has been maintained both in the meetings of the Deputies of Ministers and in the Ministerial meeting which ended in Brussels yesterday.
At this meeting agreement was reached on the tariff treatment to be applied to our imports of industrial products from Canada, Australia and New Zealand. As regards these commodities, the Lord Privy Seal said in his opening statement in Paris on October 10 that we recognised that indefinite and unlimited continuation of free entry over the whole of this field might not be regarded as compatible with the development of the Common Market. The solution now worked out provides that the common external tariff will not be applied to these imports in accordance with the normal timetable, but in three stages: the first stage on accession, the second stage on January 1, 1967, and the third stage on January 1, 1970. The European Economic Community at one time proposed that this delayed application of the tariff should only relate to a limited list of goods, but it is now agreed that all industrial exports are included. It was agreed that the Community would be ready to take part in multilateral negotiations aimed at reducing, on a reciprocal basis, the level of the common tariff on industrial products. The agreement also provides for consultation between the enlarged Community and Canada, Australia and New Zealand in 1966 and again in 1969, after
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which appropriate steps would, in the light of all the circumstances, be taken in conformity with the provisions of the Treaty.
Ministers carried a stage further the discussion of the most important and extremely difficult question of the treatment of imports of temperate foodstuffs from the Commonwealth, both during the transitional period and in the long term. In this connection we have put forward certain proposals on cereals which will be discussed by Ministers Deputies next week.
The Ministers had a long discussion of the list of products, mostly industrial raw materials, on which we have asked for a nil tariff. In some cases the Community have suggested alternative arrangements to meet the essential needs of ourselves and our suppliers. Deputies have been asked to examine these alternative proposals together with our own with a view to submitting solutions to Ministers at their next meeting.
We have made comprehensive proposals for dealing with the exports of India, Pakistan and Ceylon, and emphasised to Ministers the importance of making arrangements to protect the essential export interests of these countries. The Government of India have also circulated a memorandum to the Six Governments. Our proposals, together with the memorandum of the Government of India, will be examined further by the Deputies.
Ministers also had before them a report by a Working Party on the problems of British horticulture. The Deputies will examine it in greater detail taking account of individual commodities.
Finally, a report was made on the discussions which have been taking place between our Delegation and the Commission on the provisions of the Treaty of Rome concerned with economic union. The Lord Privy Seal was able to tell the Minister that these discussions have satisfied us that, on the most important matters dealt with in these Articles, we can accept the Treaty, subject to a small number of adjustments on timing and administration.
The next meeting of Ministers will be for four days, June 27–30.
Following is the report referred to at the opening of the statement:
Since the last report on the Brussels negotiations on May 17 meetings of the Ministers Deputies and of working parties have continued. On May 29 and 30 there were meetings of Ministers at which we reviewed the progress made during the past fortnight and continued the process of seeking to negotiate solutions.
The present position with regard to the various problems under discussion is as follows.
Raw Materials and Semi-Manufactures for which we have proposed a zero tariff
The subject has been discussed in some detail by the Deputies and we had a further useful examination of the problems involved at our Ministerial meeting on May 29. We still consider and have re-emphasised that the most appropriate solution for each of the products on our list would be the reduction of the common tariff to nil. The Six find particular difficulty in meeting us on some products, but are not yet ready to put forward any alternative proposal. On some other products they have put forward proposals which are to be discussed by the Deputies.
Industrial Products from Canada, Australia and New Zealand
Ministers agreed on the following arrangements:

1. The United Kingdom would take the first step (30 per cent.) towards the application of the common customs tariff to imports of these products on the date of its accession to the Community. The United Kingdom would take a second step (30 per cent.) towards applying the common customs tariff on January 1, 1967. The United Kingdom would apply the full common customs tariff to all the products concerned on January 1, 1970.

2. Note would be taken of the readiness of the Community to take part in multilateral negotiations aimed at reducing, on a reciprocal basis, customs duties on industrial products.

3. The enlarged Community would be prepared to examine, in 1966 and 1969, in consultation with Canada, Australia and New Zealand, the development of its trade with these countries, after which it would take appropriate steps in the light of all the circumstances, and in conformity with the provisions of the Treaty.

India, Pakistan and Ceylon Exports
The Lord Privy Seal made comprehensive proposals dealing with the exports of India, Pakistan and Ceylon and emphasised to Ministers the importance of making arrangements adequate to protect the essential export interests of these countries. Ministers asked Deputies to examine these problems further, taking into account our own proposals and a memorandum communicated to the Governments of the Six by the Government of India. The Deputies have been asked to propose solutions for consideration at the next meeting of Ministers.
Association and Tropical Products
Deputies will revert to these subjects at their June meetings. Meanwhile we have put forward precise proposals regarding the tariff treatment of the various tropical products. The Six have not yet put forward proposals of their own or commented on ours, but hope to do so shortly. Meanwhile a Working Party has submitted a report analysing the trade in a number of these products, and the problems which arise, and is continuinig to work on further products.
Commonwealth Temperate Foodstuffs
Since the last Ministerial meeting Deputies have been considering our proposals for safeguarding essential Commonwealth interests in this field. We had a further discussion at the Ministerial meeting and the Six emphasised their view that the arrangements made would need to be consistent with the Treaty and the common agricultural and common commercial policies. The Deputies will resume their examination of this subject next week, and will consider the proposals which the Lord Privy Seal has submitted for arrangements for imports of cereals from Commonwealth countries.
Horticulture
During the period under review a Working Party has been examining the problems of British horticulture and has prepared an interim report which the Deputies discussed and submitted to the Ministers. The report set out our view of the problems and how we thought they might be handled, together with the views of the Six. We agreed that the Deputies should examine the problems in greater detail, taking account of individual commodities, and should suggest possible solutions.
Economic Union
The Lord Privy Seal made a report on the discussions which have been taking place between our Delegation and the Commission on the provisions of the Treaty of Rome concerned with economic union. The Lord Privy Seal was able to tell the Ministers that these discussions have satisfied us that on the most important matters dealt with in these Articles we can accept the Treaty subject to a small number of adjustments on timing and administration.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am very much obliged to the Foreign Secretary for giving us this statement. There is nothing very new in it, so far as I can see, compared with the report which has already appeared in yesterday's London Times. Nevertheless, some points do seem to me to arise. I took note that early on in his statement he said that
"… the House will understand that any agreement on the solution of individual elements in the negotiations remains subject to overall agreement".
I am not quite sure exactly how that works out with regard to what was

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described by the London Times correspondent yesterday as the first British success in the negotiations. What sort of agreement is it? Is it the sort of agreement that any two prominent negotiators have shaken hands on? Is it final? Is it tentative? Is it, indeed, as an individual agreement, subject to agreement between the home Government here and a Conference of Commonwealth Prime Ministers? This seems to me to be very important in setting the opinion of the people in this country as to whether they are, in principle, for or against entry into the Common Market.
That is especially so when one remembers that people, very prominent people, on the Continent have even expressed the opinion that, if we go into the Common Market, the Commonwealth goes out so far as we are concerned. This seems to raise very grave issues. Apart from every other question—not going back on matters of sentiment, such as the services of the Commonwealth, given almost at a moment's notice, at any time we wanted them, in the past, and things of that kind—what many of us who perhaps are regarded as advanced politically in thought feel is that we ought surely, in this stage of political thinking in the world, to see that the only real way we can secure finally a social democracy is based upon getting a firm unity between various countries in the great Commonwealth which we have been setting up.
Therefore, I would ask, on top of what I have already mentioned to the Foreign Secretary: Was there a conference on this matter with representatives of the Commonwealth, before these particular proposals on the industrial tariffs concerned between now and 1970, were made? Was there any agreement that this was a reasonable thing to put forward? Because the London Times report seems to me to indicate that this agreement has involved a move from the position taken up by our Government, as well as a move from the position taken by the Community Governments. A little more light upon these matters might help us to collect our thoughts.
3.48 p.m.
THE EARL OF HOME: My Lords, I think it is probably better that I should reply now, if the noble Viscount is agree-
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able. On the last point, the Lord Privy Seal has been in continuous touch with the Commonwealth representatives, both in Brussels and here, and they have a full knowledge, of course, of the kind of lines we are following in our discussions of these different matters concerned with entry into the Common Market.
I think we rather suffer from words here. In the early part of my statement—and I am glad the noble Viscount mentioned it—I deliberately drew attention to the fact that this individual element on which we have agreed in the last few days is one of a number which all hang together. When we say that we made an agreement yesterday, it is really a way of saying that we have been able to agree on certain propositions, and I do not know what else you can do. When you are negotiating and you find certain common methods on which you think you can reasonably proceed, I think you must express that as an agreement. But, of course, the agreement on one section will be dependent upon our ability to reach similar agreements on many other matters, and all these are related to each other. When we come to the end of July, let us say, when we hope to have a series of agreed solutions, then at some point this has to go to the Commonwealth Prime Ministers Conference to be looked at, and it also has to be accepted or rejected by Parliament. I think that these are the processes of negotiation and consideration by Parliament which Parliament would wish.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I am much obliged, but when speaking in this way of agreement, I am anxious to know whether your negotiator, in expressing agreement, has uttered the words which I have always taken to be implied in the Government pledge—that it will be subject to acceptance also by the Commonwealth.
THE EARL OF HOME: My Lords, what we are trying to do is to reach agreed solutions to a number of items, of which this is one. For example, we have the question of comparable outlets for Commonwealth cereals, and then there is the item of nil tariffs. There is a whole series of sections which are still open to be debated with members of

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the Common Market in Brussels and we hope to arrive at agreed solutions on them all. When we have done that, we shall come to Parliament and to the Commonwealth Prime Ministers, and it is for the Prime Ministers and Parliament to decide whether the all-over agreement is worth accepting or not. I very much hope that it will be possible to accept it, but I cannot tell that until we have seen all the sections fall into place and until we are able to present the whole picture to Parliament.
LORD BALFOUR OF INCHRYE: My Lords, arising out of the Foreign Secretary's statement, I wonder whether I can ask him this. As I understand it, the eventual position which will be arrived at as a result of the Brussels preferential agreement is that Commonwealth imports will eventually pay a tariff duty Whereas similar European products coming into this country will pay no duty and come in free. How is that position to be reconciled with the oft-repeated pledges of Ministers, such as that of the Colonial Secretary that Commonwealth safeguards must be adequate and enduring or the statement of the President of the Board of Trade in February last:
"I cannot conceive that any Government of this country would put forward a proposition which would involve the abandonment of Commonwealth free entry"?
As some Commonwealth manufactures come in duty-free, how can the position which we shall eventually reach be reconciled with those oft-repeated pledges?
THE EARL OF HOME: My Lords, the section we are talking about now is in a broad negotiation which deals with manufactured goods from the Commonwealth. The noble Lord is perfectly right. Over a period, the preferences on these goods will fade out—and I gave the dates. I also said, he will notice, further down in my statement, that the agreement provides for consultation between the enlarged Community and Canada, Australia and New Zealand, in 1966 and again in 1969—that is, at two periods during the fading out of preference on these manufactured goods. We should hope that the negotiations at that time between the enlarged Community and Australia, Canada and New Zealand would be such as to lead to advantages to those countries in the whole Com-
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munity. I cannot say exactly how they would work out, but I hope that on balance the Commonwealth would benefit from our membership of the Community and would be able to bargain with the Community as a whole about the export of their manufactures.
LORD BALFOUR OF INCHRYE: My Lords, does the noble Earl realise that people think that fading out for a hypothetical benefit in an unknown future is a high price to pay for abandoning the principle of free entry of Commonwealth goods, laid down since the Ottawa Agreements in 1934, and that it is a principle which is dear to many people, not only emotionally but practically as well?
THE EARL OF HOME: My Lords, I fully understand that, but, of course, our preferences in Commonwealth countries have been steadily eroding and the principle has been eroded for some time. Of course we want to do the best possible bargaining we can for the Commonwealth export of manufactures. We are coming on to this most important section in the negotiations which deals with comparable outlets for grain, butter, wheat and commodities of that kind, in which Australia, New Zealand and Canada are particularly interested. At this stage, I can only say that we hope that, when the House sees the all-over picture, from the point of view of the Commonwealth, their judgment will be that joining in the Common Market offers better opportunities in the long run for Commonwealth exports than by Britain remaining out of it.
LORD MORRISON OF LAMBETH: My Lords, the Foreign Secretary referred to the possibility that the overall negotiations might be completed by the end of July. If that should prove to be the case, he will be aware that Parliament customarily adjourns for the Summer Recess by the end of July or, in exceptional cases, at the beginning of August. Will he give some undertaking that the Government, when they have reached their over-all picture, will consult Parliament and a debate can take place in both Houses? Would that be before Parliament rises for the Summer Recess or would it be necessary for us to wait until Parliament resumes after the Summer Recess?
THE EARL OF HOME: My Lords, I cannot tell whether we shall have completed the process of negotiation by the end of July. I think that perhaps that would be too optimistic. But we hope to get a much clearer picture of what might be involved. We have agreed through the usual channels, as the noble Viscount knows, that there should be a debate on these matters before the House rises.
LORD MORRISON OF LAMBETH: My Lords, I had forgotten for the moment that the Commonwealth Prime Ministers are to meet in London in September. Presumably that would be a real factor in the time-table, which might make it undesirable that Parliament should debate this until the Commonwealth Prime Ministers have met.
THE EARL OF HOME: My Lords, I would never invite an unnecessary debate, but I think that probably the Opposition and, indeed, the House as a whole might like to debate certain aspects of the Common Market before we rise. But perhaps we can look at that a little nearer the time. The noble Lord is quite right. The meeting of the Commonwealth Prime Ministers on September 10 is a very important factor in this whole picture.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, it is obvious, from a study of the matter, that Canada is the country most affected by this section of the negotiations. May I ask: have any representations been yet received from them in regard to the agreement that has been arrived at? Is it not very important, in dealing with the interests of our loyal adherents in the Commonwealth, that we should consider how they are to be individually, as well as collectively, affected? Canada has £70 million of exports to this country affected by this one agreement. And what sort of line will be taken by the Government of New Zealand, 67½ per cent. of whose output of dairy products comes into this country on the basis of free entry? It seems to me that our Dominions are likely to get a pretty raw deal, unless something is done about it.
THE EARL OF HOME: My Lords, I very much hope that something will be done about it. We are very fully aware
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of the importance to the Commonwealth countries of the commodities mentioned by the noble Viscount. Of course, wheat, butter and meat are of particular importance to Australia, New Zealand and Canada. The House might be interested to know the amount of trade which is affected by the last talks which have just been completed in Brussels. The proposal is concerned with trade to a value of just over £55 million from the three countries together. It represents 2 per cent. of the total Australian exports to this country and less than one-quarter of 1 per cent. of New Zealand's.
In the case of Canada the volume of trade is more substantial: it is about 16 per cent. of their exports to the United Kingdom and 2 per cent. of their total exports. This is dealing purely with the section I was talking about in my statement, but those are the figures as they affect the Commonwealth countries.
LORD WILLIAMS OF BARNBURGH: My Lords, may I ask the noble Earl whether in regard to the horticultural products which are to be looked at by the Deputies there will be a report to Parliament before any final, unalterable decisions are taken? I am sure the noble Earl is aware that at the moment we have power to impose duties up to 100 per cent. on horticultural products from certain countries which produce them more readily because of climatic conditions; and there are, of course, seasonal arrangements where imports are reduced to x per cent. Will a report be supplied to Parliament before any final decisions are taken on the decisions, if any, that are made by the Deputies now looking at these problems?
THE EARL OF HOME: My Lords, in regard to any particular section of the negotiations and, indeed, on the negotiations as a whole, it must be for the British Government to decide what they think is a tolerable arrangement. As I said earlier, both Houses of Parliament will, of course, be able to make a judgment on this when the balance is complete and the scheme is complete; but it would be very misleading to make a judgment on an agreement reached on one section or another section. We really must see the picture, as a whole, before Parliament can judge whether it is to be accepted or rejected
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, on the point of horticultural products, could the noble Earl tell us whether the Deputies will be discussing the position of horticultural products in the Channel Islands or in Malta? Will there be a different method applied to the Channel Islands? I suppose it is part of the United Kingdom, and that may be so. But what of Malta, and even some other places fairly close in the somewhat less temperate zone?
THE EARL OF HOME: My Lords, I can assure the noble Viscount that every conceivable aspect of this has been thought about and considered and will be covered in the negotiations. I think I can say that with my hand on my heart about all these problems. I do not believe we have ever taken so much trouble about anything as we have about this, and we have never had such a high-powered lot of civil servants dealing with a problem at deputy level as we have in Brussels now.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I will leave it at this: that I am still as unhappy about it as I was on the last occasion.
THE EARL OF HOME: My Lords, I hope that from now on the noble Viscount will get happier and happier.

TRANSPORT BILL
4.3 p.m.
House again in Committee.
LORD CHESHAM: Amendments Nos. 82 to 86 are all on the same point. I beg to move.
Amendment moved—
Page 23, line 6, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
Amendment moved—
Page 23, line 8, leave out ("Authority") and insert ("Board").—(Lord Chesham.)
On Question, Amendment agreed to.
Amendment moved—
Page 23, line 15, leave out from first ("the") to ("shall") in line 16, and insert ("British Waterways Board, but the British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
Amendment moved—
Page 23, line 20, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
Amendment moved—
Page 23, line 25, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
Clause 23, as amended, agreed to.
Clauses 24 to 28 agreed to.
Clause 29:
The Transport Holding Company
29.—(1) For the purposes of this Act there shall be a body corporate with perpetual succession which shall be called the Transport Holding Company and which is in this Act referred to as "the Holding Company".
(2) There shall be a chairman and not more than twelve other directors of the Holding Company who shall be the members thereof and who shall be appointed by the Minister.
(7) It shall be the duty of the Holding Company to exercise its control over any wholly-owned subsidiary of the Holding Company so as to secure that the subsidiary does not engage in manufacture or production except the manufacture or production of things for use in their own business or for supply to a Board, or a wholly-owned subsidiary of any of the Boards or of the Holding Company, for use in their business.
LORD SHEPHERD LORD SHEPHERD moved, in subsection (1), to leave out "Transport Holding" and insert "British Transport Development". The noble Lord said: We now come to Clause 29 of the Bill, which is an unsatisfactory and inadequate clause in What is an unsatisfactory and inadequate Bill. I hope that I Shall speak with temperate words. The noble Lord, Lord Mills, rather chided me late on Tuesday evening for using intemperate expressions when I was speaking to his noble friends opposite. But I must say Chat we in the Opposition have a sense of frustration. We have had five days in Committee; we have moved, in our judgment, sensible Amendments; we have spoken with moderation and, in some cases, I think, with an overwhelming amount of evidence to support us. And what has been achieved? The only major alteration made is that to Clause 11, by an Amendment moved by the noble Lord,

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Lord Conesford. I suppose the Government would describe that Amendment as in many respects a wrecking Amendment. It certainly wrecked the clause, so far as the Government were concerned. Therefore, we feel a certain amount of frustration in that the effort we have put in has achieved so little.
This Amendment is not a wrecking Amendment. It really does not alter the principle behind the Bill but seeks to improve it. The spirit of my Amendment must lie in the words to delete from the clause as it now stands the words "Transport Holding" and insert "British Transport Development ". The accent is on development. Noble Lords opposite have made it clear that they believe in private enterprise and the private operator in regard to transport. It was their original intention, as I understand it, to set road haulage universally free. But when they had the 1953 Act they decided otherwise, and they decided to have what one might call a "mixed economy" in Which there was to be an element of the nationalised undertaking and of the private operator. Therefore, whether we are Conservative, Socialist or Liberal we are committed to this mixed economy in transport.
We are, as I said on a previous ocasion, acting as the nominees of the shareholders. We have invested in State capital in the freight and passenger road services a sum of approximately £123 million. This is a considerable sum. Certainly I think it would be the wish of the Committee that this investment should be used—or, if I may use the word, exploited—to the maximum advantage; that it should earn a reasonable sum for the taxpayer; but, above all else, that it should provide a service. If we look at the words of Clause 29, what is the spirit of the clause? I think it lies mainly in subsection (6), which lays down the objects of the Holding Company. The words are:
"… as if the Holding Company were a company engaged in a commercial enterprise, and the Holding Company shall have power for those objects—

(i) to form, promote and assist companies,

(ii) to subscribe for, take, acquire and hold, exchange and sell securities of companies … "

It is purely a commercial outlook, a commercial aim. It is that the Holding Company may acquire and dispose of.
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It is obviously the intention of noble Lords opposite, and their Party, that this Holding Company will not acquire any new company. If it did, I can imagine the revolt from the Back Benches opposite. Therefore, the sole intention of these words is that the Holding Company shall hold for the time necessary and then, if the price becomes right, they will sell. I believe those are practically the words of the Minister of Transport in another place some time ago.
There are no duties laid down in Clause 29—none whatsoever—other than this commercial aspect to acquire and sell. In Clause 3, which is the one dealing with railways, there are specific duties. In Clause 7 there are special duties on the London Board to provide an adequate service. It is interesting to note also that in Clause 3 the Board are to provide an economic service—not an adequate service—and we must anticipate from what we have heard in this House recently that we shall have rail closures. But it is interesting to note that the Railways Board in themselves will not be free to carry out rail closures if they so wish. The noble Lord, Lord Mills, has repeatedly said, in assurances to us, that it will be the Minister's decision after an appeal has been made under Clause 56. Therefore, while the common carrier provision of previous Acts of Parliament is to be abolished, the railways are still not to be free to do what they wish. But the Holding Company will be in that position. The Holding Company are to have no duty laid upon them. If they decide to abolish, reduce or curtail completely any of their existing road services, there is no provision in this Bill for the public to appeal. The Holding Company will be able to do it without reference to the Minister, which I think is quite wrong.
There is one other aspect of this clause, and that is in subsection (7). The Minister has laid it down in the White Paper, and in this House, that these companies are to operate purely and simply as commercial companies. Is there a commercial company in private operation curtailed and restricted as to how it shall use its assets, how it is to be restricted in the use of its workshops and its manufacturing capacity? Is there any private operator so curtailed

