§ THE EARL OF DUDLEY rose to call attention to the accounts rendered by the railway companies under the provisions of Section 77 of the Railways Act, 1921; and to ask His Majesty's Government whether it is their intention to exercise their powers under Section 16 (2) (a) and (b) of the same Act; and to move for Papers. The noble Earl said: My Lords, I hope that your Lordships will allow me that consideration and in- 550 dulgence which I know you so courteously grant to one who is addressing the House for the first time. The Question which stands in my name on the Order Paper to-day is one which is, I submit, of considerable concern to industry as a whole, and particularly to those who are engaged in an important branch of it—namely, the manufacture of rolling stock. As your Lordships are aware, the British rolling stock industry has existed since railways came into being, and has always enjoyed a world-wide reputation for inventive genius and good workmanship. Your Lordships will also know that the industry is split up into two sections: first, the contract shops, which are privately owned and manufacture mainly for the export trade; and secondly, the shops owned by the railway companies which supply their own individual requirements and cannot under their charter sell or export their surplus manufacture.
§ Private manufacturers—and I am speaking both of the locomotive and carriage wagon manufacturers—represent some £20,000,000 of invested capital and nominally employ 45,000 men. However, the position of the trade is so serious that they are probably employing under 11,000 and there is no doubt that the capacity of both the contract shops and the railway companies' own shops is considerably in excess of the potential requirements of the home and foreign markets combined. It seems, therefore, that if anything is to be done to prevent the situation from growing steadily worse a comprehensive scheme should be considered embracing the contract shops and a great part of the railway companies' own shops, and it appears to me that the Minister of Transport has the power under the Railways Act, 1921, and preceding Acts to set such a scheme in motion should he deem it desirable. I feel sure that the noble Earl in his reply on behalf of the Ministry of Transport will not deny the fact that the private contractor, who, by his initiative and enterprise, has in past years brought business of incalculable value to these shores, which has been distributed in the form of sub-contracts to almost every conceivable branch of industry, is fully deserving of all the consideration and support which the Government can give him. I do not believe the noble Lord will deny the fact either that the export trade, which fell to a value of £1,000,000 551 in 1931 from an average value of £8,500,000 a year for the six preceding years, can ever be restored under modern conditions of foreign competition unless and until by some means the manufacturer is granted as a nucleus of manufacture a much greater share of the home market. In fact, the private manufacturer is threatened with extinction in the very near future if he does not get an additional share of the home trade, and that will be a loss not only to national prestige but to many national industries also.
§ The position of contractors from the point of view of development and design cannot be ignored. The most important developments, both in locomotive and in carriage wagon design, have come from the contract shops. For example, steel coaches, high capacity wagons, ballast wagons, containers, rail coaches, Tube stock for the Underground, Pullman cars, etc.—your Lordships will be conversant with all of these. The contractors have had long experience in designing and manufacturing railway equipment in all parts of the world for many varied requirements and their experience is of great value to the home railways. The shops of the private builders are generally up-to-date, and compare most favourably both in layout and equipment with those in the United States of America and on the Continent, and they have got an abundance of skilled labour which cannot be found anywhere else in the world. The excellence of design and workmanship has been the cause which for three-quarters of a century has brought orders for rolling stock from foreign railways to this country.
§ On the other hand, it is claimed that the interests of the railways and of the railway shareholders should be fully safeguarded. I submit to your Lordships that it is not possible under modern conditions of manufacture for the rolling-stock shops owned by the individual railway companies to be operated really economically unless combinations are effected, unless costs are reduced, and unless their overhead charges are spread over a very much larger output, a part of which can be absorbed by the export market. What is the position of these railway shops? Are they in fact being operated economically or not? I submit to your Lordships that it is not possible 552 for a railway shareholder, who happens to be interested in the subject, to satisfy himself on that point from the accounts which are submitted by the railway companies annually, or to ascertain what the costs really are and whether the renewals and repairs of the railway companies could not be carried out much more cheaply by private contract, as in the case of most foreign railways. I should like to know whether the Minister himself is satisfied upon that point, and whether he is supplied with any further information as regards costs and overheads which is denied to public knowledge.
