HC Deb 26 March 1906 vol 154 cc939-64

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."

MR. W. F. D. SMITH (Strand, Westminster),

in moving that the Bill be road a second time this day six months, said it was rather inconvenient on this occasion that those who supported the Second Reading of the Bill should have taken the course which had been taken, and which was not the usual course taken on the Second Reading of Private Bills. The subject with which the Bill dealt was of great public importance. It might have been useful if the House had received a suggestion from the representatives of the County Council as to the course they intended to pursue with reference to this question as a whole. The suggestion, however, had not yet been made, and therefore he could only suppose that the Council were carrying out what had been suggested outside this House, namely, their desire to pass this Bill and to oppose all other measures introduced into this House relating to the same subject. There were two courses open to the London County Council in this matter. The Council might either have adopted the course he had suggested, or they might have referred the whole question to a Select Committee or a Royal Commission in order that the scheme might be considered without prejudice, and with the view of some satisfactory conclusion being arrived at with which this House might have been asked to deal. The first course, how ever, was the one the County Council desired to take, and he wished to say at once that he considered the course most unfortunate and most unreasonable. There were two other considerations to which the attention of the House ought to be drawn. The scheme as suggested by the County Council was undoubtedly ill-prepared and showed an utter disregard of the financial considerations. It was, moreover, a scheme which partook largely of a speculative character, and was, therefore, in his opinion, not suited for the purposes of municipal enterprise. He suggested that the proposals which the County Council were making to-day were contrary to the understanding arrived at in 1882 and 1887. That argument was used successfully against the Administrative County of London Bill introduced last year, and would equally apply to this Bill. It appeared to him that the London County Council in the present Bill were, without justification, asking the House to break the arrangement come to in 1882 and 1887. The present scheme of the Council was to include not only the area for which they was responsible, but an area more than three times the size of the County Council area, including a considerable part of the counties which surround London, and containing 380 square miles. The area under the control of the County Council was one of 117 square miles. He doubted, indeed, whether the County Council looked upon this proposal of theirs as a serious matter of business. Personally he was inclined to think that the Council were anxious to gain a strategic position which would, in fact, give them a virtual monopoly—to exclude all private enterprise from the area sought to be covered by this scheme. In reciting the history of the Bill, and the curious and rapid changes of opinion on the part of the London County Council, he showed that last year, when the Administrative County of London Bill was introduced, the County Council in their petition denied that there was any public necessity for a scheme of this kind. When the measure wont to the House of Lords the Council dropped that plea and asked Parliament to consider whether it was desirable that a monopoly should be conferred on a company seeking such large powers as those embodied in the Bill. Last November, however, the County Council admitted the necessity, but urged that the Council was the only body which should be entrusted with the carrying out of the scheme. Private enterprise having made the discovery that the supply of electricity in bulk was necessary for industrial purposes in the Metropolis, the London County Council now came forward with a demand to exclude all private enterprise. The course pursued by the London County Council was most unreasonable. The merits of the other two Bills on the Paper† †Additional Electrical Power Supply (London) Bill. Administrative County of London and District Electric Power Bill. were not to be considered at all. Only one scheme was to be considered and the whole future of the management of the supply of electricity in bulk in this large area was to be settled in principle in this debate. Whether hon. Gentleman opposite who supported private enterprise last year were now going to submit to the dictation of the London County Council he did not know, but if they were, then they would endorse the principle that private enterprise was for ever to be excluded from this area. With regard to the merits of this particular Bill, he believed that the scheme which the House was now considering was reckless in its character owing to its want of preparation and its lack of financial caution. What was the history of the Bill? When in November last the Highways Committee of the County Council brought forward a report suggesting that a Bill should be introduced, the Finance Committee viewed the proposal with a great deal of apprehension, and this view was strongly backed up by Sir F. Mowatt, who, however, was able subsequently to vote for the proposal of the Finance Committee. Later, however, the Finance Committee brought in a stronger report relating to some of the details of the scheme, and it was then said that there were practically no estimates on which the Council could base any idea of the cost to the ratepayers. They said— We have had before us certain estimates of working costs and the probable growth of demand for electricity, but the figures are at present only of a provisional character, and we are advised that the publication of any estimates at the present stage might prejudice the Council's case before a Committee of Parliament. We are consequently placed in a position of difficulty, because while we feel that the Council ought to have before it some means of judging as to the financial prospects of the scheme, we are unable for the reasons stated to submit any figures to the Council. Even so late as December last the committee were unable to submit any figures of importance to the Council, and he had reason to believe they were in no better position at the present time. Further, there was no proof that the Council were in a position to ensure successful competition. They said— We cannot at present say whether the Council could supply at such low prices as would enable it to successfully compete for business with the large power and electric companies who possess powers of supply in bulk throughout a large part of the proposed area. This is, after all, the crucial question, because, as already pointed out, it does not appear that the Council will possess any monopoly, but will be mainly dependent for business, so far as we can see, upon its ability to sell at a price which would induce existing undertakers to take a supply from it. A very good proof, if one were needed, that this business was entirely speculative in its character. A little later on the committee endeavoured to give some good advice to the County Council. They said— The position which the Council will occupy in this matter has engaged our serious attention, and we cannot help thinking that the Council ought, before embarking capital in such an enterprise to have some further security than it will apparently possess. We are not prepared at the moment to say what the nature of the security should be, but it would appear to lie in the direction of the Council making suitable and permanent arrangements with the existing undertakers. That excellent advice, however, was not followed, and the committee finally said— In conclusion, and looking to all the circumstances, we are impressed with the fact that financial risks are inseparable from an enterprise of this kind, covering so large an area, and that if such risks mature, the burden will fall entirely on the ratepayers of London. That conclusion was backed up in even stronger language by Lord Welby, who seemed to have an indifferent opinion of the financial caution of a great many members of the council. Lord Welby said— The policy by which the Council passed scheme after scheme was a strange one. In one year, the Council passed a scheme involving huge expenditure, put it aside, forgot all about it, and looked upon it as if the thing were done. The next year, fresh schemes were produced, and the process repeated. In view of the change of Government, London County Council Bills promoted by the Council would have a better chance of passing, and fresh expenditure would he involved. And in conclusion he said— They might expect a falling revenue in the next few years, and there was no doubt that, if they acceded to those proposals, the Bill would have to be paid by the ratepayers. A very long and a very heavy bill it would be. What he (Mr. Smith) had said would, he thought, at any rate sufficiently prove that though in accordance with the custom of this House it might under certain circumstances be advisable to allow this Bill to be read a second time, it certainly was not reasonable to suggest that this was the only perfect Bill before the House, and that it alone ought to be read a second time when other schemes were not to be discussed. In the next place, he suggested that this was not a kind of business suitable for a municipal authority to embark upon. It was a business of a highly speculative character; nobody knew whether even in the hands of a company it would be successful, and it was not right that the London County Council should incur in behalf of the ratepayers such a heavy liability. To push a business of this description required all the qualities necessary for a great commercial undertaking, and he much doubted whether those qualities could be properly possessed by any municipal authority. So far, the London County Council had given no evidence of possesssing such qualities. If they were to judge from what had already occurred, the loss upon this undertaking would prove to be as great as that upon other undertakings which they had gone into. He begged to move the Motion standing in his name.

