HL Deb 02 July 1968 vol 294 cc168-90

My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.

Moved, That the House do again resolve itself into Committee.—(Lord Hughes.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD AILWYN in the Chair.]

Clause 49 [Powers with respect to land]:

LORD WINDLESHAM moved Amendment No. 141: Page 72, line 1, leave out from ("use") to end and insert ("in connection with").

The noble Lord said: Clause 49(4) enables the Railways Board and the Waterways Board, with the consent of the Minister, to acquire land adjoining their own for development. This may sound reasonable enough if the additional land is needed for the legitimate extension or development of some part of their own business, but the power is not limited in this way. Indeed, the opposite is the case, and the Bill specifically refers to land which is required for use otherwise than for the purposes of their business. So here again, following on the debate we had yesterday, is an example of a very wide power concerning the acquisition of further land which comes at a time when the Railways Board and the other authorities should be concerned more with the sale of land which is no longer required than with thinking about the acquisition of further land.

This Amendment seeks to limit the power. The wording that appears on the Order Paper was carefully chosen. I would point out that we do not seek to limit this power for the acquisition of additional land for purposes which are confined to the existing business of the authority. We do not say that it should be entirely within their existing business, because we can appreciate that there might be a connecting purpose which would thereby be excluded. On the other hand, we feel that what is in the Bill—that is, no restriction at all, and that additional land can be acquired for purposes unconnected with the business of the authority—goes too far. So we have chosen a mid-way position and said "in connection with" the business of the Railways Board or the other authorities which are mentioned.


I should like to support my noble friend Lord Windlesham who has moved this Amendment. Our current theme, which I think was brought out many times by speakers from this side of the Committee during the discussions yesterday, is that we believe that the prime job of the Railways Board is to run the railways. We feel that when they have proved to us and to the country that they are doing a competent job would be time enough to talk about the Railways Board branching into other activities which have no direct contact with the railways. We realise what a very difficult job the Railways Board have, but so far they have not shown the country that they are making a com- petent job of running the railways. They have a very long way to go, and we believe that supporting this Amendment will indicate that they should put first things first and get on with their prime job.


If I may, I will first refer to the remarks of the noble Lord, Lord St. Helens, that the job of the Railways Board is to run the railways, and say that we want the Board to be able to run the railways without losing money in the process. We must give them every possible assistance that we can legitimately give. If we are to deny that assistance we shall be thrown back, on to a conclusion which was arrived at by the Provost of a Scottish city, Brechin, which lost its branch railway. The then Government gave a remit to Dr. Beeching to say how you can make money by running a railway. The Scottish Provost thought the answer which Dr. Beeching brought back was that the only way to make money out of running a railway was not to have a railway. So Brechin lost its railway. We do not accept that. There have to be railways and if it is at all possible, we want the railways to get their returns out of the red into the black. This is one of the ways in which they can be helped.

The noble Lord, Lord Windlesham, stressed the fact that this Bill would enable them to acquire land for purposes other than the purpose of their business. That principle has been accepted already, in the 1962 Act. The Conservative Government did not find it wrong, because Section 11(4) of the 1962 Transport Act enables the Railways Board and the Waterways Board to acquire adjoining land, by agreement, for the purpose of developing it, with their own land, for use for purposes other than the purposes of their business. So that principle has already been accepted, and if it was not an anathema in 1962, it could hardly be so in 1968.

The difference is that the power which the Boards have under the 1962 Act means that they must develop this adjoining land with their own land. We are seeking to specify in subsection (4) certain circumstances in which land can be acquired—and I would stress that it is to be acquired by agreement—for development for use other than for the purposes of the Board's business, without its being a condition, as in Section 11(4) of the 1962 Act, that the acquired land must be developed with the Board's existing land. That is the difference. It can be developed separately from the land which the Board already holds. I cannot see that there is any difference in principle on that point.

A circumstance in which we see that this could be very helpful to the railways is if land adjoins other land of the Railways Board, and if the Minister is satisfied that the land so acquired will be so connected by rail, or so situated in relation to a railway line, that the rail services of the Board can be directly used by the person occupying the land. Or it could be helpful, in the case of the Waterways Board, if the land adjoins any of the commercial or cruising waterways of the Board and the Minister is satisfied that the land acquired will be so connected by the waterways or is so situated in relation to that commercial or cruising waterway, that the waterway services of the Board can be directly used by the person occupying the land.

The intention is that the subsection should give the Boards the opportunity to acquire land with a view to its development either by themselves or by others, for industrial or commercial use by others, in such a way as to generate new rail or new waterway traffic. This is a principle of which private enterprise in the United States makes good use. They have this sort of freedom and they make considerable use of it.