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to-day? Yet it is to apply to these companies. Take the case of British Road Services. They provide a very important national transport service. They have over 16,000 vehicles, and in some areas they are the only means of transport. The 1953 Act, which is still in existence and is not being repealed, restricts the number of vehicles that the British Road Services may operate. Therefore, we have a case where the Holding Company (which the Minister says shall be a commercial enterprise and shall operate as a commercial enterprise) are to be restricted in their development and in their capacity to do business. These provisions do not exist for B.O.A.C. or for B.E.A. I doubt whether they exist for any other public Corporation. They certainly do not exist in private enterprise. Why, then, do we have that clause in this Bill? It is obviously a fear of the private operators that this nationalised Board will compete and put them out of business.
I must say also, in regard to Clause 29, that many of the undertakings in the Schedule provide essential local passenger transport services. In many areas they are, in fact, the only public transport service. There is no duty in this Bill to provide an adequate service. There is no situation in which the local community, the local county council, or the rural district council, can make an appeal if there are closures. I submit that there is a clear duty on this Committee to ensure that, when we are looking at the Holding Company, which is a State organisation, organised to provide a service to the community in which they operate, an adequate service is so provided.
Now as to the future. On Second Reading, I estimated that we should be facing railway closures of in the region of 40 to 50 per cent. To some that was a rather startling guess, but it is to be noted that the Government did not respond. It makes me wonder whether my estimate was slightly conservative, and whether, in fact, the closures may be even larger. On the Second Reading of this Bill we had the speech of the noble Lord, Lord Polwarth, who was particularly concerned about Scotland. I will not quote his speech, but it will be remembered in this House for its admirable content. A few weeks earlier we had the speech of
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the noble Lord, Lord Swansea, speaking about the position on Wales. More recently, we also had the speech of the noble Lord, Lord Molson, on the first day of the Committee stage. May I remind the noble Lord of the question he put to the noble Lord, Lord Mills? He said [OFFICIAL REPORT, Vol. 240 (No. 81), col. 810]:
"… your Lordships should be absolutely assured that, when a large number of stations and lines are closed down as the result of the rationalisation of British Railways, it will be possible for the Government to ensure that road services are provided in substitution for the rail service."
That is one of the matters which the Minister has chosen to take upon himself. He then asked:
"Clearly, under the Bill it would be possible for the Minister to issue directions to the Holding Company to provide road services to take the place of uneconomic rail services …"
The noble Lord went on to point out that the noble Lord, Lord Mills, had said earlier [OFFICIAL REPORT, Vol. 240 (No. 74), cols. 210–211]:
"I think that also answers the question as to whether the Minister would, in appropriate cases, direct the Holding Company to require its subsidiaries to provide the necessary transport services if British Railways wished to close down some of their services. The answer is that he would."
The noble Lord, Lord Mills, has said that the Minister has the power, and that he would use that power. I accept that from the noble Lord.
But there is some ambiguity in the Government's position. We must anticipate that these closures may be in areas in which road transport may be uneconomic. It is quite clear that in Clause 29 the whole accent is upon the public Boards. If I may use the words of Mr. Hay in Committee in another place on March 8, on what must be the guiding principle he said [OFFICIAL REPORT, Commons, Standing Committee E, col. 1195.]:
"The best initial test of what the public need is given by what they will pay for."
In the areas which we have much in mind it is obvious that adequate transport services may be uneconomic. It may well be that the Minister will decide to use the Holding Company, if the Holding Company has subsidiaries operating in that area. But Mr. Hay,

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when tackled on this question a moment or two before, said:
"… we must be clear that it will be the duty of the Holding Company to secure the best possible results for the public purse. It was not our desire or intention to place upon the Holding Company any obligation with regard to the adequacy of its transport services for public needs. We regard any such obligation as quite inconsistent with the general duty which we are placing on it …"
We have therefore the reply, which I fully accept, from the noble Lord, Lord Mills, and we have also a statement made in Committee in another place by Mr. Hay, acting directly for the Minister of Transport. We have a case, from this Report, where it is clear that it is not the Minister's intention to place upon the Holding Company subsidiaries a duty to operate a service if it is unprofitable. We are therefore in a position—and I think we must face it squarely—that, with these massive rail closures throughout the country, many of these areas, of the size of which we have little idea at present, may die and their industries may suffer through lack of public transport. I do not take the view that because railways operate there that they must operate to Kingdom come, but certainly I do take the view that if there is a rail closure we must see that adequate alternative transport services are provided; and the word "adequate" certainly means more than one vehicle a week.
I have tried to make the case for our Amendment. Perhaps we do not go quite as fully into detail as might be necessary if the principle on which I have spoken were to be accepted. I make no apology for that, in view of the success of the noble Lord, Lord Conesford, last week. But I hope the Committee will accept the view that this Transport Holding Company should be made a Transport Development Company. The accent should not be on the disposal of very valuable assets, but its duty should be to develop them not only for the public purse but in the interests of the community. I hope that we can write into this clause this special principle. It does not exist in the clause as it is in the Bill; and I believe that the Bill will be a better Bill if our Amendment is included, and the community will be well served. I beg to move.
Amendment moved—
Page 27, line 7, leave out ("Transport Holding") and insert ("British Transport Development").—(Lord Shepherd.)
LORD MILLS: The noble Lord, Lord Shepherd, has ranged very widely over Clause 29 in support of his Amendment, which, of course, he is entitled to do. I will do my best, in replying to the noble Lord, to amplify what has been said and to deal with the points he has made. Amendment No. 87, of course, reflects the purpose of Amendments Nos. 91, 92 and 93, which seek to change the purpose of the Holding Company. The title now proposed is, I suggest, not appropriate to the functions envisaged for the Holding Company. It is not intended—and this is the reply to one of the noble Lord's points—that the purpose of the Holding Company should be that of extending materially the scope of the nationalised transport units to be grouped under it by the Bill, or to add to the number of these activities. The function of the Holding Company is to administer and guide the companies with which it is concerned, so that they can operate efficiently in competition with private enterprise and, as the noble Lord has said, do their best also for the public purse.
I think it might be helpful to the Committee if I gave some further explanation in reply to the points made by noble Lords on the Minister's powers to give directions to the Holding Company about the provision of road transport services by its subsidiaries. During the Second Reading of the Bill, as the noble Lord, Lord Shepherd, has said, I gave answers to the noble Lord, Lord Molson, and the noble Lord, Lord Shepherd, which indicated that the Minister could, and in certain circumstances would, give such directions, including the direction about the provision of uneconomic services. In reply to the noble Lord, Lord Shepherd, I said, as he has already mentioned, that the Minister would not hesitate to give directions to the Holding Company about the provision of adequate services, should this be required. He would have powers under Clause 29 to do this. But I think I should make it clear that in saying this I did not envisage, having regard to the objects and purposes of the Holding Company, that the Minister would give directions to the Holding

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Company which would bring about a situation whereby the Holding Company would be under an obligation to arrange for its subsidiaries to provide road transport services adequate for public needs but regardless of the costs and the profitability of those services, come what may. The duties under the Bill, both of the Holding Company and of the four statutory Boards do not import any such general obligation.
In this we have had regard to experience. The Commission were under a duty of this kind and the House of Commons Select Committee on Nationalised Industries said, in paragraph 417 of their Report on British Railways, that they—
"consider that this confusion in judging between what is economically right and what is socially desirable has played an important part in leading to the situation in which the Commission now find themselves."
The noble Lord will remember that we have already had a debate on another Amendment seeking to impose upon the Boards the necessity of providing adequate services. The Committee on Nationalised Industries also said, in paragraph 415 of their Report:
"It seems to your Committee that the best initial test of what the public need is given by what they will pay for."
The Government White Paper, Reorganisation of the Nationalised Transport Undertakings (Cmnd. 1248), in paragraph 7, also says:
"The practical test for the Railways, as for other transport, is how far the users are prepared to pay economic prices for the services provided."
We have had this very much in mind in framing the duties to be placed upon the Holding Company and the four statutory Boards to be set up under this Bill.
Let us look for a moment at the practical situation likely to arise. In the first place, I suggest that it is most unlikely, save in very exceptional circumstances, that the Minister would need to give a direction to the Holding Company to secure the provision of a bus service in substitution for a railway passenger closure. There is, I would remind your Lordships, a special procedure in Clause 56 whereby, under Clause 56 (11), the Minister may, as a condition of his consent to a railway passenger closure, require that the Railways Board should provide or secure the provision
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of a substitute bus service. Whether that bus service would in practice be provided by a private operator or by a bus company under the Holding Company would depend upon the area concerned and upon What buses were in operation there. It would also, of course, be subject to the grant of a road service licence by the traffic commissioners. But it would be up to the Railways Board to see that the substitute bus service was provided and to make good, if necessary, any loss incurred in running it. It therefore seems unlikely that the need would arise to give any direction to the Holding Company in this matter, if one of its bus companies were involved.
As regards the provision of road haulage services, whether or not in substitution for railway freight closures, the general position is that the road haulage industry, which is mainly in private hands, should be able to meet all public demands. There is no dearth of road haulage services. Moreover, where a railway freight service has been closed down the Railways Board have powers to make good the withdrawal of railway services in a particular locality by using their road collection and delivery services over a somewhat wider area to the appropriate railheads. Here again, therefore, there would seem to be no need for the Minister to give any direction to the Holding Company in such a matter.
Perhaps I might now come to the point put to me by the noble Lord, Lord Hawke, during the discussion in Committee on Clause 1, when he asked me if I would see whether Clause 29 (4) might be amended to make it clear that the Minister could direct the Holding Company to provide an unprofitable road transport service. I have looked at this point, as I promised. There is no doubt that Clause 29 (4) as at present drafted would enable the Minister to give such a direction, and therefore I do not think that any Amendment is required for this; nor do I think that any such Amendment should be made. The Minister's powers of direction in Clause 29 (4) are designed to provide all the controls he might need over the activities of the Holding Company. As I say, if circumstances arise in which, on grounds of public policy, the Minister finds it necessary to require the Holding Company to arrange for the provision

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of an unprofitable service, he has power to do so, and, as contemplated in paragraph 32 of the White Paper on the financial and economic obligations of the nationalised industries, he would allow for this in settling with the Holding Company, under Clause 29 (10), what surpluses should be made available to the Exchequer. But, as I have explained, the practical circumstances are not likely, as we see it, to require the Minister to make any such direction.
I hope that that explanation of the Minister's powers of direction has sufficiently amplified what I said on Second Reading and earlier in the Committee stage. But here is a fundamental difference between the way the noble Lord, Lord Shepherd, looks at this matter and the way we look at it. He looks upon these units which were included in the British Transport Commission as businesses which ought to be, and can be, developed. We look upon them as businesses which should be administered properly, and our objects provide for that. The noble Lord has at this moment proposed only the one Amendment. I will deal with the other Amendments as we come to them.
LORD SHEPHERD: I thank the noble Lord for his answer. I certainly have made a mistake, I must admit; it was my intention, when moving Amendment No. 87, to speak also to Amendment No. 91. If the noble Lord has anything to say about my remarks which related to that Amendment, I do not know whether he would like to do that now. I certainly deployed my arguments on the Amendment I moved and on those I should have declared I
was speaking to. I do not know whether the noble Lord has anything further to say.
LORD MILLS: I have said that we think the purposes of the Holding Company, as the Bill is at present drafted, are right. We do not consider that they should be altered in the way suggested by the noble Lord. But the noble Lord also has another Amendment down, No. 90.
LORD SHEPHERD: That is another subject.
LORD MILLS: It is on the same point really.
LORD SHEPHERD: No.
LORD MILLS: I can only add that we prefer to leave the scope of the Holding Company in the Bill as drafted and not accept the noble Lord's Amendment.
LORD SHEPHERD: I will not delay the Committee. I find the noble Lord's statement, apart from the manner in which it was delivered, completely unacceptable. We believe that the nationalised industry, the road transport side, should be developed in the national interest. It is clear from the noble Lord that that is not to be the case; that the operation of the Holding Company is to be simply what is in the Bill, commercial development and the selling of the securities. In those circumstances I feel that I must ask the Committee to declare its view.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 24; Not-Contents, 66.

CONTENTS

Burton of Coventry, B.

Kenswood, L.

Silkin, L.

Champion, L. [Teller.]

Longford, E.

Sinha, L.

Citrine, L.

Meston, L.

Summerskill, B.

Colwyn, L.

Morrison of Lambeth, L.

Taylor, L.

Crook, L.

Rea, L.

Walston, L. [Teller.]

Douglas of Barloch, L.

St. Davids, V.

Williamson, L.

Esher, V.

Sainsbury, L.

Williams, L.

Henderson, L.

Shepherd, L.

Wootton of Abinger, B.

NOT-CONTENTS

Ailsa, M.

Atholl, D.

Boston, L.

Ailwyn, L.

Balfour of Inchrye, L.

Brecon, L

Alexander of Tunis, E.

Bathurst, E.

Buckinghamshire, E

Amherst of Hackney, L.

Bethell, L.

Carrington, L

Ampthill, L.

Bossom, L.

Chesham, L

Colville of Culross, V.

Grenfell, L.

Robins, L.

Colyton, L.

Hailsham, V. (L. President.)

St. Aldwyn, E. [Teller.]

Conesford, L.

Hawke, L.

St. Oswald, L.

Coutanche, L.

Horsbrugh, B.

Somers, L.

Crathorne, L.

Howard of Glossop, L.

Soulbury, V.

Davidson, V.

Iddesleigh, E.

Strathcarron, L.

Denham, L.

Kinnoull, E.

Strathclyde, L.

Dundee, E.

Luke, L.

Stuart of Findhorn, V.

Ebbisham, L.

Margesson, V.

Tedder, L.

Effingham, E.

Massereene and Ferrard, V.

Templemore, L.

Elliot of Harwood, B.

Merrivale, L.

Tenby, V.

Forster of Harraby, L.

Mills, L.

Teynham, L.

Fortescue, E.

Milverton, L.

Todd, L.

Fraser of Lonsdale, L.

Montgomery of Alamein, V.

Tweedsmuir, L.

Fraser of North Cape, L.

Newall, L.

Waldegrave, E.

Gifford, L.

Newton, L. [Teller.]

Wolverton, L.

Goschen, V.

Rathcavan, L.

Woolton, E.

Resolved in the negative, and Amendment disagreed to accordingly.

4.49 p.m.
LORD SHEPHERD LORD SHEPHERD moved, in subsection (2), to leave out "not more than twelve other". The noble Lord said: In moving this Amendment perhaps I may speak also to Amendment No. 90. The purpose of these two Amendments is, first of all, that there should be no limit to the number of directors of the Holding Company. At present the Bill says that the strength of the Board shall be a chairman and not more than twelve others. In taking into account the constitution of the Board, I recommend to the Committee that we consider the last few lines of Amendment No. 90, which requires that when the Minister appoints directors of the Holding Company he should be able, for such special periods as he may consider expedient, to appoint persons who are directors concerned with the principal subsidiaries of the Holding Company. It may well be that from time to time the Holding Company will have special work to do in regard to some of the subsidiaries. It may be that they are in difficulties or that they may be subject to development. I should like the Board to be sufficiently fluid and flexible in order that the Minister, if he so wished, should be able to appoint to the Board persons who are directors of a subsidiary or who may be in an executive capacity, managing those principal subsidiaries. There are a number of fairly large and important subsidiary companies, and I think it is right that from time to time if these companies are very much involved they should be represented on the Board.
I now come to the first part of Amendment No. 90, which no doubt the noble Lord, Lord Mills, will again say is rigid
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—as he said so many times on our previous Amendments dealing with the Railways Board. The Holding Company is quite different from the Boards that have been dealt with. The noble Viscount, Lord Bridgeman, reminded us the other day that there is a considerable difference between a board activity and a management activity. Management certainly gains by having relatively few members: it is thus able to exert its wishes a good deal more quickly. But in regard to the Boards it is to be noted that many large organisations—holding companies—have very large boards, in order to bring into them a wide range of experience. There is certainly a case, therefore, for a fairly large Holding Company board, but by this Amendment I specifically wish to see that there shall be a director appointed to the Holding Company from the Railways Board, the London Transport Board, the British Docks Board and the British Waterways Board, and, of course, the British Road Services, which is a subsidiary—a very powerful subsidiary—of the Holding Company.
The purpose of the Holding Company is quite clear from subsection (6) of the clause: it is to manage, and possibly eventually to dispose of, some of the assets of the Holding Company. It may well be that the Holding Company, with little or no contact with the nationalised Boards, may decide to dispose of some asset whose loss would be considerably detrimental to the activities of one of the Boards. Therefore, I think it is right that the views of these four Boards which have been created to operate efficiently their side of the business should be represented when the Boards are operating in the capacity of a Holding Company. I do not expect (although it may be that one day I shall be sur-

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prised) that the Government will be able to accept one of our Amendments. Perhaps they will not take the view that the Railways Board, the London Transport Board, the Docks Board and the British Waterways Board should be represented. That may well be. But I certainly must press the fact that British Road Services and its main subsidiaries should be very much represented on the Holding Company.
Amendment moved—
Page 27, line 9, leave out ("not more than twelve other").—(Lord Shepherd.)
LORD CHAMPION: My noble friend, the noble Lord, Lord Shepherd, said that he was speaking here to Amendment No. 90 as well, and it is to that Amendment I should like to address my few remarks. With him, I recognise that what we are doing in this clause is to set up something quite new in connection with nationally-owned undertakings. We are here establishing a precedent which may well be followed in future similar ventures. In another place the Government made it glaringly obvious that they were feeling their way in this matter—their minds were not completely made up when they drafted the Bill. Indeed, when the Bill went to Committee, Clause 29 was substantially amended. Quite a number of Amendments were moved there to this clause, and the Government's justification was—and here I quote the words of the Parliamentary Secretary in Standing Committee E in the other place [OFFICIAL REPORT, Commons, Standing Committee E, March 8, 1962, col. 1183]:
"What we are seeking to do here is to set up a body for which, as far as I know, there is no precedent in the nationalised field. It is inevitable that as we have gone along and as discussions have taken place on some of the matters which relate to the boards, we should wish to cover the situation which those debates and discussions have shown so far as the Holding Company is concerned, and the Amendment that I am now moving is a direct result of that."
Clearly, what the Government did after drafting this clause was to have a number of discussions in which they must have learnt quite a lot about holding companies, and, as a result of which, they introduced the Amendments in the other place.
My noble friend Lord Shepherd is trying this afternoon to continue this
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process of education of the Government on this matter of a Holding Company. Throughout the discussions in another place the Government repeatedly said that there must be co-ordination of the various undertakings of the Holding Company with those of the Boards at the operational day-to-day level. This is to be found in many parts of the Report of Standing Committee E, and indeed the Report of the various Readings in the other place. The Government also said that their activities will to a limited extent be co-ordinated as a result of the work of the nationalised Transport Advisory Council. So what the Government visualise here is coordination attempted at ground level, and, at the highest possible level, a very weak Advisory Council to say things to a busy Minister about what ought to be done to co-ordinate activities. But, at the level at which the directors will be really effective in controlling policy, nothing is to be done which would ensure—and I use the word "ensure" with some stress—co-ordination.
Most of your Lordships know very much better than I do what happens in private industry when one undertaking desires close co-operation with another, without actually merging. They do not just say at board level, "Why not let your local people work more closely with ours, for our interests are mutual and do not clash in these matters?" Neither do they say, "There is an advisory committee of the F.B.I.", or some other body, "that might help us in this connection, even though it has no real power." What they actually do is to come to an arrangement to exchange directors in order to ensure close co-operation. They effectively interlock their companies at the board level, the place where real control is exercised over their undertakings.
As I am sure noble Lords will know, one needs to spend but a few minutes in the Library, with the Stock Exchange Official Year Book and the Directory of Directors, to see how much of this interlocking there is at board level in private industry. I spent some little time there this morning, and although I will not quote instances, I found many examples of Members of this House who are, in fact, on boards whose interests are interlocked with other boards by means of