MR. BERTRAM (Hertfordshire, Hitchin)

in seconding the Motion said that he desired to associate himself with the hon. Member for the Strand Division in this matter. His reason was that there were on the Order Paper three Bills dealing with the supply of electricity in bulk, and he understood that thirty Members of this House, of whom fifteen were members of the County Council, were pledged to do their best to reject two of the schemes, and to send only the Bill of the County Council to a Committee. Speaking as a ratepayer of London, he desired that London should not lose for all time the opportunity of competition. Therefore he thought a Committee upstairs should have the various schemes submitted to them, and should select the best scheme upon its merits, thereby enabling the public to secure the best, the most efficient, and the cheapest service. It was said that the present Bill was conceived in a spirit of opposition to monopoly; but a monopoly did not cease to be a monopoly because it was in the hands either of the State or of a powerful local authority. For the House at this stage to make a selection between these Bills would be tantamount to saying that, so long as this Parliament continued, no enterprising body of people need come to the House for Parliamentary powers within the area of the county of London, and that the whole future was to be committed to the London County Council. The Committee to whom this Bill would be sent would have their hands tied. It was only when a Committee went into the details of competing schemes that they could judge them in the interests of the public. He had always felt that private enterprise and the power of personal choice should be jealously guarded, and he sincerely deplored the tendency to put private activity on one side and substitute for it public activity and the control of a majority vote. If the London County Council had its way London would only have one source of supply, and that would be the municipal source, and so competition would be cut off. The primary and the most valuable function of a municipal body was policing or regulation, and to that it should be restricted as far as possible. If they were to load the municipality with new duties, especially duties that more properly belonged to private enterprise, the regulating function of the municipal body would more and more be forced into the background. In 1903 Lord Camperdown obtained in another place a significant return of the number of Bills promoted by the London County Council, the fate they had met with, and the number of private Bills which the Council had opposed. From that return it appeared that from 1889 to 1902 the Council had spent £185,000 in the promotion of 154 private Bills, of which no fewer than eighty-seven had failed. Was the London County Council apprehensive of a similar fate for this Bill if it were sent with a competing Bill to a Committee upstairs? At any rate, believing as he did that free and open competition was to the best interests of the people of London, consumers of electricity and ratepayers, he desired to see the three Bills sent upstairs to be judged solely on their merits.

Amendment proposed— To leave out the word 'now,' and at the end of the Question to add the words 'upon this day six months.' "—(Mr. Frederick Smith.)

Question proposed, "That the word 'now' stand part of the Question."

