HL Deb 13 April 1964 vol 257 cc320-48

4.50 p.m.

LORD MORRISON OF LAMBETH rose to ask Her Majesty's Government whether, in view of all the circumstances, they will reconsider their policy so as to enable the Railways Board to undertake work with the existing powers provided by Section 13(4) of the Transport Act, 1962. The noble Lord said: My Lords, this Unstarred Question arises out of a Question I put to Her Majesty's Government a little time ago with regard to permission which had been sought by British Railways concerning a certain matter which had been vetoed by the Minister of Transport. I do not think there is any question but that British Railways have a right to manufacture equipment to run upon their own lines, equipment owned by British Railways themselves, though as a matter of fact they sometimes do it themselves and sometimes by contract outside. Nor is it contested that the Board has legal power to manufacture other equipment which is to be owned by private operators but is to be run on the railways of the Railways Board or any other associated Board. It is accepted that that would be lawful.

What has happened is that the Board, having satisfied themselves that they have that legal authority, and believing that it would be in the interest of the collective well-being of British Railways undertaking, proposed that they should be able to manufacture equipment of private undertakers running their own equipment or their own rolling stock as the case might be. I believe that some of the oil companies are going to do that, and there are others, among whom may be the National Coal Board—but I am not quite sure about that. If the equipment is going to run on British Railways, then the British Railways Board are in a position, arising out of their own experience of manufacture for their own purposes—they are technically equipped to do so—to manufacture for the purposes of those undertakings whose equipment will be running on the British Railways Board system.

It seems to me that that is all right, provided that the Board enter into competitive tender with other people, including private manufacturers, and that their tender is fairly worked out, as I am sure it would be. In any case, if the Minister found that it was not fairly worked out he could warn them, and then he might have to act. But that is most unlikely; and, in fact, there would be no sense in their putting in tenders as the result of which they would lose money. But in so far as the British Railways Board are in a position to tender for this manufacture, then to that extent it would be conducive to improving somewhat the finances of the Board's undertaking. It would also provide some employment for the railway workshops, in a number of which there are threats of redundancy, or there have been or will be. Therefore it seems to me, from the point of view of the nation as a whole, that that is a good thing, and I cannot see why they should not be allowed to tender.

Moreover, when it comes to publicly-owned undertakings, the Government sometimes create trouble for them in the name of free competition. For example, the Government denationalised a large proportion of the commercial road transport element of the former British Transport Commission, and they did it in the name of competition, the desirability of competition against the publicly-owned railways. They instituted commercial television, because they considered it desirable to set up competition against the British Broadcasting Corporation. So the Government are not only willing to stimulate competition against a public undertaking; the Government are eager to stimulate competition against a publicly-owned undertaking, because they have a bias in favour of injuring publicly-owned undertakings. Indeed, if they had their way the only publicly-owned undertakings would be those out of which there is no money to be made. If the Government had their way, the only publicly-owned undertakings permitted would be the undertakings that were losing money, so that therefore the expense could be put on public funds or at any rate set to the discredit of the publicly-owned undertakings.

All the railways are asking for is the right to tender—not for a prescriptive right to get a contract, not to exclude any private undertakings from tendering in order to prevent a check against the costs or the tenders of the Board. All they are asking for is the right to tender. But the Government say, "We will not let you tender." So, although the Government have gone out of their way to institute competition against public concerns, they are now going out of their way to prevent public concerns themselves from being competitive with others, even at the point of the right to tender. They say, "Not only shall you not get the contract. You may not even tender for the contract and put in a price at which you are prepared to do the business."

My Lords, I do not know, but I think this opens the Government to grave charges. I think the Minister is utilising his prerogative not for the public good, but to protect the allies of his political Party in the field of private enterprise. I think he is doing it for an ulterior purpose, in order to build up the profits of private undertakings and to prevent the modest relief of finance which would come to British Railways if tendering were permitted. Therefore, I think the Minister of Transport is guilty of utterly anti-social conduct.

This is not the first time that this has happened. There was the case earlier of the London Transport Executive. At that time the noble Viscount, Lord Mills, was in charge of the matter for the Government. The London Traffic Combine, the London Underground group of companies, headed by my late friend Lord Ashfield, had built up the Associated Equipment Company into a very successful private enterprise concern, which built and overhauled buses for their fleet. The London Transport Executive came along and had similar powers, and then a deputation of unions, concerned about the possible diminution of employment, not necessarily at the A.E.C. works at Chiswick but at other building undertakings too, met my noble friend Lord Stonham. They brought with them the minutes of a meeting they had had with the London Transport Executive. I mention this, not because it is directly involved in my Unstarred Question, but because it is part of the same business and the same process, and is therefore relevant to the debate.

The minutes of the joint meeting between these two trade unions and the Executive of London Transport said that the Secretary had said: … that under the Transport Bill, then in the Committee stage in the House of Commons, the new London Transport Board would have unlimited powers for the manufacture of equipment for the Board's use, subject to an overriding control by the Minister. But, unfortunately, the minutes also recorded that, Immediately before the Report stage "— not in the original Bill, nor at Committee stage, but "Immediately before the Report stage"— of the Bill in the House of Commons, the Executive were told that the Minister of Transport proposed to seek to amend the clause dealing with the manufacturing powers of the new Boards to be set up under the Bill, including the London Board, by including an Amendment which would prevent the Boards from manufacturing road vehicles, bodies or chassis for road vehicles, or major components for road vehicles.

