133 Standing Committee C. Wednesday, 9th July, 1919.]

[MR. TURTON in the Chair.]

SUPPLY, CIVIL SERVICES AND REVENUE DEPARTMENTS (ESTIMATES, 1919–20).
MERCANTILE MARINE SERVICES.

Motion made, and Question proposed, "That a sum not exceeding £112,751 be granted to His Majesty to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1920, for the salaries and expenses of certain services connected with the Mercantile Marine, including Seamen's Fund Pensions." [Note.—£70,000 has been voted on account.]

Question put, and agreed to.

BANKRUPTCY DEPARTMENT OF THE BOARD OF TRADE.

Motion made, and Question proposed, "That a sum not exceeding £6 be granted to His Majesty to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1920, for meeting the deficiency of income from fees, etc., for the requirements of the Board of Trade, under the Bankruptcy Act, 1914." [Note.—£4 has been voted on account.]

Question put, and agreed to.

RAILWAY AGREEMENTS.

Motion made, and Question proposed, "That a sum not exceeding £30,000,000 be granted to His Majesty to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1920, to meet expenditure arising from the Government Control of Railways in Great Britain and Ireland under the Regulation of The Forces Act, 1871." [Note.—£30,000,000 has been voted on account.]

Major NEWMAN: I beg to move "That the Vote be reduced by £1,000." It is highly necessary, and I am sure the Committee will agree with me that we should inquire pretty closely into this Vote before we pass it. This, as the Committee will observe, is the first of the two or three subsidy Votes which will come before this Committee between now and the Adjournment for the Recess. I may point out that by some unfortunate coincidence—to put it no higher 134 than that—we are called upon to pass this Vote the very day after we passed downstairs the Ways and Communications Bill. Undoubtedly, if we had had the information which the Parliamentary Secretary to the Board of Trade will be able to give us this afternoon as to the exact position of the railways with regard to the shareholders and the tax-paying public, a great many of us downstairs would have adopted a more friendly attitude to the Ways and Communications Bill than we showed, and the Government might have saved itself some disasters. We have tried to get from the Government some actual figure of the net loss on working the railways. We have pressed for that time out of mind, but been unable to get it. Be that as it may, we have before us now, as the Committee will recognise, a very serious vote of £60,000,000. Even in these days of voting hundreds of million pounds, £60,000,000 is a big sum. £60,000,000 was about the combined cost of the Army and Navy some 20 or 30 years ago. I am sure I shall be voicing the Chairman's view when I say that I do not suppose this Committee can go into the large question of Government policy in regard to the control of the railways. All we obviously can do is to try and get from the Parliamentary Secretary a statement as to how we now stand; in other words, an estimate of the working of the railways for the year 1919. All we have to go upon now is a White Paper issued at the end of April, 1919, by the Board of Trade, which represents the labours of two eminent chartered accountants, entitled "Railway Working during the War." This statement gives us very little information. I studied this Paper at Whitsuntide, and I recognise that I was not the only person who could not make out much from the figures. During Whitsuntide there was an animated discussion in the "Times" between two eminent financial experts, who, although they only signed their initials, were well-known. One of them, after having examined the White Paper, came to the conclusion that the Government were making a handsome thing out of the railways and effecting a big profit. The other expert came to the exact opposite conclusion, namely, that the Government and the taxpayers were both making a loss, and that the Government was concealing from the people how great the deficit was. These eminent gentlemen had letters and counter-letters in the "Times" until the correspondence was closed. That is about as far as we have got. With the agreement of the Committee, I will ask the Parliamentary Secretary certain questions to try to get from him where we stand, and he, perhaps, in 135 answering and amplifying them, will be able to put before the Committee, the House, and, more important still, the country and the railway shareholders, exactly where we stand. If Members of the Committee happen to have this White Paper in their hands, they will see that on the second page it gives for the years 1914–15–16–17–18 the total revenue earned by the railways, and also the total expenditure, and that gives us, according to this Paper, the balance of revenue earned over expenditure. The Committee will see that in the year 1913 Sir William Plender spoke of the balance of revenue earned over expenditure for the British railways. I should like to ask the Parliamentary Secretary, in passing, whether we are now dealing with the railways of the United Kingdom or the railways of Great Britain, because in this White Paper the British railways are spoken of during the period of Government control, whereas, in the Vote we are discussing, we are asked to vote a sum to cover a deficit in respect of railways in Great Britain and Ireland. The Irish railways did not, as a matter of fact, pass under Government control till a good deal later than the British railways. Perhaps the Parliamentary Secretary could correct me.

The PARLIAMENTARY SECRETARY TO THE BOARD OF TRADE (Mr. Bridgeman): The White Paper only refers to the railways in Great Britain. The Estimate you are asked to pass covers Ireland as well.