MR. WOOD (Glasgow, St. Rollox)

said he was pleased to acknowledge the handsome confession which had been made by the seconder of the Amendment. The hon. Member for Hitchin had confessed that he knew nothing about either the Bill or the companies, but if he had spent a few hours reading the proceedings in Committee of this or the other House he would have discovered some reasons why the people of London objected to the Administrative County of London Bill. It was a mistake to suppose that the objection to that Bill came only from the municipal authorities of London. It was felt just as strongly by private companies which were supplying electricity in London; and what the County Council desired to get rid of in opposing that Bill was not private enterprise, but private monopoly. The hon. Member for the Strand had appealed to those who voted in favour of the Administrative Bill last session to remain consistent, and to vote against the County Council Bill. He wished to point out that the position was entirely different this year. The Administrative Bill had passed through the ordeal of a Committee, and the alarm which it had awakened not only in the minds of borough councils but also among the private companies had steadily increased. The position was different in another respect, because this year they had a municipal alternative, and a choice was placed before this House. It was not necessary for him to dwell upon what had now become common ground in regard to the advantages of production upon a large scale for a very large area. It was obvious that there would be economy in machinery, plant, labour, and supervision, and in both schemes the generating station was near the river so that they could obtain sea-borne coal and an adequate supply of water for condensing purposes. What he had to show was why it was desirable that the supply of electricity in bulk should be entrusted to the central municipal authority for London and not to private enterprise. The policy adopted hitherto by Parliament in these matters had been a municipal policy. Whenever a borough council had in the past applied for an Order it had been granted, and when a company had applied for an Order power had always been given to the local authority to purchase the undertaking at the end of a fixed period. He admitted that confusion had arisen in some cases in regard to purchase, and he believed that some of the companies had been placed in a very awkward position and did not know how to develop their concerns. He believed that both public authorities and companies would be quite willing to come to Parliament to settle this question at no distant date. The principle of purchase had not been applied to most of the bulk companies. The hon. Member for the Strand had spoken as if this question had no history or past, and he implied that it had jumped into their brains in November last in hostility to the Bill of the Administrative Company. In 1898 the London County Council summoned a conference of local London authorities and they carried two resolutions, one being to the effect that it was desirable that the principle of purchase should be applied to bulk companies, and the second resolution was in the following terms— That whilst preserving intact the rights of local authorities with regard to electric lighting and energy, in the opinion of this conference it is desirable that the London County Council should be in a position to undertake, if it so determined, or was so requested by the local authority, the supply of electrical energy in bulk for the convenience of any district so desiring to be supplied providing the Council does not become competitive with the local authority. Upon that resolution this Bill was framed. Nothing was done up to. the year 1901, when those two resolutions were reaffirmed by another conference, and a third resolution was adopted asking the London County Council to draft a Bill embodying the two previously passed resolutions. Such a Bill was introduced, but in 1903 the Board of Trade communicated its opinion upon this question to the London County Council, pointing out that this was a matter which should not be dealt with in a private Bill and that it ought to be dealt with by the Board of Trade itself in a public Bill. Consequently a Bill was prepared and introduced in 1904 and it passed through the House of Lords, but it was withdrawn before it reached the Second Reading in the House of Commons. In 1905 the Board of Trade again introduced a Bill dealing with this question. He did not say that that measure was an adequate solution of the question, but it was at any rate a step towards a solution, and so long as the Government was dealing with the matter it was impossible for the London County Council to take any steps. Therefore, it was very unjust to taunt the London County Council with being late in taking action in this matter because their hands had practically been tied. In the year 1905 eight Bills for the supply of electrical energy by private companies were brought before the House, and even then the Board of Trade did not press forward their Bill. He thought the opposition expressed in 1905 by two conferences of the local authorities of London to the Administrative Company's Bill was an opposition that was amply justified. He had no intention of going into the details of the Bill, but he wished to point out the only alternative to this measure. The spirit of the Administrative Bill had been well expressed in the phrase of Mr. Merz, the able witness for the company, referring to the existing authorised distribution, "They must come in or go under." The effect of the evidence went to show that the company's Bill did not mean so much cheapness to the consumer as a monopoly. The user of electricity was not safeguarded. The promoters of the Administrative Bill asserted that the Bill if passed would give to the industries of London the right to a supply of electricity for power purposes at rates cheaper than obtained in any other city in the world, but this and other statements put forward by them were not supported by the evidence. He could not find that it was proposed to give any valuable right to the individual consumer to demand cheap electrical power from the company. The London County Council dealt with the question of protecting the interests of the consumer in a much more effective manner. It was sought to give the Board of Trade power to revise prices at certain reasonable intervals on the application of the County Council. The administrative company practically sought power to enter into competition with the existing undertakers in regard to the supply of power. They took rights which would amount to coercive rights against the existing undertakers. When the borough council or company had been deprived of the power of selling electricity for motive purposes they would have to raise their prices for light, and the condition of the users of light would be worse than ever. What was the interest which it was sought to safeguard by opposing the administrative company and introducing a separate Bill? There was first of all the interest of the borough councils, amounting to over £4,500,000. Having sanctioned the loans was not that an interest which Parliament were bound to consider? Then the companies were acting under the sanction of Parliament, and were entitled to be protected from a great dominating monopoly. They had £11,500,000 of capita in the supply of electricity. He knew that in some quarters it was believed that a company could do anything more cheaply than a borough council, but the record of the borough councils did not bear out that claim. Seven borough councils were supplying at average prices between 2⁓d. and 3¼d, and not a single company at equally cheap rates. The case of Marylebone only proved his argument. Marylebone allowed a company to grow up and then bought it out, paying about £1,200,000 for the concern. The same kind of thing happened at Leeds, the cost to the corporation being nearly double the capital which the company had expended. They wished to avoid that error in London. They had been asked whether the supply of electricity in bulk was something which should be monopolised. It certainly possessed the characteristics of undertakings which ought to be monopolised. He thought the most convinced individualist would be ready to admit that there were businesses which in their very nature tended to become monopolies and which could supply most economically as monopolies. He might instance the water supply, the postal service, and the telephone service, and he certainly thought the supplying of electricity in bulk came under that category. But the holder of a monopoly ought to be a person or body which had no interest to serve except the public interest. No doubt he would be told that the competition of companies would keep down prices, but they had heard that argument before. When water companies asked for concessions it was always on the plea that if they were granted they would be able to keep down prices, but after a few years they found those companies making agreements with each other, and when the London ratepayers came to buy them out they had to buy them at the monopoly price of £50,000,000. They had not forgotten the story of the telephone amalgamation. These things were familiar history. A public authority had many advantages over a company. No promotion money had to be paid; there were no syndicates to receive a share of the profits or rather of the capital; and the money required could be raised more cheaply. In this case the London County Council had the advantage of already having a huge business in its hands that could not be taken from it by any competition. It had its tramway supply. It was estimated that the Council would shortly be using 37,000,000 units for this purpose, and that by the year 1915 they would require for that business alone no loss than 89,000,000 units. That was nearly double what all the borough councils produced according to the last returns, and it was approximately the same figure as that which was reached by the whole of the companies. So that it would be seen that in this matter the London County Council started with an enormous advantage. These tramways were running from early morning till late at night. He would urge one thing as showing how the ratepayer was protected, and what great prospects there were in the County Council scheme. The rate of increase in the supply of electricity under not very encouraging circumstances during the past five years had been most remarkable. It had trebled since 1900. In 1900 it was 51,000,000 units, and in 1905 it was 156,000,000 units. He had no doubt that the lower price of a large scale production would make the increase greater than otherwise it would be. They believed they would be able to maintain that great rate of the last five years. If they had a large output and a good load factor, they had all the undertaking. The County Council had other advantages special to itself. It had substations already built for tramways, elements of a cheap supply and profitable and other substations must be built as they developed the tramways. The trenches which it used to convey electricity to the substations could be used for bulk and tramway purposes. In that way the necessity for breaking up the streets twice would be saved. The people of London knew what they had suffered from the too great freedom with which private companies had been allowed to break up the streets of the City, and he did not think that, unless necessity was shown, they ought to give power to break up the streets to private companies when they could place it in the hands of municipal authorities. All these advantages added together went to show that the London County Council was in a strong position. That was his answer to the hon. Member for the Strand Division, who asked whether this was a business proposal. They were in a unique position to deal with this matter. As to the objections to the Bill, in the first place it was stated that the London County Council were going outside the County of London. That was never an objection in the case of a company, but the London County Council must not, according to their critics, go beyond the artificial line for the boundary of the administrative Council. As a matter of fact they went out not to coerce but to assist. They had to go out already. Parliament compelled them to go into the outlying districts for main drainage, although it was no advantage to the people of London but a considerable loss. When the water question was before Parliament this difficulty as to going outside was the great argument why the London County Council must not be the water authority. Then there was created the most anomalous and absurd body ever created for water supply, a body over which neither the consumer nor the ratepayer had the slightest control, which awakened not the slightest public interest, and which showed how little coherency or consistency it possessed when, after getting a Bill through Second Reading this session, it incontinently dropped it. The Traffic Commission said that it was necessary to go outside London in connection with London trams. The time had come when they must ask Parliament to recognise that the representative authority should be allowed rights given to other cities. They were given to the municipality of Glasgow in regard to telephones. When the major interest was in the great city, but it was desirable and in the interest of the outside areas that they should be united in one service, then the great city should be allowed, under proper safeguards for those outside, to go beyond those artificial and geographical boundaries which were very necessary from a local government point of view, but sometimes very inconvenient from the business point of view. This was not a coercive Bill. It was not a wrecking Bill. It would not require any existing undertakers to scrap their plant and write off their capital. The County Council did not say to an administrative company, "You must come in or go under." They took a more excellent way. They said, "We will give you. cheaper power than you can generate by extending your system, and we will leave it to you to exercise your choice as business men to take the advantages we offer you." It was a policy of sweet reasonableness, and he hoped it would commend itself to the outside authorities as well as the inside authorities. The Committee in charge of the Bill would be prepared to consider any views that might be expressed by outside authorities. This Bill had been brought in with the approval of fourteen of the borough councils of London. They carried a Resolution asking the County Council to bring in the present Bill. [AN HON. MEMBER: Which boroughs?] He would tell the hon. Member. The Resolution carried at a Conference held in November 1905 was as follows— That this Conference of Borough Councils approves of the introduction by the London County Council, of a Bill for enabling it to supply electricity in bulk, subject to the interests of the borough councils' existing undertakings being safeguarded, and the details of the measure proving to be otherwise satisfactory. Fourteen voted for the Resolution and six against it. The boroughs which voted in favour of it were Battersea, Bermondsey, Bethnal Green, Camberwell, Finsbury, Fulham, Hackney, Islington, Lewisham, St. Marylebone, St. Pancras, Shoreditch, Southwark and Woolwich. The six boroughs against it were Hammersmith, Hampstead, Kensington, Paddington, Wandsworth and Westminster.