Under the Railway Companies (Accounts and Returns) Act of 1911 and also under the Railways Act of 1921, under Section 77 of that Act and its consequent Schedules, the railway companies are required to render to the Minister certain accounts and statistics at varying periods of the year, which are subsequently embodied by the Minister in a White Paper issued annually. I presume that the object of these returns is that the Minister may retain some sort of check upon the operations of the various and manifold railway undertakings, but this White Paper is equally sketchy as regards costs of construction and maintenance of railway stock, and there is nothing more to be obtained from that document than can be got from the annual accounts. If the Minister is dissatisfied with regard to the operations of any of the undertakings, what power has he got to satisfy himself? In the second subsection of Section 16 of the Act of 1921, the Minister may—
…by order require or authorise any railway company or any two or more railway companies on such terms and subject to such conditions as may be specified in the order—
- (a) to conform gradually to measures of general standardisation of ways, plant and equipment (including methods of electrical operation, type, frequency, and pressure of current);
- (b) to adopt schemes for the co-operative working or common user of rolling stock, workshops, manufactories, plant and other facilities."
Subsection 3 states:
Before making any order under the last foregoing subsection the Minister shall (except as hereinbefore provided) refer the draft order to a Committee consisting of a representative of each of the amalgamated
companies (each of which companies shall, on being so required by the Minister, nominate a representative), and three persons of experience in the subject-matter of the proposed order selected by the Minister from the panel set up under Section twenty-three of the Ministry of Transport Act, 1919, as extended by this Act, and the Committee before reporting or advising shall, if they see fit, give public notice and permit any persons affected or likely to be affected and any authority or body of persons authorised to make applications under this Act to place their views before thorn, either in writing or orally.
What I want to do this afternoon is to suggest to the noble Earl who represents the Ministry of Transport in your Lordships' House that the time has come when the Minister of Transport should make the fullest inquiry into, and give the widest consideration to, this question of rolling-stock manufacture in its entirety.
§ I believe it to be of real national importance, and I submit to your Lordships that the whole rolling-stock industry of this country, both privately-and railway-owned, should be under a unified control which would then have power, if necessary, to restrict any redundant plant. It may be necessary also to protect the interests of the railway companies as regards price and standards by Statute. It is only by this means that our national export trade, which is of great importance to us, can be restored in the teeth of fierce foreign competition from contractors abroad who have the advantage of a regular flow of orders from their own home railways to help their overhead charges, thus enabling them to satisfy the export market at a very low figure. Surely, this must be in the best interests of the railways themselves, and is on all fours with the policy which has recently been adopted as far as the other manufacturing activities of the railway companies are concerned, and also with the policy of the Government that the British market should be primarily available to British manufacturers?
§ I suggest that the first step should be taken by the Minister, by exercising his powers under Section 16 of the Railways Act and by issuing a draft order for the co-operative working of all the railway shops. The construction and heavy repair shops of each individual railway company might be transferred to a holding company, which would then have power to tender, not only for the 554 home market, but for the export market as well. This company would invite private contractors to join with them, the penalty of refusal being that they would be denied the right, as they are at present, of tendering for the bulk of the home market. I believe private contractors would accept the offer with alacrity, and that an organisation would ensue which would put the entire industry on a better footing by manufacturing in the most economical and efficient way. Let me say at once that I am a very strong opponent of anything that smacks of railway nationalisation or extends the control of the Government over the transport industry or over any other industry; but, speaking as an industrialist, I am the first to recognise the great service which the British railways have rendered to industry in the past years and their adequate capability of looking after their own affairs to the best possible advantage. But we all know that in every branch of industry certain modifications and adaptations to modern conditions are necessary and desirable, and yet, on account of financial complications or private interests, or for this or that reason, they are extremely difficult to set in motion even by the leaders of industry themselves. In that case, my Lords, I think an indication by the Government would be most helpful and practicable, and would not be interpreted as Government interference.
§ There is a vast amount of difference between nationalisation and the study of problems from a national point of view. I submit to your Lordships that it is the duty of all of us to study our industrial problems from the national point of view with the object of setting our house in order and extending our export trade to the widest possible advantage. The export trade of the rolling-stock industry has diminished since the War, partly on account of local manufacture, though uneconomical, having been established in such countries as South America, India, Australia, and South Africa. There is reason to believe, however, that with the return of normal trade a much greater share of the export market than even that which we have enjoyed heretofore can be obtained for the rolling-stock industry of this country if manufacturing costs are diminished by such a measure as I have 555 indicated. China alone is a vast field for railway development, and has always been anxious to buy from us. With co-operation between builders here and the home railway companies, which alone will enable the costs to be brought down to a competitive level in the home market, an enormous addition might be made to our export trade.
