§ Order for Second Reading read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."
§ MR. COURTHOPE (Sussex, Rye)
moved that the Bill be read a second time that day six months. If the powers which were given by the Bill were carried out at all it would result in the very worst form of municipal trading. It practically extinguished private enterprise and the wholesome competition which tended to economy and efficiency over a very large area. The Bill would establish a statutory monopoly over an area of some 700 square miles, including not only the county of London, but parts of Essex, Kent, Surrey, and Middlesex. Over the whole of this vast district private enterprise in the supply of electricity would be entirely extinguished, with the exception of two enterprises which were expressly excepted—the municipal electric supplies of Marylebone and Woolwich, which had presumably been excluded because those enterprises were in a bad way. They all agreed that the position of the Metropolis was not at all up-to-date, although he did not think this Bill was the right way to remedy that condition of affairs. The present position was established by the Electric Lighting Acts, 1882 and 1888, under which some fifty independent generating stations and systems were set up on a comparatively small scale and applying to comparatively small areas. Since the establishment of the fifty existing enterprises the demand not only for supply in bulk on a large scale, but for other supplies, had become so great that those fifty enterprises had been for a long time incapable of meeting anything like a popular demand. It could not be done 430 cheaply and efficiently by small enterprises over small by small enter-possible with the areas. It was now possible with the improvements that had taken place in electrical engineering and science to provide electricity over a large area very cheaply indeed, and he believed it could be provided at considerably less than a penny per unit. He thought they were agreed that there must be some kind of control over the enterprises set up, and that for the metropolitan area the London County Council should be the controlling authority. The Select Committee which sat last year recommended, in Clause 18 of their Report, that the County Council should be the authority. The Committee added—The Committee have in view the fact that the County Council, as this authority, may exercise its powers in more than one way:—(a) The County Council may undertake the whole work, providing every authorised distributor and every private consumer with electricity in bulk at a maximum scale of prices; (b) the County Council may retain for itself one part of the undertaking, while permitting a private enterprise to undertake another part; (c) the County Council may lease for a substantial consideration the whole enterprise to a private enterprise, to resume possession of it when its initial stages are over.There were those three alternatives, and it was on the last alternative that there was a possibility that the objection which he was putting before the House to this Bill might be removed. The first and second of those alternatives were very objectionable, because they set up a statutory municipal monopoly. The Bill had been introduced by the London County Council several times. There were Bills in 1902 and 1903, and there was the Bill this year. The Bill of last year went up to the Select Committee, but that Committee found that the preamble was not proved, and the Bill fell to the ground. The principal difference in this Bill as compared with the Bill of last year consisted in the fact that last year's Bill was only permissive, and there was no obligation upon the County Council, having taken over all the electrical enterprises in this 700 square miles, to provide electricity in bulk for any purpose at all, either to a company or to an individual. But that was to a certain extent removed in the Bill they were now discussing. This Bill was to a certain extent obligatory, but the obligation was rendered almost nugatory by the power 431 which the County Council were endeavouring to obtain by the Bill to insist on a very long term of contracts under somewhat onerous conditions. The Bill gave power to the London County Council to take over all existing undertaking except the two which he had mentioned— Woolwich and Marylebone, which they apparently did not desire take over for financial reasons. For this purpose the County, Council would be entitled under the Bill to raise,£4,500,000 capital under Clause 54, and also an absolutely indefinite sum under Clause 55. In fact the powers of increasing the indebtedness of London were almost unlimited under the Bill. That was one of the principal objections which he had to it. The method provided for the repayment of the money was absolutely unsound. The Bill sought to set up that the repayment should be by a sixty years sinking fund, the repayment not to begin till the year 1913, so that for all practical purposes the repayment was spread over sixty five years. What was the life of electrical plant? Was it not the height of folly to set up a sinking fund in respect of a vast electrical undertaking extending over sixty-five years, which was many times the life of an electrical plant? Even if the plant could be made to last that period it was perfectly certain that, with the progress of science and invention, the existing plant would have to be replaced over and over again before this vast sum of money was repaid. Then, in addition, there would have to be another sinking fund to meet the purchase of the existing liabilities of the undertakings acquired. Therefore the ratepayers of London would be saddled with two sinking funds, one of an ascertainable