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Asking for more
PERHAPS the weekend before a Budget in which the Chancellor of the Exchequer increased taxation on road transport was not the most felicitous moment to choose for an announcement that the railways might like to have subsidies on freight as well as passenger services. Sir Henry Johnson, British Railways chairman, may have considered an Institute of Transport symposium in Bristol a sufficiently solemn occasion to outweigh any possible disadvantage in timing.
Road operators ought to have been suspicious of the unnatural quiet on the subsidy front. The most extreme demands of the railways seemed to have been satisfied by the Transport Act. Their capital debt was reduced at one stroke of the pen from £1,562m to £300m. There are to be grants beginning at the rate of about £40m a year towards what are considered unremunerative but socially necessary passenger services. Other grants will be paid on a tapering basis up to the end of 1973 to help while surplus track and signalling equipment is eliminated.
The generosity of the taxpayer has even spilled over to the National Freight Corporation. It has formed National Carriers Ltd. out of the freight sundries company transferred from the railways and is to have a subsidy of up to £60m to meet the expected losses over five years.
At the same symposium in Bristol Mr. R. H. Farmer, managing director of Atlas Express Ltd., expressed misgivings that the power to draw in national funds might give NCL an unfair advantage over independent operators. After listening to Sir Henry he may have felt even more concern that the appetite for subsidies grows from what it feeds on.
One step The apparently vain expectation was that at least the railways would have to be satisfied. There is no provision in the Act for further deficit grants and the intention is plain that the railways are on their own from the beginning of 1969.
What Sir Henry has said can easily be construed as an indication that he regards the financial concessions in the Act as merely one step along the right road. Having put the railway passenger services on a • reasonable basis he can turn his attention to the freight services which have not hitherto been candidates for a subsidy. for them quantity licensing was supposed to be the right kind of protection.
Without giving a specific example Sir Henry made it clear what he had in mind. Freight services were important in development areas, he said. Falling coal output might reduce the volume of rail traffic to the point where a line on which other industries depended was no longer commercially justifiable.
Burdened with the unaccustomed obligation to pay their way the railways might find themselves with no other option but to close the line. The mere threat that this would happen might discourage employers from moving to the development area or even from staying there.
This is a one-sided approach to the problem. If the official policy is to encourage industrial growth in an area the Government might make financial concessions to influence employers and might even in extreme cases consider a freight subsidy.
This could happen only after every transport facility had been tried and failed. Decline in coal traffic might be fatal to a stretch of railway line but road operators should have no difficulty in taking over. As has been said so often well over 80 per cent of all freight goes by road and coal happens to make up a large proportion of what is left over.
If the roads in the area are inadequate even for the slightly greater burden they would be called upon to bear, the solutionis to improve the roads. The Railway Conversion League would no doubt suggest that the line no longer of economic service to the railways could be turned into a road at relatively little cost. It is better for the area that its road problem should be faced and overcome rather than that the obviously unsatisfactory existing situation should be perpetuated by subvention from the Exchequer.
No doubt Sir Henry would be ready with alternative illustrations of his theme. He must be the first to know how the railways have fared during their first three months of freedom. The inference from his latest statement is that they may not be prospering as much as the Government expected.
Repercussions Insufficient attention may have been paid in the past to the interdependence of the various parts of the railway structure. Proper analysis might show the impossibility of interfering with one part without affecting all the rest. The closing of a small and remote branch line has repercussions all the way to the railway headquarters in London.
For example, the occasional passenger who used the line may decide to buy a car as a result of the closure. The purchase will affect the whole pattern of his future travelling. He will find the car more convenient—and certainly consider it more economical—for other longer journeys which he would formerly have taken by train. A similar chain of events may take place with freight traffic. The user turns to road transport for the service no longer available from the railways and subsequently chooses to send his goods direct from door to door even over long distances.
What has been dignified as streamlining—. a conscious effort to increase efficiency by taking off unprofitable weight—may turn Out to be more like the process of unravelling a garment. Once it has started it has to run its course. The railways may find themselves losing one limb after another until little is left except perhaps the commuter services in and out of the few major conurbations and perhaps a sparse network of long-distance services preserved by the opportune development of the container and the freightliner— and in the last resort by quantity licensing.
Diminished to these proportions the railways would no longer be recognized as a national undertaking. There would be specific services virtually independent of each other.
This may be the unappetizing vision seen by Sir Henry. It is made even less attractive by the knowledge that the freightliner company as well as the freight sundries company are now in the hands of the National Freight Corporation. It is no coincidence that the transfer of power was very much in Sir Henry's mind when he spoke at Bristol.
Strongly opposed He showed himself as strongly opposed as Sir Stanley Raymond had been to the decision in the Transport Act to separate the marketing and the operating functions. "Once again the tidy mind of the Administrator has over-simplified the problem," he said. Because separate areas of responsibility were identified they were automatically entrusted to separate institutions.
In his opinion the Freight Integration Council, "which is removed from day-to-day management," could not bridge the gulf which the administrator had created between the two functions. Confidence could be built up between the railways and NFC only on the maintenance of good personal relationships between management at the highest level
There is no reason to suppose that the relationship is not good at the moment. Sir .Henry was right to draw attention to the unpleasant consequences if the railway chairman and the chairman of the NFC were ever at loggerheads.
The railways have been the sick man of transport for a quarter of a century. Many remedies have been tried. The Transport Act provides a massive and continuing transfusion of capital. At the same time it has administered a series of shocks to a Suspect constitution.
The tonic effect expected from quantity licensing is a long way ahead and may in the end be withheld. Sir Henry must be feeling uneasy about his more immediate prospects. Otherwise his recent remarks might have taken a different line. On the face of it there seems little chance that the Government or any government would listen favourably to his appeal for yet more subsidies.