Railway Freight Charges (Increase)

The following Questions stood upon the Order Paper:

90. Mr. BOYD-CARPENTER,—To ask the Minister of Transport if he will give an assurance that he will not exercise his powers under Section 82 of the Transport Act, so as to effect any further increase in railway freight charges until this House has had an opportunity to discuss such proposed increases.

93. Mr. PETER THORNEYCROFT,—To ask the Minister of Transport whether he has yet received any report from the Transport Tribunal upon their consideration of the proposed railway freight rate increase.

With your permission, Mr. Speaker, and that of the House, I will answer Questions 90 and 93.

In view of the present financial position of the British Transport Commission resulting from recent sharp rises in their costs, I have regarded it as a matter of urgency, in order to assist them in carrying out their financial obligations under the Transport Act, to authorise immediately by regulations under Section 82 of the Transport Act such increases in their charges, as having regard to the advice received from the permanent members of the Transport Tribunal, I considered necessary. I received this advice on 6th April and made the necessary regulations forthwith. I have laid the regulations before Parliament as required by the Act.

Broadly the regulations authorise an increase of 10 per cent. in the Commission's railway freight charges, parcel rates and dock and canal charges as from 16th April.

For the information of hon. Members I will circulate the advice of the permanent members of the Transport Tribunal in the OFFICIAL REPORT.

In selecting 16th April as the effective date of these increases, did the right hon. Gentleman take into consideration the desirability of the opinion of this House being obtained before they came into effect, in view of the serious repercussions which these increases will have on the national economy?

As the hon. Member is aware, these regulations can be annulled by Prayer, and that gives an opportunity to the House to discuss them if hon. Members so desire. I made a statement before the House rose for the Easter Recess mentioning the fact that I had referred this to the permanent members of the Transport Tribunal. If the hon. Members will read their report and recommendations to me, he will see that they stressed the urgency of preventing this deficit from accumulating because of its reactions on the charges schemes that are coming forward very rapidly now.

While realising the urgency to which the right hon. Gentleman has called attention, may I ask him to consult with his right hon. Friend the Leader of the House with a view to this House having at the earliest possible opportunity a discussion upon this vital matter which must affect the whole of British industry and commerce?

Yes, certainly I will consult with my right hon. Friend and, of course, he has heard the observation.

Could we not have an answer now?

Is my right hon. Friend aware that a general increase in transport charges will have a bad effect on the sending of goods to Scotland and outlying areas, so that many foodstuffs which are not rationed and are on the market and are sold in the London area are at present not being sent and will not be sent to Glasgow, or to Scotland generally, because the margin of profit is so small and cannot bear this additional transport charge of 10 per cent.

I expect that the charges schemes are now due to come before the Transport Tribunal, and that is the machinery which has been specially established for giving detailed consideration to these wider and broader problems that cannot be dealt with under the circumstances of urgency at the moment. This would not be the appropriate moment to consider the variations of charges to which my hon. Friend refers.

While, of course, we are grateful to the Minister of Transport for promising to consult with the Leader of the House upon an opportunity being accorded to the House to debate these matters, may I be permitted to wonder whether the consultations have already taken place rapidly and that the Leader of the House may be able to give us some answer?

As my right hon. Friend pointed out, of course this is not a matter for which the Government need give time, because it can be raised by the Opposition on a Prayer. However, we are to have some consultations about Prayers, I hope very soon, and this matter might well be discussed through the usual channels. I recognise that this Order is among the more important class to which the House might very well wish to give some good consideration.

It is a very heavy tax upon the public and I feel quite sure that the Government, in discussions through the usual channels, will attach proper weight to the fact that it is executive action and requires Parliamentary consideration.

I hope the answer I have just given indicated that I share the view of the right hon. Gentleman.

Will my right hon. Friend consider giving a direct subsidy to the industry, as was given to private enterprise to the extent of £100 million in 1919, 1920 and 1921?

Will the right hon. Gentleman bear in mind that there was no public inquiry on this occasion by the Transport Tribunal before giving that advice, so it is not like the last occasion? Will he also bear in mind that the last time when the charges were put up by 16⅔ per cent., the arrangement then was that we had a full debate during the course of the day and that we did not seek to develop this enormous subject late at night on a Prayer? It would be in the interests of hon. Members on all sides of the House who would wish to make some contribution if he would bear that precedent in mind in considering the course to be taken now.

