HL Deb 10 February 1967 vol 279 cc1619-44

2.21 p.m.

THE EARL OF KINNOULL rose to ask Her Majesty's Government what action they intend to take in view of the recent announcement of the Railways Board's deficit in their last financial year of £130 million. The noble Earl said: My Lords, after that stimulating Welsh debate, I ask your Lordships to address your minds to a subject which arouses equal passion in some quarters; namely, the railways. When I put this Question down for to-day I did so in a spirit of objectivity and in terms which, if digestion permits, could lead those who are taking part in this discussion to a fairly wide-ranging debate.

I believe such a debate gives us the opportunity to express views on both the current Government policy and the management policy of the railways. It also gives the opportunity, of course, of raising political red-herrings, but I very much hope that when the noble Lord, Lord Shepherd, comes to reply he does not fall into this trap and so cloud the clarity of his arguments and lead us to suspect the frailty of his case.

The purpose of my Question to-day falls into three parts. In the first place, it is simply to ask the Government whether they are satisfied that this country is getting good value for its money when it finds itself faced, this year, with a bill for approximately £130 million for the railway deficits. Secondly, it is to demonstrate that many of the economy measures taken by the railways in recent years have resulted in little financial gain to the country and have taken place at the expense of increased public hardship. Lastly, the purpose of my Question to-day is to ask the Government perhaps the million dollar question: What positive steps do they intend to take this year to correct this ever-increasing financial drain from the public purse?

Anyone who has recently examined the Annual Reports of the railways will have noticed that the total deficit is in fact made up from two main sources: the operational deficit, which is the main guide-line, and the interest deficit payable on accumulated losses. These two figures are currently running at approximately £70 million for the operational loss and £60 million for the interest payments. What the purpose is in adding to the operational loss every year a sum almost equal to it in interest charges on past losses is difficult to fathom, particularly when no Government can seriously expect to be repaid on these accumulated losses.

The surprising feature of the operational deficit is that since 1964 it has varied little from between £68 million to £70 million, and yet during this period there have been over 286 closures of passenger lines, innumerable closures of freight services and depôts, withdrawals of many weekend passenger services, and a considerable reduction in staff. Yet despite all these economies, despite all these reductions in passenger services, despite all the reductions in freight services, and despite all the public hardship that has occurred, the annual deficit has remained exactly the same. The only inescapable conclusion one can come to is that this is a highly unsatisfactory state of affairs and that the country was getting better value from the railways in 1964 than it is getting to-day.

Perhaps I may now turn briefly to the sensitive subject of rail closures. The Railways Board estimated some time ago that recent closures would save something in the region of £17 million annually. On a number of occasions this figure has been strongly challenged by leading railway economists, who claim that the Railways Board appear to forget that the branch lines are the grass roots that feed the main lines. I would ask the noble Lord whether he can state the actual savings gained as a result of these closures. Such information may afford some grain of comfort to those who have been deprived of their rail services, and who now suffer the inadequacies of the alternative bus services. These inadequacies are very real—the services are slower, they are less frequent, they are less comfortable, they are less reliable in winter, and in some cases they have been withdrawn altogether.

The Government policy on closures is, as the noble Lord, Lord Shepherd, will be aware, a very sore point. Out of the window went their 1964 pledge to halt closures, and out of the window has apparently gone their full transport survey that was promised. In view of this, surely the least that should be disclosed is the figure of the actual financial savings from these closures.

One of the many reasons for passenger dissatisfaction with the railways to-day, and one which I am sure has contributed at least to part of the 5 per cent. loss of passenger traffic for this last year, is the recent wide curtailment of Sunday services. The pattern has been to withdraw these services from many areas throughout the country during the autumn, on the pretext that they are not being properly used, and then never to reintroduce them in the spring. These services are withdrawn without reference to the Minister or to the T.U.C.C., and those objecting have little or no chance to offer any effective or real resistance. There is clear evidence of hardship here, and I have been informed of cases in Wales where families and friends cannot be happily reunited at weekends because of the lack of Sunday services. I hope the noble Lord, Lord Shepherd, will be prepared to look into this matter, which brings nothing but discredit to the railways.

There are those who argue that the only way of making the railways pay, or to make them more viable, is to reverse the present trend and to increase passenger and freight traffic every year. Such advocates produce figures which show that from 1938 to 1966 French railways increased their freight tonnage per kilometre by 250 per cent.; Swiss railways by 400 per cent.; Japanese railways by over 2,500 per cent., and British Railways by 2per cent. With passenger traffic, the French railways increased by 75 per cent.; Swiss railways by 400 per cent., and Japanese railways by 8,000 per cent. British Railways succeeded in fact in reducing their passenger traffic by 3 per cent. Why is it, people ask, that the foreign railways appear to flourish while British Railways appear to wither? In fact, as I am sure the House will be aware, in 1965 both passenger and freight traffic fell by 5 per cent. It is my submission that whereas a loss of passenger traffic is understandable to a point, the loss of freight traffic is inexcusable and a trend which must be reversed, both on social and on economic grounds.