Major NEWMAN: We must bear that in mind in any comparison we are making. What the Committee want to get at, I imagine, is the exact amount which the taxpayer will be called upon to bear in the current financial year. Does £60,000,000 represent that sum accurately? If it does, how is that sum arrived at? I received from the Parliamentary Secretary, on the 24th June, a somewhat remarkable answer to a question I put to him as to the amount the taxpayer would have to make good in the working of the railways. He told me that the amount to be borne by the taxpayer under the Government agreement for railways "does not depend entirely on the increased cost of railway working. I am not prepared at present to say what it is likely to be." That again somewhat adds to the difficulties of my task.

Mr. BRIDGEMAN: All I meant by that answer was the increased cost was not the 136 only item to be considered, but that the receipts of the railways, of which at that time I was not able to give an estimate, must be taken into account also before it was possible to arrive at the actual position.

Major NEWMAN: Then we had an important statement made by the Minister-Designate of Ways and Communications, the right hon. the Member for Cambridge, in which he told us that the loss on the working of the railways would be in the neighbourhood of £106,000,000, at any rate over £100,000,000. Subsequently, the experts discovered that he had made a mistake, and that by the loss on working was really meant the increased cost of working the railways for the year 1919 as compared with the standard year, 1913. In this White Paper, the increased cost of working the railways for the current financial year as compared with 1913 is given as a sum of between £104,000,000 and £109,000,000. What is meant by the cost of working a railway? Is the cost of working a railway equal to the expenditure? Are they one and the same thing? If they are, we get this fact, that in 1913, the standard year, the expenditure or cost of running amounted to something over £75,000,000, and, if we add to that the £100,000,000 odd in respect of the present year, we get an expenditure of £175,000,000. Then, apparently, we have to make up a deficit of £60,000,000. Take £60,000,000 from £175,000,000, and you get a revenue earned of £115,000,000. That obviously cannot be right. It cannot be right, because the total revenue earned in 1918 was £177,000,000, and therefore that is not the way to get at the actual cost of working the railways for the present year. What I imagine we ought to have is this—we have this White Paper for the years 1915, 1916, 1917 and 1918 giving us the total revenue earned for those years as compared with the standard year 1913, giving the total expenditure of those four years, again as compared with the standard year 1913, and giving a balance of revenue earned over expenditure—what is called a net profit to the railway companies for those four years as compared with the standard year 1913. We get the interesting fact that the net sum earned for the year 1914 was £48,000,000 as compared with £45,000,573, which was the revenue earned in the standard year of 1913—a very small difference of something like £3,000,000. Then we ought to have in the sixth column "Estimated receipts for the year 1919" and "Estimated expenditure for the same year." We ought to have at the bottom of the column balance not of revenue 137 over expenditure, but of expenditure over revenue earned. In other words, there is a deficit of something like £60,000,000. If that were done, we at any rate would be able to understand where we are. We have not got that information, and we have only to grope our way through those figures. Assuming the hon. Gentleman has got this White Paper, I should like to ask him several questions on it. We have got on page 2 "Passenger train traffic for 1918 as compared with 1913." Of course, naturally the passenger traffic shows a marked expansion of nearly £16,000,000, which would be accounted for by the 50 per cent. increase in fares. Coming to "Goods train traffic," the figures show only a very small increase. In the standard year it was £68,000,000, whereas in 1918 it is £72,000,000. Then I want to ask this question: Surely that goods train traffic includes Government traffic in 1918 at any rate munitions, guns, soldiers, and all the various war services of that year?

Mr. BRIDGEMAN: The Government traffic appears under the next heading, "Estimated amounts which would be received if charged for at pre-war authorised rates, £41,917,024."

