§ Notwithstanding anything contained in section seven of the Electricity (Supply) Act, 1926, or in any order or regulation made, or to be made, under that Act, the price to be paid by the Central Electricity Board to the owners of a selected station for electricity generated thereat and not re-sold by the Board to such owners (hereinafter referred to as the "exported supply") shall, in respect of the exported supply include, and shall he deemed always to have included, a proportion to be agreed of the costs, charges, and allowances described in the Second Schedule to the Electricity (Supply) Act, 1926, in the case of those selected stations whose running charges component of the cost of production is below the average for the area in which such station is situated.
§ Provided that in the case of failure to agree the proportion shall be determined by the Electricity Commissioners.—[Mr. H. Williams.]
§ Brought up, and read the First time.
§ 11.29 p.m.
§ Mr. H. WILLIAMSI beg to move, "That the Clause be read a Second time."
This new Clause with an asterisk against it which appears in my name and the names of three of my hon. Friends was put down as an alternative to the new Clause which precedes it on the Order Paper, because it makes a smaller demand upon the Central Electricity Board than the original Clause which appears on the Paper. The position at the moment is that a certain number of selected stations are supplying what may be called, from some points of view, their surplus product, but what in this 702 Clause is defined as their "exported supply", on terms which would appear in a number of cases not even to defray the actual costs in which the selected stations are involved.
In some cases it may actually defray the nett extra cost but it pays no contribution towards general overhead charges which are borne in respect of generation by these stations. That system is a bad one. It is bad on the ground that the owners of the selected station do not get a fair price, and also bad on the ground that there is no stimulus to efficiency. I think it is going to be thoroughly unsatisfactory if people operating generating stations are going to operate them on the condition that if they operate them very well the price paid will be reduced by the amount of their savings, while on the other hand if they operate them badly they will be paid the amount of their waste.
That is the position as it stands now. Some of us have succeeded in working out a proposal which is definitely calculated to stimulate efficiency. If hon. Members will be good enough to study the Clause as worded they will see that only those stations whose efficiency is greater than the average will get anything. If every station is on the average nobody gets anything, but anybody who improves his efficiency will get some reward. It seems to me vital in the interests of the consumer that we should have electricity generated at the cheapest possible price. You will not stimulate the proprietors or their engineers, whether they are private electricity undertakings or municipal undertakings, to put forward their best effort, if the result of that effort means that they get no suitable advantage. I am suggesting what might be called a form of premium bonus for those who are more efficient than the average. This is not the time to go into the technicalities involved in the new Clause. It raises issues of very great importance to those in the industry. It is their misfortune that the question should be raised at 11.30 p.m., but because it is raised at 11.30 p.m. that is no reason why the case should not be stated briefly, as I have endeavoured to state it. I appeal to the Minister that if he cannot do anything now he should look into the matter very carefully before the Report Stage. I know that the Central Electricity Board does realise the 703 nature of the problem that has arisen, and that in one of their areas they are trying ways which may comply with the Statute to meet the legitimate grievance which exists and which is prejudicial to the interests of the consumers in the country.
§ 11.33 p.m.
§ Mr. HORE-BELISHAI appreciate, as the Committee does, the brevity with which my hon. Friend has argued this important principle. So important is the principle that if it were accepted it would have to replace the principle on which the Act of 1926 is based and would destroy the whole foundations of the grid and land us in very great difficulties. The proposal is to pay what the hon. Member calls a premium bonus, or a prize, to efficient undertakers. But he has omitted to tell us out of whose pockets this premium bonus is to come or who is to bear the cost of the prize. I have no doubt that my hon. Friend, with his ingenuity, could tell us, but there is nothing in the Clause which explains that.
§ Mr. WILLIAMSObviously, if you stimulate people to be more efficient their own efficiency qualifies them for the prize and puts everybody else in a better situation.
§ Mr. HORE-BELISHAThat is an easily stated principle, but it does not answer my question. Section 7, Subsection (3), lays down the terms on which the Board is to buy electricity for the supply station, and that price includes a whole number of items, the cost of fuel, oil, water, rates, taxes, management, interest, and everything else. The hon. Member is now proposing that in the case of certain selected stations a proportion of these charges should be paid all over again, the costs, charges and allowances described in the Second Schedule. No doubt it is a meritorious idea to reward efficiency and penalise inefficiency, but I hope the hon. Member will be fair enough to realise that it would be impossible for the Board to continue to sell at its tariff if he imposes these additional charges upon it. I accept his view that there are many people who think that the arrangements established in 1926 are susceptible 704 of improvement; I do not in the least deny that that view is held, but I hardly think my hon. Friend will seek to utilise a Bill of this restricted purpose in order to reconstruct so fundamentally the whole foundation of the Act of 1926. He has moved his new Clause with brevity and courtesy, and I have tried to reply in the same way. I trust that he will accept my assurance that it is impossible for the Board to carry on if the new Clause is accepted.
§ 11.37 p.m.
§ Sir GEOFFREY ELLISI do not propose to deal with the question at any length, but I should like to point out that the present system does not work for efficiency. It works in favour of inefficiency, as those who conduct the affairs of the Board well know. I do not suggest that at this stage of the Bill and at this hour he should accept the new Clause, but I would suggest that he should put this point to the Board for their consideration. It is not possible to go into this question fully at the moment, but I hope he will remit this point to the Board and ask them to consider the position of efficient stations.
§ Mr. H. WILLIAMSIn view of the Minister's statement, I would like to ask him to go back to his advisers. I realise his difficulties, he is a new Minister and very busy and this is a most complicated measure. If his advisers advised him to make the speech he has to-night then they have not studied the essential conditions under which efficient industry is carried on. One can hardly imagine any body who understands anything about efficiency in industry having given the Minister the advice upon which he has based his speech to-night.
§ Motion and Clause, by leave, withdrawn.
§ Bill reported; as amended, to be considered upon Monday next and to be printed. [Bill 16.]