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interlocking directorates. Such an interlocking, it seems to me, is in accordance with all the experience of industry in this country and other countries. I am saying nothing against this. I am not saying that this ought not to exist. I am not saying that it is not a proper and wise thing to do, where boards have these mutual interests. But what I am saying is that, in relation to the transport undertakings which we are here discussing, we ought to apply precisely the same principle; that there should be interlocking directorships at this level, which is the Holding Company level.
If the Amendment on the Order Paper were accepted by the Minister to-day, we should be ensuring that, as the noble Lord, Lord Mills, said just now, it would be possible for the Minister to direct somebody to deal with a certain situation—and it could, in fact, be done more easily and better in this way than by a direction, in the form of a statutory instrument or something of that sort, which might have to be submitted to the other House. If the Government want co-ordination between undertakings they should ensure that the directors are looking at the problem in the right way. That is the purpose of this Amendment, and I support it.
LORD MILLS: As the noble Lord, Lord Shepherd, has said, Amendment No. 88 paves the way for Amendment No. 90. I am very glad that the noble Lord, Lord Champion, went on to educate the Government—or at any rate a member of the Government—in what they should do. There is a lot of horse-sense in what he says and I suggest that the things he wants are very likely to happen. But that is a very different thing from saying: "It shall be so." The Minister has power, under Clause 29 (3), to appoint the directors of the Holding Company from persons of experience suitable to the duties they have to carry out; but he also has to have regard to the desirability of including among them those concerned with the principal subsidiaries of the Holding Company. This seems to be an eminently suitable provision.
I quite fail to see—if the noble Lord will forgive me for saying so—the common sense of Amendment No. 90. It is surely the Minister's duty to see that the board of the Holding Company is
306
competent to carry out its duties. That must be the first consideration. It may well be that suitable persons will be found in the other Boards, but surely to require that there must be representatives of the other Boards which are set up by this Bill limits the power of the Minister to ensure that the board of the Holding Company is the right one. To suggest, as this Amendment does, that the directors themselves, or the directors representing the Boards, should themselves have powers to appoint alternates to the board, I find to be wholly irresponsible. The suggestion at the end of the Amendment adds nothing to the powers of the Minister as already provided.
LORD SHEPHERD: Is it not customary in large public companies for alternate directors to be appointed to represent the views of the body?
LORD MILLS: I think it is very unusual, except when directors are resident in another country; or when they are resident in this country and the business is in another country. As I was saying, the Minister already has the power to deal with the point covered by the end of this Amendment, in just the way that the Amendment suggests. I think it is far better, in the interests of getting the right board and a good board, to leave the clause as it is.
LORD SHEPHERD: I am not entirely convinced, but in view of the time I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
5.7 p.m.
LORD SHEPHERD LORD SHEPHERD moved to leave out subsection (7). The noble Lord said: May I speak briefly to this Amendment? We had a considerable discussion about the restrictions placed upon the Boards in the operation of their workshops and in their manufacturing capacity, and ultimately were forced to go to the Division Lobby to express our view. That is one case. But we are now dealing with the Holding Company. It seems quite a mockery when the Government say, as they do, that the Holding Company shall operate as if it were a commercial enterprise, and then seek to impose restrictions upon it as to the use, application and development of its objects. If it is the intention of the

307
Government that these shall be commercial companies, that they shall compete with other commercial companies in the private field, why do the Government put restrictions upon them? It makes a mockery. These companies have this capacity, and the Holding Company should not be instructed to prevent the use of it. In these circumstances I must tell the Government, anticipating as I do their reaction, that as a matter of very great principle we shall have to take this Amendment to a Division. I beg to move.
Amendment moved—
Page 27, line 41, leave out subsection (7).—(Lord Shepherd.)
LORD MILLS: We have already debated this particular matter at very great length, in connection with any extension of the power of the Boards to manufacture for anyone but themselves or for one another. I do not think I should add to all that has been said about this. We have deliberately taken the line that the Boards should be concerned with what they are asked to do, and should not indulge in trade outside their functions. If the noble Lord wishes to take this Amendment to a Division, I can only sit down and await the result.
LORD SHEPHERD: Can the noble Lord help? What does the Bill mean when it says that the Holding Company and its subsidiaries should behave as if they were engaged in commercial enterprise? Surely it means that they should be an enterprise; that they should develop and use their assets and facilities to the advantage and, as the Minister has said in another place, for the interest of the public first. Their position is quite different from that of a nationalised Board because a nationalised Board has not been set up purely and simply as a commercial undertaking. Here, the Minister has said that these subsidiaries and the Holding Company shall operate for the maximum advantage of the public. Why, then, do the Government put on these restrictions? Their position is quite different from that of the Board.
LORD MILLS: I can reply only that these companies have always been restricted. In fact, for certain of them there was a particular output laid down
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in the Act of 1947. All we are seeking to do is to keep the position as it is.
LORD WALSTON: May I ask if this would apply in the following circumstances? It seems to me that, if so, it would create a rather ridiculous situation, and I think that, as the Bill now stands, it could apply in this way. If the Holding Company owned an hotel which had some land and some potatoes were grown on that land for use in the hotel, and if there were some surplus potatoes, is it right—and, as I read it, it is in fact right—that they would be debarred from selling those potatoes to anybody else? It is something that they produce, and the Bill says they can be used only for their own business. I grant you that that is not a very important situation, but it seems to me that it is something that could happen and that seems quite ludicrous. I am quite sure there are many other far more important and more wide-reaching examples of this sort of thing that could happen. Although I will not repeat the arguments, I must say that I agree entirely with my noble friend, that to hamstring a public company, a public enterprise in this way under the guise of making it competitive and businesslike, and to forbid it those facilities for making a profit which are open to any other company, seems to be loading the dice quite unreasonably heavily against any success that might come about under this new organisation.
LORD MILLS: I would find it difficult to discover a more hypothetical question. In the first place, the Holding Company does not, and it is not intended that it should, own hotels; they are a matter for the Hotels Board. In the second place, I should think the consumption of potatoes on the railways is quite adequate to take care of any potatoes that might be produced.
LORD SHEPHERD: But it is a fact, is it not, that in carrying out its duties the Holding Company can go into operations other than in the field of transport? The word "transport" is merely part of its name. Subsection (6) (b) says that it may
"… form, promote and assist companies,"
but it does not say that they shall be transport companies. Surely they could

309
go into the hotel business if that were necessary for their road transport business.
LORD MILLS: Yes, I quite agree. I am afraid I was rather led away from the subject by the mention of potatoes. But we are dealing with the power of
LORD MILLS: I beg to move.
Amendment moved—
Page 28, leave out lines 5 to 10.—(Lord Mills.)
5.24 p.m.
LORD GRENFELL LORD GRENFELL moved, after subsection (7) to insert:
"( ) Notwithstanding anything in Part I of this Act or in any subsequent provision thereof or in any scheme order or regulation made under this Act or in the case of a subsidiary of the Holding Company being a limited company anything in the Memorandum of Association thereof and without prejudice to the provisions of subsection (7) of this section the Holding Company and its subsidiaries or any of them shall not construct manufacture or produce otherwise than for the purposes of experiment or research:

(a) in any one calendar year chassis for road vehicles so that their total production

the company to manufacture or produce things other than for use in their own business.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 26; Not-Contents, 57.

CONTENTS

Ailsa, M.

Fraser of North Cape, L.

Silkin, L.

Amulree, L.

Henderson, L.

Sinha, L.

Amwell, L.

Kenswood, L.

Summerskill, B.

Burton of Coventry, B.

Morrison of Lambeth, L.

Walston, L. [Teller.]

Champion, L. [Teller.]

Ogmore, L.

Williams, L.

Citrine, L.

Rea, L.

Williamson, L.

Colwyn, L.

Sainsbury, L.

Wise, L.

Crook, L.

St. Davids, V.

Wootton of Abinger, B.

Douglas of Barloch, L.

Shepherd, L.

NOT-CONTENTS

Ailwyn, L.

Elliot of Harwood, B.

Merrivale, L.

Amherst of Hackney, L.

Forster of Harraby, L.

Mills, L.

Ampthill, L.

Fortescue, E.

Milverton, L.

Atholl, D.

Gifford, L.

Montgomery of Alamein, V.

Balfour of Inchrye, L.

Goschen, V.

Newall, L.

Bathurst, E.

Grenfell, L.

Newton, L. [Teller.]

Bethell, L.

Hailsham, V. (L. President.)

St. Aldwyn, E. [Teller.]

Boston, L.

Hawke, L.

St. Oswald, L.

Brecon, L.

Horsbrugh, B.

Salisbury, M.

Buckinghamshire, E.

Howard of Glossop, L.

Somers, L.

Carrington, L.

Iddesleigh, E.

Strathcarron, L.

Chesham, L.

Kinnoull, E.

Strathclyde, L.

Colville of Culross, V.

Lambert, V.

Stuart of Findhorn, V.

Conesford, L.

Lansdowne, M.

Tedder, L.

Crathorne, L.

Long, V.

Templemore, L.

De La Warr, E.

Luke, L.

Teynham, L.

Denham, L.

McCorquodale of Newton, L.

Tweedsmuir, L.

Dundee, E.

Margesson, V.

Waldegrave, E.

Ebbisham, L.

Massereene and Ferrard, V.

Wolverton, L.

On Question, Amendment agreed to.

of such chassis for that year taken together exceeds their current capacity namely 1,073 chassis;

(b) in any one calendar year bodies for road vehicles so that their total production of such bodies for that year taken together exceeds their current capacity namely 1,200 bodies;

(c) major components for road vehicles which are not required either—

(i) for a chassis to be manufactured by the Holding Company and its subsidiaries or any of them; or

(ii) as replacements in chassis which have been manufactured either by the Boards the Holding Company and their subsidiaries or any of them or the Commission or by the person theretofore carrying on any undertaking or part of an undertaking acquired by the Commission."

The noble Lord said: This Amendment needs a little explanation, but it is very important. The 1947 Transport Act imposed a limit on manufacturing quotas of the B.T.C. as follows: 1,250 chassis; one-fifth of their requirements for bus

311
and coach bodies; and one-quarter of their requirements for bodies of other road vehicles. The chassis are at present made by Bristol Commercial Vehicles Limited, the bus and coach bodies by Eastern Coach Works Limited, and other bodies by Star Bodies, all of which companies were acquired at that time by the B.T.C. as part of the Tilling Group. Figures showing the current production and potential capacity were given by the Parliamentary Secretary to the Minister of Transport, Mr. John Hay, at the twentieth sitting of Standing Committee E as follows: Bristol Commercial Vehicles production, 1,000 per annum, capacity 1,078 per annum; Eastern Coach Works, 750 and 750 respectively; Star Bodies, 300 and 450 respectively. This indicates a production of 1,000 complete vehicles and 50 additional bodies, a potential of 1,073 complete vehicles and 127 additional bodies.
The current annual requirements of the concerns at present operated by the B.T.C. for commercial vehicles, based on the average of the numbers put into service per annum during the six years 1955–60 inclusive, are as follows: public service vehicles (in other words, buses and coaches), 1,023; articulate motor units, each with a trailer (that is, the towing vehicles with the trailer, and also the rigid commercial vehicle and the ordinary commercial vehicle with trailer) together 2,338; tractors, 388; additional trailers, 2,389; making a figure of 6,138 vehicles in all. These figures show that production capacity of these concerns would have to be expanded to nearly six times their present level in order to take full advantage of the powers given to the Holding Company under this Bill.
The Bill, as originally drawn, allowed the manufacturing companies I have mentioned to manufacture load vehicles for sale on the home market and for export, but on Third Reading in another place, the Minister of Transport moved an Amendment, which was accepted, which stopped them from doing so, and he gave them powers only to sell to the four Boards or their wholly-owned subsidiaries. I have already mentioned that the potential of the three companies concerned under this Bill will be increased sixfold. While it is appreciated that Clause 9 contains provisions for overall Ministerial control, these provisions are
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considered hardly satisfactory for the following reasons: (1) they would be of little effect in the hands of a Minister who favoured nationalisation, who would be able to take advantage of the provisions of this clause to extend nationalised manufacture to the limit.
LORD SHEPHERD: May I help the noble Lord? We would not bother to use this Bill; we would find another.
LORD GRENFELL: Secondly, the commercial quality of the undertakings concerned would depend on the personal views and preferences of the particular Minister empowered. This would render long-term planning impossible, and is therefore contrary to the national interest. Should the expansion in manufacture be fully carried out, an estimated capital cost of well over £20 million is envisaged. It is not, in my contention, the job of a nationalised industry to export; private enterprise is far more suited to take the risks of finding capital to do this. For this reason, it is absolutely right that the Minister should have refused the Holding Company the right to export.
But it would be, in my opinion, utterly wrong to spend over £20 million of public money in removing from private enterprise the cream of the home market of vehicles of this type. It is well known that, in order to obtain a flourishing export trade, a home market is essential; and at this moment, when exports are so badly needed, it would indeed be unfortunate if prospective buyers from overseas were to find leading undertakings in this country using buses made in nationalised factories rather than by such well-known firms as Leyland and A.C.V. It is far better that the main manufacturing potential should remain, as at present, in the hands of private enterprise, who have the know-how and ability to earn the foreign exchange which we need so badly. For this reason, I am asking that Her Majesty's Government should limit the production of the Holding Company to the figures as shown in my Amendment, which are the productive capacity of these companies to-day. I trust that this Amendment will be agreed to. I beg to move.
Amendment moved—
Page 28, line 10, at end insert the said subsection.—(Lord Grenfell.)
VISCOUNT GOSCHEN: The noble Lord who has moved this Amendment has given the Committee all the facts and figures. The noble Lord opposite is glad that he has done so. Several times during the Committee stage noble Lords on these Benches have felt worried because this Bill gives extra powers and opportunities to nationalised undertakings. This is another such case. As the noble Lord said, under the 1947 Act quotas were imposed on the British Transport Commission. Under this Bill, the manufacturing companies will become subsidiaries of the Holding Company and the quotas will go. That will be replaced by "flexible ministerial direction." This Amendment does not seek to denationalise these companies and cut down their present production. It simply asks that they should be allowed to manufacture only to the full extent of their present capacity and that Government funds should not be expended in providing capital to increase their capacity. I support the Amendment.
LORD MILLS: I have listened carefully to the case put forward by the noble Lord, Lord Grenfell, and to the support given to that case by the noble Viscount. I do not think that we should be right to do what they suggest. It does not seem appropriate to start these companies off under the Holding Company with rigid statutory restrictions on the actual number of units they can produce. A quota of 1,073 chassis and 1,200 bodies is an arbitrary restriction, which could easily become outdated with changing circumstances. The Minister has already indicated in another place that these companies shall be continued more or less on the present scale, and I can give a clear assurance that it is not the Government's intention that the productive capacity of these companies should be materially increased.
I noted the noble Lord's reference to the fact that there might in time be another Government and another Minister; but, as the noble Lord, Lord Shepherd, indicated, if another Government wanted to take a different line, they could do so. My right honourable friend the Minister of Transport has adequate powers of direction under Clause 29 (4) to control the manufacturing activities and output of these companies and to ensure that the assurance I have given is met. He also
314
controls the capital available to the Holding Company for capital investment purposes. My right honourable friend also said, on Third Reading in the Commons [OFFICIAL REPORT, Commons, Vol. 658 (No. 100) col. 588]:
"There is no need, on grounds of public policy, to keep these three companies in national ownership if an acceptable price is offered for them."
In view of those statements, I suggest to my noble friends that there is no need and, indeed, it would be undesirable, to restrict output in the way they suggest.
LORD HAWKE: I am sure that my noble friend will hear the Minister's reply with considerable disappointment. Of course, he is not the Minister in that Department, and I wonder whether the Minister of Transport fully realises the problem of the export of heavy vehicles and buses, which is one of our best. Fleets of Leylands are to be seen in many capital cities of the world. It requires the most intense competition to get these orders, and not only have the firms to compete in price against many other nations, but frequently they also have to offer long-term credits, for some of the capital cities are not such good payers as our own great cities. If anything, there is a surplus capacity in this industry at the moment, and if these great export firms have to fear the whole time that the position of the home market, which they have always enjoyed, is liable to be encroached upon by a State-owned company (with all the best will in the world, the general public is deeply suspicious of the manufacturing and accounting of State-owned companies), they will feel that the best of the home market might be taken away from them by the use of public funds working at what commercial firms would call a loss.
LORD SHEPHERD: Could the noble Lord help us? What does he mean by saying the public are "deeply suspicious of the accounting of State-owned companies "?
LORD HAWKE: The public do not know really whether a nationalised manufacturing undertaking is charging up proper costs on its output, as a commercial firm would have to do in similar circumstances. In other words, we do not know whether there is a hidden subsidy from public funds in any manu-

315
facturing firm which is wholly owned by the State. The noble Lord shakes his head, but I assure him that that view is widely prevalent, and it would take a great deal to dispel it. We accept it when my noble friend Lord Mills says that the Minister has no intention of allowing these people to step up their output; but Ministers come and Ministers go. We on these Benches see no reason why a Conservative Government should pass legislation which would make it easier for a Socialist Minister, when the Socialists came into power, to proceed to the socialisation of the manufacture of buses than it would be if he had to carry through legislation of his own. For that reason, I feel that the attitude of the Government is rather disappointing.
LORD SILKIN: If noble Lords have the courage of their convictions, they ought to say that the Holding Company should not be permitted to manufacture at all. The whole logic of the case that has been made is that they ought not to manufacture. But to put down solemnly, in black and white, in an Act of Parliament that the companies are to remain but to make only 1,073 vehicles seems to me to be utter nonsense.
LORD GRENFELL: That is exactly what the Labour Party did in the Transport Act, 1947.
LORD SILKIN: I know. But why does not the noble Lord put forward an Amendment to prevent them from manufacturing altogether? What I have said is that that would be logical from the argument which noble Lords put forward. It would enable Leyland's and all these great undertakings to increase their home production and thereby be in a better position to export. All the arguments noble Lords have put forward are in the direction of cutting this out altogether, not of limiting it. I was under the impression that the purpose of this Bill was to make the British Transport undertakings more efficient.
I would ask noble Lords, with their vast experience of production and industry, whether it really is efficient to allow an undertaking to remain, and then to say to them that they may manufacture only 1,073 vehicles—"You may improve your efficiency; you may increase output
316
per man, but, whatever you do, only 1,073 vehicles." I am sure the noble Lord, Lord Grenfell, will forgive me for asking whether this is not really a silly Amendment, or perhaps I should say an insincere Amendment, because what noble Lords really want is that the undertakings should not manufacture at all. In those circumstances, I hope that the noble Lord, Lord Mills, will be as firm with his own noble friends as he has been with mine.
LORD SHEPHERD: I am glad that the noble Lord, Lord Mills, opposed this Amendment, although I must say that he had rather a different approach. When the noble Lord, Lord Mills, opposes noble Lords on this side he is extremely forthright in his views; but on this occasion he spoke, I think, with an element of regret that the restriction could not be greater. The noble Lord indicates that this is not so, but that is how it seemed to me. As my noble friend has said, noble Lords opposite are really trying to impose an even more savage restriction upon these subsidiaries than is in the Bill. I ask noble Lords again to look at the words that I keep repeating (and no doubt while we are talking about Clause 29 I shall continue to do so), that the Government wish these subsidiaries to be commercial enterprises. Enterprise and restriction do not go together.
I appreciate that noble Lords are speaking from a particular interest. But the interest of the car and the bus manufacturers is not served by placing a restriction on the nationalised Boards or the subsidiaries. There are wide open markets for these companies to go after, and some have gone after them with considerable success. Perhaps with a little more "go", particularly in the Continental markets, they could do even better. They will not be served by being provided with a safe home market. It is quite right that the nationalised undertakings or these subsidiaries should be allowed to use their facilities and assets to the maximum advantage, and anything that is done against that is quite cynical when one looks at the terms of this clause, particularly the first paragraph, about giving greater commercial freedom to these Boards.
LORD BALFOUR OF INCHRYE: I am one of those Members of the Committee who have sat through most of