Major NEWMAN: Just the ordinary general traffic. I take it that in 1919 that estimate would be very much less than in 1918. In 1919 we shall not have the same vast amount of traffic, and there will be a great falling off on that side and a bigger deficit. Then we come to the main reasons why the expenses of the railways have increased by leaps and bounds, that is to say, the concessions in war wages and hours of working, and so on. The Estimate, in the beginning of the White Paper, tells us that the war wages under the concessions to railway workers are put down at £57,000,000 as compared with 1913, new concessions recently granted between £20,000,000 and £25,000,000, and extra cost of carrying coal £27,000,000, making a total of £104,000,000 or £109,000,000. On the opposite page, under expenditure, we get "Locomotive running expenses have increased from £17,000,000 in 1913 to £29,000,000 in 1918," and "Traffic expenses from £23,000,000 to £41,000,000." What I would like to point out to the hon. Gentleman is that in these items of expenditure nothing definite is stated about wages. Then, again, rate and taxes in the year 1913 amounted to £4,705,000, but the rates and taxes in 1918 are £5,273,000. That surely cannot be right. In 1913 we had an income tax of about 2s., and in 1918 the income tax 138 was 5s. or 6s. in the £. To my mind, the rates and taxes could only have gone up by £200,000 in the year 1918 as compared with 1913. There is another item, "Allowances to dependents of men serving with the Forces," in regard to which I should like to ask a question. In 1918 the amount was £711,000. I take it that item will be wiped out. Sir Albert Wyon and Sir Wm. Plender append to their statement certain notes making the position very vague. There is one other point I should like to refer to, and which I have already mentioned in the House. We have not an audit of the railways for 1918 presented to us. I am not talking of 1919. The figures are only taken up to the close of 1916 and the greater part of the year 1917. That is to say, as far as 1918 goes, the accounts are only estimates. The wages on the several heads of expenditure are taken at the actual rates paid, rising in 1918 from 21s. to 33s. a week above the rates in force in 1913, making an additional cost incurred of £10,000,000. That is to say, for 1919 we have got to estimate for an addition of £10,000,000 as compared with 1917 or the year 1913. The question of arreas of maintenance has given rise to a great deal of controversy as to whether the Government estimated the proper sum for keeping the railways in proper repair. Have they allowed for the extra sum? Maintenance of railways has not been effected during the years of war, according to Sir Albert Wyon's report. I think the hon. Gentleman will be able to tell us something on that point. These are a few questions which the hon. Gentleman might answer, and at any rate put us au fait with the main details of the present disastrous situation. When he has answered these questions we may have other questions to ask him.

Mr. BRIDGEMAN: I quite admit that the difficulty which Members of this House have been labouring under, through not being able to have any reliable estimate of the probable deficit, is one which is regrettable and has no doubt caused them very considerable anxiety, but I think they will realise that the difficulty of getting anything like a reliable Estimate is immense. A great deal of the confusion seems to me to have arisen from the fact that many of my hon. Friends have looked upon the figures given first of all as £90,000,000, and subsequently revised in the light of further additions to wages and so on, at from £104,000,000 to £109,000,000, and have looked upon that as a deficit or loss, and not as it was intended to be—and I thought made clear—merely the extra cost of working.

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Major NEWMAN: Over 1913?

Mr. BRIDGEMAN: Yes. The reason why it was so difficult to make any Estimate as to the actual deficit was that it was almost impossible to forecast what the revenue would be. In February, when the Estimate was given us, as far as could be judged, taking what general indications we could find, it was given at £60,000,000. The figures which we have taken out since lead us to think that that is probably what they will be. The figures now put before the Committee, which we have only just been able to get at, have been made out from the returns for April, and May of this year. They show probable receipts for the year 1919–20 of £161,500,000, and a probable expenditure of £173,000,000, leaving a deficit on working of £11,500,000. To that we must add the Government guarantee of net receipts to Railway Companies, which amount to £45,500,000.

Major NEWMAN: It is £43,500,000 on the White Paper.

Mr. BRIDGEMAN: The White Paper is railway working only. This includes other services charged to the railways. The Government guarantee of net receipts comes to £45,500,000. That leaves an adverse balance to be made good by the Exchequer of Great Britain of £57,000,000. To that an addition must be made for Ireland of about £2,700,000, and interest must be allowed on additional capital which has become productive since the war began, which we may put at about £1,000,000. That makes a total deficit of £60,700,000, which comes very close to the original Estimate made in February of a deficit of £60,000,000. My hon. and gallant Friend raised several questions, some of which arose out of his reference to the £104,000,000–£109,000,000 as loss instead of being increased cost.

Major NEWMAN: I knew that perfectly well, for I said that Sir Eric Geddes made the mistake and we had to correct it.

Mr. BRIDGEMAN: I have seen a report of his speech and in that speech he certainly referred to it as increased cost, but no doubt some of the misunderstanding has arisen through not appreciating exactly what he meant. Then my hon. and gallant Friend asked whether wages were included.

Major NEWMAN: Wages were not put down as an item of expenditure.

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Mr. BRIDGEMAN: The increase in wages has been included. Of course it would have been very difficult to include in each item the amount due to wages. Then in reference to Income Tax, that is paid by the shareholders and not by the Railway Companies, and therefore rates and taxes refers mainly to the rates paid on sites, etc., occupied by the Railway Companies.

Colonel BOWLES: For many years I took part in Railway Committees in this House, and there is a very strong feeling about this. If this vote is brought in like this now, it simply means that the Income Tax payers of this country practically have to pay the rates in the urban and rural districts through which the railways run, because in this case of rates and taxes the railway companies pay out of all proportion—

The CHAIRMAN: The hon. and gallant Gentleman is out of order. We are not now, on this vote, discussing the policy of Income Tax.