The London Transport Executive made representations to the Minister disagreeing with this Amendment, and asking him not to pursue the Amendment, but they were rejected, and the Amendment was made at Report stage in the House of Commons. So there was a case where the private undertakings, headed by Lord Ashfield, had done this very thing; where the powers of the London Board to manufacture were continued, but where at Report stage on a Transport Bill the Minister promoted this Amendment to prevent their doing that very thing. This is reported at column 168 of your Lordships' Proceedings, on May 29, 1962. So here is another case where the Board was prevented, for its own purposes and for its own undertaking, from manufacturing road vehicles, and so on. My noble friend Lord Stonham very properly moved in this House that the subsection of the appropriate clause of the Bill should be struck out, but there was a Division and he was defeated.

What does all this mean? It means that the present Minister of Transport has greater obligations in his own mind, and in his own soul, to private, capitalistic interests than he has to the public interest. It means that he is a steady and consistent opponent of the public interest; that, being a good Conservative, he thinks it is his duty to look after the financial welfare of pri- vate profit-making businesses in the commercial capitalist world. I say that this man is unfit to hold office. He is unfit to hold office in public administration. The Prime Minister ought to get rid of him and let him go back to speculative building, where his philosophy would have ample opportunity of being expressed and coming out.

The noble Viscount, Lord Mills, replied to this debate initiated by my noble friend Lord Stonham, and practically all he said was that he recognised that he had a poor case—in fact, that he had not any case at all. That is one of the rare qualities that the noble Viscount, Lord Mills, has: he knows when he has no case, and admits it. I like a man like that; and I wish the Parliamentary Secretary, when he gets up, would say, My Lords, I agree with what my noble friend Lord Mills said on the other occasion. He knew he had no case. I have no case, and I will therefore say what my noble friend Lord Mills said on that occasion". Indeed, in column 170 [OFFICIAL REPORT, Vol. 241], Lord Mills said: I understood the noble Lord to say that if his Amendment were not accepted he intended to divide your Lordships' House, so I am not going to indulge in argument; I am just going to state the facts for the Record", and he went on with a thin summary of the facts, but no argument.

Why did the noble Viscount not argue? Because he could not argue. And I admire the noble Viscount very much for knowing when there is no argument, and frankly telling the House he is not going to argue. I doubt whether he will, but I wish the Parliamentary Secretary to the Ministry of Transport, for whom I have a great respect—I think he is a good Parliamentary Secretary, but he does bat on the most shameful wickets now and again, almost as if he enjoys it—would rise to the heights of Lord Mills and say, "I have got my instructions. The führer who runs the Ministry of Transport"—he is equivalent to the Führer of the Hitler German Reich in these respects, or, if you like, to the Chairman of the Council of Ministers of the Soviet Union, because he is a dictatorial man; he is bossy; that is why he is making himself unpopular —"has told me what the facts are. I cannot argue the case. I will not argue the case because I cannot, but I will give the House the facts".

My Lords, there is no defence for this at all. It is utterly anti-social, and the Minister of Transport is anti-social. He is opposed to the public interest. He has done his best to wreck the railways by stimulating reckless road competition. He is anti-railway. He hates railways, and he loves motor cars and bicycles. Why he is Minister of Transport I really do not know, and he should be thrown out bag and baggage as being unfit to hold that position. In fact, I think the Minister of Transport is unfit to hold any public office. He belongs to the capitalist world, arid that is where he ought to go back to. That is his natural place. Let him go profiteering in the capitalist world. After all, there are great opportunities for building development coming in the South-East under this "pretty, pretty" document of the Ministry of Housing and Local Government, and he is a bright spark at building. Therefore, he could have a go at that.

I do say that this is a wicked thing; that it ought not to be so. It is damaging to the finances of the Railways Board. It is denying them the right of tendering in free competition with private undertakings, and I therefore submit that it is an abomination. It ought not to be so. I hope teat the Government will give us a favourable reply, but I must say I am not too optimistic, because of their past or because of what I have said. It does not encourage them to make a favourable reply; but, as we are probably not going to get a favourable reply anyway, we might as well get a bit of argument out of it before the reply comes.

This matter was argued out in another place, and again the answer was that the Government consider that the business of British Railways is to run railways and not to manufacture. So they just stuck to their guns, and that is all there is to it. My Lords, this is one of the most shameful episodes in British public life, and I hope that, at any rate among the public outside, notice will be taken of the protest that we make against it.

5.5 p.m.

LORD HAWKE

My Lords, anybody who does not agree with the noble Lord, Lord Morrison of Lambeth, is generally anti-social, and this particular Government is generally, but not always, anti-Socialist. I think, with that slight emendation, his description of them is probably correct. But, shorn of its polemics, this is the old, old question: what should the railways manufacture? We were the country that originally started the great world railway boom, and all through the last century and up to about 1930 or so the railway material business was one of our biggest and most flourishing exports. After the slump of 1931, things were never quite the same again. I recall that one of the biggest British locomotive manufacturers, a household word in the railway world, was, if I remember correctly, employing 21 men in 1931. I remember that because I was later connected with a foreign railway, and I was told that by placing an order for half a dozen locomotives we gave them the opportunity of restarting their works.

If the old British railways had not manufactured such a large proportion of their own material all that time, people like the firm I have mentioned would never have got into such straits. In other words, the boom and stump pattern which is typical of all capital goods, and which applies particularly to railway goods, requires that, to do an export trade, anybody should have a broad basis of trade at home. For that reason, I think it can be strongly argued that the railways manufactured a great deal too much of their own stuff; that far more locomotives should always have been manufactured outside the railways' workshops, and other material, as well. Because, given that broad basis of constant demand at home to carry their overheads, manufacturers would have been able to go out into the export markets of the world, where the competition is absolutely intense, with a better chance of success.

I think that this special plea, which comes up from time to time and always whenever there is a certain threat of unemployment in railway workshops, to allow them to extend their activities over non-traditional markets, is one that we have to be strong-minded enough to dismiss. After all, if you are creating employment in a railway workshop you are presumably taking it away from another workshop, and if one is to be- lieve the stones of the various unions about wages in the railway service, one can only assume that it is going to be performed by lower-paid workers, which is certainly not in conformity with the principles of the Party opposite. No, my Lords; a very strong national case can be made out for the railways to manufacture less, and always to have manufactured less, in their own workshops than they have done over the last three-quarters of a century.