Before cooling here to-day, besides reading from the Annual Report I have attempted to discover why it is this trend has occurred in the last year. The most common complaints that have been made are, first, that the railways have an inflexible commercial approach which is outdated. and the attitude "Take it or leave it" is losing them business fast; and, secondly, the so-called rationalisation of freight depots apparently did not take into account the fact that customers would not be prepared to tolerate the extended transit time that has resulted. In the case of the London area alone, where 18 depots were reduced to six, the freight traffic has dwindled to an alarming proportion over the last year, and the result of this loss, of course, is a further increase of road congestion.

When I discussed the question of rail deficits with an old politician recently I was told that the Government answer to day would be a "lemon". I hope it is not. The Government must take full responsibility, as any Government would have to, for this continual loss. I suggest to the noble Lord, Lord Shepherd, that what the taxpayer requires to know to-day is the answer to four questions. Why is he getting less value for his money than in 1964? Why has the transport survey not been made? Why have the closures not been halted? Why has no positive step been taken to arrest this ever-increasing financial trend? Those are the questions to which I would ask the noble Lord to address his mind to-day.

2.32 p.m.


My Lords, I think the pertinent questions put forward by the noble Lord which require an answer are very important ones indeed. I would only suggest, with regard to the first two questions, that these lie with the Government which he evidently supported, because of the policy that has been followed since 1951 to date; the effect of that policy has been to bring about this continual trend that is taking place. I think it is right that he should put the third question and ask what the present Government are going to do to stop that trend. That is something that concerns many of us who have taken a keen part and a great interest in transport as a whole. I think there is a cynical disregard of the ever-increasing deficit of the Railways Board. The present estimate for 1967 of £130 milion is alarming, to say the least. We seem to be taking this just in our stride, and one must seek the reason why this should be so.

Let us look at the global figure of these deficits. If we take them from when the deficit first commenced—I will deal first with total deficits and then working deficits—we find that the policy that was followed under the 1947 Act for the first time brought some real finance into railway operation. We all know the very serious financial position in pre-war days of railways as a whole. They had their temporary respite due to the war, and after the war we found, when the decontrol took place, that at once the railways commenced to run into the deficit that was so usual in pre-war days. As the operation of the 1947 Act became more effective, we found that by 1952, after paying all working costs, paying all interest and central charges and so on, there was a surplus of £3.7 million. That is why we have to look at what has happened since that date that has now led us to a gross deficit of—these figures are staggering—over £1,345 million to the end of 1966. That is astonishing. Let me repeat: in 1952, with the common-sense operation of the 1947 Act, after paying all interest charges and meeting all working costs there was a surplus of £3.7 million. In the intervening years to the end of 1966, there was a deficit of £1,115 million. The nation has a right to be alarmed about this. We have a right to ask questions in this House and to probe it.

What has brought this about? If we take central and interest charges, we find they have been pretty static. From 1952 onwards they have gone from £35 million —a big increase—to £55 million, but if we take an average out each year for central and interest charges we find they have been reasonably steady. The big difficulty has arisen, naturally, in the operating deficit, and we find that in the operations up to 1955 the railways were able to meet all working costs and provide a surplus of £1.8 million. As the full effects of the Tory Government Act of 1951 have been felt, these operating deficits have increased to a remarkable degree. The railways commenced, let me repeat, by showing a surplus in 1955 of £1.8 million; in 1956 a deficit of £16.5 million. I do not want to quote all the figures year by year; one can find them in the Hansard of the other place for January 22, 1964, column 136, in a reply to questions. It gives the figures up to 1962, and by that time the operating deficit had risen to £104 millions. This is a proper responsibility of the policy followed out in particular by the Marples-Beeching régime. Dr. Beeching at that time went out with a halo around his head for the modernisation of transport and rail. He has been the biggest murderer of transport following the Tory Government policy that this nation has ever known. If we go on from 1962 to the present time, we find that the working deficit continues at £75 million, £62 million and £71 million. This is some thing that is very alarming.

A policy has been followed of closing branch lines, of hiving off everything that has been profitable on the railways side, of closing down railway workshops and handing out to private enterprise the maintenance production that railways require. I have before me two wonderful brochures issued by the Derby work shops in 1954. How proud they were, when I visited them on Monday, October 11, 1954, to indicate in this brochure that it was the railway workshops which experimented with the first diesels. By 1938 they had the first prototype diesels running They go on to say that by 1954 they were producing a number of diesel units, both main line and for shunting; and then suddenly they were completely deprived of their production. It was handed out to private enterprise, and we all know the sad story of the North British, and so on, in this connection.

In 1953 48 diesel locomotives were produced. They were stripped, repaired and rebuilt; and 25 new ones were produced for main line running. All this was taken away from the railway workshops and handed over to private enterprise. The significance attaching to this will be noted, because it is from that time onwards that the operating deficit and the gross deficit of the railways commenced to leap to the astronomical figures at which they stand now. Therefore, in reply to the first two questions of the noble Earl, I would say that the Government he supported, that side of the House, must take full responsibility, for this particular reason, for the tremendously steep increase in the deficit of the Railways Board, going on year by year.