In another place an Amendment similar to the one we are discussing was put forward by a Liberal Member. And when his attention was drawn by my honourable friend the then Parliamentary Secretary to what is done in the United States—he gave the specific example that the Southern Pacific Railroad attracts additional traffic by providing for industrial activity by tenants and by providing a rail link—the answer given by the Liberal Member, in withdrawing his Amendment, was that he congratulated the Minister on the research that he had undertaken and he accepted that this was in fact a good use for land; and the Amendment was withdrawn. During the last few days there have been occasions when the Liberal Party and the Conservatives in this House have been in agree- ment; there have been occasions when the Liberals have followed the Conservative lead. I think this is a case where the Opposition Front Bench can accept the arguments which I am putting forward here, and that which in another place persuaded the Liberal Party that they could safely ally themselves with the Government on this piece of commercial enterprise for the railways.


The noble Lord has trailed his coat. I hope that no Liberal foot will tread on it. This section goes one step further—I think the noble Lord has made this quite clear—than the provisions of the 1962 Act. We do not think that this sort of extension is a desirable trend from the standpoint of public policy, and that was the reason why we put down this Amendment. The examples given in reply did not seem to me to be very powerful. It is true that the Southern Pacific Railroad in the United States generates new rail traffic in this way, but of course it does not do so with public funds. The capital for development of that sort has to be raised through the market.

We do not want, on this side of the House to have an extended debate at this stage on this particular Amendment. The underlying, rooted objection that we have applies not only to this provision but, much more so, to a whole set of additional provisions running through the Bill which will come up at various times during the next few days. I therefore do not intend to press this Amendment, and, with the leave of the Committee, beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 49 agreed to.

Clause 50 [Miscellaneous provisions as to powers]:

3.23 p.m.

LORD WINDLESHAM moved Amendment No. 142: Page 72, line 32, leave out subsection (2).

The noble Lord said: There are three Amendments on the Order Paper to Clause 50, Nos. 142, 143 and 144, which all concern hotels. These Amendments were not discussed at all, so far as we can see, in another place, and therefore it seemed to us that it was worth looking at them rather closely in this House if we are to exercise our function as a revising Chamber. Although each of the three Amendments concerns hotels, they are all on different points, so I am proposing to move them separately.

Clause 50(2) gives the British Railways Board power to provide and manage hotels in any part of Great Britain and, with the consent of the Minister, elsewhere". We will return to the word "elsewhere" in a few moments. In addition, the limiting provisions of the 1962 Act cease to apply to the Railways Board. It seems to us that here is a very considerable extension to the powers of hotel trading which are possessed at the present time by the British Railways Board.

Since there are three Amendments on hotels, it may be convenient to run quickly through the existing position. The situation to-day is that the railway hotels are operated by a wholly-owned subsidiary of the British Railways Board, British Transport Hotels, Limited. These hotels are mostly in city centres and mostly adjacent to railway terminals or to railway terminals which have now been closed. In addition, there are certain resort hotels, in particular the three fine Scottish golfing hotels at Gleneagles, Turnberry and, the new hotel opened only last month, at St. Andrews. The assets at the book value are approximately £10 million. Last year, 1967, despite lower receipts, the net profits were slightly up, after altering, I suppose it should be said, the charge for depreciation; there was a slight increase in the net profit of £813,000. Good though it is to see a part of British Railways' business in a profit-making position, it is none the less a fairly modest return on assets of the order of £10 million.

As I say, it seems to us that this provision in the Bill is an extension to the existing powers which the Railways Board have. We accept that some railway hotels are very fine. They have been operating for a very long time. In the last few years they have been subject to the provisions of the 1962 Act, but now the limiting provisions of the 1962 Act are to be removed from the railway hotels, although not from the other hotels which we shall consider later. I think we must ask the Government for the reasons why that is so; and secondly, to look rather more closely at the wording of Clause 50(2), which says: The Railways Board shall have power to provide and manage hotels in any part of Great Britain, and with the consent of the Minister, elsewhere". What does this word "elsewhere" mean? On the face of it, it means that the Railways Board could open an hotel in Hong Kong if they wanted to do so. There may be some explanation which has escaped us, but I think we need to hear from the Minister who is to reply what the Government draftsmen had in mind when they put in this word. I beg to move Amendment No. 142.


