By Our Labour Correspondent It is extremely likely that a new agreement may be concluded shortly between the Government and the railway companies, replacing the one adopted at the beginning of the war. At present the railway companies are financially still being run as private concerns, only their traffic being subject to Governmental direction in return for which the companies are guaranteed a minimum net revenue.
A new agreement is now being prepared under which it is probable that the Government will lease the railway system for the duration from the companies at a stipulated rental, and the fixing of freight charges and fares, as well as the control of costs, would then pass to the Government.
Since the conclusion of the initial agreement in February, 1940, railway charges have risen by 164% ostensibly to meet higher costs to the amount of £29,000,000. These increases have aroused much opposition from the Labour benches, and further increases would undoubtedly prove very unpopular but nevertheless would have to be sanctioned under the terms of the existing agreement if evidence of rising costs is produced. For this reason alone the Government will undoubtedly be forced to change the whole basis of the scheme, at the moment governing the fixing of transport charges.
PROFITS ARE UP
For 1940 the total net revenue of the " controlled " transport pool (i.e. the four main line railways and a certain proportion of L.P.T.B. receipts) was £42,763,000. This was £2,913,000 higher than the guaranteed minimum, and has increased the railway companies' profits by £1,700,000 over those of 1939, and £9,700,000 over 1938. At the same time it would be wrong to conclude that the shareholders are making high dividends although they have certainly benefited by war conditions. The highest current ordinary share dividend was 4%, and the
average return on the whole of the railways' ordinary capital for the past 18 years was 31%. The 1921 Railway Act, which effected the amalgamations into the present groupings, envisaged a return of 4.7% on equity stock. Equally the railway worker, despite war-time bonuses, is not enjoying inflated wages, and there are still 100,000 of them (about 19% of the total personnel employed) whose weekly wage rate is not above 57s.
The railway unions and the Labour Party have repeatedly advocated nationalisation of transport. This is probably the best solution, but it would be hazardous in the extreme to attempt such a transition while we art engaged in a war, particularly when the technical efficiency of our railways is ex
ceedingly high. The whole difficulty with the financial side of the question has its roots in the initial over-capitalisation of the railways, and the fact that dividends still have to be earned on capital no longer representative of tangible assets, being originally the cost of land and way-leaves purchased at fantastically inflated prices, as veIl as fabulous legal expenses, and not least of all, capital " which came into being as the result of past distribution of profits as scrip bonus. Some, but by no means all, of this wasted outlay was squeend out at the time of the 1921 amalgamations.
ARRESTING A " VICIOUS SPIRAL "
The advantage of State control of the railways' finances will be that yet another big factor in our cost of living can be pegged down, and so help to arrest the " vicious spiral " of prices and wages. Since war began the official cost-of-living index has shown an increase of 27 per cent. Professor A. Howley, the famous wage statistician, of Cambridge, however, has pointed out that prevailing shortage has forced many housewives to change over their purchases to dearer foods or else go without, and he computes that the actual rise in living costs is in consequence nearer 35 per cent up; and they are still rising.
That further State intervention is necessary is apparent, and the control of freights charges, a big factor in food costs, would mark a definite step forward in the arrest of the still rapidly ascending price levels.