317
the proceedings on the Bill and remained silent. But I cannot remain silent any longer after the remarks of the noble Lords, Lord Silkin and Lord Shepherd, who said that restriction and enterprise do not go together. They are members of the most restrictionist Party that there is. They are the fathers of demarcation, say, in the shipbuilding industry, where one group of men are allowed to put in rivets, but another man working alongside them is not. If demarcation is allowed in trade unionism, surely it is not unreasonable to have demarcation in manufacture as between possible State manufacture and private enterprise. I quite see the point of the noble Lord, Lord Mills, about the undesirability of laying down the number of 1,073 vehicles.
LORD SILKIN: Does the noble Lord consider that state of affairs desirable?
LORD BALFOUR OF INCHRYE: No, I do not.
LORD SILKIN: Apart from abusing my Party, does he really suggest that that is a desirable state of affairs?
LORD BALFOUR OF INCHRYE: What I am suggesting is that those who have restrictionist policies which in many directions they do not stand up against in their Trade Union Congress should not come here and talk about the evils of demarcation as between private manufacture and nationalised manufacture. My noble friend Lord Grenfell made a sound point in saying that an export industry must essentially depend upon a secure and healthy home industry. What I suggest is that there should be some wide outside boundary, possibly bigger than the figure mentioned in the Amendment, which would give some assurance to the private enterprise manufacturers who are having to go out and face heavy competition in the world, that their home ground will not be cut from under their feet. If between now and the Report stage the Minister could consider the insertion of some boundary beyond which these State-owned enterprises should not go, then I think the point would be met in a reasonable way.
LORD STONHAM: I hope that the noble Lord, Lord Mills, will not accede to the suggestion just made by the noble
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Viscount. It seems to me an extraordinary situation when the noble Viscount——
LORD BALFOUR OF INCHRYE: Not a Viscount; just a humble chap!
LORD STONHAM: I have just promoted the noble Lord because of what I regard as a remarkable piece of effrontery in accusing us of following retrictive practices when the whole purpose of this particular Amendment is to impose the most rigid restrictions on the nationalised undertakings. The rest of the noble Lord's remarks I thought were completely unrelated to the Amendment.
My reason for intervening in this discussion is the remark of the noble Lord, Lord Hawke, with reference to the facility (these are not his exact words, but I think it is the sense of them) possessed by publicly-owned undertakings for, as it were, concealing what their true costs are. I should have thought that no other undertaking was subjected to such minute scrutiny, so far as its accounts are concerned, as are publicly owned enterprises. Each of them, for example, has a day in Parliament devoted to debating its annual accounts; each of them is liable to be subjected to scrutiny by the Estimates Committee, and almost certainly by the Public-Accounts Committee. I have myself in successive years sat on the Public Accounts Committee in another place, and I am aware of the relentless questioning and scrutiny which takes place on these costs in the accounts. They come under the Comptroller and Auditor General. I should not have thought there was any kind of scrutiny which was more penetrating than that of Parliament.
LORD HAWKE: Perhaps I may make a comment While this matter is still fresh in our minds. Where you have an enterprise which is selling goods to national departments and perhaps in the commercial field, it is there that the disquiet arises, because it is felt that it may be putting on to the nationalised side overheads which, strictly speaking, ought to be carried by the goods they are selling into the commercial market. That is where the fear lies.
LORD STONHAM: That is a valid point, but it does not apply to the Railways Board, any more than it applies to I.C.I. I would defy anyone to get hold of I.C.I. accounts and ascertain which particular major enterprises or departments were showing a profit and which were not. Therefore, that argument really does not hold any water at all. The fact remains that the accounts and undertakings of public enterprises are subject to the most searching analysis possible, and the accounts of privately owned enterprises cannot possibly be submitted to the same kind of scrutiny.
The other point made was that it is only right that these privately-owned enterprises should have every possible chance to develop their home markets as a buffer, a basis, for their costs, so that they can compete to better advantage in export markets. That again is an extremely sound argument. But, unfortunately, this Bill is not taking away from the private undertakings anything at all which they possess at the moment. It is, much to my regret, to a very large extent limiting the possibilities for expansion by the organisations which will be controlled by this Holding Company. I feel that, as my noble friend Lord Shepherd pointed out, that is the very opposite of the intention expressed in the Bill—that the Holding Company should be run as a commercial undertaking. In other words, the Bill as it stands now, without the noble Lord's Amendment, says that it is going to be a commercial undertaking, but there are a great many shackles put on it which no commercial undertaking would tolerate.
Finally, noble Lords opposite have expressed the fear that these undertakings will be run to the detriment of privately owned enterprise, and that they will have the use of public money for this purpose. Those protests would have been infinitely more effective if noble Lords opposite had been vociferous in their protests when we were considering the loans on special terms to Colvilles, and all the various kinds of assistance which have been given by public money to private undertakings. I very much regret that noble Lords opposite cannot see the advantage in supporting public transport and giving all possible help to a publicly owned undertaking. If they cannot, then that is unfortunate. I hope
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that the noble Lord, Lord Mills, and the Government, will not give way one inch, and will not impose any further shackles in addition to the heavy ones which are already, under the Bill, imposed on this Holding Company.
LORD TEYNHAM: I think we may be missing the real reason for this Amendment, and the whole point of it. I am told—I may be wrong—that it would cost something like £20 million to expand the Holding Company's industry in order to manufacture their requirements. That would take place with public money at a time when private enterprise is running below capacity. I think that is the real point of the Amendment, and I hope that the noble Lord in charge of the Bill will look at the whole matter again.
LORD SHEPHERD: Are we not setting up a Holding Company board to make these decisions? Why should this Committee, without the facts, have to make a decision?
LORD MILLS: I should like to remind your Lordships that when the three companies are transferred to the Holding Company by reason of Clause 29(7) the output of these three companies will be able to be sold only to one or other of the four statutory Boards or to other subsidiaries of the Holding Company. In view of that, we have felt it right not to put any quantities in the Bill. We have given rather positive assurances that it is not the intention to expand these companies, but to let them function as they are now. I do not think the noble Lord, Lord Shepherd, quite did me justice when he said that he felt I was taking this attitude with regret. I have no regrets. I think it is the right thing. If I did not, then I should be after my right honourable friend to alter it. I would ask my noble friends, in view of the assurances that have been given, and the restriction on the companies that they may supply only the nationalised Boards and other nationalised companies, to withdraw their Amendment.
LORD GRENFELL: Since the assurances that have been given are what we are asking should be put in the Bill, it would be much easier to put them in the Bill. But as it is rather late, and

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as I want to think this matter over and read carefully what has been said, to see if there is any other way of dealing with this situation, I beg leave now to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 29, as amended, agreed to.
Clause 30 agreed to.
Clause 31:
Distribution of Commission's assets
31.—
(6) Notwithstanding anything in the foregoing provisions of this section, there shall be transferred to—

the Railways Board,

the Docks Board,

the Inland Waterways Authority, and

the Holding Company,

the securities of the bodies listed in Parts I, II, III and IV of the Fourth Schedule to this Act respectively (being securities beneficially owned by the Commission), and the rights and liabilities specified in Part V of that Schedule so, however, that where such securities are beneficially owned by the Commission, but held by a nominee, this subsection shall operate only to transfer the beneficial interest in the securities.
LORD CHESHAM: I beg to move the next Amendment.
Amendment moved—
Page 31, line 1, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
LORD CHESHAM: I beg to move this Amendment.
Amendment moved—
Page 31, line 13, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
On Question, Amendment agreed to.
5.58 p.m.
LORD TEYNHAM: moved, in subsection (6), to leave out "being securities" and insert "so far as". The noble Lord said: With the agreement of the Committee, I should like to debate this Amendment with Amendment No. 102, and also Amendments Nos. 233, 235, 236, 237, 238, 239, 240 and 245 to the Fourth Schedule, which are consequential on Amendment No. 102. The object of these Amendments is to main-
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tain and foster the well-proven system of road-rail partnerships, financial and working agreements between the large bus interests and the railways, which were created as long ago as the year 1929 with the declared object of promoting co-ordination between road and rail.
I should like for a few minutes to trace the history of these partnerships, because I think it is necessary. In 1928, the main line railway companies, concerned by the very large amount of traffic which they alleged was being taken away from them by the bus interests, obtained statutory powers to run bus services themselves through a series of Private Acts. The railway companies stated that their main object in seeking these powers was to put themselves into a position to supply the public with the most efficient and economic transportation services, whether by rail or by road, or partly by one and perhaps partly by the other. But, in fact, after obtaining their powers, the railway companies did very little in the way of providing bus services, and the reason, I think, was that both the railways and the bus interests soon came to realise that the best thing they could do was to get down and negotiate among themselves; as in fact they did. Agreements between road and rail followed so quickly upon the negotiations that the road and rail interests were able to anticipate the problems of rationalisation which the 1929 Royal Commission on Transport had been set up to achieve.
The agreements made with the railway companies were based upon equal financial partnership in the operating companies concerned, the partners being, on the one hand, the railway company or companies operating in the area concerned and, on the other, the parent bus interest. In each case shares were transferred from one side to the other, or were procured to be transferred from third parties, so that each partner held the same number of shares in the operating companies concerned. Thus in some cases the shareholders would work out in this form: the bus company would have 33⅓ per cent., the railway company would have 33⅓ per cent., and an outside interest 33⅓ per cent. In other cases it worked out on a 50–50 basis. As to the directorships of the bus companies involved, each partner had a right to

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nominate an equal number of directors. These partnership agreements were accompanied by agreements, which are mentioned I think in Clause 4 (2) and elsewhere in the Bill, and it is perhaps important that we should consider their contents.
These agreements were of two kinds: parent agreements and working agreements. The parent agreements were made between a parent bus interest, on the one part and a railway interest, on the other; and the working agreements were made between the parent bus company, on the one part, and one or more of the railway companies, on the other. Working agreements provided for the co-ordination of road and rail facilities for passenger and other purposes, and established separate standing joint committees for each operating company and the appropriate railway company. One particular interesting point of these agreements, as I have mentioned before, is a clause which enabled railways to compel a bus company to run an unremunerative service in substitution for a railway service which had ceased because it was uneconomic to the railways. This clause has been invoked on a number of occasions.
Under the Transport Act, 1947, the British Transport Commission took over the benefit and burden of these agreements, together with former railway company shares. Under Clause 31 of this Bill and Part IV of the Fourth Schedule the British Transport Commission's shares in the British Electric Traction Group of Bus Companies, which is a very large owner of buses, are to be transferred not, as might be expected, to the Railways Board but to the Holding Company, which has no connection whatever with the railways.
Moreover, the Bill proposes the transfer to the Holding Company of all the British Transport Commission's shares in the Tilling and Scottish bus companies, instead of, as provided by these Amendments, one half to the Railways Board and one half to the Holding Company, which I suggest would lead to much better co-ordination. Not only is the existing partnership in the British Electric Traction Group, which has worked very smoothly indeed for 30 years, to be destroyed, for no apparent
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reason, but it is suggested that this should be the same pattern over the whole country. There is no doubt that road and rail co-ordination, and therefore, of course, the general public, must suffer if this is done. Further, I think it is essential that both road and rail have a commercial interest in such matters as the display of one another's timetables and the inter-availability of tickets.
So far, there has been mention only of the damage which the Bill's proposals would cause to road and rail co-ordination, but there is also the commercial angle. It should not be thought that there is any question of forcing upon an unwilling Railways Board a worthless bag of assets, because the shares are, in fact, of considerable value. Moreover, I believe that in the case of the British Electric Traction Group they still stand in the British Transport Commission's books at their 1929 value. So these shares, I would say, give a very high return on book value and could make a very valuable contribution to the finances of the Railways Board.
I think it was said during Second Reading that the Railways Board and its employees should be left free to concentrate upon the railways, and should not be fettered by commitments in other directions. Proper co-ordination with bus services is, however, an integral and essential part of the job of running railways and is likely to increase in degree with the closing down of more and more railway stations. This suggestion is really inconsistent especially with the explicit powers contained, I think, in Clause 4 for the railways to operate bus services themselves, particularly when taken in conjunction with the proposal to free the railways from the non-competitive covenants contained in the parent agreements which I have already mentioned. One thing safely to be said about the transfer to the Holding Company of these shares is that the railways will cease to have any interest in them at all. Road-rail partnership and financial partnership is a system which has proved itself over the years, and one that has stood the test of time. I suggest that it would be both wrong and un-businesslike for the Government to discard the principle now unless they have very much better reasons to put forward to-day for doing so. I beg to move.
Amendment moved—
Page 31, line 16, leave out ("being securities") and insert ("so far as").—(Lord Teynham.)
VISCOUNT ST. DAVIDS: I rise to support the noble Lord in his Amendment, because it seems to me to be so important, both for my native part of the country, Wales, and also for those other fringe areas such as Scotland, the West Country and other places where rail services are to be so very greatly reduced. In all those areas surely there will be a very great need for far more co-operation between road and rail services than ever before, and we must have some method by which there is an extremely close contact. We have seen in the past what happened when, for any particular local reason, a bus service and railway service became out of chime and ceased to co-operate with each other. The result in an area like Wales is simply disastrous. We must have some system of holding these together, in order that any form or system of transport shall continue at all in these remoter areas.
6.10 p.m.
LORD MILLS: These Amendments would, I suggest, radically change the purpose and function of the Holding Company in relation to the bus activities to be grouped under it, and would be contrary to the announced intentions of the White Paper (Cmnd. 1248) which envisages, in paragraphs 23 and 24, that all the wholly-owned bus companies of the Commission (that is, the Tilling and Scottish groups) will be placed under the direct control of the Holding Company. In relation to the Tilling and Scottish bus companies, the Holding Company would not have complete control and could exercise its supervision and administration of these bus companies only in collaboration with the Railways Board. It seems to me that if these Amendments were accepted—that is, if the principle were conceded that an equal holding between the Railways Board and the Holding Company was necessary to ensure adequate co-ordination between road and rail—it could equally be argued that it should be extended also to the British Road Services Companies, and perhaps even the shipping companies. If the principle were pushed as far as that it would entirely transform our conception of the purposes and functions of the Holding Company
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and reduce it to the status of a purely shareholding body.
The noble Lord, Lord Teynham, mentioned the question of the railways devoting their main energies to the provision of their own services, and I am sure that one effect would be that that possibility would arise. To ensure adequate co-ordination, it does not follow, I suggest, that the railways need to have a financial stake in the bus companies. As the noble Lord told us, there have been and there are in existence large numbers of agreements ensuring coordination where it is necessary. The main instruments of day-to-day coordination are the working agreements between the railways and the bus companies, and they should continue. In fact Clauses 4 (1) (b) and 4 (2) (b) provide expressly for the Railway Boards to be able to continue these agreements. The Bill does not therefore destroy the existing partnership between the railways and the British Electric Traction group which, as the noble Lord has said, has existed for over 30 years.
I would also remind your Lordships that there is intended to be a Nationalised Transport Advisory Council to assist the Minister in the co-ordination of policy between the new Boards, including the Holding Company. The Chairmen of the Holding Company and of the Boards will be on that Advisory Council. The Railways Board have been set a very great task indeed and we are most anxious that they should be as free as possible to grapple with the severe difficulties with which they will be concerned. I have been struck all along with the fact that that must be their main concern, and that it should be a matter dealt with in the proposals in this Bill that they can make agreements as to how far there should be railway representation and at what levels on the Boards of the operating bus companies controlled by the Holding Company or on the boards of the British Electric Traction companies in which the Holding Company will hold equal shares with the British Electric Traction group. These decisions will have to be taken by the Railways Board and the Holding Company in the light of their particular needs and circumstances. The Bill should not, in my judgment, by vesting bus companies shares in the Railway Boards, impose an obligation on the

327
Railways Board to appoint railway directors to the bus companies to look after the shareholding interests. I see no reason why the agreements which have worked so well should not continue to work well. I think this Amendment would not be a step forward and I would ask the noble Lords to reconsider their position.
LORD HAWKE: I do not know whether my noble friend is beginning to feel a little tired (if so, I have sympathy with him), but I thought he sounded singularly unenthusiastic for his case. He of course advanced the White Paper. Ministers of the Crown from time immemorial always quoted a Royal Commission if one happened to agree with their case, but a White Paper is the next best thing. But if they did not want to carry out the recommendation in these Blue or White Papers they never bothered to do so. Of course it is the Minister of Transport to whom we are speaking, through my noble friend. I feel the Minister of Transport has completely failed to understand the nature of this case. All over England buses are going to substitute rail in many places and the most convenient method of doing it will be by the partnerships that already exist between the railways and the bus companies, both the wholly-owned and the partially-owned ones.
I cannot see that railways can possibly sit down and discuss with bus companies the question of substituting bus services for railway services unless each has a financial stake in the matter. The sensible thing to do when the lines of the noble Viscount, Lord St. Davids, are closed down, as doubtless they will be, will be to send for the board of the half-owned or wholly-owned bus company in that neighbourhood and say: "What can we best devise for the benefit of passengers and what will be the best thing, to run a rail here and a rail there or a bus here or a bus there?" That cannot possibly be done if the shares are in the hands of the Holding Company. The lower tier of co-operation on what one might call the working agreements which has taken place between actual operating staff of the railways and the buses is really a totally different thing. It is a question of seeing what time the bus is to start and when it is to finish, and that sort of thing. It
328
is not a question of deciding policy as to where buses will substitute for rail and so on. That will be the main function, and that is why I think it is so vital that the railways should continue to hold their shares in this new method of transport.
I, quite frankly, simply cannot accept the argument that the railway men will not have the time to carry on this work by sitting on bus boards. Not only is it going to be a vital part of rail work in the future but also the calls upon the time of these people are not very great. In the British Electric Traction group there are 54 directorships held by railway people on those boards, and at a rough count I see that 44 men hold those directorships. So a vast majority of them are held by a single man, and I am told that the boards, as a rule, meet every other month and sit for about two hours. I think the argument that those two hours every other month are so going to divert the minds and attention of these great railway men from the running of the steel rails that the railways are going to suffer seriously, is not an argument to which one can attach great importance.
I have a list of their titles. They are all executive officers of the railway and all of fairly senior grades. There are some general managers, some assistant general managers, some accountants, a director of budgets, and so on. Those are the type of people who are required to take these policy decisions as to whether or not we shall remove a railway line and turn it into a bus route. I think that Her Majesty's Government are making the gravest mistake in digging in their toes on the line that the Minister of Transport has taken up.
6.21 p.m.
LORD STONHAM: I think it is becoming obvious that this will not be the only case in which we shall encounter what I regard as one of the evils arising from the break-up of the British Transport Commission. Immediately we run into problems of how we are to reco-ordinate, as it were, what has been disco-ordinated. But it is at least a relief, so far as I am concerned, to be able to discuss an Amendment which should be decided virtually on technical grounds. There is nothing of pro-public or anti-public ownership in this discus-

329
sion. It is merely a question of what is going to be the best method of ensuring co-ordination between the road and rail services and, in particular, in providing those additional bus services or extensions to bus services which may well be necessary when the railways are curtailed.
With great respect to the noble Lord, Lord Mills, I would say that he did not answer the case which was put forward by Lord Teynham. He has not answered the case put forward by Lord Hawke because he has not yet had the opportunity, but I think he will find even greater difficulty in doing so. One point struck me in what was said by Lord Mills—namely, that if we accept this Amendment and allow the railways to continue to work with the bus companies, why not extend it to the road freight service? Why not extend it to the coastal shipping service? The reason why not is that they are not linked up now. That is a good reason. I do not think that my noble friend can mention one example of this kind of link-up between ordinary commercial road haulage undertakings, long distance road haulage, and the British Road Services. I do not think he can mention any kind of link up between British Railways and commercial shipping services.
So we are talking about only one thing: the link-up which exists between the railway section of the British Transport Commission and the bus companies. That has grown up, as it were, historically, and therefore the decision should be made on technical grounds. I think that there is nothing to the suggestion that this would weaken the Holding Company. The Holding Company will still be able to carry out the functions with which it will be left—of course it will. If the Amendment were accepted there would be a far greater chance of the same people who are co-ordinating now continuing to do so. I think it is important that it should go on at all levels and should continue to be done by the people who are now doing it. We should try to settle this on the merits
of the case, and I would submit that the merits are all with the Amendment.
LORD MILLS: That is an interesting contribution by the noble Lord, Lord Stonham, but the Government take the view that the merits are not all with the Amendment. The merits are in having a Holding Company which has certain defined things to do and which has the control of the companies under it. The noble Lord talks as if the collaboration which has gone on between the bus companies and the railways for years is going to stop. Nothing of the sort. In my view it will continue just as it has always done, to the great benefit of the bus companies and the railways. Again, the bus companies are not lifeless things. They are out to do business. They are out to do the best they can, and their position would not in my view be improved if these Amendments were carried. In fact, there would be difficulties for the Holding Company, and the Government take the view that this Amendment is not a desirable one.
LORD HAWKE: I am afraid that I forgot to say one thing with which I was entrusted. My noble friend Lord Swinton authorised me to say on his behalf that he had been in contact with this close co-operation between the private enterprise and nationalised industry for 30 years. He admired the way that it had developed and worked and deeply regretted its breaking up now. He also regrets that he is unable to be here, owing to a prior engagement in Yorkshire.
LORD TEYNHAM: I must say, if my noble friend Lord Mills will forgive me, that I was not impressed with the argument that he put forward. I do not want again to go through the various arguments which we had earlier. They were gone into fully. In the circumstances, I feel that I must press this Amendment.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 29; Not-Contents, 31.

CONTENTS

Ailsa, M.

Burton of Coventry, B.

Grenfell, L.

Airedale, L.

Champion, L.

Hawke, L. [Teller.]

Amulree, L.

Conesford, L.

Henderson, L.

Amwell, L.

Forbes, L.

Iddesleigh, E.

Atholl, D.

Goschen, V.

Kenswood, L.

Long, V.

St. Davids, V.

Walston, L.

Luke, L.

Shepherd, L.

Williams, L.

Merrivale, L.

Somers, L.

Williamson, L.

Morrison of Lambeth, L.

Stonham, L.

Wolverton, L.

Peddie, L.

Teynham, L. [Teller.]

NOT-CONTENTS

Ailwyn, L.

Denham, L.

McCorquodale of Newton, L.

Albemarle, E.

Devonshire, D.

Margesson, V.

Amherst of Hackney, L.

Dundee, E.

Mills, L.

Ampthill, L.

Forster of Harraby, L.

Newall, L.

Auckland, L.

Fortescue, E.

Newton, L. [Teller.]

Balfour of Inchrye, L.

Fraser of Lonsdale, L.

St. Aldwyn, E. [Teller.]

Boston, L.

Hailsham, V. (L. President.)

Salisbury, M.

Brecon, L.

Hastings, L.

Stuart of Findhorn, V.

Brentford, V.

Jellicoe, E.

Templemore, L.

Chesham, L.

Lansdowne, M.

Waldegrave, E.

Crathorne, L,

On Question, Amendment agreed to.