I have no doubt that that will also be mentioned in the course of the discussions through the usual channels.

May I reinforce the request to the Leader of the House that we should not be asked to consider this matter in a debate on a Prayer to annul the order? It would place many of us in an embarrassing position. May I also ask the Minister whether, before these charges come into operation, he is not prepared to have an independent inquiry into the operation of nationalised transport, because many of us feel that steps could be taken inside the present organisation which would render these increases unnecessary?

No, Sir. I am not disposed to embark upon the course suggested by my hon. Friend. The procedure which has been laid down is adequate to deal with the issue that has been before the Tribunal.

Arising out of the question of the hon. Member for Shettleston (Mr. McGovern), when the appropriate time comes will the Minister take into consideration the very serious effect which these increases will have on long hauls, particularly in the Highlands?

All I can reply to that is that the full charges scheme on freights is expected by August. That will represent an exhaustive examination into all these matters. They are not germane to the present issue.

When my right hon. Friend is considering this question of the increase in freight charges, will he consider the re-introduction of the flat rate for transporting commodities to and from the far north of Scotland, where industry is greatly prejudiced when prices are unduly increased by the present freight charges and would be still more affected by a further increase?

My hon. and learned Friend is under a misapprehension. The charges schemes will not come before the Minister, but before the charges tribunal, and every organised body with interests at stake may fully debate these matters and express their views.

Will the Minister bear in mind that the additional transport costs levied on packages and goods sent to Scotland are added to Purchase Tax, thereby very much increasing the cost of ordinary commodities in everyday life?

How much does my right hon. Friend estimate that the 10 per cent. increase will yield? Will it cover the current deficiency?

I have made arrangements to publish in full in the OFFICIAL REPORT tomorrow the report to me of the Transport Tribunal, so that hon. Members on all sides may have the necessary information. It is estimated that this 10 per cent. increase will in a full year bring in £20 million. That will not cover the present total deficiency.

Will the Minister realise that unless advice given by bodies like the Highland Advisory Panel and the Cameron Commission are taken into account, people in the North will feel that it is useless for these bodies to be set up?

I am sure that the Tribunal, when the charges scheme is before them, will give full consideration to the views of bodies of that sort.

Is my right hon. Friend aware that quite apart from the advice which he has, there is here a larger political question to be decided, and that the Government will need to take into consideration whether nationalisation would be a larger success on the railways by following this policy of continually having receipts to cover debits, or whether it would not be better that the railways on occasion lose some money in order that freight could move about the country better and much more cheaply?

That is more a subject for debate than for an answer now.

In view of what the right hon. Gentleman has just said about this being a subject for debate, will he reconsider bringing into effect these charges at a date on which, humanly speaking, it would not be possible for the House to debate the matter before they come into effect?

I would rather take the guidance of my right hon. Friend the Leader of the House after consultation on this matter.

Following is the advice of the Permanent Members of the Transport Tribunal:

MEMORANDUM FOR THE MINISTER OF TRANSPORT BY THE PERMANENT MEMBERS OF THE TRANSPORT TRIBUNAL ACTING AS A CONSULTATIVE COMMITTEE.

1. By a letter dated the 20th March, 1951, you asked for our advice on a request made by the British Transport Commission that they should be authorised under Section 82 of the Transport Act to increase by 10 per cent. (a) all the railway charges other than those relating to the conveyance of passengers and their luggage which are regulated by statutory provisions, and (b) all the harbours, docks, piers, canals and inland waterways charges now in operation which are similarly regulated.

2. In your letter you informed us that you were satisfied that the Commission's supporting memorandum presented an accurate picture of the financial position of the Commission. We have treated this assurance as enabling us to assume that the figures put before us are substantially accurate. Our advice is based on this assumption.

3. We have considered the information presented to us in conjunction with that disclosed in the course of the extensive Inquiry held in January, 1950, and the later statistics set out in the Report of the Wages Court of Inquiry held in December, 1950, and January, 1951. (Command Paper No. 8154.)

4. The capital facts are in our view as follows:—

(1) The accumulated deficit of the Commission's undertaking considered as a whole was at the end of 1950 of the order of £40m.