We also should like to support Amendment No. 142, although we are considerably more doubtful about Amendments Nos. 143 and 144. Amendment No. 142 relates to a provision which seems to spread unnecessarily the powers of the railways into a position where they are are going to be able to have hotels merely in order to make money unconnected with the railways. This is where I should like to take up a point raised by the noble Lord, Lord Hughes, on the last Amendment. The Government Front Bench seem to be very hurt because they think that we in these two Opposition Parties do not want British Railways to make money. Of course we want British Railways to make money. It may he that the only way to make money with a railway is, as has been suggested, to close down the rail. In that situation we say, "Right! We recognise flat the Government must produce a grant, clearly earmarked as a social benefit, for keeping the railways going if the country needs them". What we say is that there is no point in answering the need to make the railways pay by merely adding more and more businesses until their surpluses come to more than the railways lose. That is not making the railways pay. Anyone can take a single company and add several more companies until overall their accounts are balanced. That is the point we want to make, and that is why I wish to support Amendment No. 142.


May I add a word in support of my noble friend Lord Windlesham on this Amendment. As to what he said as regards the operating results of the Hotel Company, I think it is fair to say that that £813,000 is really a working surplus, not a net profit; and a surplus naturally tends to go to reducing the deficit of the railway company. But the operations of this holding company are by any standard pretty considerable industrial operations. The only difference this clause makes in the existing position is to widen the scope of this company by extending its operations outside this country and beyond the needs of the users of the transport system whom these hotels were primarily designed to serve. I think it is inevitable that when a power of this kind is included in a Bill, it is an encouragement to those operating it to do their best to exercise that power. Therefore this is an encouragement to the holding company to look outside and to embark on a highly speculative and difficult business which, I should have thought, was much better left to those who have some knowledge of the territory and the commercial risks.


Before we go further into these somewhat ideological questions I should like to express a word of doubt from these Benches. First of all, if we look at the position in broad outline it seems that we have to enable the railways to bring themselves up to date, to run efficiently, to take a forward and dynamic look at what is happening in the economy to see where the best service can be rendered. But especially we have to help them to make some money and they are not likely to do it unless they are dynamic. We either have to enable the railways to make some money, or at any rate make a smaller loss, or we have to face the fact that sooner or later we shall have to subsidise them. That is a decision which I think everybody in this House is reluctant to take.

If we look round at what is happening in our economy, we see that there are many businesses which find themselves hard pressed, and that they will be able to make the grade only if they combine with other businesses. This explains many of the takeover bids and mergers that are going on. This is the way our economy achieves greater efficiency, because businesses which combine their affairs can offset small losses in other ways and especially can do business with each other in a more efficient way.

How does this apply to the railways? If we look at Canadian Pacific Railways (which I mention because they are not nationalised) it is interesting to see that they run hotels in half the cities of Canada. And they are tremendously efficient hotels. I have stayed in a good many of them. If British Railway hotels attain that efficiency I am sure that it will be very conducive to the efficient running of the railways. Canadian Pacific also run a large telecommunications service, air lines and develop forests and minerals. They are in business in a big way, and it really is a fact that if Canadian Pacific were confined purely to the business of running a railway they would lose money on a vast scale. I think the same thing applies here.

Personally I do not believe in nationalisation. I have absolutely no ideological stand in this matter, but I do not like nationalisation because it seems to me that the nationalised industries have a way of losing money. I believe, as the Conservatives do, that if we want a really good productive job done, it is better done by, private industry. Still, the fact remains that a great deal can be done by this holding company and by small concerns sponsored by it. If we want our railways to pay, to be modern and "with it", I do not think it would pay us to put them in the position where they cannot diversify their activities to some extent. I believe that the very diversification of their activities will tend to make them more go ahead and produce better transport services.

As I am on my feet, I should like to say that I hope we are going to reject an Amendment about camping sites. We need more hotels and certainly more camping sites. I should like to see our economy developed altogether faster and with more investment, and I should be very sorry if the result of the discussions on this Bill were to prevent investment and development taking place, even if it has to be done by our nationalised railway system.


While I cannot follow the noble Lord, Lord Hankey, in the whole of his argument, I support him in general. I find myself considerably confused by the proposers of this Amendment, some of whom support it on the ground that the railways are inefficient and cannot make money, while others support it on the ground that as the Bill stands the railways will make money and damage private enterprise. I think that they should agree one way or the other. In nearly all cases these hotels were started by the old railway companies, and for what were then good reasons. Certainly the Minister should keep a watchful eye on any further investment of public money in this field, but, subject to that, I think that it is rather mean to put forward an Amendment to cramp the railways and their hotels and catering branch from further enterprise.

3.36 p.m.