LORD CHESHAM: I beg to move.
Amendment moved—
Page 32, leave out lines 5 to 10.—(Lord Chesham.)
Clause 31, as amended, agreed to.
Clauses 32 and 33 agreed to.
Clause 34 [Transfer of staff]:
LORD CHESHAM: I beg to move this Amendment.
Amendment moved—
Page 34, line 27, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
LORD CHESHAM: I beg to move.
Amendment moved—
Page 34, line 28, leave out from ("Board") to end of line 29.—(Lord Chesham.)
LORD CHESHAM: I beg to move Amendment No 106.
Amendment moved—
Page 35, line 24, leave out ("any") and insert ("the Board or company or the other").—(Lord Chesham.)
Clause 34, as amended, agreed to.
Clauses 35 to 39 agreed to.
Clause 40:
Railways Board's suspended debt
40.—(1) Part of the commencing capital debt of the Railways Board shall be called the suspended debt and shall not carry any interest and shall not be required to be paid off at a fixed time unless and until the Minister otherwise directs.
6.38 p.m.
LORD HAWKE LORD HAWKE moved, in subsection (1), to leave out "Part" and insert "The whole". The noble Lord said: We now come to the clause which deals with the capital reconstruction of the railways. The total capital liabilities of the railways are approximately £1,600 million, of which £400 million represents working losses which have been capitalised in recent years. The proposal is to write off that £400 million, leaving a balance of £1,200 million. Out of that £1,200 million, £400 million represents investments since 1955, the £800 million being the older investments. It is proposed to suspend the interest on the £800 million and to keep the interest running on the £400 million—that is, the more recent additions. New borrowings are to be at interest.
At the moment, according to the last White Paper (and that may not be up-to-date) operating losses are running at £60 million a year, apparently after depreciation, which in the last published accounts was approximately £25 million, with renewals of permanent way amounting to another £25 million. So they are earning their depreciation on their renewals, but at the same time operating at a loss of some £60 million. The Minister prophesies that at the end of five years the interest charges will be cunning at about £60 million; in other words, to break even after five years Dr. Beeching will have to produce a turn-round of about £120 million from a £60 million working loss now, to pay interest charges of £60 million in a few years time. That takes no account of the requirement in the Bill to set up a reserve fund.
On present running costs it means a saving of very roughly one-fifth; in

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other words, running the railways with one-fifth less men, 400,000 instead of 500,000, or still fewer if they are to be paid more as one must expect over the next five years, because I think one can assume that receipts are not going to be particularly buoyant or elastic as railways are very vulnerable to the increased substitution of oil for coal. If the Government accepted my Amendment, the interest charges would be confined to interest on money borrowed from now onwards; in other words, the interest charges, instead of being about £60 million at the end of five years, would be relieved by putting a further £400 million capital in suspense, which would mean a relief of about £25 million; so that Dr. Beeching's break-even target would decline to something just under £100 million of turn-round from one side of the book to the other. All these are very round figures, but I submit that £100 million turn-round would be a far more realistic assessment of the possibilities of the future, and I think it foolish to chalk up unrealistic interest charges.
Suppose British Railways had been a private railway which had gone bankrupt—and many railways overseas have been in a comparable plight; in fact, I have had some experience in that way. First of all, perhaps two-thirds of the capital would have been in preference and ordinary shares. That represents the £800 million in British Railways which is being put to suspense account. In the City those £800 million would have been regarded as irretrievably lost, and the owners could hope at the best for, perhaps, a little distribution on a sale of the undertaking, in order to buy their consent to the sale. Perhaps £400 million would have been debentures. On these interest would have been suspended. This represents the £400 million on which interest is not suspended by Her Majesty's Government. But a further thing is that debenture holders' representatives would have joined the board, and one of the first things they would have done would be to strip the railways of their valuable unused land and to proceed to realise it for the benefit of the debenture holders. That had some bearing in a short debate we had some days ago.
I think I have said enough to show that private railways in a similar plight
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have been treated more leniently in the City than this Bill proposes to treat the nationalised railways here. Psychologically it would be better to treat the railways more realistically. Many of the staff still believe that the reason why the railways do not pay is that they are paying £45 million a year to the old shareholders. I met that view the other day. If Dr. Beeching can put over the simple fact that all interest is suspended, I believe he will find it much easier to put over his plans. I believe that with this relief, both psychological and practical, he will be able to hit his target. I am sure that the Treasury are terrified that every nationalised industry will come along to demand exactly the same, but in this case they have already written off £400 million and are suspending interest on £800 million, so the principle has already been accepted.
It is only just a question of degree. Is it not better to give Dr. Beeching a chance which he can probably achieve than to set him an impossible task, knowing that in five years time the same process will have to be gone through all over again? I emphasise that I am not asking for the £400 million to be written off, but only held in suspense like the other £800 million. I beg to move.
Amendment moved—
Page 40, line 30, leave out ("Part") and insert ("The whole").—(Lord Hawke.)
THE EARL OF DUNDEE: My noble friend's Amendment proposes that there shall be placed in suspense not only that part of the railway debt which was in existence before 1955 but also the amount incurred by capital expenditure since that date. As my noble friend expected, the figures have altered a little since they were put in the White Paper. The clause as at present worded would place a debt of between £650 and £700 million in suspense, and my noble friend's Amendment would place a debt of £1,570 million in suspense. But the clause as it stands fulfils the Government's proposals in paragraph 41 of the White Paper, that the debt represented by the written down book value of the railways investment since modernisation began in 1955 "should continue to rank as an interest-bearing loan", which we think in present circumstances is reasonable.

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As my noble friend no doubt knows, in a subsequent paragraph of the White Paper, No. 47, the Government recognised that the railways would still be faced with a very formidable task, and it is stated in that paragraph:
"The Government will therefore keep the financial position of the railways under very close review and will make a special review of the position at the end of the five years."
So there will be a review after five years. There will also be an opportunity for a full review of the financial position and prospects, if and when the upper borrowing limit in Clause 19 (3), and the limit on financial assistance to meet revenue deficits, expire. My noble friend has put this on psychological grounds, and I agree there are arguments on both sides. It may be said that the Treasury must pay up anyhow in the end, so why not do it to begin with? But I think it is reasonable to make a distinction between a debt incurred by expenditure on capital improvements since 1955, and the old debt existing before that.
I submit to your Lordships that it is important that the Board's accounts should give an accurate picture of the financial position. If we were to put the whole of the capital debt from the very beginning up till now to suspense account, so that it would not carry any interest, we should then be presenting to the public a misleading picture of the real deficit which the railways were incurring. The justification for putting the old capital, the pre-1955 capital, to suspense, is that it is attributable to assets which are now largely obsolescent. I think it would be a different thing to say that the whole of the expenditure on modernisation since then would not be capable of earning interest. I think it is more in keeping with reality and with honest and realistic accounting to give the public an accurate picture of what is happening and of what the results of the capital expenditure since 1955 have been on the general financial position of the railways.
LORD SHEPHERD: I have a general sympathy with the speech of the noble Lord, Lord Hawke. I think there is a good deal to be said, on psychological grounds, for the point that those we are putting in charge of the new railway
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organisation, certainly for the next five years, should be able to feel that their accounts will reflect the result of their operations. The noble Lord, Lord Hawke, estimated that the Railways Board will have to reduce (if I may put it in this way) their overheads by about £123 million, if their revenue remains the same, in order to make sufficient to pay for the interest on this capital.
LORD HAWKE: And wipe out the working loss.
LORD SHEPHERD: And wipe out the working loss. I suspect that the figure will prove a good deal higher than that. I expect that the revenue the railways now receive will seriously decline with rail closures. The noble Earl, Lord Dundee, said that the accounts should show a true position to the general public. I think that is true; but are we not rather "kidding" ourselves to the extent that the railways will certainly be unable to turn their working deficit into a credit within five years, and to pay their interest? Shall we not, in fact, be creating a further debt which will certainly have to be considered, probably in five years time?
There is certainly a case, I think, for treating the whole of these liabilities as suggested by the noble Lord, Lord Hawke, but I wonder how such an Amendment from your Lordships House would be appreciated in another place. This is a province in which, were we to accept this Amendment, your Lordships House, certainly in Committee, might be under some attack, but I would ask the Minister whether he would give further consideration to this point. I do not know what are the views of Dr. Beeching. This is one of the ways in which our House could perhaps benefit, some-times, by having some of the opportunities that they have in the United States, where Parliament is able to question a senior executive of an organisation. We ourselves, like noble Lords opposite, are unable to know, other than from what Dr. Beeching says in public; but I suspect that the desire of the Board would be that their capital should be so constructed that sufficient time would be given to them to turn this working deficit into a reasonable, substantial profit. Then, of course, the Treasury would not be losing, because any profit

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that arose could be paid over smartly to the Treasury. I do not think we should be night to accept the Amendment, but I hope Chat the noble Earl will consider the points that have been made this evening.
LORD HAWKE: I made some inquiries about our constitutional position in this regard, and I gather this action would not be without precedent. However, I did not seriously expect my noble friend to accept my Amendment: I moved it as a gesture, in an attempt to lead the Treasury out of "Cloud-cuckoo land" by the hand. If I am proved to be wrong and Dr. Beeching proves them to be right, I shall be only too pleased. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 40 agreed to.
Clause 41 agreed to.
Clause 42 [Income tax: provisions for determining capital allowances for the Boards]:
LORD CHESHAM: I beg to move.
Amendment moved—
Page 43, line 38, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
Clause 42, as amended, agreed to.
LORD MILLS: I suggest that it might be to the convenience of your Lordships if we were now to adjourn during pleasure.
[The Sitting was suspended at two minutes before seven o'clock, and resumed at eight o'clock.]
Clause 43:
Charges and facilities: general provisions
43.—
(7) The Boards shall not carry passengers by rail on terms or conditions which—

(a) purport, whether directly or indirectly, to exclude or limit their liability in respect of the death of, or bodily injury to, any passenger other than a passenger travelling on a free pass, or

and any such terms or conditions shall be void and of no effect.
LORD SHEPHERD LORD SHEPHERD moved, after subsection (1), to insert:
"( ) In respect of charges for the carriage of passengers, the luggage which a passenger is entitled to take with him and the charges, if any, to be made in respect of that luggage, on journeys by railway wholly outside the London Passenger Transport Area and on road routes wholly or partly outside the London special area, sections forty-four, forty-five, forty-six, forty-seven, forty-eight and forty-nine of this Act shall apply, mutatis mutandis, as they apply in relation to journeys by railway wholly within the London Passenger Transport Area and on road routes wholly or partly within the London special area."
The noble Lord said: Having, over the last six days or so, been moving what are strictly Party Amendments, in which I firmly believe, I am now moving an Amendment on information provided to me by the County Councils Association. The purpose of this Amendment is to ensure that the Transport Tribunal shall continue to hear local authority objections and control passenger fares over the whole of the country, and not, as proposed in this Bill, only in London. The Transport Act of 1947 provides two methods by which the public can be protected against excessive charges for services or facilities provided by the British Transport Commission. Neither of these methods will continue, under the Bill as it is before the Committee; nor is any substitute method provided, except in the case of the London area.
Under the Act of 1947, the schemes for charges for passenger services of the Commission (I do not know whether the Ministers are listening to my delivery) require confirmation by the Transport Tribunal, and before any scheme is confirmed by the Tribunal, they must hear objections duly lodged by representative bodies, including county councils, on behalf of the public and others. Part III of this Bill provides that the control of fares by the Transport Tribunal, and the right of objection by county councils and others, shall continue only in the London area. The Government may claim that this distinction is necessary because the nationalised London Board is in the position of a monopoly. It is considered that the right of county councils, or, I should have thought, other representative bodies on behalf of the public, to object to proposed charges schemes has ensured that proposals for generally excessive charges have not Seen made. Proposals made by the

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Commission to which county councils objected have, on occasion, been modified by the Transport Tribunal to secure the fairest possible distribution of the burden of charges among the various users of the Commission. It is considered that the present protection for the public does not exist in this Bill.
There is a case, I believe, that the new Railways Board should have a good deal more freedom in fixing its rates and charges to passengers; but I think there is also a case, considering the position of the general community, many of whom depend upon railway services, that there should be some provision by which a public body, such as a county council, or even, perhaps, a smaller council, should have the right and the power to submit its objections to the rates. I think that hardship may be overcome in this way. It would mean that the persons concerned, knowing that they have the right to object, are more likely to accept railway charges in a better spirit. I believe that the right to object is something we in Britain like to have. I beg to move.
Amendment moved—
Page 44, line 23, at end insert the said subsection.—(Lord Shepherd.)
LORD MILLS: I apologise to the noble Lord for my apparent inattention. I was consulting with my noble friend to see whether there was any possibility of our agreeing to his Amendment.
LORD STONHAM: How could the noble Lord possibly start his consultations before he had heard what my noble friend had said?
LORD MILLS: We can still consider the Amendment on its merits, without the embellishment of a well-directed speech. I should like to remind your Lordships that this point was dealt with in paragraphs 56 and 57 of the White Paper, which say:
"The present restrictions on the ability of the railways to adjust quickly and adequately their freight charges and passenger fares are, in the Government's view, no longer justified in present competitive conditions.
"The railways will therefore be freed from statutory control over their charges, except for fares in the London Passenger Transport Area where the London Transport Executive and British Railways have a virtual monopoly of public passenger transport."
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The object of the Amendment is to make all passenger charges (including luggage charges and allowances) for rail and road journeys outside the London area subject to control by the Transport Tribunal. That is what we decided should no longer continue. The reason for keeping the Transport Tribunal functioning in the London area is that in that case there is a monopoly; but the railways generally are subject to the competition of private cars and buses and no one could claim that they are in a position to do What they like without fear of the consequences.
This Amendment would mean the control of bus fares by the Transport Tribunal and would thus clash with the existing jurisdiction over bus fares exercised since 1931 by the Traffic Commissioners under the Road Traffic Acts. I fail to see the purpose of the Amendment unless it is simply to debate the question whether the railways and buses should be under this kind, of restriction or should be free to raise their fares as their costs mount. We take the latter view and I see no reason to alter it.
LORD SHEPHERD: I thank the Minister for his reply. It is true that under the Bill the Board will be able to charge for their services outside the London area more or less what they wish, but what is going to be the case, say, in Scotland? Under the Bill, the Minister may use his powers to instruct the Railways Board to continue a service in an area where there is a social or industrial need, even though it is to the railway unprofitable. The Railway Board may decide that they are going to continue the service for the community at a rate considerably in excess of the rate that may be charged, say, in the County of Essex or in Surrey. I should have thought that that would be unfair. I believe it is possible for this to happen under the Bill. There is nothing laid down as to how the rates will be calculated. The Railway Boards are to be permitted to charge for their services what they consider necessary for their operation. But when one considers some of the struggling industries of Wales and Scotland, which in the national interest, apart from the social consequences, should continue, in my view it would be not only unfair but quite wrong that the Board should be able to raise the freight rates of those

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areas above what they may charge in busier areas and so put what are struggling industries at serious disadvantage in relation to others.
I am not sure whether I agree with the Government, but I think there is some point in taking away the common carrier provision. But it is still the old theme which has run through the Second Reading and the Committee stage on this Bill: that the railway services in the past have provided an essential service to the community. There are many areas in our country which need assistance and in which transport will continue to play an important part. Economics to that industry will be vital. Therefore, I think it is wrong that the freights should be higher for certain areas than for others merely because the capacity is not there. If they are to be raised, then I should have thought it only right and fair that the local community, the county council, and perhaps in Scotland the Industrial Development Council, should have some genuine opportunity of stating their case, which could then be considered by the Board and possibly by the Minister.
Recently I had some experience of shipping freights to the Far East. As your Lordships probably know, to the Far East there is a near monopoly of British and German liners who are in the Far East Conference. With hardly any warning their rates were raised and this placed our better-class woollen trade at serious disadvantage. What I noticed was that there was no arrangement made by which these rates could be announced and people could protest and deal with them. In fact, one got over the problem by using influence in various areas. But that influence may not be available to county councils or even smaller local bodies.
While I fully agree that the Railway Boards should have some flexibility and some opportunity to adjust their rates at a time when possibly their costs have risen rather suddenly—and this is one of the troubles from the past, that the railways have not been able to adjust their rates with their increased costs—I think that, on the other side, in the local industries there should be some means by which their views are considered and a judgment made. Possibly; the Board, after listening to pressures by
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a local authority, might decide to act. But I should have thought that where there was going to be hardship or inconvenience, possibly the death of an industry, an appeal to somebody, maybe the Minister, would be right and fair.
I know it is easy to say that there are competitors who could provide the traffic, but I have been in business long enough—although not as long as the noble Lord, Lord Mills—to know that when one company raises its prices for its products because it is forced to, it is amazing how quickly the competitors raise theirs. They do not need to hang behind, so long as their goods are a few cents cheaper than their competitors'. Therefore, to say that there is competition or an alternative service available does not necessarily mean that the rates will be fair and within what certain people can pay. So I would ask the noble Lord not to say to himself, "There are alternative services; there is competition". I think the noble Lord has been in business long enough to know that competition does not necessarily mean that there are competitive rates. While fully admitting that the Railways Board should have some flexibility to adjust, I think, on reflection, there is reason to provide some means by which the local community, through their representatives, can register their views and take those views and their plea to as high an authority as possible.
I do not propose to press this Amendment this evening. I do not think much useful purpose would be served, but I would beg the Minister to consider the many areas in Scotland, Wales, Yorkshire and some parts of South East England, which are not too well off for transport, whether it is by rail or by road—to consider them and, in some areas, their struggling industry, in which the cost of conveyance plays a very big part. I am prepared to withdraw the Amendment. I hope the noble Lord will consider the inadequate words I have used, for I think there is a case.
LORD MILLS: I am sure the noble Lord has presented his case very adequately. There is a good deal to be said for it. But we really have a choice here between allowing the railways to exercise their judgment and laying down that they are to be subject to controls of various kinds. I have watched the railways

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for some years, and one of their difficulties, since nationalisation and before, was the fact that they could not act quickly enough to meet increasing operating costs.
But we always have at the back of everything public opinion, and in the end public opinion prevails. If people feel themselves aggrieved by what a public institution like the railways does, they can always make representations to Parliament; they can rouse the local Press, and they can present their case. There are plenty of opportunities. I say that we have to balance that against introducing another control which would prevent the railways from meeting the situation in which they find themselves. I should be very surprised to find that the railways took advantage of local situations to extract the last ounce of blood. I do not think that is the attitude of the railways; I think they have been brought up with the idea of service to the public. When we reflect that the fares of the railways have only doubled, while most other commodities and costs have gone up three times, we cannot accuse them of abusing their position; and I do not think they will in future. I am glad that I heard the noble Lord say that he would not press his Amendment. I think it is probably better left where it is.
LORD SHEPHERD: Before the noble Lord sits down, may I say that I never suggested that the railways would extract the last ounce of blood? What I had in mind was that well-known phrase which has been going through the debate: that the service the public shall have is what they can afford or will pay for. The areas I have in mind are not those such as the London Metropolis, which can well take care of itself, but areas like Scotland and Wales, which, basically, are poor, and have scattered populations and are still more dependent upon transport than we are in London. If a transport service, whether it is by rail or road, has to be maintained at an economic price, it may mean that people in these areas will have to pay more than another community; yet it may well kill their own local industry. That is the point, whether there should not be some means by which these representations can be made and considered. I am not suggesting that
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the railways themselves wish to extract blood. As the noble Lord has said, their rates have, in fact, gone up very little compared with other costs. That is why they are in difficulties. I will not press the point. I will withdraw the Amendment, but I do beg the noble Lord to consider it. I know he said the other day that he did not want to hear any more Scots hard-luck stories as they get him into trouble in Scotland, but I beg him to consider those areas which may suffer.
LORD MILLS: I hope that the noble Lord, before the Amendment is withdrawn, will just bear in mind that a good deal of what we have been saying is an argument for the independence of the Area Boards of the railways.
Amendment, by leave, withdrawn.
8.24 p.m.
VISCOUNT ST. DAVIDS VISCOUNT ST. DAVIDS moved, in subsection (3), after "Boards" to insert "other than the British Waterways Board". The noble Viscount said: In moving Amendment No. 109, I should like also to speak about Amendment No. 112, which belongs to it, and also about that incredibly long Schedule on the end of the list, No. 263. To explain to your Lordships what all this is about, I am afraid I shall have to be a little historical. The position of the waterways is completely different from that of the railways, and I do not think that this has yet been fully understood. With few exceptions railways have always been purely commercial undertakings which proprietors could keep open or closed as they wished. Traffic was carried by proprietors in their own trains. But canals, navigable rivers and harbours have always been treated by the courts as public highways by water. The Minister of Transport prefers the term "statutory rights of navigation" and "common law rights of navigation", dependent on the type of waterway. It really does not make much difference so long as the public right of passage is conceded. These public rights of passage are contained in the Canal, River and Harbour Acts or, in some cases, in Common Law. These assorted waterways are used mostly by the public in their own vessels and are thus much more like public roads than waterways.
The Bill makes no significant change in the legal status of railways, except