§ I think there is a growing feeling amongst industrialists that the railway companies are primarily carriers of goods, sellers of transport, and that it is uneconomical for them from the national point of view to pursue a policy of making themselves self-sufficient at the expense of manufacturers on their system. Sir Josiah Stamp, the President of the London Midland and Scottish Railway, in a speech recently at his annual meeting, made an accusation against the heavy trades in that they bore to a disproportionate extent the overhead charges of the railway companies as compared to the portion borne by the lighter industries. Surely that is an unfair accusation so long as the heavy trades are kept in the dark with regard to these overhead charges, as they are at present, and have no control whatever in curtailing them? To pursue that argument in rather a crude way I would ask Sir Josiah Stamp why, for instance, the freight costs of such an important national basic industry as the steel industry should depend to a greater or less extent on whether the season at Gleneagles happens to be a good one, or whether the restaurant profits at Sir Josiah Stamp's hotels at Liverpool, Birmingham, Manchester or wherever they may be, are being diminished by reason of outside competition; or, indeed, whether the cost of replacements and renewals in his own workshops are excessive on account of the restricted output or indifferent production methods.
§ I believe it is true that the overhead charges of the railways have not increased since pre-War days, and, if that is so, I know your Lordships will agree that the railways are to be congratulated, but that in itself is not an argument against such overheads being still further reduced by means of the railway companies adopting a policy of shedding many of their costly ancillary undertakings and thereby simplifying their organisation and reverting more and more to the rôle of common carriers. I 556 am of the opinion that in the early stages of the development of a new country, or of the industries of that country, by a railway company, the company should be empowered by its charter to take upon its shoulders all sorts and conditions of work outside its normal functions—work such as land and industrial development, shipping, harbours and docks and other public utility works—work such as that undertaken by the Canadian Pacific Railway during the development of Canada. Strict monopolies should be granted to the railway companies, where necessary, by the Government of the country which it is in process of developing, but as soon as the process of development is completed the company should without delay revert to its fundamental rôle—namely, the simple carrying of goods and passengers.
§ The only criticism I have to make against British railways is that they have failed in sufficiently carrying out that policy. A great many of these ancillary undertakings are costly and unprofitable and no longer attain the object for which they were adopted by the railway companies—namely, an increase of their goods and passenger traffic. In some cases, indeed, such as in the case of many of the railway hotels, they are of greater advantage to the great rival trade, road transport. I see that the total capital expenditure of the railway companies on their hotels is about £10,000,000, and the percentage return on the capital invested is something under 3½ per cent. The hotel restaurant business is the only part of the railway ancillary undertakings that does show such a profit. I think I am right in saying there is no other part which shows a profit of more than 1 per cent., and a great many parts are conducted at a loss, but, even though they make a profit, I submit it is no longer the function of the railways to manage hotels, and if they had adopted the policy of selling them when the market was good the percentage return on the invested capital would be a great deal greater than it is to-day. Likewise, if they had made up their minds some years ago to group their workshops in the manner I have indicated, I venture to say that the capital value of their rolling stock would stand in their books at a very much lower figure to-day. I am grateful to 557 your Lordships for having given me such a patient hearing, especially as I know many of you are much more experienced and more widely informed on railway matters than I am, but in spite of my shortcomings I hope that the noble Lord will convey my arguments to the Minister of Transport for his consideration. I beg to move.
My Lords, may I begin by saying with how much interest I have listened to the very able speech which, the noble Earl has addressed to your Lordships. It is the first time he has made a speech in this House, and I congratulate him upon it. I am sure that feeling will be shared by the rest of the House. I do not wish to detain your Lordships, but there is one part of tae noble Earl's speech on which I should like to comment. It is Section 16, sub-section (2) (a), of the Railway Act which states that the Minister may, by order, require or authorise any railway company and so on "to conform gradually to measures of general standardisation of ways, plant and equipment (including methods of electrical operation)." I understood the noble Earl to state that a large measure of standardisation would be important with a view to improving the facilities for the manufacture of railway rolling stock in this country. The question of standardisation is an exceedingly double-edged weapon. It is all very well to standardise simple things like rails and bolts and nuts and things of that kind, and the rails on the whole of the railways of the United Kingdom are, I believe, in process of being standardised with good results. But when it comes to a question of complicated things like rolling stock, wagons, carriages and, in particular, locomotives it is an altogether different matter.