(2) The accumulated deficit of the British Railways treated as a separate part of the undertaking after debiting its net revenue with an appropriate share of the central charges which have to be met by the Commission was at the same date of the order of £51m.

(3) The additional revenue which it was estimated in 1950 would accrue from the increased charges authorised in May, 1950, and from the London Area Passenger Charges Scheme has been offset by the increased expenditure of the Commission in salaries and wages and on the purchase of coal, petrol, fuel oil and other materials.

(4) At the present level of charges the principal activities of the Commission during 1951 will result in deficits of the order following:—

(a) British Railways, £24m.

(b) Docks and Canals, £2½m.

(c) London Transport Road and Rail Services, £4m.

the remaining activities producing a credit balance of £5½m.

(5) At the present level of charges accordingly the deficits of the Commission as a whole and of British Railways taken as a separate unit will by the end of 1951 have grown to approximately £65m. and £75m. respectively.

(6) During 1950 the British Railways staff decreased by about 19,000.

(7) It is estimated that the working expenses (including depreciation and renewals) of British Railways in 1951 will be greater than they were in 1950 by more than £23m.

5. It was contended at the inquiry held in January, 1950, that as a result of further feasible economies and of a prospective increase in traffic the Commission might, without any increase in charges, be expected to be paying its way by the end of 1952. The conclusions reached by the Consultative Committee were, however, that if charges were not increased the deficits for 1951 and 1952 were not likely to be less than the 1950 deficit (£30m.), that a deficit in the region of £100m. might well have accumulated by the middle or end of 1952, that "any attempt to liquidate such a deficit through the medium of a Charges Scheme would … be highly detrimental" and that it was "in the interest of the users of the Commission's services and of the Commission that steps should … be taken to secure additional revenue."

6. We think that the main question we have to consider its indistinguishable from that which was decided by the Consultative Committee in 1950. We find ourselves forced by the facts and estimates summarised above to conclude that the Commission must be enabled to earn additional revenue.

7. In reaching their conclusion the Committee in 1950 were content to accept as an assumption, though they regarded it as optimistic, that the Road and Rail Charges Scheme bringing with it whatever benefits could be secured by a full integration of the Commission's services could be brought into operation by the end of 1952. In our view it would now be unsafe to act on any such assumption. It seems to us that even if a Freight Scheme be lodged in August next it is unlikely that a complete Road and Rail Charges Scheme will be in operation before 1954 at the earliest.

8. It is evident that the great bulk of any additional revenue must be obtained from railway freight charges. The question whether any increase should extend to passenger fares was fully considered by the Consultative Committee in 1950. There are, we think, two reasons which make any discussion of this topic unnecessary at the present moment. The first is that fares regulated by the London Area Passenger Charges Scheme cannot be altered by regulations made under Section 82 (1). The second is that a general Passenger Charges Scheme is about to be lodged so that passenger fares generally will be the subject of a public investigation in the immediate future. It is obviously undesirable in these circumstances that we should enter upon any discussion of the possibility or expediency of obtaining any increase from this source.

9. We conclude then, and, in principle, for the reasons given by the Consultative Committee in 1950, that the additional revenue which is in our view urgently necessary must be secured by an increase in railway freight charges and in dock and canal charges. The Commission estimate that the increase of 10 per cent. in these charges now proposed will, after allowing for some loss of traffic, produce in a full year in the case of railway freight traffic about £19½m. and in the case of dock and canal charges about £½m. If the increase be authorised forthwith the Commission's accumulated deficit at the end of 1951 will be of the order of £51m. It is we think of the utmost importance that such a deficit should not be allowed to grow pending the coming into operation of a complete Charges Scheme and should indeed be diminished.

10. We are disappointed by the information in the Commission's memorandum about the prospective yield of the road haulage services to the effect that an increase in the net revenue could only be obtained by an increase in charges and that any such increase is impracticable in the face of existing competition.

11. We cannot emphasise too strongly the necessity of securing every possible economy in such of the operating costs of the Commission as are within their control. Unless indeed substantial economies can be effected the financial position of the Commission on the figures now available will not be stabilised even if the increases under discussion are brought into operation.

12. For the reasons indicated above, we recommend that regulations be made as soon as possible authorising the British Transport Commission to make the additional charges proposed.

6 th April. 1951.

Volume 486: debated on Monday 9 April 1951