Ouch, Yaroo, Legg° !
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WHOEVER may be hurt by a decline in traffic, one imagines it will not be the British Transport Commission. They are so far in debt that an ordinary commercial concern in the same situation would have foundered long ago. The Commission keep afloat, and to
outward view appear more prosperous than ever. They know that at any time the Treasury can rescue them by writing off their loans and deficits, and even the interest as well.
The time has not arrived yet. For a while longer the pretence must be kept up that the railways are as vulner able as any industry under private enterprise. At present there is to be no shrugging off of deficits as the kind of misfortune that might happen to anyone. The Commission are borrowing £1,500m. to bring themselves up to date. They are borrowing more money to pay the interest, and still more to keep pace with current deficits. In the midst of the astronomical figures involved, they can still claim to maintain a sense of proportion sufficient to mourn sincerely a further loss amounting to no more than a few millions.
Addressing the European Ministers of Transport a short" time ago, Sir Brian Robertson, chairman of the Commission, found a vivid physical metaphor to describe his feelings. Much less coal and steel were being sent by road, he said. The coal was going back into stock instead of being moved, and production in the steel industry had fallen. "British Railways," Sir Brian lamented, "have no resources to cushion them against the effects of such a sudden blow, and it is hurting a lot."
On somewhat different occasions, and in somewhat different words, Billy Bunter has for several years been in the habit of expressing essentially the same sentiment. More often than not, he does so before he is hurt, and here is another point of comparison with Sir Brian, in spite of his more dignified language. The railways, like Billy Bunter, are really very well cushioned against financial disaster. Ironically, it is their road transport competitors who are likely to be more hurt in the long run.
Gilbertian Situation
There is an air of unreality about transport finance. Everybody knows the Government have been taking huge sums from road users in the form of taxation, and handing over almost equally huge sums to the railways in the form of loans. Everybody knows also that there is not the slightest chance these loans will ever be paid back. The assumption upon which this Gilbertian situation rests is that the railways are essential to the nation in peace and in war.
Lightly though their obligations may rest on the Commission, there must be a limit to them. When this is reached, the Government must decide whether or not to pay 'a subsidy by writing off what already amounts to an enormous debt. There is no serious alternative. The railways cannot hope to make sufficient profit to pay back all they have borrowed. .
There is a growing doubt whether they will ever again make any profit at all. The new equipment will help, but cannot forever disguise the fact that the railways are an outmoded form of transport. Sir Brian's cry of anguish may be prophetic. When receipts are falling and the bills are mounting, the loss of a little extra traffic may seem comparatively unimportant. The long-term plan, however, c16 lays down that just about this time the downward trend should be reversed and the climb should begin towards solvency. If the Commission are going still further into the red, they will have to think again about whatever result they hope to achieve in the long run.
The proposals for the railways presented to Parliament two years ago by the Minister of Transport included a review of policy and prospects made by the Commission themselves. They commit themselves to an estimate that by 1970 there should be a total surPlus revenue of £50m. a year, aft eor charging to revenue all interests except on deficits. "But the critical period of reconstruction and development terminates much earlier, and the Commission• would probably cross the line from annual deficit to annual surplus in 1961 or 1962."
In other words, the effects of the new policy would be felt all the way through, and not merely when the plan is completed. The Commission even ventured on figures, and indicated that at the date of " crossing the line" there would be extra annual revenue or savings of £35m. from modernization, £3m. from the pruning of services, £5m. from increased productivity, and £20m. as a result of the freedom from stationary obligations.
Remote Chance
Sir Brian appears now partly to contradict this. He told the Ministers of Transport that the large sums already spent on modernization had scarcely begun as yet to pay dividends. If this is so, the chance seems remote that by 1961 they will be paying dividends on anything like the scale predicted. At about that time, if not sooner, the Government will find it necessary to make a reassessment of the situation.
Road transport operators should make up their minds as soon as possible about the railways. The Commission's financial plight is no encouragement to their principal competitors. They have been accustomed to adopt a patronizing attitude, as if towards a business associate who had come down in the world. They go out of their way to say from time to time that the railways perhaps ought to be preserved, if only for reasons of national security. In other words, even road users accept the assumption that has hitherto guided the policy of the Government and of all the political parties.
It is an awkward assumption, from which certain uncomfortable consequences flow. If the main line companies had escaped nationalization, they might have done a little better than the Commission, but they would still have been in financial trouble. As independent companies, they could hardly have been permitted to borrow as much money as is now being lavished upon the Commission.
Another consequence of assuming that the railways must be kept at all costs is that they must also be kept properly fed, either by handing traffic to them or by a subsidy. It is more than suspected that forcible diversion is already taking place of coal to be conveyed from pithead to electricity generating stations.
If road operators believe in the inevitability of the railways, they must also believe that money or traffic must be supplied to keep the railways going. The conclusion is hardly likely to be welcomed on the road side. Operators must ask themselves, and the sooner the better, whether their attitude towards the railways is not now in need of revision.