Colonel BOWLES: In voting this it is very important for us to know what goes to rates and what goes to taxes.

The CHAIRMAN: That is quite in order.

Mr. BRIDGEMAN: I cannot give the actual figures, but practically these are all rates.

Colonel BOWLES: That is what I want the Committee to understand. "Taxes" is a misleading word to put into this Paper.

Mr. BRIDGEMAN: My hon. and gallant Friend asked about the Audit. The reason why that has not been completed is because one or two outstanding points have not yet been agreed upon. He asked about arrears of maintenance, but I could not quite understand that.

Major NEWMAN: I want to know if full allowance has been made in this estimated deficit of £60,000,000 for full arrears of maintenance? We have been told that maintenance has not been kept up to pre-war level. Work has got to be done to overcome the arrears of these war years. Has that been allowed for at present rates and prices for this particular year, 1919? It says: "The estimate of increased expenditure referred to is an estimate of increased cost of 141 labour and material and does not include any allowance for abnormal maintenance work."

Mr. BRIDGEMAN: No, but it does include arrears of maintenance.

Major BARNES: I wish to draw the attention of the Committee to this Paper 147. On the first page, which is easier to understand than the second, the estimated value of Government traffic is put down at £,112,000,000 and the compensation paid at £95,000,000. From the point of view of the taxpayer those are comfortable figures, because the Government have made a profit of something like £16,000,000 during that period and, therefore, they have made a very good bargain with the railway companies. But there is a sort of postscript to this which, like most postscripts, is a great deal more important than what goes before. That is that those figures do not include any provision for extra wear and tear. On the other page, Note 7, by the Accountants', states that extra wear and tear is estimated to result in a figure of about £40,000,000. In other words there is a claim in against the Government which is going to reduce the profit of £16,000,000 to a loss of something like £24,000,000. A claim of that sort merits close attention. If a man who has been engaged in a transaction and thinks he has made a big profit is suddenly called upon to face a considerable loss, he examines the bill very closely. I should be very much disposed to dispute it, and I hope what I have to say will lead the Government to dispute this account. May I draw the attention of the Committee to the way in which this account arises? In the first column here, we see how these net aggregate receipts were arrived at, and the succeeding columns show the figures calculated on the same basis for the following year. The whole question as to what sort of aggregate receipts you are going to get depends upon the amount of deduction made from gross receipts, and, if Members look at these deductions they will see that the first ones are for the maintenance and renewal of ways, works, and rolling stock. If you look at the column for 1913 you will find only two figures, one £11,000,000 odd and the other £13,000,000, but if you look at the succeeding column you will find four lines of figures in every succeeding year in the place of two lines of figures in the year 1913. The explanation is to be found in the fact that they are in respect of both ways, works and rolling-stock in the years 142 of control. There are two sets of figures, one referring to maintenance and renewal, which accounts for actual expenditure; and another set, which includes arrears, which are to be carried out. I think everybody is familiar with the position. During those years, it was rather a difficult matter to carry out all the works of maintenance that were required, owing to the difficulty in getting men and material, and some of these works had to be deferred. Thus, in the period of control, you have items for arrears to be carried out, which do not appear in the year upon which the basis is calculated, that is, 1913. That is, of course, perfectly proper. There were different conditions in the years of control from the year 1913, so it is perfectly right that these arrears should be charged. The accounts were made up on that basis, and they were audited up to the end of 1916. But some time, subsequently, it occurred to somebody or other that in these amounts for maintenance and deferred maintenance they were not getting all that they might or ought to get, and so somebody thought of this theory of extra wear and tear. Now, although it does not appear in the form of accounts in any of these years in the period before or after the war, after the net aggregate receipts have been determined and compensation paid, there is this something extra, extra wear and tear, which has still to be met. What is the exact position? It will be found that during the period of control there was actually spent in maintenance over £125,000,000. If Members take the trouble to add up the figures, they will find that the railway companies have in their possession now a sum of not less than £35,000,000 to carry out deferred maintenance, and, after these very large sums for deferred maintenance, they come forward with a claim for extra wear and tear for something like £40,000,000. It seems to me to be at all events a claim requiring very careful and close examination. Supposing an hon. Member had taken a house, and had undertaken to pay the rent and make repairs. He actually carries out a certain amount of repairs, but through some cause or other he is not able to do all that he ought to have done. He is paid for the actual repairs he did, but the landlord holds him liable for the repairs he should have carried out. Having paid this money, you think you are clear of all liabilities, but the landlord produces a bill for extra wear and tear. I think if any of us found ourselves in that position we would very carefully scrutinise and examine the bill, and find out the basis upon which it was made up. I submit that the Government are in the posi- 143 tion in regard to the general public that any man is to his own accounts, and that they should exercise the same care and scrutiny of this claim that any private individual would do. I should like to ask the Parliamentary Secretary who calculated this amount? Obviously it was made up by accountants who could not say whether it was a proper claim or not. In answer to a question addressed to Mr. Runciman at the time the railways were taken over, he said that individual companies retained the management of railways subject to the instructions of the Executive Committee. I take it that these figures have been made up by the engineers of the companies. The companies are still carrying on. The Minister-Designate of Ways and Communications has not possession of them yet. I take it that it is the railway engineers who are claiming for these arrears. I should like to know whether it is their own engineers that made the claim for the extra £40,000,000. It appears to me that this is a claim which the Government ought to dispute and which they ought to submit to the Railway and Canal Commission for award. The figure is twice the amount for settling the soldiers on the land, and it ought not to be paid until it has been established by an impartial body. It is not for engineers to put in the claim and for accountants to justify it. It is an account which ought to be submitted to reference, and paid if it is awarded. It is an account which should be subjected to very severe scrutiny, and should not be paid unless an independent and impartial body finds that it is properly due.