He wished to be perfectly open with the House. There was no doubt that some of the fourteen boroughs approving the Bill objected to one clause in it, and no doubt in Committee they would contest that proposal. It was important to retain this proposal in the interests of consumers of electricity. It was a proposal that after a certain number of years the County Council might go to the Board of Trade if the supply was inadequate or deficient, or excessive in cost, point out on what terms the County Council wore prepared to supply, and ask the Board of Trade to consider all the circumstances and decide whether some action should not be taken to make the authority supply in a satisfactory way. It was natural that an existing authority should object to that, but it was a power not likely to be parted with. It would be a valuable power in the hands of the Board of Trade. His last word would be about the ratepayer. There was a notion common in some quarters that the County Council did not protect the ratepayer. If so, it was an extraordinary thing how the ratepayers for so many years had approved of that institution. He had shown that the County Council had special and unique advantages over any company in dealing with the supply of electricity in bulk. The County Council were not guilty of rashness in taking up this matter, but were merely using common prudence and foresight. The Council had been warned by past experiences which were not pleasant. London had had to buy freedom from great monopolies before now. They had not forgotten the £50,000,000 paid to the water companies, which would have been reduced by many millions had the advice of the County Council been taken and if the legislation had been passed when introduced. The water scheme had cost London £10,000,000 more than it ought to have done. The policy of the County Council now was to be in time to prevent the creation of a gigantic monopoly. The Council believed it was doing a good turn for many generations of ratepayers. He asked the House to pursue the settled policy of Parliament and not to establish a huge monopoly which would have to be bought out by some future generation of ratepayers at a great and exorbitant cost.