I am very tempted to leave the argument on the basis on which it has been taken by the noble Lords, Lord Hankey and Lord Robertson of Oakridge. I find myself in agreement with every word the noble Lord, Lord Hankey, uttered, except for the bit he put in parenthesis about not being in favour of nationalisation. I cannot go all the way with him on that. I also agree with what the noble Lord, Lord Robertson, has said. But the noble Lord, Lord Beaumont, seems to be under a misapprehension about what the Government want to do in this matter. We are not taking the point of view that it is impossible for the railways to make money in normal railway running and that therefore we have the choice of either letting them carry on these loss-making activities and helping them by subsidy, or permitting them to make profits on something which has nothing at all to do with the railways. What the noble Lord, Lord Hankey, said suggested to some extent that it was not unreasonable that the railways, like progressive private enterprises who find their traditional lines are not doing so well as they could, should find ways of diversification. I do not believe that this should be denied to the railways.

But that is not the primary purpose here. The main purpose is that it should be made easier for the railways, waterways and buses to turn their loss-making activities to profit-earning ones by adding other lines which induce increased traffic. It may well be that a new enterprise may not in itself make a great deal of money; but if, together with the increase in revenue that accrues to the railways it substantially improves business then it is a good thing. For these reasons, we think that this is a proper thing to do.

As the noble Lord, Lord Robertson, said, this is not something which has suddenly been thought up in 1968 by a Socialist Government. It is a longstanding part of railway history. I was surprised to hear the noble Lord, Lord Windlesham, in moving the Amendment, giving as his first justification that it and the succeeding Amendments had not been discussed in another place. He has not done his homework very well on this. These Amendments were not only discussed in another place but were negatived on a Division. It is true that they were not discussed on Report, but they were discussed in Committee.


Could the noble Lord help us by giving the reference?


Yes. An Amendment was tabled by the Conservatives, debated in Commons Committee and negatived on a Division: Hansard, Standing Committee F, March 21, cols. 206378. An identical Amendment which was tabled for the Commons Report stage was not debated. If it will help in relation to the succeeding Amendments, the equivalent to Amendment No. 143 was No. 1813. That also was negatived on a Division. The same column references as for Amendment No. 142, I think, are applicable, and again for an Amendment identical to No. 144 which was negatived on a Division in Commons Committee. So, in fact, the three Amendments were the subject of debate in another place.

The concept which we wish to reject is that railway hotels must be next door to railway lines. We no longer accept that; we think it is quite out-dated. For one thing, "Motorail" enables travellers who use the railways for the greater part of their journey to use hotels at places to which rail passenger services are not run. We think it is desirable to give the Board freedom to exercise their commercial judgment in deciding whether to manage hotels themselves, or to entrust the management to British Transport Hotels, or to other subsidiary companies, if they so wish. II, for example, the running of an hotel was something which was obviously in the interest of the railways, and obviously was going to be a profitable concern, then it would be run by the hotel company.

But in pursuance of the point which the noble Lord, Lord Beaumont, was following up—helping the operation of the railways itself—if there were to be a case for running an hotel in a particular place where the direct beneficiary would perhaps be not the hotel profits themselves, but the induced extra railway traffic, it might well be the case that the right thing would be for the railways to manage that hotel themselves, as they would be getting the traffic benefit, although it might not be worthwhile, say, for the hotel company who would say: "It is not going to help our position all that much."

The noble Lord asked about the power given to run hotels elsewhere than in Great Britain, and he postulated that British Railways might open an hotel in Hong Kong, or that they might open an hotel in Tahiti, or one at Christmas Island. I have no doubt whatever that they will not do any such thing. What I do think, having regard to the fact that British Rail have interests in certain shipping services, is that it might be reasonable for them to run an hotel or manage an hotel at the terminals of the shipping services, because it would be a direct advantage to them in getting business for their shipping services and for their railway lines. If this is done elsewhere than in Britain, it will obviously be done only where it has a direct connection with the services which the railways are providing in or to this country. It does not seem to me that this is an unreasonable thing to do. We propose to remove the restrictions which the 1962 Act imposes. The Government's policy is that the nationalised Boards should have power to expand ancillary activities where they can do this to advantage and where they can do it without detriment to their primary functions. If we accepted this Amendment, we should be cutting completely across the principles that we are seeking to follow up, and I therefore cannot advise your Lordships to accept the Amendment.


Perhaps I might ask one question of the noble Lord. He says that these services of hotels abroad should be in direct connection with the railway services. Personally, I agree with that. But there is nothing about that in the Bill.


