Subsidy in Disguise
Page 55
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FACED with the problem of finding money for the proposed increase in wages, the representatives of the railway workers found the answer in the surplus revenue absorbed by the Treasury while the railways were under State control during the war. Any hope of getting this revenue back was forlorn from the beginning, and it is strange that the National Union of Railwaymen did not press with equal strength the vanishing possibility of balancing railway losses with the profits from
British Road Services. .
The union., may have. hesitated because they did not wish to mix politics with their claim, or because they wanted to be 'sure of the support of road haulage workers, who might not have embraced enthusiastically a cause •that. earmarked their profits for the benefit of another section of the transport industry. Such considerations .do not affect the 'politicians. As soon as possible after. Parliament meets next week, they will point the Contrast between affluent road and impoverished rail.
A £9m. Myth The myth of the £9m. profit made by B.R.S. in 1953 is now firrnly established. It is almost useless to reiterate that the figure indicates net revenue only and takes no account of the proportion to be borne by B.R.S. of the British Transport Commission's central charges, nor of other items left out of the reckoning in 1953. No opponent of denationalization refers to the figure as anything else but profit, or fails to add that, had the Government left well alone, there would have been an infinite progression of bigger and better profits. It has' even been suggested that an undisturbed B.R.S. would have made a profit of £20m. this year.
The transport user, who would presumably have been called upon to pay for this in charges ov'er and above the working costs of B.R.S., may sigh with relief and think the levy a small price to pay for his escape. The financial consequences of integration, had they been allowed to continue indefinitely, might well have caused alarm.
Under the Transport Act, 1947, the Commission have a duty to balance revenue and expenditure "taking one year with another," and losses in one section may be set off against the profits of another. Had there been no amending Act in 1953, it is possible that B.R.S. would have made a substantial profit last year. There was an abundance of most kinds of traffic and production was increasing. With practically a monopoly, B.R.S. could charge rates that paid handsomely. The profit might have been sufficient to meet the wages demands of the railway workers.
Few people, except those workers, would have been very satisfied. Increased competition as a result of disposal brought road transport rates down during the latter half of 1954, and this must have had some effect in checking what was otherwise a fairly general rise in prices. The trader has begun to see the benefits of denationalization. He would have been disquieted at having to pay what he would regard as inflated road haulage rates in order to keep the railways going. Integration would have proved yet another disguise for a subsidy,
The railways seem fated to have always a glorious future and a grimy present. The 1953 Act frees them from many of the shackles that have been the cause of complaint in the past. They look forward to the opportunity to charge, within very wide Iimits,-what they like or what the customer will .pay. They are being given permission to borrow on an ambitious scale, and with the money thus made available they hope to carry out extensive re-organization and to bring themselves up to date.
The recent wages dispute has brought to light the present shortcomings of the railways. Observets have reported on antiquated rolling-stock and equipment, on the low morale of many of the workers, and on evidence of redundancy. With appropriate economies in the labour force and improvements in effiCiency, it is likely that the wages problem would solve itself. In the process the railways would also be working towards balancing their budget. The desire of the railways to do so, and of the workers to co-operate, will obviously be most effective if they have to stand or fall on their own merits, without hoping for a windfall from some other branch of the Commission.
In view of this, it is strange that in their interim report the court of inquiry into the wages dispute should argue that good husbandry is irrelevant. " The nation has provided by statute," says the report, "that there shall be a nationalized system of railway transport, which must therefore be regarded as a public utility of the first importance. Having willed the end, the nation must will the means." From this beginning the court comes to the conclusion that the only problem is how much pay the workers should receive. The question of the wherewithal may safely be left to a higher power.
Court Recommends Subsidy,
However -much disguised, the reconunendation of the court is fundamentally that the railways should receive a subsidy. A strike has been averted at a heavy cost if the public are expected to regard a railway deficit as inevitable. From this point it is only a step to the question whether one should regard the railways themselves as inevitable. A subsidy may be justified in respect of a new and vitally important enterprise such as research into atomic energy. When outside money has to be fed to a well-established industry, the suggestion soon follows that that industry has outlasted its usefulness.
In their own interests the railways must solve the problem of paying their way. This is also to the advantage of everybody .else, including the public who would ultimately be called upon to meet the deficit. Road operators are prepared to encounter stronger competition from the railways than in the past, but they cannot be expected to compete against the' Treasury as well. Trade and industry want keen and fair competition between the two forms of transport. There is still a general recognition that the railways have an essential part to play in the country's economy, although the road operator's share of the volume of traffic carried is now far greater than that of the railways and increases each year. If the railways are to meet the challenge, they must do so out of their own resources.