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Janus comments
Page 66
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Kicking the railways around
ACCORDING to the White Paper on freight transport the Government is hoping that the road-rail negotiating machinery will continue to operate if and when quantity licensing takes effect. Representatives of the railways, the National Freight Corporation (taking over from the Transport Holding Company) and the hauliers—presumably joined by the traders from whom in licensing terms they will be indistinguishable—will continue to sit round a table and mull over like old friends those applications for special authorizations which it may seem possible to settle out of court.
If it ever comes to the point, hauliers and traders will no doubt do something along these lines without being prompted in the light of present opposition to the Transport Bill, and the Government's suggestion appears even more clearly as the empty gesture that it is.
Leaders of the road transport industry if not the opt-ators themselves have for a long time maintained that the negotiating machinery would be greatly strengthened if it were regarded as part only of the tripartite scheme covering many matters other than licensing. Any meaningful development along these lines would mean giving the transport industry as a whole more control over its own destinies than the present Government would ever be likely to allow.
The Bill, if it is implemented, must involve dismantling the whole concept of the tripartite working. On this assumption the casual reference to negotiating committees in the White Paper seems even more cynical.
The Railway Conversion League, I suspect, would have an explanation. Its latest news sheet affirms that the main purpose of the Bill "is to keep the railways in being and to conceal from the public the staggering cost of doing so".
Being hoodwinked Unfortunately, suggests the League, even the people who should be opposing this policy root and branch are being hoodwinked or persuaded into avoiding what should be the only proper solution to the transport problem, namely the conversion of the railways into roads.
The Parliamentary opposition, says the League, have no effective alternative policy "and are as deeply committed to the fundamental fallacies which underline this Bill as is the Government itself". Trade and industry come in for an even stronger attack. The main road users' organizations, the League would have us believe, are "dominated" by their industrial and commercial members who have "enjoyed substantial pickings from railway `modernization'." This explains the lack of objections when the railways sell off surplus property for development for nontransport purposes.
The point of view is interesting. "We are now in the motoring age and have left the railway age behind", says the League. If this is accepted as a premise then the politicians and the economists, or the vast majority of thein, are engaged in a great conspiracy which has taken control of the situation.
The hauliers. are as much the victims as any one else. Their participation in the negotiating machinery is a sign that they accept the almost universal evaluation of the railway problem. They are prepared to share the available traffic with a competitor who is therefore accepted as an essential part of the transport scene. No wonder that the Government, who as part of the conspiracy are anxious to keep hauliers in this frame of mind, have given the unofficial machinery an official blessing and a hope for its continuance.
Another railway solution
Hauliers have gone further without being prompted. They make a point of praising what elements in the railway organization it seems possible to praise without appearing hypocritical, such as the Freightliner system, which in any case many hauliers are now using regularly.
The rivals of the railways apparently still see them as a formidable force to be reckoned with or alternatively to collaborate with. The contention of road operators over the years—admittedly to some extent diverted by self-interest—is that the railways would cut a good enough figure on the industrial stage if only they were properly organized and freed from continual political interference. Support for this interpretation has come from an economist, Mr. George Polanyi in a memorandum on Contrasts in Nationalized Transport Since 1947' published by the Institute of Economic Affairs. The cause of the railways' poor financial performance, says Mr. Polanyi, has been growing competition from road transport.
The failure of the railways to devise commercial policies that would have enabled them to operate profitably in the face of this competition, he continues, "was due largely to the absence of clear guidance from. successive governments on whether commercial or social objectives were to be pursued".
The commercial objectives were those which would have Mr. Polanyi's approval. The Beeching plan was along these lines but the Transport Bill "reverses this policy and returns to the earlier system of integration" through the medium of the National Freight Corporation. For an example of the opposite Mr. Polanyi has only to turn to the record of the Transport Holding Company which shows that "a nationalized industry can record relatively high rates of return on capital if it is given a clear brief—and the necessary freedom—to act commercially".
Railway concessions
He does not need the Conversion League to point out to him that the contrast is not as simple as that. Conditions of demand differ between road and rail, he admits, the latter "facing long-term contraction and the other expanding demand in road haulage". He still believes that it is possible to put the railways on a sound financial basis. His regimen for the railways is spartan. The first requirement is to strengthen competition and in particular to stop eliminating it where it prevails at present. This means dropping the proposals in the Bill for setting up a National Freight Corporation and for quantity licensing. The present licensing system, it almost goes without saying, would be swept away on the lines of the recommendations of the Geddes committee. Even this would leave the railways with a monopoly—of rail transport. Mr. Polanyi would deal with this by allowing tenders for the operation of the railway system, or parts of it. Prospective operators would set out their proposed charges and there would be safeguards on safety and quality. One variation on this might be to invite individual managers or groups of managers to operate a "railway concession" within the still nationalized industry in return for a share of the profits.
The problem of so-called "social interests" would remain. Mr. Polanyi believes they are often exaggerated out of all proportion to their actual importance. In other cases, he suggests, there may be "failure to create an appropriate market environment". Clearly the failure is the fault of the authorities for not, as an example, pricing road space properly in congested urban areas.
Profit maximizing concerns
In the last resort "the creation or strengthening of market systems" may not satisfy social needs. Where this happens, says Mr. Polanyi, rules for government intervention "should be aimed at protecting the autonomous operation of nationalized enterprises as commercially oriented, profit maximizing concerns".
There is precious little left of the Transport Bill when Mr. Polanyi has finished with it. If his proposals were adopted it would be interesting to have his views on a tender from the Conversion League to take over the railways.
*Background Memorandum—Institute of Economic Affairs, Eaton House, 66a, Eaton Square, S.W.1. One guinea.