amount, and the other of an absolutely unknown amount which would be incurred under the powers of this Bill. Not only would the ratepayers of London be saddled with; these two sinking funds, but their credit would be pledged for the benefit of a large area outside the county of London. If the enterprise was a failure, the loss would fall on the ratepayers of the county of London, not on the whole area of 700 square miles. The area outside the county of London would have no financial responsibility at all, and for that reason the ratepayers of London had very good reason to distrust this Bill. Beyond those which he had men- 432 tioned there were a number of other powers set up by the Bill. One was the power to trade in electrical appliances of all kinds. That would be a very dangerous. interference with the whole-some competition of private enterprise, and should not be permitted to any municipal body. The objections he had raised to the Bill were principally on financial grounds. Municipal enterprise which excluded private enterprise was almost always a financial failure. It was neither economical nor efficient, and he thought the ratepayers of London who would have to pay for the vast scheme set up by this Bill had a right to look for economical and efficient working. On the other hand, the Moderate Party, the Party now in power on the London County Council, were the Party opposed to municipal monopoly and municipal trading in competition with private enterprise. They disapproved and he disapproved of the policy of taxing capital in order to compete against that capital. He hoped that in the course of the debate that night some authoritative statement would be made on behalf of the County Council, which might remove the objections he had raised to the Bill. From a recent debate in the County Council he gathered that if this Bill passed the Council would lease their powers under it to private companies. If the Council leased their powers, then there would be that competition by private companies which was so necessary to efficiency and public economy. If he got an authoritative statement that that would be done, he would withdraw his opposition to the Bill.
§ *SIR SAMUEL SCOTT (Marylebone, W.),
on behalf of his constituents, seconded the rejection of the Bill. Marylebone had been entirely left out of this Bill, because, he thought, of the fact that the electric lighting undertaking which the borough council had acquired had not been a great financial success. Perhaps that was not the reason, but unless some undertaking was given on behalf of the London County Council that what was proposed in this Bill would not further handicap the Borough Council of Marylebone in regard to their undertaking he would have to press the Amendment to a division. Hon. Members were no doubt aware that a very large outlay had 433 been incurred by the Borough Council of Marylebone in acquiring the electric undertaking. The council went to arbitration with the company, and a very large award was given to the company. One of the chief reasons for the size of the award was that the borough council were to have a monopoly of the electric lighting supply in Marylebone. But now, under this Bill, a private company might come into competition with the Marylebone Borough Council and supply electricity in Marylebone. It was not fair that Marylebone, having paid a big price for the monopoly of supply, should have it taken away from them and that private companies should have power to compete.
To leave out the word 'now,' and at the end of the Question to add the words 'upon this day six months.'"—(Mr. Courthope.)
§ Question proposed, "That the word 'now' stand part of the Question."
§ *MR. WOOD (Glasgow, St. Rollox)
said that the hon. Member for Rye, in moving the rejection, had given a strong reason why the Bill should be passed into law. He had pointed out that, while the present system of generating in a small area was unsatisfactory and did not satisfy the public demand, yet he believed that an adequate system for an adequately large area would be capable of producing an economic supply and fulfilling the requirements of the commerce of London. It was for that very reason this Bill was brought in by the County Council. They would not do anything to extinguish the private enterprises that existed at present. On the contrary, if the scheme of the late Council had been allowed to proceed, it would have recognised that these existing companies had a statutory right until 1931, and suitable arrangements would have been made with them. Parliament intended that the ultimate authority should be the municipal authority, because it provided that these companies should be purchased, most of them in 1931. He would frankly say why Marylebone and Woolwich were not included in this Bill. The reason was that both these authorities committed the mistake of allowing a company to set itself up within their area, and then had to buy the undertakings at an 434 enormous cost. The Marylebone company only spent £500,000 on their works, and yet the borough had to pay them £1,200,000—a profit of £700,000 made in a very short time.
§ *MR. WOOD
replied that the Council hesitated to encumber the new municipal undertaking with that enormous premium of £700,000 upon a single small undertaking. He sympathised in some respects with the feelings of the hon. Member for Marylebone. He was glad that he was taking up the position of defending the interest of that borough. He was himself a resident in Marylebone, and had to pay the high price due to the enormous premium which the Council had paid for the electric undertaking.
§ MR. LUPTON (Lincolnshire, Sleaford)
Can the hon. Member say who were the chief witnesses for the Marylebone Borough Council?