One of the things that we are seeking to alter in this Bill is the not surprising fact that, as Parliament has in the past been so obsessed with putting restrictions in the way of nationalised industries, the nationalised industries have found it difficult sometimes to make money. We would suggest, for a change, that it is worth while trying to look at it the other way. Let us see how we can help the nationalised industries to make money by seeing how few restrictions we can put in their way and confine them to those that are reasonable.


Can the noble Lord say whether the Government have considered, in order to help the railways to make more money, setting up casinos in various parts, when they would probably get a great deal of railway traffic to those places?


I always give the most careful consideration to anything proposed by the noble Baroness. If she puts down an Amendment to that effect on Report stage, I promise her that the Government will not reject it without giving it the consideration that it merits.

3.45 p.m.


This has proved to be an interesting debate to start off the afternoon, and I should like to make a comment on the way the debate has gone. The noble Lord, Lord Hughes, with his customary dialectical skill, sought to put us in the dock as if we were being mean and unkind to the railways; and indeed the noble Lord, Lord Robertson, suggests this. But let us look into the facts before we get into the emotions. The noble Lord, Lord Hankey, in what I thought was a most interesting intervention, said that the railways should be helped to make money.


Hear, hear!


With that we all agree; that is what this Bill is about. If we did not help them, they would have to be subsidised. And, bless my soul ! that is what this Bill is about, too. Let us consider for a moment what the Bill does provide. Those noble Lords who were present in the Committee last night will remember that we had a debate about the capital provision of this Bill. Among other things, this Bill writes off over £1,300 million of the railways' capital. It is the taxpayer who has paid that; it is money that the people of this country, the whole nation, have paid—and in the post-war years, too. The Bill also provides another £700 million to finance the railways needs over the coming years. We are subsidising these; and we are subsidizing current deficits, too. We accept that. Of course, the main object of this Bill is to write down the capital to a reasonable size—the £300 million—to provide certain specific subsidies, and to relieve the railways of things which they cannot make a paying proposition, like urban and conurbation services, and so put them on a viable basis. That is the primary object of the Bill.

The noble Lord's comments, I thought, were rather directed to the idea that the railways should be allowed to develop hotels wherever they liked, because this would make money for them as well. I very much doubt whether it would; there is no particular reason to think so. Our position here is that we support the railways, the subsidiaries they have, and the railway hotels which they have which are just paying their way, and we think they should go on with them. Furthermore, we are willing to see them open new ones under the terms of the 1962 Act, which are very reasonable. Section 6 of the 1962 Act, to which the noble Lord, Lord Hughes, referred as if it was a sort of stranglehold says this: The Railways Board shall have power to provide hotels in places where those using the railway services provided by the Board may require them for use both by those and other persons, and shall have power to manage hotels". Then it says it is subject to the Minister. This is perfectly reasonable, and I should have thought that is all the railways would normally want. What subsection (2) does here is to remove this and allow the railways to develop hotels anywhere. I do not think this is right. Where does the money come from to do this? It comes from the taxpayer, from the nation, and while I would agree—and I am sure everybody would agree—that we want to put taxpayers' money into British Rail to strengthen their finances and to put them on a viable basis for running railways, because this is what we want them to succeed with, it is altogether a different matter when we are being asked to provide extra money for them to develop hotels.

The noble Lord referred with interest to the Canadian Pacific Railway and said that the Canadian Pacific rail services would not pay their way if they did not have subsidiaries. Perhaps I should declare an interest. I am a small shareholder in the Canadian Pacific Railway. It is true that they do not make much out of their railways, but they certainly "wash their face". They certainly do make their railways pay, which is due to exceptionally good management. This is entirely up to them. They are doing it with their own funds—and, incidentally, with a little of mine because I am willing to put my money there— but this is a different proposition altogether and I do not think the noble Lord, Lord Hughes, has made out his case. It is one thing to ask a nation to provide money for strengthening the finances of the railways in operating the railways. That we are doing on a gigantic scale in this Bill, and it is a right thing to do, but it is quite another matter to ask the general public to provide money for the building of hotels.

3.52 p.m.


May I ask the noble Lord, Lord Nugent, if he will say whether he disagrees with the noble Lord, Lord Hankey, who at least implied, if he did not exactly say, that part of the success of the Canadian national railways was due to the extent to which they had these other services? And I think he expressed the opinion that if they confined themselves to running railways they would not make money out of it. I think the noble Lord, Lord Nugent, is helping to make the case for both the noble Lord, Lord Hankey, and the Government when he points out that after doing all these other think they not only make money out of them but also have been running the railways. That is what we are trying to do; to avoid providing subsidies by getting profits on other things to offset losses on the railway. If I am wrong, is it then the noble Lord's opinion, speaking with his declared interest as a shareholder in the Canadian Pacific Railway, that he would have received a dividend from them if they had confined themselves to running railways?