5.10 p.m.

LORD STONHAM

My Lords, I have no doubt that the noble Lord, Lord Chesham, being, as I know he is, a good Parliamentary Secretary, will indicate a repudiation on behalf of his right honourable friend of some of what my noble friend Lord Morrison of Lambeth said about him. Nevertheless, there is a strong, growing and accumulating case for saying that in all these transactions there is a very strong private-enterprise bias. The noble Lord, Lord Hawke, said that the railways should not do so much of their own equipment work; that they should not do what he called the nontraditional work.

I understood—and I know that the Minister of Transport has said this many times—that we want a twentieth-century transport service; we do not want so much of the "old traditional". Indeed, he brought in Dr. Beeching, a famous apostle of private enterprise, who in turn enlisted the support of Batchelor's Peas and many other distinguished exponents of private enterprise, in order to give a new look and a new policy to British Railways; and it is Dr. Beeching's proposal that the railways should be allowed to tender for this particular work which forms the whole crux of my noble friend's Question and the whole burden of his complaint. It seems to me that it is reasonable to say that the left hand of the Government has ordered the railways to make a profit and theright hand is destroying all their chances of doing so.

The 1962 Act laid on the British Railways Board the task of eventually (I am not using the exact words) making the railways viable; and this is one of the ways in which Dr. Beeching hoped to do so: it was not done only to provide employment. And this is after Dr. Beeching has taken steps to reduce the number of railway workshops and the number of shopmen. Therefore it is reasonable to say—and I hope that the noble Lord will answer this point when he comes to reply—that Dr. Beeching thought there was good commercial, economic reason and "twentieth-century tradition" for engaging in this particular enterprise. The noble Lord, Lord Chesham, is aware that when questions are asked on matters of detailed management affecting British Railways the usual reply given, quite rightly (although the noble Lord may give a private or personal answer) is that these are management matters and must be referred to the Railways Board. I should have thought that this particular matter of being allowed to tender for railway equipment was, in fact, a management matter and one on which the Railways Board should have been allowed to decide. I put it to the noble Lord, Lord Chesham, that this is one example of the left hand ordering the railways to make a profit and the right hand destroying their chances of doing so.

My noble friend quoted the earlier case which I raised during the passage of the Bill with regard to the workshops of London Transport at Chiswick and Aldenham. The noble Lord will remember that earlier, when the Bill was first produced, they would have been allowed to go on with their repair work there; and it was a later Amendment—which I sought to remove; and which the Government introduced during the passage of the Bill in another place—that produced the present situation. I had always thought that what I refer to as these apparently "daft" management decisions of the Railways Board were the work of Dr. Beeching; but I am now coming to believe, in view of this decision about tendering, that they are not; and that Dr. Beeching, as on this occasion, is acting under orders. I refer to the loss-making decisions, of which there are so many examples, because it now appears that there is substance in the case that the Government, knowing that they could not secure majority support for denationalisation of the railways in the ordinary way, are determined on denationalisation through the back door, or on "death by a thousand mistakes".

There are other examples apart from this particular case of refusal to tender. Perhaps the noble Lord when he replies will say who is responsible—the Minister of Transport or Dr. Beeching—for giving three weeks' notice to the Derby railway workshops that they are to cease dismantling surplus railway stock and recovering the material so that it could be used again. This is now to be done by private enterprise; and British Railways will then buy back their own material at a price which will include two profits. On whose instructions is that to be done? And can we know, in general, on whose instructions—is it the Railways Board or the Minister of Transport?—railway property, when it is scrapped, is to be sold to dealers at give-away prices? And on whose instructions do the Board refuse offers made by local authorities or by other bodies, sometimes private, which desire to preserve a railway? In some cases of this kind a line is scrapped by the Board. If the Minister genuinely wanted to assist towards the viability of the railways, then, if these decisions are being made by the Railways Board to dismantle their own lines, he would intervene and reverse those decisions. Otherwise, it seems that the Government, to reduce or lose altogether the railways' chances of making a profit, are ignoring all these steps the Board are apparently taking. They are intervening adversely in the case to which my noble friend referred when the Railways have a chance to make a profit.

Perhaps the noble Lord would say something on this point about the question of staffs and whether this policy has the approval of the Government.

LORD CHESHAM

I am sorry, my Lords, but I am not clear where we are now. Did the noble Lord say "staffs"? Which staffs?

LORD STONHAM

My Lords, I was referring to the stars employed in the railway workshops. I have just referred to Derby workshops and to the decision, as I understand it, that railwaymen in these workshops shall no longer do the work they have been doing in the past. That must create redundancy. The refusal of permission for the Railways Board to tender for these contracts is likely to create redundancy. The point I want to make is that last year there were 38,000 fewer railwaymen's jobs—that is the Board's own figure and therefore cannot be disputed. I do not say 38,000 fewer staff; but 38,000 fewer jobs during the year. But, meanwhile, the number of jobs at headquarters has been increasing. For example, since 1948 the staff at Marylebone has increased from 59 to more than 650—an enormous increase in headquarters staff. Who is responsible for what could be interpreted as a deliberate attempt to make sure that the railways lose money left, right and centre?

I would quote one other example, which came to me only this morning, from the Templecombe Parish Council. They sent me the label by which freight, which they described as clay traffic, was sent from the Wareham area to Fowey, in Cornwall. They say that this traffic, instead of being moved for a distance of 30 miles, taking three hours, was deliberately sent by a different route so as to travel 50 or 60 miles longer and to take some 20 hours longer in time. I have all the details here.