Sir EVAN JONES: I should like to know whether this deficit of £60,000,000 is the total deficit, or is only a portion of the total deficit to be borne by this vote? Does it mean that cost relative to transportation of different branches of His Majesty's Forces has been deducted from the railway expenditure before the deficit was arrived at, or does it mean that the receipts corresponding to that transportation have yet to be credited to railway companies, thus reducing the deficit of £60,000,000. Or, does it mean that that cost of transportation has to be paid by other departments concerned as an additional deficit added on to the £60,000,000?

Mr. BRIDGEMAN: With regard to what the hon. and gallant Gentleman opposite (Major Barnes) has said, his views seem to coincide exactly with those of the Board of Trade. He says that he would not pass any claims; for extra wear and tear without scrutiny. 144 No more should we. The position is that the claim has not been sent in. When it is, it will be closely scrutinised by the Board of Trade and by our auditor, and if the latter finds fault, it will be sent to the Railway Commission. That is exactly what the hon. Gentleman desires, I think, and if he could only trust the Board of Trade, they will be sufficiently severe in their scrutiny of the figures. I think I am right in saying that the £60,000,000 is the whole of the deficit, as far as we can ascertain. The note below does not refer to any subsequent addition which would have to be met.

Colonel BOWLES: Does this not mean that there is another sum included in other estimates which have been paid for in other ways by this House? The point is, does this note mean that there are other charges? For instance, we know perfectly well that these other services have conveyed an immense number of men and certain charges have been met. I take it that the expenditure incurred by branches of the Service for the use of the railways has been included in other votes and therefore is outside the £60,000,000 deficit. It is not quite clear.

Mr. BRIDGEMAN: What appears in their vote is a credit to us to meet what we have to pay.

Colonel BOWLES: You cannot vote it twice over. If the demands made by the War Office for money to cover expenses of travel in the coming year is to be paid over, we have to consider if the country or the Government has to pay these costs over and above the £60,000,000 deficit.

Sir E. JONES: I take it that the Board of Trade deducted the cost of transportation from the total expenditure of the railways before they arrived at the deficit of £60,000,000.

Mr. BRIDGEMAN: Yes. It is included in the receipts. What it means is that the amounts appearing in the estimates of the other services are their share of what they have to pay towards the total amount. Therefore they do not make any difference to the total deficit.

Sir E. JONES: I do not think it makes the matter clear, because, if that is so, the cost of transportation still to be borne by other departments is an addition to the £60,000,000.

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Colonel GRETTON: This point is of very great importance as a matter of accounting. There is a charge of £6,000 to railways working on account of the Ministry of Shipping. That sum is apparently voted elsewhere out of money supplied by Parliament, and there are charges you will find throughout the Vote for Traffic in the older Departments. The Government has during the war guaranteed the railways the net revenue on the prewar basis, and that sum was paid to the railway companies from year to year according to this White Paper in order to keep their accounts going. We are also told in the White Paper that the audit is not finished, that is has only been made up to the close of the year 1916 and a great part of 1917, and the remainder of the audit has still to be finished. These figures and deficit are therefore not finally ascertained figures, and are subject to final examination according to the decision taken on points of dispute. The War Office, the Admiralty, and the Munitions Department have not been able to give their railway carriage for passengers or goods, and these sums, drawn hitherto in one lump sum, are deficits and paid out of the Vote of Credit. This year, for the first time, these Departments are required by Parliament to furnish an account of the sums which they expend in railway carriage. The question raised here is: Are these sums shown in the Army, Navy, and Munitions Votes actually paid out of those Votes or are they all carried over and included in this £60,000,000? That wants some explanation. This kind of account keeping is of first importance. I do not suppose for one moment that errors have been made, but, at any rate, Parliament should be informed what method has been adopted and what items are included in this £60,000,000. Is this the total indebtedness of the Government to the railway companies under this head, or are these charges shown in the Army, Navy, and Munitions Estimates merely dummy Votes and not, in fact, paid by those Departments? I am afraid I am rather tedious, but the matter is of very great importance, and I venture to press it on the attention of my hon. Friend and hope he will give some further explanation in regard to it.