Standardisation, while no doubt economical, is terribly likely to lead to stagnation. Many attempts at standardisation have been made in this country. The best known probably was that introduced by the late Mr. William Stroudley in the 'seventies and' eighties of last century on the Brighton Railway. Mr. Stroudley was appointed locomotive superintendent of the Brighton Railway somewhere about the year 1870. When he arrived at Brighton he found that small company in possession of seventy-two distinct types of locomotives. Mr. Stroudley set to work and by the time 558 that he died, about twenty years later, there were only six standardised types of locomotives on the Brighton Railway. That was thoroughly satisfactory as far as it went, but it must never be forgotten that all the time Mr. Stroudley was at Brighton practically no improvement in the service of the Brighton Railway took place at all. There was never any development or progress. That, of course, fitted in very well with standardisation, but it is not at all in the public interest.
Other attempts that have been made include the attempt of the old London and North-Western Railway Company which once had a scheme for reducing the number of locomotives to about eight, I think, but nothing ever came of that. I imagine it perished in the War. The whole of the railways in India got out standard designs for their locomotives when the matter of superheating, which, of course, is of capital importance, was brought up, and all these standard engines had to be redesigned. After the War the French Government thought that they would go in for standardisation, so they produced a standard locomotive, but most of the French railways flatly refused to have anything to do with that locomotive. Those who did adopt it found it very unsatisfactory and the system has been abolished.
As for the standardisation of electrical locomotives it is almost impossible to imagine anything more hopeless at the present moment. The electric locomotives of to-day are full of the greatest and most elementary defects and it is absolutely necessary that enormous improvements in design should be made before there can be any possibility of standardising electric locomotives with economic success. I believe that only within the last year or two the Paris-Orleans Railway which is in process of electrifying its main line brought over a large electric locomotive of the latest design from the United State's. It was found so unsatisfactory that it had to be shipped back to undergo the most drastic reconstruction. Beyond these few remarks on standardisation I have really nothing to say to justify me in detaining your Lordships longer.
§ LORD MARLEY
My Lords, I should like to intervene in this discussion for 559 one moment before the noble Earl replies on behalf of the Ministry of Transport. The speech to which your Lordships have listened from the noble Earl is one of the clearest and most lucid which can ever have been delivered as a first effort in your Lordships' House, and I feel certain that your Lordships will be anxious again and again to hear the noble Earl. I would venture to suggest that the Minister will of course take into account the possibility of the alternative arrangement of transferring the whole of the private contractors' building shops to the railways. It is possible to close all the railway building shops and transfer them to the contractors, but alternatively you may close the contractors' shops and transfer them to the railways.
§ THE EARL OF DUDLEY
May I be allowed to interrupt to say that I did not suggest that course because it seemed pretty obvious that it would not be within the Minister's power to do that? He would not have power over the contractors whereas he might have a certain power over the railways.
§ LORD MARLEY
Even though he does not actually control the position the Minister might do something, because the railways might omit to give any further orders to private contractors. That is another way of dealing with the matter, and that is a point which I suggest the Minister might take into account when he gives consideration to the points which the noble Earl raised. The other point I wish to mention is one of the utmost possible importance. The noble Earl pointed out that there is an immense market for rolling stock in China. The question arises whether there is in fact any unfair competition by Japan in that market which would prevent Great Britain from receiving a fair share of the orders from China as she should do under the open door arrangement which is supposed to exist as regards trade in China. I hope that the noble Earl will find it possible to deal in his speech with that extraordinarily important aspect of our export trade in regard to this matter of the manufacture of rolling stock.
§ THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE COLONIES (THE EARL OF PLYMOUTH)
My Lords, I should like to add my warm 560 congratulations to those of others to the noble Earl upon the first speech he has delivered to us. He has shown a very thorough and fundamental knowledge of the subject with which he dealt. His type of specialised knowledge is of particular value to your Lordships' House and we shall hope that armed with it he will find many opportunities of joining in our discussions. The noble Earl has raised matters of considerable interest and importance not only to the railway companies but to industry as a whole. He really divided his speech into two parts and, if your Lordships will allow me, I would like first to deal with the second part. In that part of his speech the noble Earl directed attention to the extent to which railway companies are engaged in ancillary or subsidiary businesses, which are not part and parcel of the operation of the railways themselves. He suggested to your Lordships that the time has now come when they might, with advantage, dispose of those ancillary businesses and confine themselves to the business of common carriers.