If we take the Beeching-Marples era, traffic was constantly falling. If we take the coal traffic carried by rail in 1963 and compare it with that of 1966 we find there has been a reduction of 4.7 per cent. One understands certain economic changes that have taken place in the use of oil and electricity for power producing units. But we have only to travel the countryside, and particularly my own part of the world, in the great North-East, the industrial area, and we see the amount of coal which is now being carried by road; vehicles are cluttering up the roads where there should be an adequate rail service to carry it. At one particular time there was such a service. Of course, the branch lines and so on have been closed down, and we see the added congestion that is caused through this.

Since 1963 to the end of 1966 we find that there has been a decrease of 15.4 per cent. in the iron and steel carried on rail. Again, as we travel up and down the countryside we see much of this heavy traffic cluttering up our roads when it ought not to be there. We even see our motorways being developed in order to carry much of this type of traffic, but those concerned have neglected to connect them up to the docks and seaports where, if we are to be really economically solvent, the steel ought to be travelling for export. Instead of that, we see what takes place.

We see also what happens in regard to other quantities of traffic. I am not going back too far. I am quoting figures only from 1963. We find that there has been a further decrease of 2.6 per cent. in the volume of traffic carried. This is the story. This is the reason why these deficits are constantly growing. We know that the Beeching—Marples policy has been to cut out all sundries as much as possible. The noble Earl referred to what is taking place in this particular direction. If we take the sundries traffic we find that the closing up of many branch line stations and collecting depôts has deliberately sent this traffic off to the road. Those of us who live in rural areas have seen our local stations being closed, and are having to depend upon distribution from a given centre. We know that freight that is carried by rail and sent on by road is often waiting two or three days before it is delivered. These, then, are the reasons for the deficit.

To take some global figures, the total freight receipts in 1963 were £291 million. In 1965, the last total gross figure was down to £282 million: and the estimate for 1966 is £271 million. This reflects itself in the falling gross receipts. This is the answer to the question posed by the noble Earl.

Looking at the Accounts, while all the accounts are legally scrupulously correct, one wonders whether they are not overbalanced a little to show more of a deficit than they should. If we take the Depreciation Account and suchlike which is written off, we find that the depreciation has been quite considerable over the years. But when we come to the assets —I do not mean the rolling stock assets, but land values and so on—while there are certain items in the accounts which indicate the book value of the assets, one queries whether the correct land values have been brought into them. I am subject to correction on this, but I think the last valuation of land values took place in about 1963. We all know that there has been an appreciation in many depôts and areas of land where the station buildings have been pulled down. The land is most useful in the centre of a town. I do not think that assets have been written up to quite the extent they ought to have been. This could have a certain effect upon the accounts in this particular direction.

We find, too, a point that has been emphasised on a number of occasions, that the railways have never acted, and under existing statutory regulations never can act, on a commercial basis. In fact, up till now it is a one-way traffic, because the railways have been placing large con tracts to outside industries for vast quantities of their materials. We have also found changes within the administration which are supposed to be modernisation. There is, indeed, much to be desired, be cause departments have been established. In addition to the higher price that has to be paid for goods coming from private production compared with what it used to be under railway production, let us consider changes that are taking place in the Chief Mechanical Engineer's department, the divisions and workshops. We find the workshops have to produce to sell. The accounts of one department have to be adjusted to another's. A really fantastic set-up is in operation. I sincerely hope that the Government are going to have another look at this.

We find that instead of the 28 railway shops we had a little time ago, we have only 16. This is significant. If we take a place like Wolverton, at one time not only was there a most efficient shop but it was producing gas to serve the town. This is something that has been hived off and sold. This is a consequence of the Beeching, Marples, Watkins, Len- nox-Boyd set-up in previous Ministries of Transport under the Tory régime. I am afraid that when the subject of railways comes up I am inclined to speak for a little too long, but I feel that these are matters which have to be pointed out.

If we look farther into the matter of reorganisation, we have before us the out standing example of the British Rail way-owned service from Southampton to Le Havre, which was sold to the Norwegian line on the grounds that it was not profitable. The policy of the Government, as implemented by their minions in the Railways Board of that time, accepted that situation. Although it was suggested it should be transferred to a car ferry service, they would not allow that to be done and the line was sold. Now, of course, we see the Norwegian Olsen line making a tremendous profit on this service. They built two new car ferries in Norwegian shipyards, which was an order lost to our own yards, and they are now building a third. One could go on giving many of these examples if one had more time. There was the case of the proposed sale of Milden Quarry, and it was only after a great deal of hard work that that sale was stopped.

These matters have all combined to lead to this increasing deficit, and it is as well that they should be on record, because the present Government, owing to the short period of time they have been in office, have not had the opportunity to bring in amending legislation, as I hope ultimately they will do, to put these matters right. Furthermore, on the question of the accounts the Railways Board have to find some £3 million in order to keep in being a separate police force. Is such a force in its existence only for the Railway service? Additionally, the Board carry a burden of some £6 million for pensions and other things. I see that in 1963 they paid £92,600 in order to keep unremunerative bus services in operation—in other words, as grants to private bus companies to keep the services running. All these matters are reflected in the financial statement which we have before us.