Major NEWMAN: On the second sheet of this White Paper we have passenger and goods train traffic Estimates for these five years as compared with the year 1913. I want to know, in regard to these two items, whether the traffic for the Army, Navy, Air Force, Civil, and Revenue Departments are included in those two items, or are they absolutely excluded?

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Mr. BRIDGEMAN: This Paper is only for 1918, and, as the hon. and gallant Member said, it is this year for the first time that these different Departments are going to take charge of their own particular use of the railways. I do not quite understand this note. I am afraid I cannot give exactly a clear account of the transaction that takes place. But, whatever it is, that £60,000,000 is the net deficit which the Government expects to bear.

Colonel GRETTON: Under all headings?

Mr. BRIDGEMAN: Yes. The amount of Government traffic which is used by the Army, Navy, and Air Forces, and so on, will appear in their own Estimates, but it will not make any difference to this £60,000,000, which is the total deficit.

Major NEWMAN: In 1918 we get the figures of passenger train traffic as £69,000,000, and of goods train traffic as £72,000,000. Does that include carriage of troops, etc., or not?

Sir E. JONES: The £60,000,000 is a deficit and is not the cost of transport. It is a deficit on the working, and has no relation whatever to the question of the cost of running railways. The value of carriage traffic of railways for the respective Government Departments is about £40,000,000. It looks to me very much as if that has to be added to the £60,000,000, and that the actual deficit which will have to be met by all the Departments when pooled will be £100,000,000. That is a point that ought to be explained. The Vote refers to the cost of transport, and in that respect is very deceiving, and it is therefore more necessary to raise the point.

Colonel GRETTON: Is this not a deficit which is arrived at after all the other departments have paid all the charges necessary to be paid by them during the current year?

Mr. BRIDGEMAN: I have already said so.

Colonel GRETTON: Then what he tells us is this—that the Government is paying vast sums for the transport of munitions and returning soldiers. The munitions department is paying great sums, and the actual payment due by the State after the State has paid all the indebtedness to the railways amounts to £101,000,000—that is £60,000,000 plus £41,000,000. That is the meaning of 147 the answer that the hon. Gentleman has given to the Committee. It is a matter of the first importance that we should know what the State is paying for railway charges and for the deficit brought about by various causes in the working of the railways while under the control of the State.

Mr. BRIDGEMAN: The £60,000,000 is the net figure of the deficit the Government will have to find. With the Government traffic falling off, it will during the next few months be less than for the early months of this year. I do not understand the point raised by the last speaker, or how he arrived at £41,000,000 plus £60,000,000.

Sir JOSEPH LARMOR: Is the Government paying for the services rendered to it, and after the Government has so paid for these services is there a deficit of £60,000,000?

Colonel GRETTON: The figure of £41,000,000 is last year's figure of the estimated amount which would have been received for Government traffic if charged for at pre-war authorised rates for the year 1918.

Major BARNES: I take it that the £41,000,000 of Government traffic is included in the figure of £161,000,000, the estimated income which the honourable Gentleman gave us. This £41,000,000 the Government have to pay to the railways. I should just like to ask one question. This White Paper, No. 147, contains a letter from two accountants—Sir Albert Wyon and Sir William Plender—and in that letter they admit the claim for wear and tear. It is only a question as to the amount. That letter is covered by a statement signed by the President of the Board of Trade. He is not quite so explicit, though he does seem to endorse the view of the accountants and to admit the claim for extra wear and tear. Will the hon. Gentleman tell me whether the position is that the Government have admitted that there is a claim for extra wear and tear, and that the only question is as to the amount? I want them to dispute that there is a claim for extra wear and tear and to submit that dispute to the Railway and Canal Commission. Perhaps the hon. Gentleman will make perfectly clear what is the position of the Government. Have they admitted the claim, and are they now simply querying the amount, or are they going to dispute the actual claim?

Mr. BRIDGEMAN: I understand this to 148 mean that they admit that they have a right to make a claim but that there is no admission as to what the amount of that claim properly should be.