It is perfectly true that the railway companies are engaged to a considerable extent in ancillary or subsidiary businesses. If you take docks, for instance, you will find that the railway companies own a large number of docks and harbours all round the coast. In the Bristol Channel they own, I think, all the principal ports with the exception of Bristol and Avonmouth. On the East and North-East coasts they own a large number of docks and harbours of which Hull is the most important, and on the South Coast, Southampton, Folkestone and Newhaven are all owned by railway companies. In fact, the railway companies are by far the largest owners of docks and harbours in the country. It is perfectly true that before 1913 it was impossible to find out how much capital railway companies had invested in ancillary businesses, but the Railway Companies (Accounts and Returns) Act of 1911 required that capital expenditure upon these businesses should be shown separately in their accounts. This is now being done, and further than that, under Section 77 of the Railways Act of 1921, the Minister has approved rules as to the manner in which the railway companies' accounts are to be compiled, rules which apply to revenue as well as to capital accounts, with the primary object of obtaining some uniform 561 principle of accountancy. Separate accounts of receipts and expenditure on revenue account in respect of each of the subsidiary businesses are, as I think the noble Earl is aware, published annually in respect of the road transport, steamboat, canal, dock and harbour, hotels and refreshment roams, and collection and delivery businesses carried on by the railway companies.
I freely admit that these accounts are complicated and that it requires a good deal of industry on the part of the research student to ferret out exactly what he wants to know, but I am afraid that is inevitable in the case. The Minister, however, is satisfied that these accounts are reasonably correct and that it is possible to deduce from them the position of these ancillary businesses fairly accurately. These ancillary businesses are, after all, properly related to the conduct of the railway undertakings. They have been sanctioned by Parliament from time to time. I think it only fair to add that some of these undertakings were, one might say, foisted upon the railway companies at various times as part of the price of obtaining the railway powers which they were granted in the early days. That refers, perhaps, to some of the canals. It is true that these ancillary businesses do not show a high return upon the capital sunk in them, but I venture to say that that is due to a very considerable extent to the present industrial depression and, after all, this fall is not peculiar to the railway companies, but is spread over business as a whole.
I think we must remember and give full weight to the fact that these ancillary businesses, at any rate in the estimation of the companies, have a considerable contributory value which is not reflected in the figures. It is obviously impossible, I think, to set a figure on this value, but I feel tolerably certain that the railway companies are satisfied that these ancillary businesses do contribute to the revenue-earning capacity of their undertakings as a whole. May I take as an example the collection and delivery activities of the companies, which are perhaps an outstanding example? These in the aggregate have shown a considerable annual loss, but I do not think anybody would deny that the control of this service is essential to the companies to en- 562 able the collection and delivery of traffic to be properly co-ordinated with the railway services themselves.
Generally speaking, the Government have no reason to suppose that the railway companies have embarked extravagantly or unwisely upon these undertakings. It might be of interest, perhaps, to your Lordships to know the amount of capital which has been sunk by the four railway companies in these ancillary businesses: Horses, road vehicles, garages, £6,000,000; canals, just over £8,000,000; steamboats, etc., about £9,500,000; docks and harbours, £70,000, 000; hotels, £9,500,000. That comes to just over £100,000,000 out of a total capital expenditure of £1,200,000,000. I do not think that is really an excessive proportion if you take all things into consideration. In any case there are safeguards provided in the Railways Act, 1921, whereby, when modifying railway charges on an annual review, the Railway Rates Tribunal must have regard to the financial results obtained from the operation of an ancillary or subsidiary business carried on by the railway company and if satisfied that the net revenue resulting therefrom is, having regard to all the circumstances, unduly low, the Tribunal may make such deductions as they think proper from the railway charges which would otherwise have been fixed. To that extent the railway user cannot be called upon to subsidise the capital invested in the ancillary businesses.
I should like now to say a word about other activities of the railway companies. One must, of course, distinguish between the anciliary or separate businesses in which Parliament has from time to time authorised railway companies to embark their capital and such activities as are to be regarded as adjuncts to the ownership and operation of railways. There are many things which a railway company can do beyond the mere operation of its railways; for example, it must keep in repair running lines, rolling stock, plant, buildings, etc. I agree that they might let out the repairs to contractors, but at the same time I think the railways must have full control of this sort of activity and therefore must be able to do the work themselves, if necessary, in their own establishments. To require that they should keep separate 563 accounts of each such activity would really be quite uneconomic and unnecessary.
