CAB129-37 — Page 714

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HIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY'S GOVERNMENT)

SECRET

C. P. (49) 239

21ST NOVEMBER, 1949

CABINET

COPY NO.

31

FINANCES OF THE BRITISH TRANSPORT COMMISSION

Memorandum by the Minister of Transport

In

The operations of the British Transport Commission during 1948, which was the first year of their existence, resulted in a net revenue deficit of £44 millions. In their first annual report, which covered this period, the Commission stated (paragraph 69) that the trends of traffic receipts and of expenditure indicated that with the existing levels of fares, rates and charges a marked deterioration of the working results was inevitable in 1949. Events have confirmed this forecast, and the net revenue deficiency for the current year is estimated to be of the order of £25 millions. The accumulated deficiency at the end of 1949 will thus be some £30 millions which must, ultimately, be met out of the Commission's revenues if a charge is not to fall upon the Exchequer. the view of the Commission the position during 1950 is likely to deteriorate rather than improve unless they are authorised to increase certain of their charges. Since they assumed their responsibilities they have been faced with greatly increased costs in regard to both labour and materials. existing level of charges, which on the railways (which con- stitute by far the largest part of the Commission's under- taking) are no more than 55 per cent above those made before the war, is quite insufficient to meet these costs. The Commission stated in their report that it is not possible that any undertaking which is to pay its way (as the Commission are required to do under the Transport Act) should submit to constant increases in the cost of the services and commodities which it needs, and yet refrain indefinitely from raising its prices to its customers.

2.

The

Apart from increases in the cost of labour, the figure of 55 per cent by which railway charges have been increased since the outbreak of war may be compared with the following percentage increases in the cost of some of the most important materials used by the Commission:-

Iron and Steel

Coal

Non-ferrous metals Timber

All other stores

Percentage Increase mid-1949 over pre-war

105

180

136

291

123

It is not surprising in view of such figures that the Commission, in spite of every effort to effect economies, are

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