Is it not the fact that the Canadian Pacific hotels are all adjacent to the railways? The Canadian Pacific Railway does not exercise powers to build hotels anywhere, as is now proposed in this Bill. At Lake Louise, Banff, Ottawa—all the hotels are adjacent to the railway. We have no objection to that, but the Canadian Pacific Railway authorities do not do what the Government propose for British Rail.


It seems to me that we are back to where we were last night, indicating the deep cleavage between both sides of the Committee on the question of public ownership. The noble Lord, Lord Nugent of Guildford, constantly refers to the great deficit which has been created since the Tories took control of British Rail in 1951. Therefore, at the risk of tedious repetition, we must continue to remind the Committee that this huge deficit which is constantly being referred to has been created entirely by the policy followed by successive Conservative Governments.

The railways were encouraged to develop under the British Transport Commission—I am repeating myself, but in view of the number of times this has been referred to by the Party opposite I am going to give the answer. Up to 1953, under the old 1947 Act, the railways paid all interest charges, all working costs, and showed a profit. The deficit of £1,200 million has been created entirely by the Tories. Therefore, the problem to which they are referring is one of their own creation and now, under this Bill, at long last some freedom is being given to the various publicly owned undertakings to allow them to develop as they so determine in the best interests of their business, whether it be by hotels, caravan sites, or anything else. Why should they not have the right to develop?

The noble Lord, Lord Nugent, constantly refers to the fact that they are developing with taxpayers' money. This development which is taking place is a service that is being given and is deliberately being aimed at preventing the financial drain that the Tories have imposed upon the nationalised transport industry in the past. Therefore, I suggest to noble Lords opposite that, much as they possibly detest public ownership, there is surely a sense of justice in their minds and if they accept the thesis of public ownership—and we often hear them say that they do; they accept the question of a mixed economy—and if they are sincere in that, then surely they will be equally desirous of ensuring that the public sector of our economy should be as efficient and as commercially solvent as the private sector. I put this to them clearly, as a reasonable question, seeing that they accept the thesis of a mixed economy. If they are sincere in what they have been saying about matters of this type in the past then surely they will not insist upon these niggling Amendments that are aimed purely and simply at getting the publicly owned sector into financial difficulties and not giving them a desire to expand, and so to assist the economy.


The game of baiting the Tories for what they may or may not have done is entertaining but it does not really get us down to the heart of the question. In this House we are surely all agreed that we want the railways to be as efficient and as solvent as possible, and indeed that applies to the whole of the public sector. The question is whether these particular clauses help this aim or whether they so expand the area in which this sector works that in point of fact they achieve the opposite effect.

The noble Lord, Lord Hughes, in his eloquent way, has persuaded me that we should certainly keep in subsections (3) and (4) of this clause. I should also like to see Section 25(3) of the 1962 Act repealed, as he wishes to do. The only thing about which I am still unhappy —and I should like him to answer this point—is why it is necessary to repeal Section 6 of the 1962 Act. All the examples that he has given of why we should have these hotels in places which are not next door to where the railways actually are must surely be covered already by the 1962 Act, which does not say that these hotels shall be next door to the railways but that they shall be in places where those using the railway service provided by the Board may require them. Surely it covers people who are motoring to and from the railway, and also most of what he wants. Therefore I wonder why he wants to repeal this hardly less limiting clause which does not impinge on the argument he is making.


Perhaps the noble Lord, Lord Nugent, will permit me to answer this first. I have asked him a question which I think he wants to answer, but I will leave him to wind up. I think the question which the noble Lord, Lord Beaumont, has put, and which I think has been put by the noble Lord, Lord Nugent, also, is a perfectly reasonable one and one which I am under an obligation to answer. If the interpretation of Acts of Parliament were left to people like the noble Lord, Lord Nugent of Guildford, and the noble Lord, Lord Beaumont, and myself, I have no doubt we should come to the conclusion that those words in the 1962 Act did not stop British Railways from doing the sort of thing the Government now want them to do. The reason why the Government are taking these words out is that we are advised that these words have a restrictive effect, and do not in fact enable the British Railways Board to put up hotels where they may be helpful for their purpose.

In fact, these words, although to a layman they look as broad as they can be, are restrictive. 'What we are seeking to do is to put in a form of words which is not restrictive and which will enable British Railways to do what the noble Lord, Lord Beaumont, and what, I must confess, I myself, would have said the words in the 1962 Act allowed them to do, but which in fact do not.