Major NEWMAN: Speaking as a shareholder in one of the railways, I must say that the hon. Gentleman (Mr. Bridgeman) has made a very serious statement. As I understand it, the railways may make a claim against the Board of Trade for fair wear and tear and the Board of Trade may not grant it.

Mr. BRIDGEMAN: Extra wear and tear.

Major NEWMAN: In other words, the railways may be starved in the maintenance of the permanent way. I want to put another point. What about the development of the railways under Board of Trade control? The Great Central Railway have great schemes of extension at Hull, Grimsby, and elsewhere. They have expended large sums of money to carry out those improvements. That money at the moment is not earning anything, but those of us who invested in the undertaking were told that when Hull, Grimsby, and Immingham were developed we should at once get a return on our capital. If the Board of Trade are going to arrest the development of the Great Central Railway, what is to happen to the money that we have invested? Supposing the Great Central Railway do carry out these improvements, and the Board of Trade come down and say that they have been carried out expensively and badly, and that they will not allow the Company anything for what it has done, what will be the position of the shareholders? We have heard something about maintenance. I should like to get something from the hon. Gentleman about development, and to know what freedom the Companies have under the control of the Board of Trade to develop their undertakings.

The CHAIRMAN: I really think that is going outside the Vote, which is not at all concerned with the future development of the railways.

Mr. C. WHITE: The hon. and gallant Gentleman who has just sat down has said that these railways have been starved. I have been running through these figures, and I find that during the four and half years £57,557,000 have been spent upon maintenance of way and works and £73,955,000 upon maintenance and renewal of rolling stock. Now we have £131,000,000 for the 149 maintenance of these two in addition to the accumulated arrears. Are we, on the top of that, to recognise a further sum of £40,000,000 for extra wear and tear, or are we to seriously protest unless we know a good deal more about it? It seems incredible, after the enormous amounts that have been spent, that £40,000,000 should be required for extra wear and tear. It is a much more serious matter than anything that we have considered this afternoon, and I join in protesting strongly against the Government recognising this claim until we have had some expert examination of it. On the face of it, the claim to some extent has been sanctioned by the two gentlemen who have signed this letter and by the President of the Board of Trade himself, when he says that "the above figures include provisional allowances for deferred maintenance of permanent way, rolling stock, and plant, but do not include any provision for extra wear and tear." Inferentially, at any rate, he agrees that extra wear and tear must come later. I think we ought to protest against this claim until we have a good deal more information before us than we have at present.

Major NEWMAN: Under the circumstances, and having heard the explanation of the hon. Gentleman (Mr. Bridgeman), I ask leave to withdraw my Amendment to reduce the vote by £100.

Colonel GRETTON: I do not think that we can leave the matter here to-day. My hon. Friend has raised a very serious point. What is the position as regards this wear and tear? Is the principal of extra wear and tear admitted? Are the Board of trade going to leave the question to the decision of the auditors, or have they a policy of their own? Much more than £40,000,000 is at stake. We ought to have some assurance as to how that sum is going to be dealt with and why there is a liability at all. The Committee ought to press for an answer, which I am sure my hon. Friend will be only too ready to give. We are still without any definite statement from the hon. Gentleman as to the total sum paid by the Government to the Railway Companies during the current year. Do the War Office, the Admiralty, and the Ministr of Munitions pay their own railway bill as well as the old-fashioned civil departments and is this £60,000,000 due by the Government after paying to the railway companies all their indebtedness for services rendered? That is a question of great public importance, 150 and I think we ought to press for further enlightenment on the matter.

Mr. BRIDGEMAN: I am sorry if I have not made the position clear with regard to wear and tear. I thought that I had made it quite plain that the Board of Trade admit that there may be legitimate ground for a claim for extra wear and tear where there is abnormal or severe use of a railway. We have not yet got the claim, and therefore we cannot say whether it is excessive or not. When the claim comes in it will be submitted to careful investigation, and it will go before the Railway and Canal Commission.

Mr. WHITE: Upon what are the figures based?

Mr. BRIDGEMAN: I do not know, the claim has not come in, and I cannot say. All that I can say is that we admit that there may be a fair claim for extra wear and tear, but until we see it we cannot say whether it is a reasonable one or not. With regard to the total amount, I have said over and over again that £60,000,000 is the total deficit which will have to be found by the taxpayers. The figures I gave showed the railway receipts as £161,500,000. That includes the payment due from the Government to the railways. Expenditure is £173,000,000, leaving a deficit of £11,500,000. Then there is the Government guarantee of net receipts £45,500,000; additions to be made for Ireland £2,700,000; and interest on additional capital £1,000,000. That is the way the £60,000,000 is made up.