These things are extremely disturbing, because every day matters of this kind come to my knowledge. They cannot be properly investigated, unless we can talk about them here and get an answer. Failing a satisfactory answer, I would say that the evidence is piling up to provide justification for my noble friend's suggestion that in various ways decisions are being made—and we ought to know who is finally responsible for these decisions—which steadily, step by step, are removing from British Railways all chance of their reaching viability; and all because the railways are a publicly owned industry and because of the prejudice of the present Government against publicly owned industry.

5.25 p.m.

VISCOUNT MILLS

My Lords, I am brought to intervene in this debate, not so much because the noble Lord, Lord Morrison of Lambeth, mentioned my name in the course of his speech, but because of what I regard as his unwarranted and intemperate attack on my right honourable friend the Minister of Transport. The noble Lord was kind enough to inform me, with his usual courtesy and kindness, that he was going to mention my name, but he said that I need not bother about that and could safely go home—and, indeed, he said nothing about me which would cause me to get up. He said that I asked your Lordships to rely upon the facts and that I did not indulge in any argument. I do not think that argument is a very strong point of mine, if I have facts to support the case.

But in connection with his attack on the Minister of Transport, I should like to say that my right honourable friend has worked and slaved to try to improve the efficiency of the national services for which he has a responsibility. Nothing has been too big for him to do, nothing has been too arduous for him to do, to try to promote efficiency. I would say that the Socialist Administration which set un these nationalised concerns did not do much more than set them up. They did not do much to ensure that they should be efficient. I think that the Minister is quite entitled to judge whether, in the interests of efficiency, the Board, where they have to seek his permission, should or should not do a particular thing. I do not like to hear the Minister criticised and told that he should get out because he is anti-social. He is nothing of the sort. His actions are dictated by the desire, which has all along actuated the Conservative Government, not to destroy the nationalised industries but to see that they work efficiently. I am sure that that is the sole object of the stand my right honourable friend is making.

I wanted to get up and say this, because I honestly believe it; and I think that the noble Lord, Lord Morrison of Lambeth, whom I have always found to be fair, should just look at this problem again and see whether he cannot come to the same conclusion.

5.27 p.m.

LORD MERRIVALE

My Lords, I hesitate a little to venture into this debate, which seems to be a private controversy between the Opposition and the Minister of Transport, but I sincerely hope that my noble friend Lord Chesham will stand fast with regard to the tendering by British Railways for the manufacture of privately-owned railway equipment.

I say that for several reasons. One of these reasons is that British Railways already manufacture a large proportion of their own requirements of equipment. In certain items they manufacture 100 per cent. of requirements. Their practice differs radically from that of almost every other national railway in the world. Foreign railway systems purchase about 100 per cent. of their requirements from private manufacturers. On the other hand, British private manufacturers have little domestic business on which to base their export efforts. This point has already been made by my noble friend Lord Hawke.

With regard to this question of tendering by British Railways for privately-owned equipment, I believe that I am right in saying that the policy of British Railways is to limit their production to a small number of standard types, and by standardising these types they have been able to achieve certain economies. If, as was suggested by the noble Lord, Lord Morrison of Lambeth, they were to embark on the manufacture of equipment for special requirements—equipment usually tailored for specific firms—the benefit of standardisation would certainly be lost. For these reasons, I sincerely hope that my noble friend will stick to his guns—or rather to his right honourable friend's guns.

VISCOUNT STONEHAVEN

My Lords, I did not initially mean to intervene in this debate, and I shall be only a few minutes, but I think that it would be a pity if nobody mentioned the achievements of British Railways over recent years. Everybody would think that we had a third-rate railway system. Of course, there are black spots, but the good trains are second to none in the world, and I think that this point should be made, and made again. I think that all these articles slinging mud at the railways and those in charge of them should be torn up and buried in the waste paper basket. I suppose that all this reflects on the Minister of Transport. I do not know him personally, but measured purely in accomplishment over the last ten years I think he has accomplished more than has ever been done before.

5.30 p.m.

LORD CHAMPION

My Lords, as a railwayman, I am glad to hear the noble Viscount, Lard Stonehaven, pay that compliment to railways and railwaymen: I must say that, in the circumstances, I think it is justifiable. The noble Lord, Lord Hawke, said that this question of the manufacture by a publicly-owned undertaking of goods for use outside that undertaking is an old question which was considered under the Act of 1947.

LORD HAWKE

My Lords, does it not go back still further? This controversy as to how they should manufacture used to rage in the days of the old railway companies.

LORD CHAMPION

I do not think it is the case that under the 1921 Railways Act they were specifically prevented from manufacturing for outside bodies if they so wished. I think the first prohibition was contained in Section 2 of the 1947 Act, which, as everyone knows, was passed by the Labour Government.

The 1947 Act was intended to give the British Transport Commission near monopoly conditions for long distance road and rail freight traffic, and the restrictions as to freight rates were designed to ensure that that power was not abused. The point I would make in connection with that Act is that there were a number of political considerations surrounding the prohibition of manufacture included in the Act, arising out of the fact that, although the Labour Party had in the House of Commons at that time a substantial majority sufficient to enable them to push through any legislation, they had to make sure that it would also get through the House of Lords, where there was then a large and hostile majority. Many of the things we should have liked to have in the 1947 Act were not done because of this simple fact. It is true—and I think some tribute should be paid here—that we did not know at that stage quite how this House would behave in relation to the other place. We had not had the experience of the noble Marquess, Lord Salisbury, leading the then Opposition as sensibly as he did, which eventually proved to us that this House on certain matters would behave reasonably in relation to legislation which was being pushed through the other place.