§ *MR. WOOD
said he would not go into these personal matters on that occasion. The hon. Member had raised another matter in regard to which he sympathised with him very much. He had said he objected to a private company coming into competition with the borough council of Marylebone after it had paid such an enormous premium to obtain a monopoly. There was a reasonable objection. It was in the first place to protect the interests of the municipal authorities of London that the County Council originally took up this question. But that was an argument against leasing to a company, because, supposing the whole area of the undertaking were leased to a company, what would prevent that company from competing with the Marylebone Borough Council in such a way as to bring about the disastrous results which the hon. Member anticipated and feared? He supported the Second Reading of this Bill. That might not appear remarkable, because he backed it; yet some explanation was needed. The Bill was prepared by the late Progressive London County Council and was denounced in the most unmeasured terms at the last election. 435 It was now promoted by the new Moderate County Council. He was bound to say that it was with avowedly different intentions that the majority of the present Council desired that this Bill should go to a Second Reading. It was with a view to passing over the undertaking to private enterprise. [Cries of "No."] Their present intention was to hand over the whole undertaking to private enterprise and not to deal with it as the Progressive County Council would have done. He did not know that they would be able, on further reflection, to do that, but that was their present intention. Nevertheless he agreed to support the Second Reading because he felt the urgency of the question, and he did not wish to be responsible for any delay in dealing with it. He regretted that the Bill of last year had not been passed. He hoped the Bill would go before a Committee of this House which would thus obtain control over the whole question. He presumed that some Committee of this House would have to be satisfied that the conditions proposed would be in the public interest before power to deal with the matter would be given. He was certain that the present County Council could not say that they were being treated in a Party spirit. What the last County Council desired, when it brought in what was called a Permissive Bill in 1906, was to keep a free hand as regarded expenditure until they came to an arrangement with the existing companies before further public money was expended. Last year's Committee said that the County Council should bring in a more thorough-going measure and should be under an obligation to provide a cheap supply. The Committee would doubtless take care to see that the new scheme did guarantee a cheap supply, and that the interests of the consumers of electricity, both large and small manufacturers, were thoroughly safeguarded. Another essential was that there should be a really comprehensive scheme dealing with the large area covering 700 square miles which had been proposed, with a large generating station economically placed, where it would not be a nuisance to any populous part of London. It must not merely perpetuate present conditions and maintain a number of small and uneconomical generating stations. A third condition was that the County Council must be 436 the authority as recommended by the Committee last year. It must also protect existing municipal interests. There was a large ratepayers' interest involved, for the municipal authorities had spent some £6,500,000 of public money on electrical enterprise. Nothing must be done to put a company in a position to dominate over the interests of the ratepayers of London and the district round about. Then they had the tramways to safeguard. It was calculated that in a short time the amount of electrical energy required for the tramways would equal the output of the whole of the borough councils. That would be one difficulty in the path of leasing. He did not see how, under any system of leasing, they were going to safeguard the interests of the borough councils and the ratepayers whom they represented. There were three difficulties in the way of leasing—how to protect the local authorities, how to protect the rights of the statutory companies at present existing, and how to obtain a sufficiently comprehensive scheme with a sufficiently large system of generation. An important reason for supporting the Second Reading was that the Bill contained a provision for the purchase of the companies by the Council in 1931. He did not doubt that a Committee of this House would decide the matter in the interests neither of the Council nor of any competing body, but with a view to obtaining a wise solution of a problem that had remained unsolved too long—the provision of an economical and adequate supply of energy for the manufactures of London, and, of course, the House would reserve the right of finally dealing with the Bill when it came back from the Committee.