Both inside and outside Parliament there have been savage attacks on railway men who, it is said, are not doing a good day's job of work and are against change. I would point out that since 1947 the railways staff has been reduced by half; since 1960 there has been a further reduction in railway staff of over 150,000. At the same time, since 1960 one finds that there has not been a steep increase in wages and salaries paid by the Railways Board. Despite all that is said about staff problems, one must recognise that staff is the largest single unit for which the Board have to provide. Furthermore, one finds that since 1960 wage rates and staff remuneration have remained pretty static. It is interesting to note that in 1960 salaries and wages paid to railway men amounted to £373 million; in 1965, they amounted to only £389 million—in spite of all the inflation and rising costs; and at the same time there was a reduction of 167,000 staff.

There have been many instances where the railway management have wanted to follow a certain policy which, because of directives by the Ministry on the part of those at the top, they have been unable to implement. One knows that there has been a remarkable procession of change after change. If I may go back, one remembers the old British Transport Commission as a policy-making body, with its various executives responsible for various forms of transport. The policy-making body tit the top decided that the best change from steam to some other form of traction was by electrification in densely populated areas and by diesel traction in less dense areas. The railways management went to great expense to heighten the bridges between London and Newcastle in order to take the overhead electric equipment. But then the dead hand of the Tory Government came clown, and said that, instead of electric power, diesels would be used. And yet one finds that the cost of using the electrical equipment resulted in an expenditure of £25,000 less than that on diesels.

The Government of the day, in the interests of the oil industry, decided that it should be dieselisation. Then there was the great hold-up that took place in electrification on the route from Euston to Manchester. Electrification went on as far as Crewe for five years, and then came the dead hand of the Tory Government, and that electrified route was not completed until last year. Now every body is extolling the benefits of electri- fication when the old railway management wanted to go ahead in this direction years ago. These are all costs which have had to be borne by the Railways Board and they have all contributed to this large deficit.

A third and very pertinent question was put to your Lordships by the noble Earl, Lord Kinnoull. What steps are the Government going to take, and how soon, to produce legislation which will treat transport not from the angle that each section, or workshop or branch line must be balanced to pay for itself, but from the standpoint that it should be part of the whole overall transport policy? We are entitled to say to the Government: "These are the failures of the past. How soon are you going to put them right? How soon will you give freedom to railway workshops to embark on work which they can well do as compared with out side bodies?" How soon are they going to get back to the old system carried out by private-owner railway managements which established their own workshops because of the difficulties they experienced outside? We all know about the numerous failures of diesel engines, and most people realise that what is required is overall electrification.

This matter of restoring to railway workshops the right to manufacture their own equipment has been pursued by many Members of the other place. Certain promises were extracted from the Ministry some time ago that this would be attended to as an urgent matter. It has now been postponed. I would ask my noble friend to press the Minister to do something tangible about these railway workshops, without waiting for legislation to come along later.

We hear a lot of talk about the National Freight Authority. We shall all be very interested to read the White Paper which is coming along, and if what we hear is correct—that this is to be something separate from other forms of transport—then I would again ask my noble friend to have another look at this, because under this Government transport must be looked upon as a whole. There is wide scope for road transport, inland waterways, air and everything else, but transport must be looked upon as a service to the nation, and we should not just separate roads, inland waterways, docks and harbours and railways and treat them as separate factors. We are too much inclined always to refer to transport as an industry. Certainly, transport requires industry to produce the goods, but of itself transport is a service, and we must look at it from that angle. There fore, when he replies, I hope that my noble friend will be able to tell me something comforting in that direction.

In conclusion, I should like to turn to another most interesting point. I wonder whether my noble friend would convey to the Minister of Labour, in his exalted position, with his railway background and experience, the urgent need to try to secure the amalgamation of the three railway unions—N.U.R., T.A.S.S.A., and A.S.L.E.F. It is a long-standing disgrace that these three unions remain as separate identities. Down the ages we have seen the warring factor between those three. We have just averted a strike or a work to rule, because of A.S.L.E.F. and their attitude so far as mileage is concerned, and I sincerely hope that the Minister of Labour will be more energetic in trying to secure this amalgamation.

I also hope that he will try to ensure that we get away from the position in the railway world where, if the lower-paid man gets a little bit of something, there must be these wide differentials. At the present moment, railwaymen on base rates are not well-paid, but many of them are able to get a very good remuneration because of the introduction of these so-called bonus and piecework earnings. But in consequence of having introduced these bonus and piecework earnings in certain grades, we witness a very disgruntled staff in other grades where the bonus system cannot be so easily applied. This is a curse which has been introduced, and I think a leaf ought to be taken out of the book of Jack Scamp, who is responsible for getting some easement in so far as the rates of pay at London Docks are concerned, where piecework and bonus rates are rather going by the board and a decent base rate is being established. That type of arrangement, not only on rates but on other conditions of service, ought to be earnestly thought about, and I sincerely hope that it will.