The Act of 1962, to come a little closer to to-day, was designed to meet conditions produced by reason of the denationalisation of road transport and the removal of these near-monopoly powers which I have mentioned. The Act of 1962 was designed to give to the various Boards greater competitive powers and commercial freedom. It is true that an exception to this commercial freedom was a retention of the prohibition to manufacture anything not required for the purpose of the undertaking, which was contained in Section 13 of that Act. This we regarded as an exception quite unjustified in the circumstances created by the 1962 Transport Act, and Section 13, as has already been mentioned by my noble friends Lord Morrison of Lambeth and Lord Stonham, was fought by the Opposition. We thought it quite wrong to include this prohibition at a time when Parliament was giving to these undertakings the degree of commercial freedom that seemed to be justified in the circumstances created by the Tory Government. I remember moving an Amendment on this matter which was rejected by the noble Viscount, Lord Mills, who was then speaking for the Government. But Section 13 also clearly enabled the British Railways Board to manufacture products for anyone, always provided that they were designed for use on the railways, although this was, as of course this case clearly proves, subject to the Minister's veto.

Mr. Marples appointed Dr. Beeching with a mandate to make the railways pay. Dr. Beeching's drastic Report of 1963 was accepted, in principle, by the Government. I must say that it was a Report with which I found myself largely in agreement, given the conditions produced by successive Tory Governments and, to some extent, I agreed with the mandate which had been given to Dr. Beeching. Much of it I would have accepted even without those conditions: for I have never been one of those who sought to retain for ever the shape of the railways produced by the railway age of the last century, a good deal of which has clearly outlived its usefulness. I have always accepted this, and that is why I have refrained from sniping too much about the closing of the branch lines, although I suppose that my knowledge of the industry would have enabled me to do this. I believe that the railways have to be remodelled largely on the lines proposed by Dr. Beeching in his Report of 1963.

This man was brought in to make the railways pay. His intellectual capacity and commercial training enabled him to look at the railway problem with a fresh and pretty ruthless eye. He is the man who proposes to reduce the number of men employed in the main railway workshops by over 19,000 in five years, with disastrous consequences to the staff, and, indeed, in some cases, to whole railway towns. This will result, he has told us, in an annual saving of £4 million. This man, who was brought in for this special purpose, is the man who submitted a Memorandum to the Minister of Transport setting, out in six paragraphs his proposals for the future manufacture of equipment. These paragraphs were as to the exercise of his powers under Section 13 of the 1962 Act.

Paragraph 6 of this Memorandum reads: It is quite possible that rail customers may increasingly wish to own their own rolling stock and containers; particularly the latter. The Board are advised that so long as privately-owned railway equipment is manufactured for use on the Board's railway system or on that of any other Board (within the context of Section 1 of the Transport Act, 1962), which has railways, the Board can themselves lawfully tender for the manufacture of that equipment; otherwise they cannot. It is the intention of the Board, therefore, to seek opportunities to tender for the manufacture for their customers of privately-owned railway equipment which is to be used either on British Railways or on the railways of any other Board. I think it should be noted here, and underlined, that the operative word in this connection is "tender". Clearly, this means that the tender, to succeed, will have to be competitive, both as regards price and as regards quality. There was nothing in this Memorandum, or anything behind it, which suggested in any way: "Buy with us, or else you will not be able to use our undertaking". Indeed, Dr. Beeching dare not use that sort of threat. All he was asking for was a straightforward opportunity to make equipment for a lawful purpose if the tender of the British Railways Board was accepted; and the Minister's sanction was all that was required in this connection.

To that memorandum, submitted by his specially appointed commercially-minded man, Mr. Marples, replied "I decline to approve proposal No. 6." He reserved his position in relation to, I think, one other proposal, but he declined specifically to give his sanction to permit the British Railways Board to tender for the manufacture of the equipment set out here. Why did the Minister decline to approve this proposal to allow the Board lawfully to tender for the manufacture of this equipment? I have read most carefully the replies given by his Parliamentary Secretaries in both Houses. They amount to this: first, that Dr. Beeching's proposal would not accord with the Government's policy for the British Railways Board, which is to provide railway services; second, that if this facility was given to the British Railways Board, certain private firms might go out of business altogether: third, that never once in the history of railways have they ever manufactured for private concerns; and, fourth, that the validity of the costing systems used by the British Railways Board might well be in question.

Let me say a word on the first point, that the job of the British Railways Board is to provide railway services. This is, I admit, quite in line with all that the Tory Government have done in this connection—namely, that, no matter how great the amount of publicly-owned capital involved, no matter how much of it might be wasted by a doctrinaire decision, how many of its men may be made redundant, or how many whole towns may be made to suffer, the publicly owned capital must be wasted, the men dismissed, and towns injuriously affected. That is the beginning of the Minister's reply. This is, in other words, protecting capitalism against the public interest. I am sure that this is one of the few points that Mr. Enoch Powell would find satisfactory in the present Government's policy.

More and more this Government are saying that to safeguard our future there must be a greater element of competition in our economic system. The abolition of resale price maintenance and further action against the monopolies are promised, and it is all said to be part of this job of providing greater efficiency in our economy as a result of competition. Yet by such decisions as the one we are now discussing, the Government are prepared to reduce the element of competition by specifically debarring the publicly owned undertaking from entering into competition for the manufacture of wagons to be used on its own system.

The second argument was that many privately owned firms might go out of business if the British Railways Board were given this right to manufacture certain types of railway wagons. This argument seems to me to come strangely from a Government who do not seem to care how many small shopkeepers would go out of business as a result of the Resale Prices Bill. I do not want to see privately owned wagon manufacturers go out of business, any more than I want to see the small shopkeepers go out of business, unless (and this is the point I want to stress) they are a drag upon our economy. If they are a drag, they ought to go out of business. The Government say that unless that small shopkeepers can compete successfully, they must go; but so far as the privately owned wagon makers are concerned, if they cannot compete with the publicly owned undertaking the competition by the British Railways Board must be prevented.