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that in some cases they must give six months advance notice of intention to discontinue; but in the matter of waterways the law is fundamentally altered by this particular Clause 43. As the law now stands, under the Transport Act, 1953, the British Transport Commission have power, with the approval of the Transport Tribunal, to make reasonable charges (I hope your Lordships will note the word "reasonable", because it is basic to my entire argument) for the use of these canals, rivers and harbours and to impose reasonable conditions in the form of by-laws and regulations. The Commission are also bound to provide reasonable services and facilities, wharfage space, cranes, handling gear and so on. Clause 43 entirely repeals the latter duty. It provides that the new Board may make such charges and impose such conditions as they think fit. This must mean something different from "reasonable". There is no control of any kind and the new Board is the sole judge. This may be appropriate enough for a railway, but it is entirely contrary to the existing statutory rights of the canal-using public, both commercial and private, and it is particularly bad for the commercial people whose capital is tied up in boats and waterside premises, factories and so on, making use of the water.
The point is quite simple. They are entirely dependent on a reasonably fixed state of affairs, or on knowing that their costs of transport will be reasonable. They cannot move away from the waterside; they cannot take an alternate canal to the one they are using. So far as they are concerned, the canal authorities are in a position of complete monopoly. In the case of the London Passenger Transport Board in this Bill, where the Government admit that there is a monopoly position, powers of appeal are given; and the same is true with the harbours, where again the Government admit that something like a monopoly exists. But in the matter of the inland waterways, the rivers and canals, no right of appeal is given, and we are entirely at the discretion of the operators of those waterways as to what they shall charge under the Bill. This is indeed a very serious change—a fantastically serious change.
To put the matter right I have put down this enormously lengthy series of
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Amendments. All this vast mass of verbiage is to replace one word which was in the 1953 Act and which is not in the present Bill; that is, the word "reasonable". The Amendments are basically better than the one word "reasonable", for this reason: they set out a scale of charges, a method of charging which, if it goes in the Bill, will-prevent a lot of lawyers work later. There is nothing in that Schedule which would stop the waterways from charging what they need to charge. It protects the private operator; it protects the factory owner whose goods travel by water and who has factory-side wharves; it protects all the private individuals who rely on the water for their livelihood—the small businessmen and those who have invested their capital in the waterways and who are entirely dependent on statutory rights of navigation, fixed tolls and charges and charging systems.
If this clause goes through as it is the carrying firms are entirely at the mercy of their principal competitor, and the waterside firms will simply be swept out of existence. If we can have this Schedule in the Bill it will make all the difference. Your Lordships will observe that it is a carefully written Schedule. It is made out specially and with enormous care by a transport legal expert who not only knows his job but is, I think, respected by those at the Ministry of Transport who have had to deal with him, and he is probably the only person in the country who could have made out a waterways Schedule in proper form, in the form needed for the use of the commercial and private users of the waterways. If this Schedule is inserted there will be absolutely no dispute about anything. Everybody will know what is being charged and what is being charged for. That is its great advantage over the word "reasonable".
I am informed by the legal eagles that it has a further advantage. I do not know whether my legal terminology is correct, but I am told that waterway charges are of a taxing nature and that the courts, when considering what is being charged for a particular waterway service, tend to look into the legislation to see what is supposed to be charged for. It is most difficult to make anybody pay up for a waterway service

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unless in the appropriate Act of Parliament there is a statement that so much is charged for this, so much for that, and so on, in detail. If there is merely a general power to charge, it may make the legal position before the courts much more difficult.
The present British Waterways Commission, using the 1953 Act, has been incredibly lucky. A great deal of its luck, as I well know from personal experience, has occurred because it has been resting on the good will of the waterway users; and I assure your Lordships that the waterway users have considerable good will towards the British Transport Waterways. If you will accept this Schedule, then there will be no difficulty; if you do not accept the Schedule, then the alternative is to put the word "reasonable" in the Bill. If the Government will assure me that they will consider inserting the word "reasonable" in suitable context at a later stage in the Bill, I shall be quite happy to withdraw this Amendment. If they cannot accept this Amendment and they are not willing even to insert the word "reasonable", then I think we must take the opinion of the Committee, because one or other must go in if these waterways are to be made a solid and fit part of our British scenery.
The position on these waterways is serious, one of the reasons being, as I stated in a speech on Second Reading, the very great uncertainty as to their future. This Bill is sweeping away many of the uncertainties, but it creates a fresh one, in that it is creating uncertainty as to what the waterway users may have to pay for the use they make of the waterway. If you were a factory owner, with a factory beside a waterway, would you set up handling equipment to deal with goods coming in by those waterways if you did not know from day to day what the charges would be? If you were intending to invest in a fleet of carrying craft, would you invest if you knew that at any time you might be run off the waterway by the lack of the word "reasonable" in connection with the permitted charges?
I know what one of the Government's answers is going to be on this point—the one, the noble Lord, Lord Mills
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has just put to my noble friend Lord Shepherd. It is, of course, that we are all reasonable people; that we all treat these matters in a spirit of great friendliness, and the charges do not go up very greatly; that everybody is very happy to be of service; and, of course, that there is commercial freedom, which means that if they put up charges too much they would drive the traffic off the water and thus hurt themselves. To some extent that is true of the waterways, but it is not entirely true. There are some cases where it pays quite considerably to drive the traffic off the waterways. I can think of a whole number of waterways—not only national ones but some of the others as well—where it would pay the operators very well to put the charges up to £10 a mile and drive the traffic away.
To quote one historical case, some years ago there went through this House the Rochdale Canal Act. The Rochdale Canal had a very considerable income from water supply; it was also a traffic canal. They made a lot of money on their water, but lost quite a lot of money on their traffic-carrying activities. They raised their rates; they drove the traffic off the water. They came to Parliament and obtained a Bill allowing them to exclude traffic from their waterways. They took out their lock-gates, they put in weirs, they dismissed all the lock-keepers and, for the first time in the history of the company, they made money. I am not saying that the British Waterways Board are going to do the same thing. Nevertheless, it shows that in certain circumstances in operating a waterway it pays very considerably to drive the traffic off the waterway.
Unless we have something in this Bill—either this Amendment and this vast Schedule of mine, or the little word "reasonable", which surely can be put into any Act of Parliament without any damage whatever to the public—the waterways will be considerably endangered. The Government will have put up another barrier to their proper operation, and I think they will be piling up a lot of trouble for themselves in the future. I beg to move.
Amendment moved—
Page 44, line 29, after ("Boards") insert ("other than the British Waterways Board").—(Viscount St. Davids.)
LORD CONESFORD: I do not know whether my noble friend would like me to add a few observations now.
LORD CHESHAM: I should be delighted.
8.42 p.m.
LORD CONESFORD: What I wish to suggest to the Committee is that, whatever their view of the specific solution suggested by the noble Viscount, Lord St. Davids, the problem is not met in the Bill as it stands, and it really must be met. I should like at once to acquit the Government of any intention to bring about some of the results and the injustices that could, in fact, follow from the Bill as it stands. I do not profess to be in any way well acquainted with, or an expert on, this branch of the law, but to the best of my belief the position has been stated with substantial accuracy and completeness by the noble Viscount who has tabled this series of Amendments. The fact that no injustice is intended against private individuals does not justify us in passing legislation which would enable that injustice to be perpetrated, however unlikely that injustice may be.
The noble Viscount who moved the Amendment was quite right in pointing out that what we are here dealing with are, in effect, highways by water, over which private individuals and private business concerns have definite and valuable rights. I am sure Her Majesty's Government do not wish any business at present exercising such rights, or which may wish to exercise such rights, to be treated unjustly. But think what could result if we left the Bill as it stands. All legal restraints on the sort of charges that could be made would be swept aside. I am not overlooking the small exception made by subsection (2), but all obligation to make only reasonable charges would be swept aside. The people who could suddenly, quite lawfully, be subjected to unreasonable charges could be put completely out of business, and the public body itself—the British Waterways Board—could for a time run its own ships perhaps at a loss, because under this Bill it receives for some years a grant from the Government. It could simply do away with its competitors altogether.
Against that risk, there is in the Bill as it stands, so far as I can see, no
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protection whatsoever. As a result of the noble Viscount's three Amendments, which are being taken together in this discussion, there is a considered scheme for giving reasonable freedom to the new Board that the Government are creating, but yet reserving some public rights and ensuring that private people and private business concerns are not subjected to what would be the greatest possible injustice. I confine myself entirely to pointing out the necessity for some change in the clause as it stands, and in the scheme of the Bill as it stands, for dealing with the inland waterways, and to saying that, so far as I can see, the scheme proposed in the Amendments of the noble Viscount does provide a solution. It may be that the Government can think of another solution which they prefer, but I cannot think that they will inform the Committee that there is not here a real problem which must be dealt with by Amendment.
8.47 p.m.
LORD CHESHAM: I have listened very carefully to the arguments that have been put forward by the noble Viscount and my noble friend. Needless to say, I had, before the Committee stage, carefully considered what would be the effects of the noble Viscount's three Amendments, including his "two-acre" one at the end of the Bill. The combined effect of those three Amendments is, to all intents and purposes, just this: to impose a rigid code and control over the charges and commercial policy of the new Board, and to re-erect a detailed pattern of statutory obligations and restrictions in relation to their charging and commercial powers. I do not think the noble Viscount would disagree that that is exactly what, in principle, they do.
VISCOUNT ST. DAVIDS: It still leaves them full freedom to charge what they like.
LORD CHESHAM: That is difficult for me to understand or to see. But, to sum up, I still think that the effect of the Amendments comes into (I used this expression before, I believe) headlong conflict with the principle of giving commercial freedom which is embodied in the Bill, and which is the whole idea of it. Consequently, the noble Viscount and the Committee will not be surmised to hear that I am not keen on these

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Amendments. I do not, I must hasten to say, criticise the way the noble Viscount and his advisers have put the Amendments together. I am quite sure that they, and particularly the long new Schedule, are very well drafted and soundly drafted. Not only do I admire the expertise of his friend in doing such a job, but I am amazed that anyone could draft such an Amendment as the new Schedule at all. What I am criticising—and I do not intend to address myself to the details of the noble Viscount's Amendments—is that though they are admirable for his purpose, his purpose is wrong.
The first Amendment, which is the key Amendment, No. 109, seeks to exclude the British Railways Board from that provision in Clause 43 which empowers the four Boards to make such charges for their services and facilities, and to impose such terms and conditions upon the according of those services and facilities, as the Boards think fit. That is the basic charging power of the four Boards, to give them commercial freedom, and that is the power which the noble Viscount's Amendment seeks to deny them. It is to that point, or, rather, to those two points, of which that is one, that I intend to address myself. I should think that the noble Viscount's case, eloquently supported by my noble friend, was a very much better one if I could even begin to accept the argument which was put forward about this question of the canals being public highways by water. I cannot accept that at all. I am going on to say why; but as I cannot accept that, I think that the case on which the noble Viscount has been working is not soundly based. If that were right, his case would be much better; but I do not believe it is right.
VISCOUNT ST. DAVIDS: Even if it is wrong, it is sound enough.
LORD CHESHAM: I do not agree there, because I am going on to several other points which the noble Viscount put forward——
VISCOUNT ST. DAVIDS: I stand on equity, as well as law.
LORD CHESHAM:—and perhaps, when I come on to them, it will be a little easier to understand. This argu-
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ment is a very legal argument; there I agree. I am not a lawyer, and I cannot argue it in that way; indeed, I hope to keep right off that side, and shall try to confine myself to the simpler and more understandable aspects.
There have been, as the noble Viscount, I am sure, knows, a good deal of consultations between the legal advisers to the Inland Waterways Association and those of the Ministry, and I am bound to say that so far I do not think any agreement has been reached on this particular question. Certainly the Ministry do not accept the general proposition which the noble Viscount put forward; that all inland waterways—or perhaps I should say all inland waterways with few exceptions—are public highways by water. I accept the fact that the tidal parts of navigable rivers are public highways by water; and that is probably true also of certain other rivers, or non-tidal parts of rivers. But as a general proposition with regard to canals, it just will not do.
The canals which form the greater part of those that will be taken over by the British Waterways Board are, in fact, artificial creations, constructed and operated under the special Statutes which apply to them. The right of navigation on these canals depends upon such statutory rights as are conferred by those Statutes; therefore it is much more accurate to say that the position for canals generally is that there are statutory rights of user though they are not public highways by water. And the statutory rights of user are subject to such payment of tolls as prescribed in the Statute conferring those rights. On that statutory right of user I must take a stand, because I cannot agree with the noble Viscount that it does not matter whether we call it a public highway by water or a statutory right of user; that the position is the same. The position is not the same at all. There is really no analogy. There is nothing in the provisions on charging in the Bill which repeals any statutory rights of user that attach to canals. As the noble Viscount said, where there are express statutory exemptions from payment they are preserved in the Bill.
My noble friend Lord Conesford mentioned the other day—perhaps this will colour other discussions later on,

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so I think it is important to get it right—the position of pleasure craft as an example of how statutory rights of user may be very different from the rights of public highway. In the days when canals were first constructed they were little used by pleasure craft. They were constructed for commercial carriers and the Statutes mainly applied to that kind of use. It can be argued that the statutory rights of user conferred by the founding Statutes of many canals did not include pleasure craft at all.
VISCOUNT ST. DAVIDS: The noble Lord is entirely wrong, but I shall wait until I reply to deal with the matter.
LORD CHESHAM: The noble Lord may have his opinion. He really cannot "sell" it to us on the basis that, if one says something often enough, everybody believes it. A great many people who are as well able to understand this matter as are the noble Viscount and his advisers believe that he is completely wrong. There is a very strong argument that the statutory rights of user apply only to use by those craft for which there is a clear right in the canal authority to levy tolls and charges. I want to make this as clear as I possibly can because it has a definite bearing on these Amendments.
I am now going to switch to the other side of the argument.
LORD CONESFORD: I am most grateful to my noble friend for the careful way he is going into this. Whether it is more accurate to refer in general language to "a highway by water"or to "statutory rights of user" I shall not question, because I am quite content to accept, his "statutory rights of user". But I should like to ask him about boats which he admits at present have the right to go on these canals and to be charged. Does he not admit that under existing Statutes, particularly the Act of 1953, they can be subjected to only reasonable charges?
LORD CHESHAM: My noble friend has correctly stated what is contained in that Act. The whole theme of my argument is that commercial freedom should be given to the Board. It was necessary to deal with the other side of the argument first because the noble Viscount, and to a certain extent my noble friend,
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developed the argument that many people were being done out of their rights and the public as a whole were being done out of rights which they could enjoy if they so wished. I thought it was necessary to get the position into perspective to see exactly what it was we were doing.
It might perhaps make it somewhat clearer if I finish my argument. The provisions detailed in the Amendments for the control of charges and restrictions on commercial freedom, which is what they are, would be a serious handicap to the ability of the Board to operate their waterways economically and discharge the financial duties which they have under the Bill. I cannot remember who it was, but one noble Lord said that the Board would be in receipt of Exchequer assistance for at least five years. If they are not to have freedom to charge in this way, that may quite easily entail an additional burden on the taxpayer.
The canals, as has been said on several occasions in our proceedings, are costing the country a lot of money. I was struck by the fact that, although there has been a good deal of talk about injustice, nobody has so far mentioned the injustice which is likely to be done to the taxpayer if the Board do not have the commercial freedom to operate which we visualise for them. To sum up, I do not think any convincing argument has been put forward to persuade us to adopt the course suggested by these three Amendments which would justify sustaining or increasing that burden upon the taxpayer.
My noble friend Lord Conesford raised a point of some importance, as in a slightly different context did the noble Viscount in his speech. My noble friend mentioned the independent waterway carriers, and the noble Viscount mentioned other people who had business of one kind or another on the waterways. The noble Viscount said, I thought in rather a disdainful way, that you could hardly expect the Board to look after their interests very much and they might be priced right out of the market. But these people are the customers of the waterways. They have to do their best to make a financial go of it, and I should have thought it would be a strange policy to adopt to price your customers out of the market.

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So far as the independent carriers are concerned, there is a rather important point. This was discussed, I understand, in another place and my right honourable friend the Minister of Transport had something to say about it which I should like to quote to your Lordships. He said:
"I would be distressed if the new authority charged its own bodies less or gave them more favourable terms than it gave to the independent carriers. I think that to do so would be indefensible. It would also be wrong for the authority to expand its fleet by using a subsidy to knock out the private people. There must be fair competition between the two. I am concerned to ensure that Exchequer assistance is not used to compete unfairly with private enterprise. In these circumstances, it is not the Government's intention to agree to any significant overall expansion of these fleets."
That my right honourable friend can effect by his control over the borrowing powers and investment as contained in the Bill. I thought I should make that point, because it is of importance. Otherwise, I think the most important point is the possible effect on the taxpayer. I would ask your Lordships not to accept this Amendment.
9.5 p.m.
LORD CONESFORD: May I put one point to my noble friend? The Committee are most grateful to him for the detail with which he has gone into this important matter. But the last quotation from his right honourable friend confirms my view and, I think, the view of the noble Viscount, Lord St. Davids, that that which the Minister deplores is something which can be done under the Bill as it stands, though he has said that he would be against it. I am sure it is not beyond the Government's skill to meet the point by making what the Minister himself has said he would deplore, something that could not be done under the Bill. What is at present possible is completely unfair competition between the Board's own fleet and the independents.
LORD CHESHAM: I am sure it would be quite possible to do that were it thought desirable. As my noble friend knows, the skill and ingenuity of the Government is infinite. But I doubt whether it is desirable, because if you are trying to give the Board freedom of operation in their financial affairs and a task to do their best, the moment
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you begin writing in a restriction of one kind or another the thing begins to build up, and I do not think that would be the way to do it. What I have just said I said very much on purpose, and I do not think we can start writing into Bills various protective measures for what might happen. After all, if the principle of commercial freedom is being extended to other Boards as well, if it is justified, people could equally argue, with the noble Viscount, that it could affect their costs and injure their business. I do not think that is acceptable in an Amendment.
LORD CONESFORD: There are many statutory precedents for saying that a public Board must be fair as between its own concerns and others who use its facilities. There is nothing very novel in that.
LORD STONHAM: I thought it was a little rash of the noble Lord, Lord Chesham, to claim that the skill and ingenuity of the Government was infinite, because even if that were true—and I doubt if any one Member of your Lordships House would agree that it was—it is not so much that their skill and ingenuity is infinite, but that everything depends on how that skill is applied. If it is applied merely towards evading the point of worthwhile Amendments, then, of course, it has very little value. Indeed, the noble Lord himself, at an earlier stage of his very interesting speech, confessed that he was, as it were, lost in wonderment at the excellence of Lord St. Davids "two-acre Amendment". If he had any real experience of the water, he would not be lost in wonderment at all, because it lends itself to contemplation—particularly inland waterways—and, of course, anyone who sits over the water for a long time would be quite capable of bringing up an Amendment of this kind.
The one point I do not think the noble Lord answered was the quiet insistence of my noble friend that the Government must either accept his very complicated Amendment or else introduce into the Bill the "little word," as he described it, "reasonable". The noble Lord, Lord Conesford, also raised that point, and the noble Lord, Lord Chesham, did not answer it. Whilst one might accept the view expressed by the noble Lord that the Waterways Board

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must have freedom to charge as they wish, it is a little disconcerting to realise that it might well be that they would have freedom to charge a rate of charges designed expressly to exclude particular forms of traffic. That may well be. We listened to an example of that and the fact that it might suit them to be suppliers of water instead of owners of an active waterway. Really, it is no answer to that to say, in effect, that the Board are reasonable people. As my noble friend has said, that is the stock answer. If the Board are charged with the duty of running their waterways as a commercial undertaking, they may well decide that it will be much more profitable to have an expanse of water between two banks which is merely a carrier of water and not a waterway for the conveyance or use of traffic.
I do not think therefore that we ought to dispose of this series of Amendments without evidence that the Government have really considered that point of view. What we are asking, in effect, is that in subsection (3) the word "reasonable" should be read between the words" such "and" charges". The subsection would then read:
"Subject to this Act and to any such enactment as is mentioned in the last foregoing subsection, the Boards shall have power to demand, take and recover such reasonable charges for their services and facilities … "
and so on. The real purport of these Amendments is to ensure that there should not be artificially high charges with the sole object of driving certain users off the waterway so that a profit can be shown. I think that that is really the essence of all the arguments to which we have listened. Having taken, I trust, a fairly objective view, I hope that the Government, and particularly the noble Lord the Minister, will address themselves to that point. If he could answer that, I am sure that I, and I imagine many other noble Lords also, would be very much more satisfied about the position.
LORD CHESHAM: I should be delighted to do that. I had thought I had dealt with it, although not maybe in specific terms, because the noble Viscount gave us the idea that there were only two alternatives. One was to accept his Amendments; the other was to put in the word "reasonable". In point of fact, there are more than two
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alternatives. A further course is to accept what is in the Bill, which is what I am suggesting should be done. At this point I will address myself to the actual putting of the word "reasonable" where the noble Lord, Lord Stonham, has suggested. Unless that is qualified in some way elsewhere, it has no meaning, because someone has then to determine what is "reasonable". The noble Lord, I am sure, would not say that there would be much object in putting it in and leaving the Board to determine what is reasonable.
LORD STONHAM: If I may say so, very often when we bring up Amendments of that kind that is precisely why the Government reject them. They leave the law to determine what the word means; though it is not very apt if that excuse is made now for objecting to the word "reasonable".
LORD CHESHAM: On the contrary, it absolutely supports what I said, as the noble Lord will realise when he comes to think it out afterwards. Never mind. The real point is this: that the implication is that if you put in the word "reasonable" you then set up some kind of organisation—a tribunal or something of that kind—to determine what might be reasonable. That, incidentally, raises the question of restriction on the Board's freedom of action with charges and commercial policy. That is why I would reject the word "reasonable" in this context. I might add this. I think it would be justifiable to say that up till now there has been a test of reasonableness; it has been possible to take canal charges to a tribunal. I simply say that so far that test has not been applied.
LORD WALSTON: The noble Lord who has just sat down used as the burden of his refusal to accept this Amendment the expression "commercial freedom", and that seems to be, in his view, the ultimate good and anything which does not allow commercial freedom is the ultimate bad. Surely we cannot accept that "commercial freedom" must be the best possible way of doing things, because, after all, commercial freedom does at times lead to some very undesirable things. It can lead to monopolies; it can lead to restrictive practices; it can lead, as the noble Lord, Lord Conesford, pointed out, quite possibly and perfectly