I can understand the reason why legislation has taken so long and I can under- stand the noble Earl's reason for pressing this Question and seeking an answer. Of course, the Government have had tremendous difficulties—they have had to overcome the hopeless mess which was left them by their predecessors; there is the economic difficulty which we have been experiencing, and they have been trying to put the nation on the right lines. Those are some of the reasons why up to the present it has not been possible to have legislation embracing all these services. But now, when we may be getting towards the end of these difficulties, I hope we can receive some indication from my noble friend that legislation is to be brought forward at a reason ably early date. If two bites at the cherry are required, a certain section will have to be dealt with immediately and a bigger and more co-ordinated measure will have to come later. I sincerely hope that my noble friend will be able to give some indication when that might be expected.

3.5 p.m.


My Lords, I was very pleased when I saw the Unstarred Question which the noble Earl, Lord Kinnoull, had put down for this afternoon, because it raises one or two very important matters in which I have been interested for quite a long time. I want to put certain questions to the noble Lord, although I am not expecting a very detailed reply.

The noble Lord, Lord Popplewell, said that the railways paid for a short time after the 1947 Act which was, taking the story of the railways generally, a very remarkable thing. I say that because, so far as I recall, they certainly were not paying, or were not paying very well, in the days of private enterprise for a long time before the 1947 Act came into operation.

The noble Earl mentioned what was happening in some foreign countries. He said that passenger numbers had increased and freights had increased. But although freights have increased in most of the countries which the noble Earl mentioned, the railways are paid a very substantial subsidy of one sort or another. They do not all get subsidies in the same way, and it is not very easy to find out exactly what form that subsidy takes or what sum is involved. But certainly the railways in Belgium, France, Italy and West Germany have a big Government subvention of some sort or another. I cannot talk about Japan, because I am afraid I did not have an opportunity to look into the figures, and I did not know that the noble Earl was going to refer to that country. I think one can say, therefore, that it is very difficult to ensure that a railway service is going to pay its way in the world at the present time.

I think the position might be greatly improved, as the noble Lord, Lord Popplewell, said, if one could get a co-ordinated system of transport, which I have always thought it was right to aim for, and that we should not try to make one branch of the transport system pay to the exclusion of the others. That is why one must regard the railway system as part of a general social service over most of the country; and that should be particularly applicable to those parts of the country where development is expected or wished to be encouraged. There has been considerable talk about whether some of the railways on the borders of Scotland should be shut down, although I do not think there has yet been any decision taken about that. But attempts are being made to develop that part of the country, and it is very difficult to develop part of a country if, at the same time, you take away the railway services.

Then there are those parts of the country where new towns are being built, and where overspill towns are being encouraged to take population from what are over-populated centres. There has been talk about closing the line between Colchester and Cambridge, while at the same time there is talk about certain towns along that line being developed to take more and more population. That again is a case where the railways should be used as a social service, and should be encouraged. The third group of which I am thinking consists of the holiday parts of the country, taking Suffolk, Norfolk and East Anglia generally, where again there has been talk about shutting down the railways because they do not pay. It means that the holiday towns will suffer a good deal because the roads are not big enough to take a great deal more traffic.

There were two things, however, which gave me some encouragement. One was the White Paper on Transport Policy, published in July, 1966, which in paragraph 17 says: For the for seeable future the country's transport system must include a substantial railway network. In paragraph 25 it says: Certain services which are unremunerative but socially necessary will be assisted by the Government. That seems to be the right kind of policy to pursue, because the railways must be regarded as a necessary part of the social structure of the country, and the expectation that the railways themselves are going to pay their way is not borne out by the experience of countries on the Continent of Europe.

3.12 p.m.


My Lords, my name is not on the list of speakers, but I have asked for permission to speak. In fact, my name is represented by a blank on the list, and that is descriptive of the sort of speech I am going to make. I would declare an interest, in that I have recently gathered together a group which intends to try to preserve the Manx Steam Railway. This railway is unique in this country, being the longest steam railway, and I hope it will go into the future as a living railway, a permanent memorial to steam. I shall preach to this group what I have heard to-day, and tell them not to copy British Railways when they are deciding the way in which to run their railway in the future.

I shall explain to them that, in my view, and from what I have gathered, British Railways have failed because they made two cardinal mistakes. They have failed because they did not have regard to the passengers. They will not listen to what the passengers want, or study what they do. They regard them as so much material that is moved about on the railways, and not as customers. The same attitude, which is pathological, is adopted in the case of freight. They have laws laid down about freight, and they will not run it as a commercial business. They do not try to get new orders by bargaining and by providing new opportunities for commercial firms to transport their freight on the railways in a way which would be more attractive than the road services.