It seems to me to be a strange inconsistency, even for this Tory Government, that while, on the one hand, they say they are fighting for competition, when it comes to the competition between a publicly owned undertaking and a privately owned one, the Government, or Mr. Marples, steps in and says, "No; no competition of this nature". I agree with the noble Lords, Lord Hawke and Lord Merrivale, that if private firms are to compete abroad, it would be nice if they had a good solid market at home as a jumping off point for their competition abroad. I would say that it would be a good thing for those private undertakings to be stimulated into efficiency by competition at home, for a start; and if they are good enough to win contracts from the British Railways they would be in a pretty good condition to fight the competition of the foreign manufacturer.

The third point was that the railways have never once manufactured for private industry. Never once, until this Government's actions drastically reduced the railways near-monopoly position, have railways had commercial freedom to compete on freight rates or rail fares. From their very beginning they were hedged about with restrictions, and rightly so, in monopoly or near-monopoly conditions. But the Conservative Government said, "We are now removing all that and they will be, and are, free to compete." That is what they said in the 1962 Act. The purpose of that Act was to give them greater commercial freedom. They specifically excepted freedom to compete for works for their shops to produce for outside industry products having no relation to their function of providing transport facilities. But in the provisions of the 1962 Act there was no prohibition against manufacturing for railway purposes unless the Minister so ordered.

We were led to believe that Dr. Beeching and the 1962 Act were heralding a great departure from the thinking of the nineteenth century; that gone were the restrictions of the nineteenth century; that the railways must use to the full their efficient capital and close down the rest. In this new beginning, Dr. Beeching closed branch lines and ruthlessly cut wasteful capital, but by his proposal to be allowed to tender he said, in effect, "Under the law, and economically using my capital, I believe that I can compete with the private manufacturers of wagons". He asked for permission to tender, and although the railways have entered a new competitive era this was denied to Dr. Beeching.

The last point—which was made by Mr. Galbraith in another place—was that the validity of the costing systems are in question. Is it really being suggested here that this great commercially-minded man, Dr. Beeching, whose drastic proposals for streamlining the railways shocked so many of your Lordships, is prepared to betray his training and background so far as virtually to "cook the books" in favour of the British Railways Board in order to tender successfully for orders for railway wagons? I would imagine that, with his background, he would recoil in horror from such a proposition, and I could understand that very well. The more I look at the Minister's decision in relation to proposal No. 6 of Dr. Beeching's memorandum, the more I am bound to see that decision as a narrow, doctrinaire decision, weighted against the general public interest, and in favour of a small group of manufacturers.

I am not one of those people who like to threaten anyone with what we will do when we again form the Government of this land. I believe that no Government should be fettered with dogmatic promises made with the authority of prominent leaders, regardless of the fact that by the time the promises have to be implemented circumstances will have changed, or may have changed, considerably. But I must say that I do support the statement about this ministerial decision by Mr. Marries, made by Mr. Strauss in the other place, and by others, who have said that immediately the Labour Party gets power again it will change this bad decision by this bad Minister.

5.52 p.m.

LORD CHESHAM

My Lords, the noble Lord, Lord Morrison of Lambeth, sets me some pretty problems. He always reminds me of an unskilled gardener who gets a lot of seeds from everywhere, jumbles them up and scatters them all over the place. Up comes every kind of plant and weed, and I am left as the chap who has to sort out the tangled mass of herbage. Somehow I must get the noble Lords opposite away from a position in which they have led themselves completely up the garden path, headed by the noble Lord, Lord Morrison of Lambeth. If I reject Lord Morrison of Lambeth's invitation to use arguments such as he has used, it will be because I propose to stick to the facts of the matter and not to deploy such arguments as noble Lords opposite used, which were loaded with Party political bias to a degree that I have seldom heard, even from them, before. The noble Lord, Lord Morrison of Lambeth, perhaps got into this position by abandoning the role we have become more used to recently, when some of his speeches might almost, it seemed, have come from this side of the House. Perhaps that is the reason.

I do not know whether the noble Lords who spoke opposite have forgotten exactly what happened, but I think I had better go back to the basis of the Transport Act, 1962. May I digress there, to hope the noble Lord, Lord Stonham, will forgive me if I do not respond to his suggestion that I should answer some ques- tions he put to me? I would point out to him that we are to-day discussing the manufacturing powers of the Board and not the repair arrangements, over which, of course, my right honourable friend does not have powers, as he does over the manufacturing ones. Perhaps on some other occasion it may be appropriate to do so.

I would remind your Lordships of what was the basic policy of the Government in the Transport Act, 1962. It was that the basic job of a railway system is to provide transport, not to make goods. It was the provision of transport which Dr. Beeching was asked to make a paying proposition, not the other things. Manufacture is, therefore, not the purpose of the railway workshops.

LORD MORRISON OF LAMBETH

My Lords, the noble Lord says that Dr. Beeching was appointed to run the railways and not to manufacture. Is he suggesting that Dr. Beeching is breaking his contract of service, that he is acting ultra vires by merely requesting that he should be able to tender in competition with private firms for this work?

LORD CHESHAM

Perhaps as my relating of facts goes on a little further it will become clearer, because, after all, I have said only two sentences so far.

As I said, the basic fact, which I repeat, is that it was the transport system that Dr. Beeching was asked (and this is a matter of policy) to make as far as possible a paying proposition. I believe that is perfectly clear; and I do not think that manufacturing is the purpose of the railway workshops. The purpose of the railway workshops is to carry out the repair and maintenance of the railway system and its equipment and so support it in its job of providing transport. But, all the same, as my noble friend Lord Merrivale pointed out, historically the railway workshops in this country have built up a manufacturing capacity which is almost unique in railway systems in the world, even if that manufacture, as it is, is designed to manufacture only for its own purposes.