In spite of that the noble Earl will find in the Railway Returns special accounts, or abstracts as they are called, showing the cost of maintenance of rolling stock, with locomotives, coaching vehicles and wagons distinguished. He will also find expenditure on complete renewals in the companies' shops and by contractors distinguished under each head. I would like to assure the noble Earl that the Minister has no return which is not available to the public. Of course it is not possible from these figures of expenditure to ascertain exactly what is the profit or loss on these rolling stock shops, but I think it is fair to say that that does not necessarily mean that these shops are not run on economic lines. The railway companies naturally often have under review the advantages or disadvantages of production on their part or purchase from outside, and I am led to understand that this particular matter has received a great deal of attention quite recently. I have figures relating to the statement I have made, but unless the noble Earl would wish me to refer to them I do not think it is really necessary for me to trouble your Lordships with them.
May I now pass on to the other part of the noble Earl's speech which dealt with the powers of the Minister under Section 16 (2) of the Railways Act, 1921? The noble Earl asked whether the Minister is prepared to exercise his powers under that Act for a specific purpose. Your Lordships will see, if you read that section, that the Minister is in a position to require or authorise, under certain specific conditions, the railway companies to embark upon standardisation or to adopt schemes of co-operation one with another. In fact the Minister has already in one case exercised his powers under the Act with regard to the standardisation of methods of electrification—not, I understand, with regard to the standardisation of electric locomotives, but in regard to other matters which are of great importance in connection with this form of development. He naturally thought it highly desirable, when a considerable development in electrification appeared to be probable, that there 564 should be a uniform system of development.
The Order to which I am referring came into operation in October of last year. Beyond that the Minister has not so far considered it necessary or advisable to go, but I should like to say that the railway companies do tend more and more to act in common. I could produce evidence to that effect if necessary, but here again I do not think it necessary to trouble your Lordships. It is quite clear that they have, with their own object and advantage in view, tended much more to co-operate one with another than they have done in the past. What the noble Earl has in mind is not co-operation of that kind so much as a merger or amalgamation of the railway companies' rolling stock works with those of private companies outside. He has very rightly pointed to the present very depressed state of the manufacturing industry; he has pointed to the markets which have been lost abroad and at home; and he has urged that unless private manufacturers are assured of a substantial proportion of the home market they are at very grave disadvantage in competing in foreign markets. These are very forcible arguments indeed. He has suggested a scheme of amalgamation, but such a scheme would obviously be very complicated indeed, and would naturally have to be preceded by long and difficult negotiation. At the same time I would like to say this. In these very critical times for industry any proposal of this kind cannot be lightly brushed aside without consideration, but I must point out that under Section 16 the Minister really has no power whatsoever to compel, or even, I think, to initiate, negotiations for a merger of this kind. His powers under this section are quite clearly confined to requiring or authorising, under certain conditions, the railways themselves to co-operate with one another, but he has no powers to require them to cooperate or amalgamate with outside private companies.
The present difficulties in this particular industry are due, I think, principally to three causes. The first is the general trade depression, especially in the heavy industries which reacts upon the railway industry and the trades dependent on it. Secondly, there are the artificial restrictions upon 565 foreign trade; and thirdly, the effect of road transport competition. The effects of depression naturally are not confined to this country. Germany and America are suffering in exactly the same way. I think it would interest your Lordships to know that I have been informed by the railway companies that in 1932 only 14 locomotives and 3,336 wagons were constructed in the United States of America. Those are remarkable figures, and they show the extent to which the depression has gone throughout the world. Out of the numbers that I have quoted only two locomotives and no wagons were exported from that country. All this has naturally led to the contraction of purchases of railway material.
Until recently the railway companies have placed a considerable proportion of their orders outside with private firms. Now their own establishments are sufficient, and I am sorry to say in many cases more than sufficient, to cope with their own requirements. One naturally hopes that this phase will not last, and will in time pass away. I do not want to weary your Lordships with figures, but I think it might interest your Lordships again to know that during the last ten years the total purchases of complete units of railway rolling stock on renewal account only, made by the companies, amounted to just over £20,000,000, and quite recently financial assistance has been given to a scheme whereby the Great Western Railway are placing orders for 5,000 20-ton wagons, all with outside manufacturers. Quite lately the railway companies have assured the Minister that they intend to make no change in their policy, and that they have absolutely no desire to extend railway manufactures to the detriment of the trade outside. I think in evidence of this one might draw attention to the fact that lately the London, Midland and Scottish Company's steelmaking works at Crewe and Horwich have been closed down. I say that to emphasise this point.