I shall also tell my group to follow the example of the Swiss, the French and the Japanese railways, which pay. Here I am very much indebted to the noble Earl, Lord Kinnoull, for some figures which he gave. I shall point out to them that they should study the methods of those countries rather than those of the British, because they had an increase of 2,500 per cent. in passengers and an increase of 8,000 per cent. in freight.

3.14 p.m.


My Lords, I was very interested in the speech of the noble Lord, Lord Popplewell—one always likes to listen to an expert—but he cannot expect me to agree with everything he says. I am not a railway expert, but I am an expert on this question in another respect, in that I am an expert taxpayer. It is as such that my noble friend has asked this Question—I think, very wisely—and I hope we shall be given some satisfactory answers. I am not going to follow the noble Lord, Lord Popplewell, into the Party political aspect which he tried to raise, except perhaps in saying two things. Under the present régime, which has been in office for two and a half years—


Which régime is the noble Lord talking about?


The noble Lord fully understands. The Ministry of Trans port régime under the present Minister and the late Minister. Under that régime, nothing, specific seems to have been done to improve the rail services. The Marples Beeching régime at any rate attempted to get cracking on something. I merely throw that remark out to the noble Lord. He referred to the economic mess left by their predecessors. We are getting rather bored with hearing about this. I think it is now generally agreed that most of the economic mess was caused by a lack of confidence in the 1964 Government. Most economists now agree on that.

In this connection, there is one matter about which I do know a good deal, and that is the question of road transport. I agree with the noble Lord, Lord Popplewell, that it is very desirable that more goods should be put on the railways, but the fact is that one of the reasons why so much freight goes by road which should go on the railways is that the handling charges are so high nowadays when goods are being transferred from lorry to train, from train to lorry and so on, and it is far cheaper to put goods on a lorry and send them the whole distance by road.

Another thing is that, compared with pre-war, the delivery system on the railways is, I regret to say, extremely inefficient. The noble Lord touched on that subject. I have a particular friend who, ever since the war, has longed to put his goods back on the railways, as he did before the war. He just cannot do it. He has to run his own fleet of lorries, which he does not like doing, because he has to deliver from, say, Doncaster to Glasgow by a Tuesday, and the railways cannot tell him when they will be delivering. That is one great problem with regard to rail transport.

The noble Lord rather indicated, though he did not say so, that he thought the unions and the railwaymen had really very little to do with this inefficiency which has grown up. I do not think he can quite get away with that one. The controversy about liner trains, which ought to be running properly now, is a case in point. I was glad to hear him say (because he knows more about this than I do) that, as I have long thought, many of the railways' troubles would be overcome if there was one union. I entirely agree with him. Time and again we have seen trouble caused which has had very little to do with the management and very little to do with the men, but has arisen simply between the unions.

My Lords, I said I was going to speak for only a minute or two. I am speaking as a taxpayer, and it is in that respect that I am interested in my noble friend's Question. The noble Lord, Lord Popplewell, went long into the past. But what this Question, for which we are all grateful to my noble friend, asks is: What is in the Government's mind? What are they intending to do? We should like to hear that answered in some detail, if possible, and not be given vague generalisations. We do not want to be told merely, "We are going to amalgamate this", and so on. We should like to hear in some detail what the Government are going to do, if they know, and how soon they are going to do it. Those are the questions which all of us, in all Parties, hope that the noble Lord, Lord Shepherd, will be able to answer.

3.18 p.m.


My Lords, at a quarter-past three on a Friday, which the noble Lord, Lord Derwent, admits is a rare occasion, I do not think he would expect me to deliver a major transport policy speech. As the minutes ticked by, and I again looked at the noble Earl's Question, I thought that as a kindness to the House I could merely draw his attention to the fact that the announcement to which he refers in his Question arises from an error in our newspapers, in that, of course, the 1966 accounts have not yet been published. There has been no announcement as to the deficit. The figure that the noble Earl had in mind when he put his Question down refers to the estimated deficit for 1967.

Having corrected that. I was wondering whether, again as a kindness to the House, I should merely refer the noble Earl to the White Paper issued in July 1966, which sets out in quite considerable de tail what the Government have in mind. But kindness is one thing, courtesy is another. The speech made by the noble Earl, Lord Kinnoull, was one of misery and woe, I thought; a damning indictment of the 1962 Act, for which his Party was responsible, because the railways and the Holding Company now operate under an Act of Parliament that noble Lords opposite put through against severe criticism from this side. But, in view of his speech, I will perhaps say a little on the points he raised.

First, the problems of the railways are not unique. I do not know whether the noble Lord did me a little justice by reading a speech I made in 1962 when I was leading for the Opposition in this House on the Transport Act. Your Lordships may remember that I quoted a speech made by my noble friend Lord Brabazon of Tara. I think he made this speech on what is now the 1947 Transport Act, an Act for which a Labour Government were responsible. He said this: For many years now, not, of course, because of any fault of the railway companies, but because of the advance of the internal combustion engine, transport by road has eaten into the guts of the railway companies and it will go on. And the question arises, and a question that we have decide: Are you prepared to let the railways go bankrupt and let everything go by road, or do the railways supply something which is of national importance and which ought to be kept alive? He went on: But if they are to be preserved in this country, to preserve them is to co-ordinate them with road haulage. I do not say you should take them over by nationalising, but anyone who takes over the railways without at any time taking a very close hand in road haulage is just taking over a bankrupt concern. That was the situation in 1947 and the situation that had been prevalent before the war. The railways were in very grave difficulties.