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reasonably to the squeezing out of any competitors of the Inland Waterways Authority, so that it is then in a monopolistic position and can charge what it likes for its services. That is what commercial freedom can do, and it is perfectly clear from what the noble Lord said in quoting the Minister that that has been envisaged and is deplored.
It seems to me rather a confession of failure that the Government in drafting a Bill of this sort can say: "We realise that something undesirable might happen; we do not want it to happen and we hope it will not happen, but we refuse to put into the Bill a perfectly reasonable"—if I may use the word—"and sensible and practical Amendment which will ensure that it does not happen". That surely is not the way to govern a country even in something as relatively unimportant as canals.
To go to the second point on commercial freedom, if the noble Lord generally sets such store by commercial freedom as he does here, why is not commercial freedom allowed in other parts of this Bill? Why is the Holding Company not going to be allowed to sell its surplus potatoes in the name of commercial freedom? It is not allowed to. The other Boards are not allowed to run a pipe-line somewhere; they are not allowed to make more lorries or other transport facilities. They are not allowed to do a whole mass of things which, surely, if you believe in commercial freedom they must be allowed to do. So I do not really think we can pay a great deal of attention to commercial freedom as a justification for turning down this Amendment. There may be other reasons. But if you are going to be consistent in believing in commercial freedom, let us have commercial freedom throughout the whole Bill and do not just trot it out on the odd occasion when there is an Amendment the Government do not like and they have no other argument, then quietly push it into the background when other noble Lords want to bring it forward for something else. We must have better arguments than that of commercial freedom if we are going to turn this down. Whether its actual wording is correct I do not know, but what the Amendment tries to do is surely
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eminently reasonable and right and should be supported.
LORD STONHAM: When the noble Lord replies would he explain why it was unreasonable to accept the suggestion that "reasonable" should be included in line 30, and perfectly reasonable for the Bill to include the word "reasonable" in line 36? The words in line 36 are:
"impose a duty to afford reasonable services and facilities."
I cannot see why it is impossible to say what is meant by "reasonable" in line 30, if it is possible to say what "reasonable" means in line 36.
9.20 p.m.
VISCOUNT STUART OF FINDHORN: It seems to me that "reasonable" is becoming the main word under discussion in this Amendment, and it seems to me a reasonable word to write into any Bill, because it has already been said by the Parliamentary Secretary that it means nothing anyway, and the noble Viscount advocating the use of the word "reasonable" said that he would be very happy about it. I do not want to be out of order by referring to something which we have not reached, but if your Lordships turn to the proposed new Schedule you will find that the noble Viscount has taken trouble to lay down what action shall be taken in the event of anybody saying that something is not "reasonable". I defy anybody to define "reasonable". If the bus fares go up one penny per mile the London Transport Board will say that it is reasonable; but I, as a passenger, may say that it is unreasonable. It must then go to the tribunal to decide. I should have thought that the adoption of the word "reasonable" would have been a very reasonable way out of this difficulty.
LORD CHESHAM: I do not know at what stage this is going to become unreasonable. The noble Lord, Lord Stonham, raised a rather interesting point in calling my attention to the use of the word "reasonable" in line 36 of page 44, where of course it is put down in connection with a duty to which the Board shall not be subject, as he will readily see if he reads the previous two lines.
LORD STONHAM: Of course I read them. One of my few accomplishments is that I can just read. But if it is the fact that in an enactment which has been in operation, I believe, for 15 years the word "reasonable" has been understood and accepted without any trouble, I should have thought it could be accepted in the enactment that we are now considering.
LORD CHESHAM: Yes, that is right; it has been in that enactment, and that enactment is being repealed.
VISCOUNT ST. DAVIDS: It was put in there by this Government.
LORD CHESHAM: And is now being taken out by this Government. We can all understand the facts, quite honestly. But I say again that one thing was left out of the argument put forward by the noble Lord, Lord Walston: he just did not mention it at all. He addressed himself considerably to something which might happen, and so on, and again he completely omitted to talk about something bad which is happening. My final remark on this discussion is, who, or how, or what, is going to determine, and how are they going to determine, what is going to be a reasonable charge in the face of a £600,000 annual deficit?
LORD AIREDALE: Perhaps I could make one final suggestion. If the noble Lord does not like the reference to "such reasonable charges" in line 30, he might consider the expression "such charges as they think reasonable", bearing in mind that two lines later the Government draftsman has used the expression "conditions as they think fit". If the Board is capable of thinking fit, it is perhaps capable of thinking reasonable. Perhaps that would commend itself to the noble Lord.
LORD HAWKE: I wonder whether it would clarify matters if we put in some such words as, "such charges as are reasonable in the circumstances". I would support the Government wholeheartedly in allowing this body to charge what they can get for their services, or what they think they ought to charge, because there is no doubt that a great many of the inland waterways will be redundant in the face of both road and rail. Therefore if they chose to put on a completely prohibitive tariff
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on certain waterways I should not object. But it must be the same for all. They must not let their own barges through at a cheap rate and somebody else's barges at a dear rate. Provided we could get some words to mean that—that the tariff was reasonable in the circumstances—those circumstances might be explained before a court as meaning that they wanted to prevent anybody from using the thing. That would be reasonable in the circumstances. But, as I say, if it is a case of no discrimination, I support the Government.
LORD SHEPHERD: We have had a good deal of debate on this subject. Obviously there is strong feeling on both sides. I wonder whether the Government could give an undertaking to look at this matter. I wonder whether that would be acceptable to those who have supported the Amendment. We have a great deal more business to do, and if the Government could make that gesture I think we could move on.
LORD CHESHAM: There has certainly been a good deal of expression of thought, both pro and con, on this subject. The Government are, of course, as somebody said earlier, reasonable men. I should be quite prepared to look at this again in view of what has been said. I must make it clear, however, that I will look at it again carefully from every point of view, but with no undertaking of any sort or kind; because I do not as yet, at this moment in time, feel very inclined to depart from my argument. But I would be very ready to have another good look at it if that is what noble Lords would like us to do.
LORD CONESFORD: In doing that, may I ask my noble friend if he will bear in mind what I think would go a long way towards satisfying noble Lords—it would certainly go a long way towards satisfying me. The Minister described in another place an evil that could happen which he would deplore. Could not protection against that evil be inserted in the Statute?
VISCOUNT ST. DAVIDS: Is the noble Lord going to answer that?
LORD CHESHAM: I did not think I need waste the time of the Committee to do so, because I had said that I would look at everything that had been said, and it had already been done.
VISCOUNT ST. DAVIDS: I think that the Committee feel that something should be done about this clause, and it might be a good idea if we gave the Government time to have second thoughts. On the other hand, something must be done, and if later on we hear that their second thoughts have resulted in the same decision as was reached on their first thoughts, then I think we would have to move this Amendment, or something similar, again.
In the meantime, I would just point out to your Lordships one or two matters that have been referred to. The noble Lord spoke about statutory right of user. I am prepared to accept his phrase, but statutory right of user consists of two things: a right given by Statute to an individual to navigate the waterway, and a second right resting in the operators of the waterway that if the user does use the waterway then they have the right to charge a toll. That is statutory right. The thing consists of the two halves, as I have said, but if the toll is unreasonable the second half of the business is a denial of the first half because it removes the statutory right to navigate.
The second point that the noble Lord made was when he said that, historically, pleasure craft are recent. He might "get away" with that with any other noble Lord in this House, except myself. Some day I think I shall write a book on the history of pleasure craft through the ages. There were packet boats operating as water stagecoaches along our waterways. I can show you rows of hostelries still called "The Pleasure Boat", "The Packet Boat Inn ", "The Paddington Packet", and so on, but I am not going to recite them all now. The third point was on injustice to the taxpayer. Of course, we are firmly against any injustice to the taxpayer. The most important thing in this matter is to get the British Waterways Board properly on its feet.
THE DEPUTY CHAIRMAN OF COMMITTEES (LORD CROOK): Is the noble Lord withdrawing his Amendment?
VISCOUNT ST. DAVIDS: Yes, I will withdraw it. But the point quite simply is this: that the losses are not nearly as
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great as they are made out to be. The noble Lord, Lord Mills, twitted me at one moment about six million fishermen. Let me point out to the House that there are three million fishermen and that there alone there is a very considerable source of revenue that has not been dealt with.
Differences of treatment was another subject that came up. I am not now going to relate instances to the House, but I could mention many of them. I accept commercial freedom and we certainly need it in this case, but we must not have commercial freedom at the cost of injustice. So I ask the Government to reconsider this matter. If they do not do anything about it at a later stage, then we must move this Amendment again. But to-day I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
THE DEPUTY CHAIRMAN OF COMMITTEES: I understand that certain of your Lordships have Marshalled Lists in front of you with the misprint of the words "rail or" instead of "by rail". The amendment to be moved by the noble Lord, Lord Shepherd, is at page 45, line 19, to leave out "by rail".
LORD SHEPHERD LORD SHEPHERD moved in subsection (7) to leave out "by rail". The noble Lord said: I will seek to be brief. I do not know what is the explanation of the fact that in subsection (7) it says:
"The Boards shall not carry passengers by rail "—
the words are specific, "by rail"—
"on terms or conditions which—

(a) purport … to exclude or limit their liability in respect of the death of, or bodily injury … ."

As I see it, this means that the Boards will have a liability by rail but will not have a liability when carrying passengers by road or by water. I do not know whether the Government can give an explanation. An illustration has been given to me that, if you were going from Waterloo to the Isle of Wight, you would travel on one of the railways steamers; there would be liability on the Board which carried you by rail, but, because of a certain provision, there would be no liability while you were on the ferry. It seems to me rather peculiar that this should be in the Bill, and I wonder Whether the noble Lord can give

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an explanation. Can he say whether it is a fact that, because of these words, there will be no liability if passengers are carried by road? I beg to move.
Amendment moved—
Page 45, line 19, leave out ("by rail").—(Lord Shepherd.)
LORD MILLS: I think this is quite simple. We announced in the White Paper, on the Reorganisation of the Nationalised Transport Undertakings, paragraph 55, that:
"In the new circumstances it would not be reasonable to leave the railways subject to out-of-date restrictions on their commercial activities."
The common carrier concept was allied to the idea of the railways as a monopoly. Railways are no longer a monopoly, and we felt that it was right to relieve them from the requirement of being a common carrier, which means that they must accept traffic of any kind whenever anybody wants to send it by rail. I just ask your Lordships to bear in mind that it had become quite a common practice to use road transport during the week and then to saddle the railways with the carrying of traffic at the week-ends, because they are common carriers and cannot refuse it. All that this clause seeks to do is to say that none of the Boards shall be regarded as common carriers, by rail or by inland waterways.
LORD SHEPHERD: I do not want to interrupt the noble Lord, but the question of a common carrier was not in fact the point about which I was speaking. The question concerns subsection (7), the exclusion of their liability in the event of death or bodily harm. I am sorry if I did not make myself clear.
LORD MILLS: Does this Amendment not come first?
LORD SHEPHERD: No. I am talking about the Amendment to page 45, line 19: after the word "passengers" to leave out the words "by rail." It is not a particularly important point. If the Government's brief has gone astray I am quite prepared, at this very late hour, to withdraw this Amendment and to move it on the Report stage. It is not controversial; it is merely to illustrate a rather peculiar position.
LORD MILLS: I think there is probably a mistake in the printing of the Amendment. I apologise to the noble Lord and will take advantage of what he has just said.
LORD HAWKE: Will the noble Lord see that the liability for damage to passengers, and so on, covers all their ancillary activities? It would be most unsatisfactory if it did not.
LORD MILLS: Yes, I will have a look at it.
Amendment, by leave, withdrawn.
9.38 p.m.
LORD CHAMPION LORD CHAMPION moved, in subsection (7) (a), to leave out "other than a passenger travelling on a free pass". The noble Lord said: This is a completely reasonable Amendment. If I were asked to define what is reasonable in this context, I would say, "Any Amendment moved by myself". This Amendment deals with an important subsection of Clause 43. It seems to me to seek to prevent any injustice that may flow from an attempt by the Railways Board to repudiate liability in the event of any passenger receiving an injury while using the Board's services. It is a long time since I have used an excursion ticket, but I remember that on the old excursion tickets issued by the railways they always had something on the back which was a sort of "saving clause" which said, "In the event of your being injured, we shall not pay you any damages". Those are not precisely the words to be seen, nor those that used to be seen, on them, but they were to that effect.
I am glad that this subsection removes any vestige of doubt about this matter. The Railways Board will undoubtedly be liable for injuries caused to passengers while they carry them. This subsection is, then, a useful protection for ordinary passengers; but it seems to us, and to me particularly, to be quite unfair to exclude from protection, in certain circumstances, those travelling on a free pass. That is why I am seeking to remove these words from this subsection.
It so happens that for some time I was a member of the negotiating committee of a great railway trade union, and in

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our applications to the railway companies for increases in wages—applications for improved conditions, and so on—we always sought to make comparisons between the wages paid to railwaymen and those paid to people in comparable employment outside the railway service. We were usually able to prove that people employed outside the railway service in comparable employment were getting higher wages than railwaymen; but the answer we so often got from the employers side of the table was: "Ah, but they haven't the benefit of free travel or privilege tickets." Figures were produced to us showing the value to railway workers of the privilege tickets and the passes which they received. Passes, and also privilege tickets, were excluded from ordinary negotiations; they were regarded as something given to railwaymen ex gratia. Nevertheless, they were always in the background of negotiations with the employers.
The simple fact, as I see it, is that if these privilege tickets and free passes are part of the payment to railwaymen, they should not be excluded from the benefits of this clause. It happens that there is more than one type of free-pass user. There is, of course, the man who is using a pass in the course of his work. In the event of his being injured while using that pass, he would, of course, come under the provisions of the National Insurance (Industrial Injuries) Act, and he would receive compensation. In the other case there is the railwayman using his pass, or getting a privilege ticket, for holiday or comparable purposes. In the latter case there is no doubt that, if that man were injured whilst travelling on a free pass, he would be debarred from the benefits of the cover of this clause. We think that the railway unions rightly believe that this is an injustice. This is an opportunity to remove it, and I hope that the Government will accept this reasonable Amendment. I beg to move.
Amendment moved—
Page 45, line 23, leave out ("other than a passenger travelling on a free pass").—(Lord Champion.)
LORD CHESHAM: The noble Lord, Lord Champion, has moved his Amendment in a charming and beguiling way, which I am sure is greatly to the taste of the Committee. It makes me feel
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awful when I say that I really do not want to accept his Amendment. It is not that I do not agree that there is substance in what he says on this matter. The fact that there is substance is proved, I think, by the fact that, although it is not in the Bill, or anything of that kind, this is, in fact, what happens as a result of the negotiations in the past between the B.T.C. and the appropriate union. I think I am right in saying that if someone is injured while travelling on a free pass, he does get the protection he would have had if he had had a ticket. Therefore it could be argued that there is little harm in putting it in the Bill. I think that this was the gist of the noble Lord's remarks. But I could argue that it is an equally good reason for not putting it in the Bill, since the arrangement works perfectly well as it is.
The point that concerns me most is that if the Amendment were accepted it would inevitably mean repercussions on the road. The Road Traffic Act, 1960, sets out the corresponding position as regards the liability of road transport operators to their fare-paying passengers and employees. If the Amendment were accepted, we should have one law for the rail and another for the road.
LORD STONHAM: Subsection (7), to which the Amendment refers, relates only to railways. How will it affect roads?
LORD CHESHAM: I have just explained that the position on the roads is dealt with under the Road Traffic Act. Therefore, if we were to amend this Bill in the way suggested, we should have a difference between rail and road. Particularly in the London area, it would create a nonsensical situation. A transport employee out for the day on a free pass would be protected from injury while travelling in a train, but if he went by bus he would not be so protected. It seems to me better to leave this as it is, and I hope that the noble Lord will agree.
LORD CHAMPION: The noble Lord has been sweetly reasonable about this, and has put forth arguments which in the circumstances I feel bound to accept. I beg leave to withdraw my Amendment
Amendment, by leave, withdrawn.
LORD CHESHAM: I beg to move.
Amendment moved—
Page 45, line 30, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
Clause 43, as amended, agreed to.
Clause 44 agreed to.
Clause 45:
Transport Tribunal's power to make orders
45.—(1) The Transport Tribunal shall, subject to and in accordance with the provisions of this Part of this Act, have power to make orders as respects the following charges of the London Board and the Railways Board, that is to say—

(a) charges for the carriage of passengers by railway on journeys wholly within the London Passenger Transport Area, and

9.51 p.m.
LORD MILVERTON LORD MILVERTON moved, in subsection (1) (a,) to leave out "on journeys wholly within the London Passenger Transport Area". The noble Lord said: Clause 43, together with the repeal of the greater part of Part V of the Transport Act, 1947, has the effect of removing from local authorities the power, which they have previously been able to exercise, of making an objection to the Transport Tribunal against confirmation of a draft charges scheme—that is, against fare increases. Under Clause 45, the Transport Tribunal are given competence to determine fares in the London area; and by Clause 46 local authorities are enabled to make objections to applications for fare increases within the London area. But there is no provision for the Transport Tribunal to exercise general powers, or for objections to be made to fare increases outside the London area. Indeed, Clause 43 makes it clear that the Railways Board will have complete discretion in the fixing of charges, subject to the Minister's power under Clause 27 to give the Board directions of a general character. It is appreciated that one of the prime purposes of the Bill is to give the Board much greater flexibility for fixing fares, but it is felt by local authorities that there should be some statutory provision for public opinion to make itself known, particularly in view of the fact that charges are also to be outside the scope of the reconstituted Transport Users Consultative Committees.
In his Second Reading speech the Minister drew a distinction between London, where the right of appeal to the Transport Tribunal is to be retained, and the rest of the country, on the ground that in London the Railways Board and the London Board together exercise a sizeable monopoly. But most of the bus services in England and Wales are provided by two large groups—the Tilling group, which is owned wholly by the British Transport Commission, and the British Electric Traction Company, which incorporates most of the large private companies and in which the British Transport Commission also hold a substantial interest. Many of the bus companies in these two groups have working arrangements with the railways, which include co-ordination of fares. Thus, although the element of monopoly is less complete outside of London, there is not sufficient competition for public disapproval at the level of railway fares to have much, if any, effect upon them.
This being so, I venture to urge that the right of appeal by local authorities to the Transport Tribunal ought to be retained. While one fully understands the importance which the Minister attaches to the principle of giving the railways greater commercial freedom, nevertheless, the position seems to be that unless local authorities are able to represent the public before the Transport Tribunal, there will be no measure of accountability by the Railways Board to transport users on the basic matter of the price charged for service rendered or for service offered. I cannot believe that it is in the public interest that a virtual monopoly should not be open to public interrogation on its charges policy before an independent tribunal.
It is relevant, surely, to show the extent to which local authorities have up to the present time taken advantage of the provisions in the Transport Act, 1947, whereby they are able to object to the Transport Tribunal against fare increases. Since the Transport Tribunal was set up in its present form under the 1947 Act it has held ten inquiries on objections to draft charges schemes proposed by the British Transport Commission. On no fewer that eight of these ten occasions the inquiry led to an alteration in the