MR. BURDETT-COUTTS (Westminster)

said the hon. Member for the St. Rollox Division of Glasgow had devoted the greater part of his speech to the denunciation of the Administrative County Bill. He held no brief for that or any other Bill, but he did hold a brief on behalf of private enterprise against municipal monopoly. The hon. Member began by stating that the state of things had greatly changed since last session. He admitted that, and the difference to his mind constituted a most startling change of front on the part of the County Council. In the discussion last session on the Administrative County Bill, which was for forty days under the close examination of a Committee, counsel for the London County Council said that "the Council did not desire to advance their own claims to be constituted the central authority either for the production or the distribution of electricity," and the hon. Gentleman himself said in his evidence that "the whole question should be considered comprehensively." The Council had executed an extraordinary change of front, for they now claimed to be constituted the central authority for the production of electricity, and sought to deny the House an opportunity for treating the whole matter comprehensively, by excluding from the consideration the two great measures now before the House which were variants of their own.

To what was this extraordinary change due? Was it due to the discovery that the London County Council—a body elected without reference to the special business aptitudes of its individual members, certainly without reference to their (expert knowledge of electricity, had suddenly become possessed of all the qualifications necessary to carry on the most complicated, scientific, difficult, and from the financial point of view, doubtful enterprise of electric power supply?