In conclusion I want to assure the noble Earl that I look upon the questions which be has raised as of the very greatest importance, and I feel that in these times they should be very carefully examined indeed. I think, however, he will agree that they are essentially questions of a character which can best be discussed be- 566 tween the railway companies and private manufacturers, in a spirit which recognises the difficulties on each side. I can only repeat that the Minister has no power to compel amalgamation of this kind, and I think the best way to initiate a discussion of that kind would be to get the railway companies and the private interests concerned to come together. Meanwhile I feel certain that this House will be very grateful indeed to the noble Earl for having raised this question to-day, and particularly for the very lucid way in which he has put his case. I certainly will communicate the sense of this discussion to the Minister, who, I have no doubt, will draw the attention of the railway companies to it.
§ THE EARL OF DUDLEY
My Lords, I am very grateful to the noble Earl for the sympathy that he has given to the question that I have raised. He stated, quite truly, that he had no powers for forcing a merger of this sort, or even of indicating—I do not quite agree as to indication. He certainly has no power to enforce such a merger, but as I stated in my previous remarks he has undoubtedly the means of taking the first step, that is to say, of setting up a Committee to enquire into the desirability of the amalgamation of these railway workshops. That in itself would be an indication to the railway rolling stock industry as a whole—both private and railway owners—that such a course was desirable from a national point of view. Therefore I do hope that the noble Earl will convey to the Minister the desirability of revising his opinion, and of going very carefully into the question in order to see whether such a course would not be advisable from the Government point of view. The noble Earl rather avoided the main issue, as I think your Lordships will agree. That is as regards the costs of these railway workshops. He told us that he had no further information than we could ourselves obtain from the railway accounts, and he said that he thought that those accounts were reasonably accurate. I think that that is damning the accounts with rather faint praise, but I hope that the Ministry of Transport will take the trouble to find out what those costs really are, for that is the main point of the question, and see whether by amalgamation with private contractors the costs can be reduced, and our export 567 trade built up by reducing the total costs of our rolling stock manufactures. If that is the case, then I submit that it is a course which the Ministry of Transport ought very closely to consider.
As to the question which was put by the noble Lord, Lord Marley, with regard to the manufacture of rolling stock for China, I think I am right in saying that practically the whole of the Chinese rolling stock orders are going to Hungary at the present time. I was very glad indeed that the noble Lord, Lord Monkswell, quoted paragraph (a) of Section 16 the Railways Act, because it gave the noble Lord an opportunity of telling us some interesting facts about electrification standardisation in the South. But that really was not the point of my argument. I was not so much trying to impress the noble Lord with the importance of standardisation as with the importance of amalgamation. Of course, a certain amount of standardisation would come with amalgamation and would therefore simplify the costs and overheads of rolling stock manufacture. But still I do agree with the noble Earl that a very large measure of standardisation has been carried out.
With regard to what the noble Earl said about the ancillary undertakings, I quite agree with him that it is extremely difficult to know how to dispose of many of these ancillary undertakings, such as canals and docks and harbours; the canals are very costly and the docks not very profitable. I think that they should be dealt with in the same way if possible, and that they should be transferred to a holding company, and those who use them should pay for them. Because I think your Lordships will see the argument which industry puts forward at the present time, that it is very difficult, with all the outside costs that it has to bear, to carry on its shoulders those added costs of expensive harbours and expensive canals. After all, it is industry mainly which is paying for these harbours and docks and canals, and I think the time has come when the Minister ought to consider whether it is not desirable that some of these undertakings should be subsidised by the Government. The docks and harbours are a very important source of receipts for one of the most valuable parts of the Government's revenue. I do not think that the Government pays any rent in that respect. But at any rate I hope the noble Earl will consider that aspect 568 of it. Industry is paying for these expensive ancillary undertakings, and it desires that the railway companies should do everything in their power to simplify their organisation and not forget that their primary function is to be common carriers and the servants of industry, rather than industry being the servant of the railways. I thank the noble Earl for his reply, and I beg leave to withdraw the Motion.
§ THE EARL OF PLYMOUTH
My Lords, I am sorry I am not in a position to answer Lord Marley's question right away, but I will make inquiries and if he desires it I will communicate with him.
Motion for Papers, by leave, withdrawn.