HC Deb 15 March 1904 vol 131 cc1205-12
MR. GODDARD (Ipswich)

said in moving the Instruction standing in his name he might perhaps be allowed to deal shortly with the history of the Bill. The borough of St. Marylebone had been supplied by the Metropolitan Electric Supply Company for some years, but the local authority in 1901 obtained a Provisional Order for the purpose of supplying electric light in competition with that company. In order to do that they had to buy out the company, and under an arbitration the borough council had to pay about £1,250,030 for the undertaking. Up to that time the arrangements had been made without any general sanction from the ratepayers. Having obtained these powers the council failed to carry out the contract, and the company brought an action against them by means of which they obtained an order for the amount of the arbitration award. That was suspended in order to enable them to obtain a Bill in Parliament to borrow money for the purpose. That Bill had now passed its Second Reading, and it provided not only for the arbitration award but for a further expenditure of £500,030 for the purpose of constructing a generating station. The Instruction on the face of it was a very reasonable one, and was one that had been inserted in several previous Acts of Parliament. The first part of it laid down the principle that there ought to be supplied, annually, a statement of affairs and a balance-sheet showing the trading profit and loss. No one could raise any objection to that, as any ratepayer ought to be able to see it he was to be charged with a rate to make up some deficiency on the trading of the corporation. The second part suggested that the borough council should fix, annually, the charge to be made for the supply of the electrical energy, so that the revenue of the undertaking should cover the expenditure for the manufacture of the light, the interest on the money borrowed, and the sinking fund. Without such an Instruction it would be possible for the borough council to charge less than the cost and mike up the loss so incurred out of the general rate, and against such a thing as that the ratepayers ought to be safeguarded. Electric light was more of a luxury than a necessity, and it could only be used in this case by the wealthier portion of the community in their private houses and by tradesmen in a large way of business. In Marylebone 25 per cent, of the ratepayers were supplied with electric light, and it would not be fair or just for the remaining 75 per cent, to have a rate put upon them in order that the remaining 25 per cent, might enjoy this luxury at a low price. The Metropolitan Electric Lighting Company had been supplying this district at a profit, as was shown by the award of the arbitrators, and therefore it was perfectly obvious that the Marylebone Corporation ought to be able to supply electric light at a profit at present prices. With regard to fixing the price after one year he was not tied to that particular time, but thought there would be no difficulty in so doing owing to the number of consumers that existed in the borough. This matter could not be left to the Committee to deal with, and if it were not settled by the House, it in all probability would not be settled at all, because all those who could have raised the question in Committee hid now no locus standi. His observation led him to suppose that, in the future there would be a far large: number of municipal councils which would undertake trading concerns of this kind, especially those which in some way or other interfered with the management of the roads. He was rather in favour of that view, but he asserted that the credit of public life demanded that these undertakings should at least be carried out in the most fair, open, and straightforward way possible.

*MR. KIMBER (Wandsworth)

said he did not support this Instruction on any grounds personal to the Marylebone scheme, with which he had no acquaintance. He supported it because the question raised by it was one of principle, Parliament in its wisdom having thought fit to give local authorities power to use the ratepayers' money for the purpose of manufacturing electric light and competing in industrial enterprises. He was against committing to local authorities general powers of trading, but he was prepared to admit that public lighting should be committed to the charge of the local authority, and if in this case it was a question of public lighting no one would complain. But when it came to supplying light to private consumers it was important that accounts should be kept which would show that the benefits conferred on the few were not conferred at the expense of the many. If powers of competition were given to local authorities they should be compelled to render accounts that the ratepayers might see that they were not paying for the light supplied to consumers. They should render a balance-sheet and a profit and loss account, showing not only how much of the ratepayers' money was expended but what the return was, and the profit and loss account should show that the revenue from the consumers was sufficient to pay the expense to which the local authority was put in the manufacture and supply. In this case, inasmuch as the Metropolitan Electric Lighting Company was already supplying this district at a profit, it followed that the local authority should have no difficulty in rendering an account at the end of each year after the one year granted to them for making the transfer. It was bad enough for the ratepayers to have to find the capital for these undertakings, but it would be still worse if the non-consumers, to assist consumers, were mulcted in a rate to make up a deficit. He would not labour the point; it was a business matter and one that should occur to a business community. He begged to second the Resolution.