He could find no proof of that, but he could give an instance, very close at hand, which illustrated the amount of confidence that the London County Council had in itself, not with regard to a great scientific project but with regard to a simple business proposition, that of selling land for building purposes. The House was aware that a large area of land in Westminster came under the control of the London County Council in connection with the completion of the Thames Embankment. While the part necessary for the new Embankment had, quite properly, been retained by the London County Council, the whole of the adjacent property had been handed over to a private syndicate who had undertaken to pay the London County Council 4 per cent. on the value. That was a very good rental. But what he wanted to ask was this. The syndicate was a commercial syndicate formed for the purpose of making money. It was going to make a profit—probably a large profit—over and above this 4 per cent. If the London County Council were business people, why could they not do the thing themselves and make that profit for the rates? Was it not a confession of their inability to carry on a business as well as private enterprise could, that they should give up this profit, which really belonged to the ratepayers? And was it not strangely inconsistent that, after admitting their inability to equal private enterprise in a simple business like letting building sites, they should now claim that they were qualified to embark upon a vast scheme of electric power, involving many millions of the ratepayers' money, and one of the most complicated and difficult business enterprises in the world? He was entitled to complain of the London County Council's treatment of that project which was situated in Westminster, as contrasted with this which was to be located in Battersea. He was not here to deny to Battersea the legitimate claim to electric energy in the person of the right hon. Gentleman the President of the Local Government Board; but he did not see that that generated a claim to have the works and the great expenditure of money, and the vast demand for labour, located within the limits of that distinguished constituency. Or had the London County Council changed front because it thought it could supply electricity cheaper than it was to be got at present? He would show that by this Bill they were entering into a trade competition, and a sort of competition that required all that peculiar kind of energy and push which was natural to private enterprises, but which could not be carried out by a municipal body. [An HON. MEMBER: Why not?] Because London County Councillors could not undertake a hard canvass for trade, or conduct the difficult negotiations which secured customers, or instruct manufacturers how to re-organise their plant and suit it to electric power. He submitted it was an entire misconception of the proper functions of London County Councillors to involve them in such services; and that such services were absolutely essential to successful competition. Or, had they changed front because they were now convinced that the supply of electric power was a matter of such great importance that it should be in the hands of some central representative body? That, he admitted was the crucial point, and he desired to deal with it at once. If this were realty a great project to supply the whole of London, and the enormous area they were taking outside of it, 387 square miles, and all its authorised distributors, and all its great commercial undertakings, railways, trams, docks, canals, waterworks, &c, with electric power on equal terms, why then, although in his opinion it would be quite outside the scope of the legitimate functions of a governing body, it would at least be logical. It would appeal to those considerations which no doubt existed in the minds of people who had not examined what was actually proposed, and who thought that electric power was a factor of great and growing importance; that its supply ought to be controlled by a representative authority; that if so it could be secured by everyone on equal terms; that a centralised source would ensure cheaper production, and so on. But the London County Council were not attempting anything of the sort. There was no universality and no general equality of terms secured by this Bill. It was simply a competitive business they were going in for. He was aware that the Report of the London County Council Parliamentary Committee said "the scheme is based on co-operation, not competition with existing undertakings," and the hon. Member opposite had advanced the same argument. They heard of that co-operation long ago—the sort of co-operation that existed between the wolf in the night-cap and Little Red Riding Hood. The London County Council proposed to enter the market, with the ratepayers' money, or with capital got cheap on the security of the rates, to compete with, and if they possibly could, to destroy, private corporate enterprise. It was quite obvious that was the case. In the first place nearly the whole area over which they were taking powers was already occupied by other undertakings which had been endowed by this House with the same powers which they, a governing body, were seeking, in order to convert themselves into a trading body. The Report of their Finance Committee said so. He would point out that the Finance Committee of the London County Council was the only expert body that had examined this scheme, and that its Report was the charter of opposition to it. What did they say on this point?— Our attention has been directed to the extent to which powers of supply in the proposed area, are already possessed and exercised by other bodies and companies. It seems that nearly the whole area is covered by local authorites or companies possessing provisional orders, and over a large part of the area bulk powers, practically identical to those proposed to be sought by the Council, have been granted by Parliament to certain power and electric companies. Within that area there were three borough councils and six great companies that now had statutory powers to supply electricity in bulk; and of the sixteen borough councils that had statutory powers to distribute electricity, nine were now in a position to take it in bulk from these existing companies. Could there be a clearer proof that their object was trade competition with those companies, competition by means of the ratepayers' money with private enterprise, which a vast number of ratepayers had invested their money in? But there was another proof. While they were glad to have the aid of the belief or impression that they were going to supply all the power that London required and could not now obtain, their Bill was only permissive. Clause 7 read—"The Council may supply to such bodies and persons, etc." They did not have to. Was it any wonder that their Finance Committee, groping about for some wild scheme, found it in this permissive provision, and in their Report said — There will be no power for any authorised distributor or other person to demand a supply, and consequently no obligation on the Council to give it. The optional nature of the powers to be sought, if that option is maintained, may be held to lessen to a certain extent the financial risks which attend the undertaking. But their Finance Committee found an excuse in what, from the point of view of the public interest, was the weakest point in their Bill. They were not undertaking a great universal supply of the requirements of London on equal terms to all. They were simply grasping, by the rights they were trying to obtain from this House, and by the use of the ratepayers' money, at a position which would enable them to throttle private enterprise. It was quite true, as the hon. Member had said, they could obtain their capital cheaply; but on the security of the rates. Were the ratepayers secured? The Report of their Finance Committee said— Whatever conclusions may hereafter be arrived at as to the probable ultimate financial results of such an undertaking as the Council may obtain power to establish, we are of opinion that the Council must face the probability that, during the early years, the undertaking will show a deficiency which will have to be made good out of the rates. The whole policy of this Bill was a political policy. The London County Council hoped to obtain support for it from the other sections of that big majority and would no doubt offer each a political quid pro quo at the proper time. They had a pretty clear indication of its true basis when the hon. Member opposite said he was surprised to hear the speech of the seconder of this Motion to reject the Bill from that part of the House. That simply meant that the London County Council was a political body. Their policy was to turn the London County Council into a trading, not a governing body. The right hon. Gentleman the President of the Local Government Board had always been a brave and consistent champion of that policy in this House. The present Government had made that policy its own by appointing the right hon. Gentleman to be the head of the one Department which had to do with and could control those extravagant municipal tendencies. It was well that the ratepayers of London should understand once for all the position of the Government in this matter, and the enormous expenditure, without any security for adequate return, which was going to be cast upon their already overburdened shoulders.

THE PRESIDENT OF THE BOARD OF TRADE (Mr. LLOYD-GEORGE,) Carnarvon, Boroughs

said the time had arrived when he ought to state on behalf of the Board of Trade what course they intended to take in regard to this Bill. The Government proposed to support the Second Reading of this Bill and, if that was carried, to move that it be referred to a hybrid Committee with a locus Standi to all those who had petitioned against the Bill, including all the private enterprises which had been referred to. They proposed to instruct the Committee to consider, with special reference to this Bill, the best means of providing for a supply of electric energy in bulk and for power and motive purposes, and to report thereon. That instruction would give very full powers to the Committee to consider all the points that had been raised.

MR. WILLIAM RUTHERFORD (Liverpool, West Derby)

Will you send the other two Bills to the same Committee?