If I may digress for a moment, I should like to point out that the French railways, which we are continually told are so much a pattern and example to us, do not manufacture their own capital equipment. This is done by specialist firms who are now among our biggest competitors in the export market. The railways in Poland do not either, and neither do those in the other Iron Curtain countries. Poland, in particular, is sending railway equipment all over the world. But I do not want to go on too long about other countries, because we must talk about our own. We in the Government have always recognised the practical fact that railway workshop manufacturing capacity exists, and that was why, when we brought in the 1962 Transport Bill, we approached the manufacturing problem in no doctrinaire spirit whatever. In fact, we left things exactly as they were. We gave the railway workshops the same field of custom for their product as they had under the 1947 Act—and if noble Lords opposite think that that is Party dogma at work they will believe anything.

But what is sauce for the goose, I am told, is sauce for the gander. Private rolling-stock makers have been hard hit by the general fall in the demand for rolling stock, and they have as much right as the railway; to expect that the status quo should continue to apply, and that the railways should not enter into an entirely new field of competition with these firms who, as taxpayers, can claim that they are being asked to contribute towards the finances of their rival. It is also a fact that, not so long ago, private firms were building more carriages and more wagons hr British Railways than the railway workshops were doing. The last year for which I have figures is 1962, and they were then, my Lords, on carriages. British Railways took from the railway workshops 666, as against 91 from the private firms. On wagons, they had 6,485 from rail way workshops and 2,244 from private firms. Although my noble friend Lord Hawke is not sure about it, I must say that I do not see anything immoral in those proportions. If noble Lords opposite believe that the situation that arises from that is the result of Party dogma at work, they will believe anything.

If only noble Lords opposite would look at all the manufacturing proposals which my right honourable friend has approved, and not just pick out those facts which are a suitable background music to the Party political song and dance they have chosen to put on, they would see that for their own require- ments the railways are entitled to give preference to their own workshops where there is level tendering. This seems to us quite natural, and my right honourable friend accepted this proposal. If noble Lords believe that this is Party dogma at work, they will believe anything.

I would, if I may, deal with a few other points, because there has been so much—"misconception" is a mild word really, but being where I am I think I will use it, about this matter, not only this afternoon. I would take the opportunity to deal with one or two points, not all of which may have been made this afternoon. The first is that my right honourable friend has chopped off a limb of the railways' existing activities. This simply is not true. The noble Lord, Lord Champion, reminded us that the Party opposite, in the Transport Act, 1947, gave the railways no power to build for outside owners, and in fact the Minister at the time made it clear that he was giving the Transport Commission the same powers, no more and no less, as those of the old main line companies.

Incidentally, the noble Lord may like to know that that business goes back well before the 1921 Act. There was litigation in 1873 on this very subject. That point, I must say, came from somewhere else and was not a result of searching inquiries. But we have made searching inquiries and we have so far failed to trace any manufacture by the railways for private owners before nationalisation, and there has certainly not been any since. In all that time, therefore, it is the private firms which have continued to make for private owners the private rolling stock, such as tank wagons, which, despite another misconception, was in fact permitted to continue in operation under the 1947 Act.

There seems to be some thought—the noble Lord, Lord Morrison of Lambeth, said it himself the other day—that my right honourable friend or I myself had admitted that there is a legal right for the railways to manufacture for private owners. What I said was that this was not the point. We are not concerned to confirm or deny this legal right. The legal interpretation of the Act is not for us. My right honourable friend has merely used his powers in order to up- hold the policy and the undertakings on the basis of which Parliament passed the Act as it now stands. But since it has been suggested—not only by the noble Lord, but elsewhere—that we have trespassed into the field of legal interpretation, I would only ask all concerned to look very closely at what has been said on the subject by my right honourable friend and myself, and they will find we have done no such thing. In fact, the position is that the Board are advised that they have the legal power in question, and private industry appears to be advised to the contrary. But my right honourable friend and I have in fact offered no opinion on that subject either way, and we see no reason to do so. Apart from that, as a matter of interest, I understand that action bearing directly on resolving these matters is still pending in the courts, and it would therefore also be improper if we were to do so.

It has also been said that a new situation has arisen since the 1962 Act was passed, and that the policy on which that Act was based should no longer apply. I remain unconvinced, and unrepentant on anything I have said on the matter. There is no new situation. Private tank wagons, privately built, operated on the railways then. They will continue to operate—more efficiently, rather naturally—on Dr. Beeching's one-commodity trains. They are not liner trains. That is another misconception. Liner trains are flat wagons carrying containers. There is no change in the situation, and I do not think the noble Lord can claim that is Party dogma, either.

It has been widely said—I thought it was not directly said but insinuated this afternoon—that my right honourable friend's decision has spread ruin and destruction throughout the railway workshop towns, meaning of course those towns which have nationalised railway workshops. Certainly the noble Earl, Lord Attlee, thought that, because he said so the other day, and so did the noble Lord, Lord Williams of Barnburgh; and, if a report in the Sunday Teleqraph of March 15 is right, the right honourable gentleman who leads the Opposition in another place told the London Labour Party Conference that he thought so too. We are asked to believe that Derby is devastated, Doncaster desolate and Swindon swept off the map. That is a wild allegation, and people who go about saying that sort of thing either do not know, or else are very careful not to mention that under British Railways current plan of workshop reorganisation there are only two workshops which, as well as doing repair and maintenance, manufacture new wagons, and those are Shildon and Ashford. So far as the rest are concerned, some repair and maintain wagons, and others, being locomotive or carriage works, are not concerned with wagons at all.