We in 1947 thought that we should seek a co-ordination of road and rail. I will not say that the structure we then created was perfect. At that time we thought it was the best way to do it. But at least we had an integrated service and, as my noble friend Lord Popplewell pointed out, in 1951 the railways had an operative profit of some £39 million. In 1954 it was still a profit of some £16½, million. Then came the noble Lords opposite, with their competition as the one way of stimulating effort, and what happened? In 1956 we had the first deficit since the war, a deficit of £16½ million. In 1958 it increased to £43 million in operating deficits. In 1960 it was £67½ million. Then, after the 1962 Act, the Act which was to make the railways viable and efficient, we find that the deficit soared to £73 million. By 1965, it was £79 million; and it is estimated that for 1966 it will be about £71 million.

.Great efforts have been made by the noble Lord, Lord Beeching, by Sir Stanley Raymond and by members of the Board to make the railways efficient, and they have made a considerable improvement. I will give an indication of this to the noble Lord, Lord Derwent, in a moment. Certainly they have been able to keep their gross receipts, particularly for passenger traffic, fairly high and fairly steady in spite of the increasing use of motorcars and other forms of road vehicles. Some of the old freights of coal and steel have been declining, and much of the lucrative freight has been moving on to the roads.

But let us think in terms of improvements of service and what it can mean in increasing revenue. Take the new electrification of the London-to-Manchester line. We see that since April the number of passengers has increased by some 65 per cent. and the receipts have been increased by some 50 per cent. We should treat these figures with caution because it is a new service, but it shows that where the railways put on modern, efficient, speedy and punctual trains the public will support those services. Very shortly we shall see the London-to-Birmingham line electrified and I should not be at all surprised if the results were the same. But you can have this type of system only on the main lines.

The noble Lord spoke about the in creases in passengers and freight in Japan. I know something of these Japanese trains. They are all long-distance trains, very fast, very efficient, and all built since the war. And if my memory serves me aright, they run on tracks which have been laid since the war. But the trains in Tokyo, which are infinitely more crowded than we should be prepared to tolerate, run at a loss rather like our own internal services.

I think there is a strong case for moving freight on to the railways; but we must have a little sense in this. Let us see what the railways can do. It is clear to the Government and, I think, to most, that the railways are best for the long haul, for the cargoes from London to Glasgow, from London to Edinburgh, and between places like that. If I may say so to the noble Lord, Lord Derwent, he is right in this respect: that one of the problems is the cost of handling the cargoes. But this will be changed. I believe that we shall see a big revolution in transport in the next few years through containerisation. This means that there will need to be a greater co-ordination between road and rail, if only to see that the vehicles that run on the road can carry the containers that you put on the railways. It follows that in short haul the roads will still be the better means of transport.

But at a time when most trunk roads are carrying a large number of goods vehicles, heavily overloaded, the railways have spare capacity. The situation so clearly conflicts with the best use of national resources that the Government have put in hand a very comprehensive review of the policy for freight transport. I am afraid that one of the causes of the imbalance between road and rail has been the determination of noble Lords opposite to destroy the methods of integra- ing road and rail. They set the road hauliers free; that was one thing. But the 1962 Act set the Transport Holding Company and the private road services in direct competition. They did it deliberately; they set it in direct competition with the railways.

Therefore, we feel that we must provide the machinery for integrating the freight-carrying of this country to a greater extent. We are proposing a new national freight organisation. This is now being worked out with the Railways Board, the Transport Holding Company, the transport unions and the users' organisations. I shall not hide the fact that there are going to be difficulties in getting all these various groups to agree. I agree with my noble friend Lord Popplewell that if we could have fewer unions—not only in the railways, but throughout the country—many of our difficulties would quickly disappear. But those who say that this can be done quickly forget how and why the unions came into being. But I do not think it is for the Minister of Labour to push it. He can encourage; but this, in my view, is the responsibility of the Trades Union Congress. I think they are cognisant of the problem, but we must approach with care all these groups, so far as this new organisation is concerned, to see that we obtain the maximum of co-operation.

I think it was my noble friend Lord Popplewell who mentioned the labour force, and the noble Earl, Lord Kinnoull, drew attention to the fact that we have had considerable savings by railway closures and a decline in the number of workers, but we do not appear able to reduce costs in any big way. It should be borne in mind that the railways are one of the most labour-intensified industries in the country. Two-thirds of the cost of running British Rail is represented by wages. My noble friend Lord Popplewell drew attention to the decline in the working force. Since 1963 the labour force has been reduced from some 500,000 to 350,000, which is a sizeable reduction. I question whether any other industry, except perhaps the coal industry, has a higher rate of increased productivity than British Rail.