Mr. HANCOCK: When we talk about wear and tear, may I ask whether that has any reference to the re-laying of lines that have been taken up? In the neighbourhood from which I came—and I think pretty well all over the country it is the same—branch lines have been taken up, rails have been removed, and with the exception of the removal of the rails the lines are there to-day as they were before the war. Are these lines to be re-laid, and is that caused in any way by the wear and tear of which we are now talking?

Mr. BRIDGEMAN: The rails referred to are rails used abroad by the War Office. The War Office is responsible for them, and the charge is one borne by them.

Colonel BOWLES: That is the very point I have been endeavouring to emphasise. I 151 do not think it right that the House of Commons should be treated in this manner. We should know exactly what are the expenses the country has to support towards the railways. If we are dealing with little sums piecemeal, one on one Vote and one on another, and we are told, "We do not know anything about that because it is paid by somebody else," we cannot ascertain whether we are dealing fairly with the companies or not. The only way we can do that is by knowing the whole of our liabilities.

Mr. HANCOCK: We are now in July, 1919. I understand from what I have already heard that these accounts have been audited to 1916, so that what we are considering now are merely estimates. I have no doubt that they are estimates formed on the best knowledge that is available, but when we have looked at the matter from the most generous point of view and in the most sympathetic spirit possible, we are still compelled to admit that they are estimates. The fact that they are estimates makes it exceedingly difficult—for me, at any rate—to consider them with that degree of confidence that we could show if they had been audited and were absolutely reliable. I should like to ask whether we have any reason to think that before long these accounts will be audited down to date, so that we shall have figures that are not open to question.

Colonel STEPHENSON: In reference to the answer given to the question on the relaying of lines, does it apply to rolling stock removed from this country to France?

Major BARNES: I addressed a question to the President of the Board of Trade asking him to state what arrangements have been made with the railway companies as to compensation for rolling stock, rails, and general plant which had been taken and transferred overseas. I got an answer from the War Office— "Generally speaking, rolling stock in traffic sent overseas has been on loan, and the War Department is only liable for putting it in repair on its return or payment of its value if not returned. Stores and general plant taken overseas have been paid for. I understand a similar course has been followed in respect of rails which have been dealt with by the Ministry of Munitions."

Mr. HANCOCK: So that it does not involve the re-laying at all?

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Major BARNES: Apparently not.

Mr. HANCOCK: Can anything be said about the Audit?

Mr. BRIDGEMAN: The Audit refers only to the accounts. You cannot Audit an Estimate. The Audit is delayed because there are one or two things still outstanding. I do not think it is likely to be delayed very long, or not longer than can be helped.

Mr. WHITE: Shall I be in order in moving that—

The CHAIRMAN: I cannot take any further Motion, because we already have before the Committee an Amendment for reduction. Is it the pleasure of the Committee to allow the Amendment to be withdrawn?

Amendment, by leave, withdrawn.

Original question again proposed.

Mr. WHITE: With regard to this £40,000,000, I should like to place it on the records that it is suggested by Sir Albert Wyon and Sir William Plender that it may be required for extra wear and tear, and that this Committee is of opinion that nothing should be paid on this account until particulars have been submitted to the Estimates Committee of the House of Commons.

The CHAIRMAN: I am very sorry I cannot take that Motion.

Colonel GRETTON: We have been trying for some little time to get answers to questions. What is the total amount paid by the Government during the current year to the railway companies? The hon. Gentleman (Mr. Bridgeman) is not able to answer that question. We are not complaining, but I am going to move that the Committee do now adjourn in order that we may consider this Vote further at the next meeting.

The CHAIRMAN: There are very substantial reasons why we should not go to a Vote at the present moment.

Attention called to the fact that twenty Members were not present. Committee counted; and twenty Members not being found present

The CHAIRMAN: Attention having been called to the fact that there is not a quorum present the Committee stands adjourned 153 until to-morrow. This Vote will be continued first to-morrow afternoon, and then the Votes on the Paper.

154

Adjourned at Ten minutes before Six of the clock till to-morrow (Thursday) at Four o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE—

Turton, Mr. (Chairman)

Barnes, Major

Betterton, Mr.

Bowles, Colonel

Bowyer, Captain

Bridgeman, Mr.

Bromfield, Mr.

Colvin, Brigadier-General

Curzon, Viscount

Elliot, Captain

Galbraith, Mr.

Gretton, Colonel

Hancock, Mr.

Jones, Sir Evan

Larmor, Sir Joseph

Newman, Major

Stephenson, Colonel

White, Mr. Charles

White, Lieut.-Col. Dalrymple

Wilson, Captain Stanley