So far as the two wagon building works go, it has been said that my right honourable friend's decision has deprived Shildon of orders for cement wagons, and both Shildon and Ashford of orders previously placed by Shell for oil tankers. I am told that the cement wagons in question were never to have been anything but railway owned, so my right honourable friend's decision could not have affected them at all. As regards the tanker wagons, I need only say that the Shell Company issued an immediate repudiation of the allegation at the time it was made. It was published by some newspapers. I think I might be allowed to read a short extract. This is from the Yorkshire Post of March 13: An allegation that Mr. Marples, Minister of Transport, had deprived British Railways workshops of orders for oil tanker wagons worth £15 million was denied by a spokesman for Shell-Mex and B.P. last night … The spokesman … said Mr. Noel-Baker's letter was incorrect in its suggestion that Mr. Marples' ruling had caused Shell-Mex to reverse a decision. No decision had been made by the company at the time Mr. Marples made his ruling. British Railways, along with other concerns, had been invited to submit tenders to supply tanker wagons, but they had been ruled out on purely commercial grounds. The company's decision on where to place its order had not been affected by Mr. Marples' ruling. I am trying to dispose of this rumour. It has not been said to-day, I quite agree, but I wanted to tackle it while I was on that particular ground.

LORD STONHAM

My Lords, if I heard the noble Lord rightly, the spokesman for the company said that tenders had been rejected on commercial grounds. Could the noble Lord say why it was necessary for the Minister to intervene?

LORD CHESHAM

My Lords, I said that the Minister had not intervened and had had nothing to do with it. That was the purpose of my quotation. He did not intervene. I just wanted to make that point about that so-called loss of £15 million. I would point out that some of the talk I have heard about it, and some of the things I have read about it, certainly imply that that £15 million was a net loss to the railways, whereas if it had existed at all it would have been a gross one.

I must deal with this question of redundancy in railway workshops in relation to my right honourable friend's decision. I thought I understood the noble Lord, Lord Morrison of Lambeth, to say something about that to-day, and I have seen reports that his right honourable friend the Leader in another place has certainly said something. I said in this House the other day that there would be no redundancy at Shildon and Ashford resulting from my right honourable friend's decision. If these are the only two firms who would have built wagons, it is difficult to how not building them could cause redundancy anywhere else. There will he none at these two places where manufacture would have taken place. As a result of this decision there will not be any this year, or any change in the capacity under existing plans. All that will happen is that they will be doing more repair and maintenance work.

The noble Lord, Lord Stonham, asked about Dr. Beeching's position in this matter. I have no doubt that Dr. Beeching would have liked to have up his sleeve the possibility of this extra work. All good employers like well-filled order books and are out to get as much work as they can for their staff. But, in fact, neither Dr. Beeching's workshops nor his staff are going to be idle as a result of this decision. I understand that, at the most, about 250 men, all told, might have been employed by the railways on the job. But I think that, despite the rather denigrating attitude of the noble Lord, Lord Champion, to it, it is important to remember that, up to now, no tank wagons have ever been built in the workshops of British railways, and, as I have just said, the building of a given number of them can result only in employment for a specific number of work people expressed in man-weeks. There is no suggestion that these wagons will not be built in this country, and therefore this employment for British workpeople will be provided in any case in the workshops of the private firms. Therefore the effect of building a proportion of these tankers in the British Railways Board's workshops could result only in providing work for men who have never previously been engaged upon it, while an equal number of men who have been on it all their lives would possibly not have any work at all.

I should like to come back to the Question which started this discussion. My right honourable friend has no intention of reversing the decision he has taken—a decision, contrary to the views of noble Lords opposite, that he has taken in no doctrinaire spirit, but, as I am perfectly certain I have demonstrated, based on a practical and common-sense appreciation of the realities of the situation and an assessment of the real role of a transport undertaking. My right honourable friend's decision was not taken hastily. In matters of this kind there are always arguments in favour of both sides. But we have no doubt as to the rightness of the final decision. Above all, it is consistent, even if noble Lords opposite have completely forgotten about it, with the undertakings given to Parliament in a situation which has not changed since those undertakings were given.

I know that the noble Lord, Lord Morrison of Lambeth, makes great play of his personal political animosity towards my right honourable friend. He loves to say the kind of thing that he has said to-day. He knows that the shoulders of my right honourable friend are extremely broad. The noble Lord can really get up on his tub or his dogma kennel, or anything like that, and shout away about it. But it will not detract from the fact that my right honourable friend is going to prove just about the most successful Minister of Transport of all time. It must be most galling to have to admit it.

LORD MORRISON OF LAMBETH

Is it? Is the noble Lord admitting saying that it is most galling to him to have to say that this is the greatest Minister of Transport—past, present or future?

Is it galling to the Parliamentary Secreary? Does he hope to fill the Minister's position and hope to do better?

LORD CHESHAM

My Lords, I said that it must be galling for the noble Lord, not for me. And I think it must be. But of course, I do not expect the noble Lord to do other than take that attitude, because he has this business of Party dogma so much on his mind. He has it in his mind he has it in his soul. He has gone so far as to suggest that the nationalised railway undertaking should be allowed a new departure, with utter disregard of the consequences to the private sector of the industry, of its contribution to exports, the effect on its workers, or indeed of the national interest.

All noble Lords opposite can do is to see this matter in terms of profit. Profit can be most useful, and some of these old-established firms have kept the chaps in their jobs because of it—they have not an open-ended, bottomless, taxpayer-backed Exchequer to make up their deficiencies. My Lords, I think it is the Government who are shouldering their responsibility for the interests of both the public and the private sectors in a most realistic and practical way; and I say, once more and finally to your Lordships, that if the noble Lord, Lord Morrison of Lambeth, believes that his attitude is not based on Party dogma, then he will believe anything.

House adjourned at seventeen minutes past six o'clock.