My Lords, they have, with respect, been reducing the services as well.


The amount of service may have hurt particular areas, but the broad railway pattern remains the same. In many parts where railway services continue the service has been increased, and I would say that, by and large, the output of British Rail remains broadly the same as in 1963; but it is being provided by a much smaller number of workpeople. The cost of increased wages—and no one would say that the pay for railwaymen is high (I see that the noble Lord, Lord Derwent, nods his head in agreement with me)—is one of the problems confronting the Railways Board. Top management is needed and there is difficulty in finding the right men from among railwaymen because their pay is so low that the right people are not attracted. Therefore the Railways Board have been obliged to go to grammar schools and universities in search of top management material. I hope that in time we shall be able to find a greater percentage of people to fill top management positions directly from the rail way workers.

I think it is to the credit of the Railways Board that in spite of the increased cost of fuel and repairs, and the amount paid in wages, they have been able to hold the working deficit pretty steady over the years, though they have not been able to make any great reduction in it. I believe that those who work and manage London Transport and British Rail, and the provincial bus ser vices, are struggling to reconcile two mutually contradictory objectives: the provision of an adequate service for the public and one which will pay its way. As a result, they are finding it increasingly difficult to do either, and the Railways Board would be the first to admit that the solution will come only from a radical change in the provisions of the 1962 Act. The noble Earl, Lord Kinnoull referred, rightly, to the amount of some £17 million which has been saved by rail closures. I have not the 1966 figures—they have not yet been published —but if the noble Earl looks at the 1965 figures he will find that in respect of what is called stopping trains there was a loss of some £49 million and on suburban trains some £19 million. That makes a sizeable figure and we should try to make the necessary savings.

The closures which have taken place have been in respect of railway services which were not supported. No one would disagree that hardship has been caused to a number of people, but I must say, though it comes hard to say it, that there are limits to which public money can be spent on providing services which people do not use. We may have to find other ways to assist our people in need. The noble Lord, Lord Amulree, drew attention to what the Government intend in the White Paper. We intend, not to subsidise, but to assist or relieve the Railways Board of the responsibility for the cost of operating those services which are maintained on service grounds. One of the first things we have to do is to identify them. I do not know whether the commuter service into London which conveys hundreds of thousands of people every morning to the City is regarded as a social service. Certainly the railways run it at a loss and in some respects I suppose that the railways are subsidising the merchants of the City and the West End.

These burdens are borne by the rail ways, and I am quite sure that the noble Lord, Lord Auckland, whom I saw shaking his head, would find it hard to argue that the commuter who uses these trains would accept a major increase in his fare to cover the deficits. But some way will have to be found to cover them, because I think most people would agree that it is unfair to place this burden on the railways, particularly if we say to the railways, "You must try to become commercially viable." The identification and the costing of these services is being looked at by a special committee under my honourable friend, Mr. John Morris.

The noble Earl, Lord Kinnoull, spoke about Sunday services. The responsibility lies with the Board, which takes out of service those trains which do not pay their way. I can hardly see how we can blame the Board if, under the provisions of the present Act, they close a Sunday service completely. But local people have a right to go to their transport users' consultative committee to seek redress. if they can make out a case, the matter has to be referred to the Minister, who will take it up with the Railways Board. During the summer period I have seen trains operating on the East Coast of England on a Sunday and carrying only two or three people, and I think it hard to expect the Railways Board to run services under those conditions.


My Lords, it depends on the time of day the trains run.


My Lords, as I said to the noble Earl, if the services are withdrawn completely, the appropriate machinery comes into operation.

My noble friend Lord Popplewell asked about the value of the Board's land, and revaluation. I do not know how the Railways Board and their advisers arrive at the figures in the balance sheet, but profit and loss is not in any way affected; although were we to increase the value of the land, and then seek to devalue what was on it, it would have an adverse effect on the accounts. I think that is all, except perhaps what was said by the noble Lord, Lord Strange, about the Manx Railways. But the noble Lord has left the Chamber, and I do not think that what he referred to is the responsibility of Her Majesty's Government.

Perhaps the main question put by the noble Earl, Lord Kinnoull, my noble friend Lord Popplewell and the noble Lord, Lord Derwent, was "When?". As one who must be careful in your Lord ships' House, I will only say that your Lordships will see a Bill in the not-too- distant future which I believe will be a framework for our transport system with which most of your Lordships will agree. It will be a comprehensive measure and I imagine that we shall have a great deal of work to do on it.

As my noble friend Lord Popplewell said, most people now believe that trans port must be a service for both the community and industry. We have to see how we can make the best use of all the resources available to us. This requires integration and co-operation. I hope that co-operation will be the policy of the future instead of competition, with perhaps in that co-operation a little competition to see how great the co-operation can be. I believe that such a Bill would receive the overwhelming support of your Lordships. It would bring about a major development of the railways and be of benefit to the men who work in them and those who use them. I thank the noble Earl, Lord Kinnoull, for asking this Question, even though he has called on me to reply at a very late hour.