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Harbours, Docks And Piers (Temporary Increase Of Charges) Bill

Volume 41: debated on Tuesday 13 July 1920

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Order of the Day for the Third Reading read.

Moved, That the Bill be now read 3a .—( The Earl of Lytton.)

On Question, Bill read 3a .

Clause 1:

Provided that—

(a) Where the undertakers are commissioners or any other authority or public body of persons carrying on otherwise than for purposes of private profit any such undertaking, no modification in the statutory provisions regulating the charges to be made by the undertakers shall be authorised which is more than sufficient, so far as can be estimated, to enable the undertaking to be carried on without loss;

had an Amendment on the Paper, at the end of proviso (a), to insert "and to maintain its financial stability." The noble Viscount said: I may remind your Lordships that in Committee Lord Balfour of Burleigh drew attention to the limiting nature of certain words in Clause 1 proviso (a), which reads as follows—

"… no modification in the statutory provisions regulating the charges to be made by the undertakers shall be authorised which is more than sufficient, so far as can be estimated, to enable the undertaking to be carried on without loss."
To these words he took exception, because he thought, and we, the port authorities of the country, also think, that those words are unduly limiting, possibly dangerously so. He suggested the addition of certain words, which he indicated, and I have adopted those words in my Amendment, because Lord Balfour of Burleigh is not able to attend. On that occasion the noble Earl in charge of the Bill promised to give the matter his consideration, and to make a statement on the next stage of the Bill. Unfortunately, when the next stage came, I was not present, and consequently my Amendment went by default, but thanks to his consideration and kindness, I have this opportunity afforded me to day of moving the Amendment, which will enable me to make a statement.

What I may call the great dock authorities of the country come within the scope of the clause, as they are carrying on their undertakings "otherwise than for purposes of private profit." Of course, the great dock undertakings, like the Mersey Docks and Harbour Board and the Port of London Authority, and many others, are not money-making authorities, but simply have to discharge interest obligations on their bonds. Beyond that they have no power or desire to make profits. Under this Bill the powers of the Minister of Transport are pretty extensive, and he may, if he thinks fit, by order provide for the modification—which really means an increase—of most charges, to enable the dock authorities to meet increased expenses incidental to the cost of labour and material. But in the subsection it is provided that no modification shall be authorised by the Minister which is more than sufficient to enable the undertaking to be carried on without loss.

As I have said before, we fear that those words are, unduly restrictive, and that unless we get some expansion of them we may find that in bringing his powers into operation, the Minister will take action which will affect the financial security of the undertakings. For instance, under cover of these words it might be quite possible for the Minister to rule out of account expenditure from revenue upon which the status of the undertaking may rest. I desire to give one or two illustrations as to how the present position may be jeopardised by these words. If you take the Port of London Authority, we are under a statutory obligation, imposed upon us by the Act of 1908, to go on creating a reserve until it amounts to £1,000,000. The Statute does not lay down that this reserve is to be built up by annual payments of a certain amount, but simply leaves us with the obligation. That means, of course, that Parliament. intended it should be discharged. Now it has been our practice year by year, varying according to our financial circumstances, to set aside a sum of money towards building up this reserve—in some years £100,000, in other years £50,000; as I said just now the amounts vary. Now, under these limiting words it would be quite possible, we are advised, for the Minister of Transport to object to our placing these sums of money, as has been our practice hitherto, to the reserve fund, the object of which is to stabilise the financial status of the undertaking. Therefore, we should be impaired if he took that course.

There is another illustration in connection with maintenance that I might give. During the war it was quite impossible for us properly to maintain our buildings, machinery, equipment and anything of that kind, because of the restrictions which were imposed upon us by the Defence of the Realm Regulations and other Government enactments. Therefore, we set aside for deferred maintenance large sums of money which at that time we deemed to be quite sufficient to make up the arrears when the time came for this deferred maintenance work to be carried out. Now we find that these sums, again owing to the increased cost of materials and labour, are altogether inadequate, and therefore we shall have to add to these sums out of our revenue further sums to meet this necessary work. We fear that under the clause as it stands these necessary outgoings might be forbidden by the Minister of Transport. Again, we have a constant charge on our revenue to make good the depreciation in the value of our securities held on account of sinking and reserve funds. Although these securities were of the highest character when bought, they have been subject to considerable depreciation, and we are compelled to provide year by year large sums to restore them to their proper level. We fear that these limiting words might cause the Ministry of 'Transport to object to the setting aside out of our revenue sums for these purposes.