MR. LLOYD-GEORGE

said the hon. Member had been fighting for the Company's Bills, but he did not think the promoters of those Bills really desired them to be sent upstairs to a Committee. All they wanted was a locus standi, and that the Government proposed to give them. The whole question would be considered by the Committee. That was the course suggested by the London County Council last year. They thought the question of the supply of electricity in bulk to London was a matter of such magnitude that it ought to be considered by a Committee of the House. It was now proposed that that consideration should be given on this particular Bill, and it was a course not inconsistent with that taken by the Board of Trade last year. Last year when there was only one Bill before the House, the Administrative County Bill, it was agreed on all hands that the question of the supply of electricity in bulk for all purposes was of the utmost importance to the greatest manufacturing city in the world—a city of small manufacturers. And it was also agreed that this was particularly a case for a scheme for the provision of electricity in bulk by some great central body. The London County Council had no scheme of their own, and the Board of Trade adopted the view that, as the matter was urgent, the only Bill before the House should be sent up to a Committee. This year the circumstances were different. They had a body representing the ratepayers of a great city bringing forward a scheme after mature consideration, and he thought when they came to consider competing schemes the municipality should have the first consideration. Their scheme ought to be considered in the first instance. He did not think that was disputed. But the Government did not ask the House to neglect the other schemes. A locus standi would be given to the promoters of the other schemes, and if the Committee came to the conclusion that the considerations urged against this Bill were substantiated in the main they could either reject the Bill or make a special Report as to what, in their opinion, would be the best method of dealing with this great and urgent problem in London.

MR. BURDETT-COUTTS

asked whether this Committee would have before them the Finance Committee of the London County Council or any Member of it?

MR. LLOYD-GEORGE

said the Committee would have power to call for persons and Papers, and could call up the gentlemen who prepared that Report if they desired to do so, and they could call upon the exceedingly able gentlemen who promoted the scheme of last year to scrutinise the document referred to by the hon. Member for Westminster.

MR. WILLIAM RUTHERFORD

What is the objection to sending all these Bills to this Committee?

MR. LLOYD-GEORGE

said there was a very substantial objection to that. He thought that, in a case of this sort, priority ought to be given to the scheme of the ratepayers. That as really his main reason, but he did not want to enter into that argument, because he did not wish to prejudice the consideration of the matter before the Committee. He thought the hon. Gentleman would be well advised not to press that point even in the interests of his own side.

MR. WILLIAM RUTHERFORD

You do not know which my side is.

MR. LLOYD-GEORGE

said that no matter which side it was the hon. Gentleman would be well advised to accept the proposal put forward by the Government for dealing with this great and difficult problem. He understood the County Council were perfectly prepared to agree to this course. He understood, also, that that was the view taken by the Administrative County Company, and, after all, it saved expense. He must say, however, that the Government did not accept the view that had been urged that municipalities were not capable of going into enterprises of this character. The experience of London did not bear out that contention. He found that sixteen borough councils sold their electricity at 3¼d. per unit, and that the eight companies sold at 4d. Not merely did the borough councils sell more cheaply, but he found that there was not a single borough council that did not, in addition, make a profit ranging from £1,000 to £20,000 a year. So that all the talk about the squandering of the ratepayers' money was actually beside the mark. It was quite unjustifiable. The London County Council, and the borough councils more especially, had been running these electric enterprises with great success. The hon. Member who spoke last seemed very much afraid that the County Council might, in some way, crush out the enterprises of the borough councils. He found that the money that had been advanced to the borough councils for the purposes of these undertakings had been advanced to the extent of something like £4,500,000 by the County Council, so that the wolf had a vested interest in keeping Red Riding Hood alive.

MR. WILLIAM RUTHERFORD

Do they supply in bulk?

MR. LLOYD-GEORGE

said he knew that they supplied in bulk and at a very much cheaper rate than the companies; and the London County Council was prepared to supplement the cheaper supply of the borough councils. If hon. Members opposite thought this was a fair proposal he would put it on the Paper, and he trusted the House would give them now the Second Reading of the County Council Bill

SIR J. DICKSON-POYNDER (Wiltshire, Chippenham)

said he was in a position to state, on behalf of the promoters of the Administrative County Bill, that they acquiesced in the proposal made by the right hon. Gentleman the President of the Board of Trade. He understood that every opportunity would be given to the Select Committee fully to investigate the whole question of electrical bulk supply, so that as a result of their deliberations some practical and economic scheme might be evolved. It was not his province to enter into the merits of the Administrative County Bill, nor into the merits of the London County Council Bill, nor to make any remarks on the speech made by his hon. friend the Member for Strand Division, nor on the eloquent speech of the hon. Member for Glasgow in advocacy of the London County Council Bill. It was only natural that the County Council, representing the ratepayers, should be given a preference in having their scheme thoroughly discussed and examined. If as a result of that examination it was found that the County Council could prudently, economically, and effectively give a bulk supply over this large area, then the situation, of course, was a different one from that of last year, when the Administrative County Bill was the only proposal before Parliament. The London County Council had undoubtedly the very great advantage of having the Administrative County Bill of last year to work upon, and also of having the expert assistance of gentlemen most competent to deal with this highly complicated question. The question was an extremely urgent one. It affected the greatest manufacturing area in the Kingdom. Manufacturers and railway companies had all been asking for this supply for a long time, and he only hoped that some conclusion would he arrived at, as the result of the examination by the Committee, which would meet with the general assent; and agreement of those who desired to see a bulk supply furnished to this great area on an effective and economic scale.