Can the noble Lord give any case where the railways have wanted to build a hotel and have been prevented from doing so?


I have not yet had access to all the decisions the previous Government have taken in these matters. I do not know whether this has ever taken place or not, but even if it had not, that is no reason why we should seek to place ourselves at risk in future.


It is apparent that a large number of Members of this Committee are assuming that running a hotel is a gold mine, more particularly if it is run by a railway company. May I remind the noble Lord, Lord Hughes, as a good Scot that the railway hotel at Dornoch had to be closed down because it was making such losses.


I have never suggested, and I am quite certain that no other member of the Government has suggested, that to open an hold is a certain way to make a fortune. Some hotels make a great deal of money. Some hotels, either because of their situation or because of the way they are run, would not make money this side of Time, and they go out of business. This could happen with the railways as well as with anybody else. What we will, of course, endeavour to do, and what good manage-merit in the railways (just as good management anywhere else) will do, is to ensure that hotels are opened only where there is a reasonable prospect that direct and indirect profits will provide financial advantage. It may be they are sometimes wrong, just as a private hotel keeper is sometimes wrong. But if the noble Lord wants me to put on record that I do not believe every hotel opened is a gold mine, I am prepared to confirm that I agree with him.


The debate has had an interesting quota, and I now have an opportunity of answering the question which the noble Lord, Lord Hughes, put to me. After all, we are in Committee and therefore we can speak as often as we like. The noble Lord asked me whether I thought Canadian Pacific Railways would pay the dividends without the subsidiaries, and the answer is that they would do so because the railways side is normally profitable. The subsidiaries side of course helps their profitability. My noble friend Lord Balfour of Inchrye made the really relevant point. So far as I know, although I do not pretend that I have been to all of them, the C.P.R. hotels are certainly in the main all adjacent to their transport services. Of course this is the point. The noble Lord has skilfully made it seem as though we are trying to strangle British Railways, but that is not true. Section 6 of the 1962 Act allows very wide powers of development of hotels, and as the noble Lord, Lord Beaumont, rightly said, it would cover all the examples the noble Lord, Lord Hughes, gave, including the shipping services; anything in direct connection where their customers would use it. The noble Lord really has not made out a case for extending the 1962 powers and allowing them powers in this Bill.

If I may make one point in answer to the noble Lord Lord Popplewell, who came in with his customary warmhearted support for British Railways, I would remind him, when he castigates the Tory Party for what they did and did not do with regard to railways, that they at least financed modernisation of the railways, which is more than he and his right honourable friends did. In 1956, as the noble Lord, Lord Robertson, would confirm, we provided, at the rate of about £150 million a year over the early years, coming down to about £120 million, something of the order of £1,000 million for modernisation. This could hardly be said to be an unfriendly act to the railways and, of course, we are just as much concerned as noble Lords opposite to make the railways a solvent and viable business and do all we can to help them. I really do not think subsection (2) is going to achieve this, and I must ask my noble friends to press this Amendment.


May I say that I feel strongly inclined to support the Government. Gleneagles is struggling along and Dornock is closed —both railway hotels. There is a big hotel in Devonshire, Morton Hampstead, built entirely by the W. H. Smith people, which the Great Western Railway Company bought "dirt cheap"; otherwise they would not have bought it. The same comment applies to the hotel at St. Ives. The Great Western did not buy them because they were serving the railways; they were encouraging people to use the railways to play golf. I do not think it will make a ha'pennyworth of difference which way this goes, and therefore I will support the Government.


May I say—



We are in Committee and therefore we may speak as often as we like. May I say this to my noble friend? We are not suggesting in any way restricting the activities of the existing British Railways Hotels subsidiary to which my noble

friend referred. We accept that they are useful, and the effect of our Amendment would in no way restrict them, nor prevent that subsidiary opening further hotels directly in connection with its transport services. All we are seeking to do is to limit the development to that and refuse British Railways powers to build a hotel anywhere they like which is not connected with their services.


I cannot let the matter rest there. I think the noble Lord, Lord Nugent, is completely ignoring the answer I gave to the noble Lord, Lord Beaumont, which was that the words in the 1962 Act, which appear to open the door wide, are in fact restrictive in their effect. We seek to remove the restrictive effect of those words. The noble Lord chooses to ignore that and to say they are not restricting the activities. He says he does not wish to restrict British Railways activities, yet he persists in continuing to support these words which are restrictive in their effect.


May I ask the noble Lord whether he will be good enough to correct me or confirm what I am about to say? Is it not a fact that to-day British Railway hotels are encouraging opposition to the railways in that their hotels are being used to a greater extent by coach parties, that is, by people who do not use the railways at all?