Motion made, and Question proposed, That it be an Instruction to the Committee to insert provisions in the Bill to the effect that the council shall, once in every year after the first year's working of i he electric lighting undertaking, cause to be laid before them a statement and balance-sheet of the accounts of the electric lighting undertaking drawn up in accordance with the form of accounts prescribed by the Board of Trade for a local authority under the Electric Lighting Acts, 1882 and 1888, and the council shall thereupon fix annually the charges to be made for the supply of electrical energy in the then ensuing year at such rates (not exceeding the maximum rates specified in the Order of 1901) so that so far as is reasonably practicable, the revenue for that year shall not be less than the estimated amount of the expenditure and of the charges for interest and sinking fund for that year." —(Mr.. Goddard.)

MR. BOULNOIS (Marylebone, E.)

said he had always been opposed to municipal trading of every kind and had done everything in his power to prevent the council from entering into such a mad project as the purchase of a hugh undertaking under the Lands Clauses Act. He went so far as to refuse to allow his name to be put on the purchase Bill but the ratepayers of Marylebone having decided by a considerable majority to proceed with the Bill to provide purchase-money, he was anxious to help them to get through a bad bargain in the best manner they could. He hoped the House would not make the burden harder to bear, as it would be if the Instruction were passed. In his opinion such Instructions tied the hands of the Committee when the matter came before them. While he agreed that there might possibly be excellent reasons why some such clause as this should be inserted, on the other hand there might be reasons why it should not be inserted, and he maintained that the House was not the proper tribunal to decide such questions off-hand. The hon. Member for Ipswich claimed that the ratepayers would not be represented, but this Instruction had been put down at the instigation of the Gas; Light and Coke Company, and that company presented a petition against the Bill before the Standing Committee to which the borough council did not object. He agreed that this proposal might be an excellent one in principle. It might be right to argue that those who did not use the electric light ought not to be compelled to pay a rate in aid of it, but he could not help thinking that this Instruction would hamper the Borough Council of Marylebone to such an extent that it would render it almost incapable of carrying out the undertaking and it would create a ridiculous and ludicrous position. He agreed that the borough council was bound to keep regular and accurate accounts, but that question did not enter into the discussion at all, for the proposal was that the charge for electricity in each area should be based on the balance-sheet of the previous year. The certainty would be that in the first two or three years the price would have to be raised to the consumer every year if this Instruction were carried. He did not think that would tend to an extension of business and it would lead to an enormous amount of irritation and dissatisfaction amongst the consumers. He thought something might be said in favour of a revision of prices every three years, but to do it every year would cause confusion and render it almost impossible to carry on the undertaking. It was well known that these companies entered into special contracts with large consumers and gave them a reduction in price, but contracts of that kind were not made for one year for they invariably extended over a number of years. He hoped such a clause as that which was suggested would not be inserted, and he trusted the House would insist upon a full inquiry before adopting such an Instruction. It was impossible that the undertaking could be made to pay immediately after it-had been taken over, and this instruction might prevent the borough council making it a prosperous concern in years to come. He hoped the House would not impose such an Instruction without inquiry for it might throw an additional burden upon his Borough.