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charges scheme. On average, about 24 authorities have put in objections to the Transport Tribunal in connection with these inquiries. On the last occasion, when the Tribunal were considering the Passenger Charges Scheme, 1959, 34 authorities put in objections. Since 24 of these authorities were situated outside the London Passenger transport area, they would have had no right to object under the legislation now proposed. It is also interesting to note that, apart from the 34 local authorities, there were only seven other objectors. My Amendment would restore to the Transport Tribunal the power to determine fares outside the London area. If this principle is accepted, as I hope it will be, no doubt the Government would wish to consider the wording and whether consequential Amendments are necessary. I beg to move.
Amendment moved—
Page 46, line 12, leave out from ("railway") to ("and") in line 14.—(Lord Milverton.)
LORD HAWKE: Might I point out one small slip in my noble friend's statement? By a majority of two votes, this House decided that there will not be co-ordination between bus and rail fares, and therefore there can be no suggestion of a monopoly. Moreover, anybody who has had any experience of running a railway must realise that one of the reasons why railways have perpetually gone into deficit has been the tremendous delay all over the world—it does not apply only to Britain—in relating fares to the devaluation of currency. The noble Lord's Amendment is only proposing to perpetuate that state of affairs, and I, for one, would support the Government in rejecting it.
LORD MILLS: I am glad that my noble friend Lord Hawke has spoken in support of the Government. I was under the impression that we had debated this matter pretty fully on Amendment 108A, moved by the noble Lord, Lord Shepherd. The fact is that the present restrictions on the ability of the railways to adjust their freight charges and passenger fares quickly and adequately are, in the Government's view, no longer justified in the present competitive conditions. I do not think I should be far short of the mark if I said that the delays which resulted
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because authorities and others could appeal were to some extent responsible for the heavy deficits of the railways. It is our deliberate intention to free the railways from statutory control over their charges, except for fares in the London Passenger Transport area, where we admit the railways have a monopoly. Surely that carries with it the idea that there shall not be public hearings and that there shall not be a right of appeal, but that, instead, the railways should adapt themselves to the circumstances of the time. We hope that that will prove the right thing to have done. I am sorry that I cannot agree to the noble Lord's proposal which, in effect, would restore the Transport Tribunal's right to look at all the fares before they are brought into force and to hear objections to them.
LORD MILVERTON: I thank the noble Lord for his reply. While I think it will leave the local authorities as dissatisfied as they are at present, I have no wish to carry the matter further now, and I beg leave to withdraw the Amendment.
LORD SHEPHERD: Before the noble Lord withdraws his Amendment, may I say that I understood the noble Lord, Lord Mills, to say, with regard to the Amendment I moved, that he would give consideration to the various points I made. I hope that the rather adamant words he has just delivered on the Amendment of the noble Lord, Lord Milverton, do not mean that his mind has been made up to the extent that he will not consider the points that I made in regard to some special areas of Scotland and Wales.
LORD MILLS: I am always only too willing to consider what the noble Lord has to say on any point, but I do not think I gave any commitment at all that there could be any intention on the part of the Government to restore the authority of the Transport Tribunal over fares anywhere.
Amendment, by leave, withdrawn.
Clause 45 agreed to.
Clause 46 [Applications for orders]:
10.7 p.m.
LORD MILVERTON LORD MILVERTON moved, in subsection (8) (c) to leave out all the words after "Area". The noble Lord said: I should be far short of the mark if I noble Lord, Lord Shepherd, and myself

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are associated with this Amendment will convince the House that it carries a great deal of reason behind it. Under Clause 46 representative bodies are to be enabled to object to applications made by the London Board and the Railways Board to the Transport Tribunal for fare increases in the London Passenger Transport Area. Subsection (8) excludes from the definition of "representative body" seven non-county boroughs all of which have a population of less than 50,000. This, I am aware, follows the precedent of previous legislation but it nevertheless seems arbitrary to exclude a few authorities in connection with a matter where the level of population has relatively little relevance. The smaller authorities surely, equally as well as larger authorities, represent public opinion in their areas which can otherwise only be made known through the county councils which are more remote for the transport user.
The Government, I realise, consider that the clause as drafted provides a reasonable balance between the need on the one hand to ensure that proceedings of the Transport Tribunal are not unduly protracted, and, on the other, to ensure that the views of representative local bodies can effectively be put before the Tribunal. There seems then, to be no reason at all to suppose that the amendment of the clause in the way desired is likely to bring about any undue increase in the work of the Transport Tribunal, and hence the Amendment proposed, which extends the definition of representative body. I sincerely hope the Government will be able to see the reason which lies behind this Amendment. I beg to move.
Amendment moved—
Page 48, line 43, leave out from ("Area") to end of line 45.—(Lord Milverton.)
LORD CHESHAM: The noble Lord who moved this Amendment has left me a little standing, as he has put both sides of the case already. I had not thought that it was on the whole desirable to accept this Amendment for the reasons that he stated. I think that the status quo, so to speak, which has now existed for some time, has worked well in practice. I had not thought that there was any complaint that any of the smaller authorities had suffered; I thought it had worked well. There is
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certainly the point that the more authorities who can make representation, the more the work of the Tribunal is bound to increase. They can in any case, as no doubt they have done—as I say, it is working quite satisfactorily—make their views known to the county councils within whose areas they are placed, so that they who can make representations can make them on their behalf, and their views be brought forward in that way. I should have thought that in the circumstances the Amendment was unnecessary.
LORD MILVERTON: I thank the noble Lord for his reply and can only say that I regret he is so impervious to reason. But I do not wish to carry the matter any further, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 46 agreed to.
Clause 47 agreed to.
Clause 48 [Special procedure for temporary authorisation of increased charges]:
LORD SHEPHERD LORD SHEPHERD moved, after subsections (4) to insert:
("( ) A public inquiry under section forty-six of this Act in respect of an application under subsection (4) of this section shall be held within one month after the time for lodging objections and representations has elapsed.")
The noble Lord said: I hope the Committee will consider this a reasonable Amendment. Clause 48 deals with the special procedure for temporary authorisation of increased charges within the London area. We do not object to the provision that the London Board should be able to raise its fares if it is faced with a sudden increase in costs. But, as I understand it, a public inquiry can be held into these increased costs, and this Amendment seeks merely to provide that there shall be no delay in holding such a public inquiry: that an inquiry should be held into these increased rates "within one month after the time for lodging objections and representations has elapsed". Whilst acknowledging the right of the London Board to raise these rates, we have the monopoly position which has been stressed so many times by noble Lords opposite. Perhaps there is a case for the increases, but if there is to be an inquiry—and I think there should be—

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the effect of a speedy inquiry will obviously be beneficial to the community. I beg to move.
Amendment moved—
Page 49, line 46, at end insert the said subsection.—(Lord Shepherd.)
LORD CHESHAM: I should like to establish the principle here and now that if one resists or recommends the rejection of an Amendment it does not mean one necessarily thinks it is not reasonable. Of course, the noble Lord is right in principle. I agree with him; it is desirable that this procedure should be speeded up. The only thing we have to discuss between us is the question, so to speak, of machinery. Under the existing procedure, which is in some ways a little cumbersome, the whole period of the inquiry—notices served, objections and so on and so forth—takes usually four months, and sometimes more. I ask him to bear in mind that the modifications to the existing procedure and to the constitution of the Tribunal between them are designed to speed up the procedure. There will not be any other charges schemes to take up their time.
The Tribunal are having their membership increased into two divisions, so that they can get on with their work more quickly; they will not be diverted sometimes doing one thing and sometimes another; they will be able to do both simultaneously. Also their procedure is being amended so that the original application by the Board to make an increase will be done by notice, published by the Board or Boards, whichever it is, in the London Gazette; and it will contain a brief statement of the grounds on which it is given, so that they will not have to put that one through. There will still be a period of a month for the Boards to make application for an alteration of the fares order, but the application has to contain a written case in support which will be available to objectors. That should reduce the time occupied by the public inquiry quite materially.
Usually at present the first two or three days of an inquiry are occupied by the B.T.C. case. They then have to adjourn for two or three weeks while the objectors consider that and work up their own case. This should now be unnecessary because objectors can prepare their
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case on the written evidence which is submitted with the application, all of which should have a speeding up effect. I think that this in itself will meet the point of the noble Lord.
There is one other point: it is one of dignity, in as much as the Tribunal has always enjoyed, and will continue to enjoy, the status of the High Court. In that case I do not think that it ought to do other than exercise its own discretion in the matter, and I do not think it should be told exactly how soon to do it. Perhaps in that case the noble Lord will think that we can rely on the improved procedure to provide the speed-up that he wants.
LORD SHEPHERD: I thank the noble Lord for a fairly satisfactory answer. I must say that I raised my eyebrows at his statement that this Tribunal is rather like a High Court and therefore must be allowed to do what it likes and should not be told what to do. These are the servants and not the masters. They are our protectors, or at least the protectors of the community; and even if we cannot tell them what they should do or when they should do their business, I think they should take into account the fact that in the interests Of the community any inquiry should be held with the greatest expedition.
LORD CHESHAM: I do not want there to be any misunderstanding about this. When I referred to dignity, I meant that they were a body whom one could rely upon to do certain things.
Amendment, by leave, withdrawn.
Clause 48 agreed to.
Clauses 49 and 50 agreed to.
Clause 51 [Revision of harbour dues]:
10.13 p.m.
LORD CHESHAM: I beg to move Amendment No. 117.
Amendment moved—
Page 5, line 2, leave out ("Inland Waterways Authority") and insert ("British Waterways Board").—(Lord Chesham.)
Clause 51, as amended, agreed to.
Clause 52 agreed to.
Clause 53:
Coastal shipping
53.—(1) If at any time a complaint is made to the Minister by any body appearing to

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him to be representative of the interests of persons engaged in coastal shipping as to—

(a) the charges for the carriage of goods by rail made by the Railways Board in competition with coastal shipping, or

(b) the charges made by the Railways Board for the carriage by rail to any harbour of goods which are to be carried by coastal shipping,

the Minister may give directions to the Board with regard to the charges which are the subject of the complaint.
THE DEPUTY CHAIRMAN OF COMMITTEES (LORD AIREDALE): I think that Amendment No. 118A is out of its correct place in the Marshalled List. With the leave of the Committee I will call Amendment No. 118A after Amendment No. 125, which I think is its correct place in the list.
LORD TEYNHAM LORD TEYNHAM moved, in subsection (1) (a), after "made" to insert "or proposed to be made". The noble Lord said: With the leave of the Committee, perhaps we could debate Amendments 121 and 122 together. The purpose of these two Amendments is to enable complaints to be made not only about charges that have already been put into operation by the railways, but also about charges which are proposed to be made. This is to ensure, so far as possible, that traffic is not lost to the railways before any action can be taken, as would happen if complaints were to be allowed only in the case of charges that have already been made. Traffic so lost to the railways would be very difficult to regain. The Transport Act of 1953, by Section 21 and the Fourth Schedule, recognised this and made provision for complaints by coastal shipping to the Transport Tribunal about railways rates to extend to proposed rates. I would suggest that it would be a good thing if a complaint could be made to the investigator at the same time as it was made to the Minister. I suggest that it would make a speedy procedure, and I feel that any statutory relationship between coastwise shipping and the railways should be such that it would be in the interests of both sides to continue on a voluntary basis, somewhat similar to the conference arrangements that exist at present.
I should like to raise one point that is not strictly applicable to this Amendment. I would suggest that companies
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engaged in short-sea liner services—which, as your Lordships are aware, carry general cargoes between ports in the United Kingdom and those in North West Europe—should be allowed to appeal against unduly low rail rates as a component of a through-rate. Unless care is taken to see that railway shipping, working in conjunction with the railways themselves, does not fix its rates on any other basis than the hard commercial core of rates which is forced upon private owners, the short-sea little ships will be driven out of business. They are quite prepared to meet fair competition, but I would say that when rate cutting is the result of subsidies provided by the taxpayer, then it is a different matter. Perhaps the Minister would be kind enough to give an assurance on this point; but, dealing with this Amendment as a whole, I beg to move.
Amendment moved—
Page 54, line 12 after ("made") insert
("or proposed to be made").—(Lord Teynham.)
LORD SOMERS: I should like to second this Amendment. If there is one section of our public transport that needs protection, surely it is our coastal shipping—not only for the invaluable use it is in peace time, but also for what it means to us in time of war. If it is going to be driven out of business because of unduly low charges by the railways, then there is no hope for it, because it is not a very strong competitor against rail haulage. Rail haulage is faster, and, of course, very much more able to reach various points inland. Personally, I feel that our coastal shipping is so important that it should be protected at all costs.
LORD SHEPHERD: We on this side of the House have given consideration to the Amendments that are on the Order Paper in the name of the noble Lord, Lord Teynham and Lord Somers. I think that there is some merit in the fear which noble Lords have expressed on numerous occasion as to the position of the short-haul coastal steamers. When one looks at coastal shipping, one should not, like the noble Lord, Lord Somers, say simply: "This is what we have; it has given us good service, and we shall keep it." I think we must consider

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this form of transport, and any other form of transport, in regard to the way it fits into the general pattern. Is it necessary? Is it a useful part? I think that coastal steamers can undoubtedly play a useful and important part in our transport service. It is true that on certain merchandise, because of their methods of haulage, rail, and possibly road also, are able to compete by quoting cheaper rates than those of the steamers because, as we all know, the steamers include in their freight rates considerable charges for loading and offloading. I think the noble Lord really has in mind, the possibility of the railways making charges which perhaps are uneconomic in regard to their costs. I think that could be investigated—in fact, it probably has been investigated.
We come back again now to the words of Dr. Beeching, and I should like to read them this evening because I think they are so important. Dr. Beeching was speaking at the Institute of Transport, and he said:
"To me a co-ordination of transport means the use of each of the various forms of transport to do those things which it can do best; best in terms of quality, of service and of cost. It also means avoidance of that condition when all forms of transport are competing blindly for all forms of traffic. Although most people accept the desirability of co-ordination in this sense, the plain truth of the matter is that transport as an industry has never moved very far from the conditions of excess capacity and blind competition."
This, I think, is the major problem, and I believe that the noble Lord, Lord Teynham, will agree with me. We have in transport to-day an excess capacity, in that all types of transport are fighting for merchandise to carry. Therefore, the competition to-day is mainly in the rates charged, and not in service or suitability.
If the noble Lord has made a case, I think it must apply equally right through all our forms of transport. In my view, this is the failure, the weakness, of this particular Bill, because it does not deal with these main elements of competition, which means that we do not use transport in the way which is most suitable. I think that the Government will have to devise—and the sooner the better—some system such as exists on the Continent by which, somehow, the rates charged for the movement
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of freight are equalised, so that they are roughly similar whether freight is moved by road, by rail, by coastal steamer or—as is done on the Continent—by inland waterway. There is no competition on rates, with one side of the industry undercutting another. But these services will compete with each other. They should become complementary to each other, providing the capacity and the facility according to the need.
The noble Lord, Lord Teynham, has put his finger quite clearly on the present weakness. He relates it to the position of coastal steamers, which is extremely vulnerable. But his finger points at a problem which applies right throughout the transport industry—in fact it has bedevilled the industry ever since 1953. We are moving far too much by road when it could well be moved by rail. It may be that we are to-day moving goods by rail which could well be moved by coastal steamer. The Government's decision as to how those goods were to be moved was probably based on price, through which the rest of the public, particularly those who are road-users, have been put to considerable inconvenience and danger. I do not think, with all the merits of the case that the noble Lord, Lord Teynham, has made, that we can relate this to the position of only coastal steamers and the railways. This is a very grave point, and it is one which the Government must soon face squarely—otherwise, we shall be in great difficulties.
As to the terms of the Amendment moved by the noble Lord, I should be grateful to hear from the Minister whether they are practical. I am not sure; but he certainly has made a case. It certainly applies, as I have tried to say, right through our transport industry. I know there is considerable concern not only on the part of the shipowners but also among those very gallant men who man our ships about their future employment. I think there is a case to be looked at. I am not myself sure what the answer is, unless we go right back to the words of Dr. Beeching when he talks of "co-ordination".
LORD CHESHAM: I think that at this hour I will address myself merely to the Amendment, and will let the noble Lord

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opposite have his say. I also will not address myself for very long to my noble friend's point about the short sea lines. I will simply say that in their case they have never enjoyed the protection that the coastal shippers have had. Coming on to the Amendment itself—or, rather, to the Amendments themselves—with the noble Lord, Lord Shepherd, I would say that I am a little doubtful as to exactly what these Amendments would do, and whether they would meet the point my noble friend is worried about. The provision in the Bill is that the Minister's power of direction following a justified complaint can be used only in respect of charges made. That is right. The noble Lord wants it to be "charges proposed to be made"; but, as it is, it is not intended to prevent complaints from being made and investigated about charges which the Railways Board may quote. I think we are almost getting down to the definition of "made", because if the clause did prevent investigation at an earlier stage the coastal shipowners on, for instance, the short-haul routes, where they get protection under subsection (1) (b) of Clause 53, might be quoted charges which were so high that they could not accept them. In that case, they could not have been said to have been made—or even, possibly, "proposed to be made". It is rather a difficult point to know exactly what to do about it.
I think the justification is—I do not want to get muddled about this question of "made"—if the railways are going to have complaints made against them before the charges are accepted, or before there exists a contract, they are never going to get any business. As the noble Lord has argued, protection is justified to the degree which the Bill gives in the case of shipping. But we must remember that we have also to try to run the railways as an economic proposition. I think the bar here would be to their legitimate trading transactions and the fact that they could be held in suspense because the commercial competitor enters a complaint against the rate that has been quoted. Unless it is actually charged, it will be impossible for them to enter into any commitments at all. The uncertainty would lose business for them, as their customers, those who require transport, are getting much more choosy about satisfactory prices,
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regularity, punctuality, and so on. With the uncertainty it would create if we accepted this Amendment, I should like to look at the point again to make sure that prior consideration of a charge before it is actually paid is properly covered by the Bill. Otherwise, I should have preferred not to accept these two Amendments.
LORD TEYNHAM: I am grateful to the noble Lord, Lord Chesham, for undertaking to look at the point again, and I appreciate very much the assistance I have received from the Opposition Benches and the noble Lord, Lord Shepherd. I do not want to deal with the matter any further to-night, so I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
10.32 p.m.
LORD TEYNHAM LORD TEYNHAM moved, in subsection (1) (b,) to leave out ("to any harbour"). The noble Lord said: The purpose of this Amendment is to enlarge the definition of the short-haul by rail contained in paragraph (b) of subsection (1), so as to cover not only the haul from inland point of origin to point of shipment, but also from the port of discharge to the inland destination. I thought the fact that paragraph (b) applied only to short hauls in one direction might be a draughtman's omission; but I subsequently learned that this is not so, and that the short haul from port of discharge to inland destination had been deliberately omitted because the Ministry did not think that there were any cases where the traffic would be tied to rail, and therefore a rail monopoly. There are in fact a number of cases where short-haul traffics from port of discharge to destination is virtually tied to rail, but I do not propose to weary your Lordships with them tonight. But they certainly exist. If one adds up the whole amount, I believe it comes to something like a quarter of a million tons, which is really quite a lot of freight. I beg to move.
Amendment moved—
Page 54, line 16, leave out the words "to any harbour".—(Lord Teynham)
LORD SOMERS: I rather hesitate to speak in support of this Amendment at this time of night, but I hardly think anyone will consider this Amendment

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anything but (if I dare use the word) reasonable.
LORD CHESHAM: I do not want to accept this Amendment now as such. But the noble Lord is right; there has been a certain amount of consultation and negotiation on this question. He was also right in saying that the Bill as drafted was deliberately drafted in that way. I think that there is a case here, and if my noble friend will consider withdrawing these three Amendments now, we should like to consider them further. We have a definite sympathy with this point.
LORD TEYNHAM: I am grateful to the noble Lord, Lord Chesham, for giving this undertaking to look at the matter again, and I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD TEYNHAM LORD TEYNHAM moved in subsection (1), after "Minister," where that word occurs a second time, to insert:
"shall forthwith refer the complaint to a person appointed by him for the purpose of investigating it and of advising the Minister thereon.
(2) Any person appointed in pursuance of subsection (1) of this section shall be a person appearing to the Minister to have had wide experience of, and to have shown capacity in, industrial, commercial, financial, economic or transport matters.
(3) The Minister, after considering any advice given to him by the person to whom he has referred a complaint in pursuance of the said subsection (1),".
The noble Lord said: The effect of this Amendment is that, when a complaint is made to the Minister under Clause 53, it has to be referred to an investigator with the qualifications referred to in the proposed new subsection (2). I suggest that the nature of the advice given to the Minister as the result of the investigation would guide the Minister as to whether the case is one in which he can properly give direction to the Railways Board under the clause. In effect, the Amendment goes no further than to make statutory the procedure which the Minister has already said he intends to adopt. The Minister used these words in another place:
"When complaints are made, I propose to appoint an accountant of very high standing to investigate impartially and then report to me."
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It is of the utmost importance that the Minister, having accepted the principle of independent advice from an impartial third party, should write that principle into the Bill. I beg to move.
Amendment moved—
Page 54, line 18, after "Minister" insert the said words.—(Lord Teynham.)
LORD CHESHAM: The noble Lord is right. That is what the Minister said. The only thing that is between us is that I think, for reasons I need not go into, his Amendment goes further than what my right honourable friend said in another place. Again, I would ask him if he would care to withdraw it now. We will look at it sympathetically once more, with a view to putting an Amendment down at a later stage which would give effect to the undertaking of my right honourable friend.
LORD TEYNHAM: I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD TEYNHAM: I beg to move this Amendment formally.
Amendment moved—
Page 54, line 35, at end insert—
("(6) Before the vesting date references in this section to the Railways Board shall be construed as references to the Commission.")—(Lord Teynham.)
LORD CHESHAM: I am glad that my noble friend moved this Amendment formally because I want to tell him that it is not necessary, as what he wants is already achieved in the Bill.
LORD TEYNHAM: I am much obliged to the noble Lord. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 53 agreed to.
LORD MILLS: It might be to your Lordships convenience if we now adjourn the Committee. I beg to move that the House do now resume.
Moved, That the House do now resume.—(Lord Mills.)
On Question, Motion agreed to, and House resumed accordingly.

SHOREHAM HARBOUR BILL
Reported, with Amendments.
SOUTH ESSEX WATERWORKS BILL
Reported, with Amendments.

LETCHWORTH GARDEN CITY CORPORATION BILL
Brought from the Commons; read 1a, and referred to the Examiners.
House adjourned at nineteen minutes before 11 o'clock.