Parliament has clearly recognised that it is absolutely necessary that these authori- ties shall have some, margin of income in order to maintain their credit. In the Port of London Act itself, in the financial provisions dealing with the power of the authority to levy charges on goods, it is expressly provided—I quote the exact words—that
"the rates specified in the Schedule shall be such that, in the opinion of the Board of Trade, the amount of revenue produced thereby will, with the other receipts on revenue account of the Port Authority, be sufficient to meet the expenditure on all the purposes to which the receipts of the Port Authority on revenue account are by this Act to be applied, and—"
I direct the noble Lord's attention specially to these words—
"to provide a reasonable margin for contingencies."
That is what my Amendment in effect seeks to do. I would remind the noble Earl that the Ministry of Transport will, under this Bill, always have the power to reduce the rates when it is shown that a port authority has obtained and exercised powers beyond the necessities of the case.

We fear that the words in their present limiting state will cause us to be subject to such interference that our financial stability may be affected. If, however, the noble Earl can give us a full assurance that the Ministry of Transport has no idea of acting in a sense that will be detrimental to our financial status, I shall not persevere with the Amendment. He gave a promise to Lord Balfour of Burleigh that when the occasion offered he would be able to make some reply to the fears that were expressed. I hope that the noble Earl will be able upon this occasion to give us some satisfaction and to remove our fears.

Amendment moved—

Page 1, line 25, after ("loss") to insert ("and to maintain its financial stability").—(Viscount Devonport.)

My Lords, I am unable to accept my noble friend's Amendment, but I think I can explain to him in a few words that it is not necessary to fulfil the purpose that he has in mind. The first point I desire to make is that this Bill is of a strictly temporary character, and is introduced for the sole purpose of meeting the increased expenses which will result from the Report of Lord Shaw's Committee. As my noble friend knows, the Bill is limited in its operation to a particular time, and its only object is to enable these increased expenses to be met during the interval in which it will be possible for the various undertakings to promote legislation in Parliament to extend their general charging powers. The Bill does not seek to deal with the general financial stability of the undertakings; therefore, if at this moment one of these undertakings has not made proper provision for its general financial stability, it is not contemplated, nor, I think, would it be proper, that under this Bill special increases of charges should be authorised to enable it so to do. The proper remedy in that case is for the undertaking to seek legislative powers to raise its charges for that purpose.

In so far, however, as the expense put upon them by the Report of Lord Shaw's Committee is immediate and pressing, some relief has to be given to them, and this Bill has been introduced for that purpose. My noble friend, in his remarks, has dealt not with an undertaking which has failed to make normal provision for its financial need of the future, but he has instanced the Port of London Authority, and has told us what are the provisions which this Authority in its wisdom has made in the past. If I understood him aright he is afraid lest the Minister stay come down and say: "There will be no need to raise your charges to meet this new expenditure if you will only reduce your sinking and reserve funds, and diminish the provision that you have hitherto made for future needs." My noble friend, I think, understands that these matters will always be dealt with in the first instance by the Rates Advisory Committee, and I can only say, though I cannot bind that body, that it is unthinkable that a body constituted as is the Rates Advisory Committee would ever say that an undertaking like the Port of London Authority should not make reasonable and proper provision for the future, but that it should attempt to balance its accounts during the next two years by curtailing its capital reserve fund.

I want, therefore, to make it clear that in so far as that provision is made to-day, it will continue. If it is not made to-day, it is not intended that it should be provided for under this Bill. If I were to accept the noble Lord's words they would introduce into the Bill the suggestion that it was passed for the purpose of dealing with the general financial funds of the undertakings. That is not the object of the Bill. I am quite ready to give my noble friend an assurance on behalf of the Ministry of Transport that the Minister has no intention whatever of interfering with wise, proper and normal provision for future financial needs. I would also remind my noble friend that this Amendtment was moved in the House of Commons, and when an explanation such as I have given was made on behalf of the Ministry, the Amendment was withdrawn. I hope that my noble friend will be satisfied with the assurance that I have given him, and will not press his Amendment.

I am much obliged to the noble Earl for his statement. I may say incidentally that. the proceedings in the House of Commons were never reported, and consequently we were not able to follow them. I am, however, quite satisfied with the assurance that has been given, and I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Bill passed, and returned to the Commons.