EARL PERCY (Kensington, S.)

suggested that after the speech of the hon. Gentleman opposite and the speech of the right hon. Gentleman the President of the Board of Trade, containing a proposal not, he thought, unreasonable, his hon. friend might agree to withdraw his Motion. He said that with the proviso that in withdrawing this Motion they on that side of the House were not to be taken as in any sense pledging themselves to the principle of the supply of electricity in London by a public authority as opposed to private enterprise. There were many of them who were not prepared to give a vote in that sense. It would be foolish to contend, in view of the Acts of Parliament that had been passed, that the supply of electricity was not, under certain circumstances, a legitimate object of municipal enterprise. But it was none the less municipal trading of a highly speculative character, involving very large expenditure, which a private company was justified in undertaking, but which a public body ought not to undertake without clearly ascertaining that the majority of the ratepayers was in its favour. He did not know that there was any indication whatever that the majority of the ratepayers of London was in favour of the supply of electricity by the London County Council. It was true there was a majority on the Council itself, but the Council was a decadent body, which came to an end next year. The scheme had been condemned by the Finance Committee of that Council.

MR. WOOD

said he must be allowed to state that the scheme had never been so condemned by the Finance Committee.

EARL PERCY

said he ought not, perhaps, to say condemned, but the Finance Committee reported that there were no financial estimates which would justify it in expressing any opinion at all. The President of the Local Government Board had said that he regarded it as one of the great virtues of the Bill that it was so indefinite that it offered no target for attack. It was opposed also by a large majority of the borough councils [MINISTERIAL cries of "No"] —a majority then [renewed MINISTERIAL cries of "No"]; at all events there was no such consensus of opinion on the part of the borough councils as would justify them in saying that the ratepayers were in favour of the scheme, and the borough councils represented ratepayers who had already embarked large sums of money in local schemes which would be seriously hit by the project of the London County Council. In their opinion there were very grave objections to the municipalisation of a supply the cheapness and efficiency of which would depend on costly experiments and the constant discarding of old methods in favour of new, with the possible risk of eventual loss. And it must be remembered also that not only would there be a conflict of interests between rate-payers and consumers, but also between the ratepayers and their employees, for the London County Council was steadily forming a vast body of workmen who were always under the temptation to use their suffrages for the purpose of advancing their pecuniary interests. That was not a state of things likely to promote economy in business management or purity of local government.

MR. ROWLANDS (Kent, Dartford)

said he wished to express his satisfaction at the policy adopted by the President of the Board of Trade. He had no objection to the London County Council having complete control over the electric supply over a wide area, but hoped that when the Bill went to a Committee upstairs the interests of the outlying districts affected which had themselves invested capital in electrical undertakings would be especially considered and safe-guarded. At present, he thought, the interests of the municipal authorities outside London were not thoroughly safe-guarded.

SIR SAMUEL SCOTT (Marylebone, W.)

said that the Marylebone Borough Council had passed a resolution to the effect that the whole question and the supply of electricity in bulk should be dealt with by a Royal Commission. The proposal made by the President of the Board of Trade amounted to much the same thing, and he trusted that the whole subject would be most carefully considered.

MR. STUART WORTLEY (Sheffield, Hallam)

said he merely wanted to ask one necessary question. The right hon Gentleman a few minutes before had implied that the promoters of the Additional Electrical Power Supply (London) Bill had agreed to the proposal of the reference to a Hybrid Committee, but that was not so.

MR. LLOYD-GEORGE

I did not say that.

MR. STUART-WORTLEY

said his impression was that the promoters of that Bill desired to have their rights saved and not to enter into any particular bargain.

MR. LLOYD-GEORGE

I do not think I said so, but I agree with what the hon. Gentleman says.

MR. MORTON (Sutherland)

said he only desired to detain the House for a few minutes while he said a few words on the connection of the City of London with this measure and the position of the Corporation. He wished to thank the President of the Board of Trade for his statement, in the first place because it was the right statement to make, and in the second place because he had adopted the proposal of the Corporation of the City of London. It was indeed identical with a proposal which he himself handed to the clerk at the Table some time ago, and further, the policy now being pursued was identical in terms with the evidence that he had himself given on behalf of the Corporation of the City of London last summer. He only wanted to mention on the part of the Corporation that they wished to have the fullest inquiry. The proper course was to send the Bills to a Select Committee or some body of that kind. In his evidence he had suggested either a Select Committee or a Royal Commission, but he thought the Corporation had been treated with scant courtesy by the Government. The Corporation had by letter asked that all the Bills should be sent to a Royal Commission for the fullest possible inquiry into the whole subject of the supply of electricity in bulk, but up to the end of last week they had received no answer. He himself had put a Question down on the Paper and had at the request of the Government postponed it, but they had in the interval answered a similar Question put by another Member. He was not sure that that was the proper or courteous way of conducting the business of the House of Commons. He thought it would be much better to send all these schemes upstairs, so that a Committee might consider what was best for the whole of London. In the City they were more interested in this Question than any other part of London, because they paid one-eighth of the rates, and should in case of a loss have to pay one eighth of it. He was glad that the Government had adopted the course recommended by himself and the Corporation.

MR. W. F. D. SMITH

said that after what had been stated by the President of the Board of Trade he did not desire to proceed with his Motion and would withdraw it on the understanding that the whole question should be referred to a Committee upstairs.

Amendment by leave, withdrawn.

Main Question put and agreed to.

Bill read a second time, and committed.