We entirely accept what the noble Lord. Lord Hughes, said in answer to the point about the clause in the 1962 Act being restrictive although it might not seem to us to be so. But we still think that by its repeal it is made far too permissive and covers a much wider scale than necessary. We welcome two-thirds of the proposals in this clause, and therefore I would advise my noble friends on these Benches to abstain if this Amendment is pressed.

4.10 p.m.

On Question, Whether the said Amendment (No. 142) shall be agreed to?

Their Lordships divided: Contents, 97; Not-Contents, 70.

Aberdare, L. Amory, V. Audley, Bs.
Aberdeen and Temair, M. Arbuthnott, V. Balfour of Inchrye, L.
Albemarle, E. Ashbourne, L. Barnby, L.
Allerton, L. Auckland, L. Beauchamp, E.
Belstead, L. Glentanar, L. Oakshott, L.
Berkeley, Bs. Greenway, L. Powis, E.
Bessborough, E. Grenfell, L. Rankeillour, L.
Blackford, L. Grimston of Westbury, L. Rathcavan, L.
Boston, L. Hamilton of Dalzell, L. Rockley, L.
Buccleuch and Queensberry, D. Horsbrugh, Bs. St. Aldwyn, E.
Burton, L. Howard of Glossop, L. St. Helens, L.
Carrington, L. Ilford, L. St. Just, L.
Clithe[...]oe, L. Inglewood, L. St. Oswald, L.
Coleraine, L. Jellicoe, E. Salisbury, M.
Conesford, L. Kilmany, L. Sandys, L.
Cork and Orrery, E. Kilmarnock, L. Savile, L.
Cottesloe, L. Kinnoull, E. Selkirk, E.
Craigavon, V. Lothian, M. Sempill, Ly.
Cromartie, E. Loudoun, C. Sinclair of Cleeve, L.
Daventry, V. MacAndrew, L. Strange of Knokin, Bs.
Denham, L. [Teller] McCorquodale of Newton, L. Strathclyde, L.
Dilhorne, V. Margadale, L. Swinton, E.
Drumalbyn, L. Massereene and Ferrard, V. Templemore, L.
Dudley, L. Mills, V. Teviot, L.
Effingham, E. Milverton, L. Thurlow, L.
Elliot of Harwood, Bs. Molson, L. Trefgarne, L.
Exeter, M. Monk Bretton, L. Tweedsmuir, L.
Falkland, V. Monsell, V. Vivian, L.
Ferrers, E. Mottistone, L. Wakefield of Kendal, L.
Ferrier, L. Mowbray and Stourton, L. [Teller.] Windlesham, L.
Fortescue, E. Wolverton, L.
Gage, V. Newton, L. Wrottesley, L.
Glendevon, L. Nugent of Guildford, L.
Addison, V. Heycock, L. Royle, L.
Arwyn, L. Hill of Wivenhoe, L. St. Davids, V.
Beswick. L. Hilton of Upton, L. [Teller.] Samuel, V.
Blyton, L. Hirshfield, L. Segal, L.
Boothby, L. Hughes, L. Serota, Bs.
Bowles, L. [Teller.] Iddesleigh, E. Shackleton, L.
Brockway, L. Kirkwood, L. Shepherd, L.
Buckinghamshire, E. Latham, L. Silkin, L.
Burton of Coventry, Bs. Leatherland, L. Simon, V.
Carron, L. Lindgren, L. Snow, L.
Chalfont, L. Llewelyn-Davies of Hastoe, Bs. Soper, JL.
Clwyd, L. McLeavy, L. Sorensen, L.
Donaldson of Kingsbridge, L. Maelor, L. Stocks, Bs.
Douglas of Barloch, L. Mitchison, L. Stuart of Findhorn, V.
Douglass of Cleveland, L. Moyle, L. Summerskill, Bs.
Gaitskell, Bs. Pargiter, L. Swanborough, Bs.
Gardiner, L. (L. Chancellor.) Phillips, Bs. Taylor of Mansfield, L.
Garnsworthy, L. Plummer, Bs. Walston, L.
Geddes of Epsom, L. Popplewell, L. Wells-Pestell, L.
Granville of Eye, L. Raglan, L. Williamson, L.
Hall, V. Rhodes, L. Willis, L.
Hankey, L. Robertson of Oakridge, L. Winterbottom, L.
Headfort, M. Rowley, L. Wootton of Abinger, Bs.
Henderson, L.

On Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.


I beg to move that the House do now resume to hear the statement by my noble friend the Baroness Phillips.

House resumed.