*MR. MOULTON (Cornwall, Launceston)

said he happened to have an intimate personal acquaintance with the circumstances of this case by reason of his having acted as Counsel in the Arbitration which fixed the price at which the Marylebone Corporation acquired the undertaking. He was not going to inflict upon the House his views in regard to municipal trading, but he thought hon. Members would agree with him that the question the House should decide was whether they should allow municipal trading or not, and if they allowed it they ought to do so fully and not with one hand take away the power of trading while with the other they gave authority to trade. In electric lighting the most important thing was that a company or municipal body should have a perfectly free hand as to the business management of the concern. Of all the large supply businesses he knew of none in which the cost of the article supplied was so enormously diminished by the scale of supply as electricity. To give to a body the power to supply electricity and then to say that if at any moment they found they were not making a profit they must raise their price was practically to drive them into bankruptcy. If they were losing money the best course would probably be to drop the price and not to raise it. An Instruction such as the present one could only be proposed in the interests of the gas companies, the trade rivals of electric lighting. The Legislature compelled local authorities to repay their capital, which was a very severe term to impose, and one from which trading companies were free, and to add to it the suicidal condition that when there was a deficit they must raise their prices would be treatment so unjust as to be wholly unworthy of the past traditions of the House. Ho gathered from the speech of the hon. Member who moved this Instruction that there were such questions on foot as that of compelling Marylebone to buy electricity in bulk from some particular company. As this House could not go into the actual circumstances of the case surely it was not going to commit itself to an Instruction which might have the effect of practically giving back to a company the full value of an undertaking for which it had been paid. He thought this was a matter of a kind which the House ought never to meddle with by such Instructions as this. But, in addition to these general considerations, there were special features in the legislation as to Marylebone which would render it little less than a scandal if, at this stage of the matter, the Instruction were passed. Two years ago the Legislature passed a Bill which not only permitted, but made it the duty of, the Marylebone Corporation to purchase this electric lighting undertaking. The present Bill was simply for the purpose of enabling the corporation to borrow the money that was necessary to carry out what the Legislature had put upon them. It would not be fair now, when it came to ask for the necessary power to borrow the money, to put these new and onerous terms upon the Corporation.


said several requests had been made to the Board of Trade to insert this clause in Electric Lighting Provisional Orders, but the Board of Trade had always refused to do so. As far as he could see, the object of the Instruction was, in the first place, to protect private interests—in this case a gas company—against what was said to be unfair competition, and, in the second place, to protect the ratepayers. There could be no doubt whatever chat the Instruction would fully achieve the first object. It would protect private interests, but at this cost that it would impose upon the local authority, that was upon the ratepayers, conditions of competition which were altogether unfair. General considerations of municipal trading had nothing whatever to do with the matter as it now came before the House. Arguments of that kind should be considered when it was to be decided whether or not certain powers should be given to a local authority. But once those powers had been given, as was the case here, it was obviously the duty of the House to see that the local authority was put in a position to enable them to trade on as good terms as any private individual. To lay down that the way to turn a loss into a profit was to increase the charge, was contrary to the experience of almost every commercial undertaking in the world, and there was no commercial undertaking in which this was more true than in regard to electric lighting. It was constantly urged that municipalities should be made to carry on their business upon general commercial lines, but could anyone imagine the private individual carrying on his business upon the principle laid down in this Instruction. The same principles which applied to ordinary commercial dealings applied more strongly to electric lighting, the success of which depended largely upon the number of consumers.

MR. JOHN BURNS (Battersea)

said the Secretary to the Board of Trade had covered the ground in so pertinent a manner that he had left little for anyone to add in opposing the Instruction. The hon. Member who moved the Instruction laid great stress on the desirability of publicity. He only rose for the purpose of satisfying the hon. Member on that particular point. Under the Borough Funds Act the ratepayer had access to all the information any reasonable ratepayer should require. In addition to that, the hon. Member would find that there were conditions prescribed by the Board of Trade in connection with electric lighting undertakings which would secure what the hon. Member desired when he said that everything should be open and above board. Where these rules did not apply, the Local Government Board could interpose to prevent anything of a secret or collusive character, such as the hon. Member feared. If this onerous Instruction were imposed, he believed the Borough Council of St. Marylebone would have the greatest possible difficulty in making the undertaking a financial success. The ratepayers had by two to one spoken in favour of the Bill, and the only interest opposed to it was the Gas Light and Coke Company, who were rivals in the sphere of illumination. It seemed to him to be a gratuitous impertinence on their part to ask Parliament to take their side and to handicap the borough council in the way proposed.

Question put, and negatived.