§ *MR. W. F. D. SMITH (Strand, Westminster)
said that on the present occasion he was going to support the Second Reading of the Bill although he last year moved its rejection, and he hoped he might be able to satisfy his hon. friend who moved its rejection this year and the hon. Member who had just sat down that he was justified in doing so. Last year a compromise was arrived at by which this Bill and other Bills were referred to a Select Committee, and on that understanding he withdrew his opposition to the Bill, and having done so, although he did not say they were bound to accept 437 the Report of the Committee, he did think that they were bound to consider it very carefully. Its terms had been quoted that evening so he need not repeat them, but he would say that he did not think that the hon. Gentlemen opposite who represented the Progressive Party in the London County Council could complain if they on that side adopted the terms of the compromise which they considered most favourable to their view and the most likely to serve the interests of the ratepayers of London. That Report suggested alternative schemes, and his hon. friend who moved the rejection of the Bill mentioned one such scheme. The Committee suggested that the County Council might lease for a substantial consideration for a certain period the whole enterprise with a view of resuming possession of it when the initial stages were over. He could hardly think that even the hon. Gentleman who had just sat down would suggest that after the last County Council election the County Council could ask this House to adopt any but the last alternative suggested by the Committee last year. It was perfectly true to say that the electrical power scheme of the late County Council was one of the chief questions which were debated on every platform during the last County Council election, and there could be no manner of doubt as to what was the answer of the ratepayers of London. It appeared to him to be absolutely impossible to embark upon what they considered last year, and what they considered now to be a great and risky scheme of electrical supply, in view of the result of the elections to which he had just referred. He did not know that it would be necessary now to refer to the report of the Finance Committee from which he quoted somewhat fully last year, but the Committee evidently thought that it was advisable that the County Council should see whether the alternative scheme would not be the best to adopt. The Parliamentary Committee of the London County Council, which considered this scheme, reported in these terms—We think that the alternative provisions in the Bill may be utilised for the purpose of securing some arrangement under which the financial risks to which the Finance Committee called attention may be avoided, and in which the business of the supply of electrical energy may be carried out by private enter- 438 prise under the control of the Council, and that the Bill should be proceeded with with that object in view.Further, they suggested a resolution which was subsequently adopted at a meeting of the London County Council which ran—That the London County Council (Electric Supply) Bill be submitted for Second Reading in the House of Commons with a view to securing an arrangement under which private enterprise undertakes, subject to the control of the Council, the business of the supply of electrical energy, and on the understanding that such alterations as may be required in the Bill to effect this object and to deal with any other matters of importance which may arise on the Bill, will be reported to the Council for its approval as soon as possible.No doubt the conditions of leasing to which the hon. Gentleman referred must be the subject of inquiry either by a Committee of this House or by a Committee of both Houses, but it did not seem that to devise satisfactory conditions was out of the reach of the ingenuity of such Committees or of the gentlemen who appeared before them as counsel. At any rate he thought that the present County Council could be trusted not to waste the ratepayers' money. He confessed that he had listened to the speech of the hon. Gentleman with some amusement, because he remembered very well—he was not quoting the words—that on this Bill last year he suggested that the County Council as an institution was identified with the Progressive Party and the Progressive Party alone, and also suggested that the ratepayers of London in the past had shown confidence in the institution as conducted by that Party by constantly returning members of it to the London County Council. Circumstances had changed cases and much had happened since the hon. Gentleman spoke.
§ *MR. W. F. D. SMITH
said he would read what the hon. Gentleman said—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 thought that any hon. Gentleman reading that quotation would take it to mean that the Progressive Party and the Progressive Patty alone were indentified with the institution, but he thought the 439 ratepayers had shown during the last twelve months that they looked upon the Moderate Party, as at present constituted, as more efficient guardians of the ratepayers' pockets than the Progressive Party had been in the past. As he had said, the circumstances had changed, but he thought his hon. friend might be quite certain that due care and economy would be observed in the exercise of any powers conferred on the Council by this Bill. He could not but hope, therefore, that his hon. friend would be satisfied with such an explanation, and be content to withdraw his opposition.
§ *MR. CHIOZZA MONEY (Paddington, N.)
regretted that he had to differ from his hon. friend the Member for the St. Rollox Division, although nobody could be more sensible of the services to London in general, and in regard to this subject in particular, which the hon. Member had rendered. It seemed to him, however, that his hon. friend, having uttered able and forcible arguments against the clauses of this Bill, had ended his argument rather lamely by asking the House to vote for the Second Reading. He rose to ask the House to reject this Bill because it contained the leasing clause—Clause 66. He would like to remind the House of the extraordinarily grave interests which were involved in this measure. It dealt with an area which he might be allowed, perhaps, to call the area of the new London—the greater London of the future. That area consisted of about 700 square miles, in which there was at present a population of 7,000,000 of people, and this was likely to have expanded to 10,000,000 or 12,000,000 before any lease would have lapsed. Yet it was proposed under this Bill, while nominally making the London County Council the electrical authority for this great area, to give powers to an authority which they knew had a full intention, indeed a declared intention, to hand over those powers for a considerable period, a period which would probably extend far beyond the lifetime of hon. Members who were listening to him, to some limited liability company, or, if he might use the word in a way which would not be misunderstood, to some trust. This was a great business and had long passed out of the experimental stage. We had in the United Kingdom some 110 or 120 successful electrical municipal undertakings in being. The position of 440 these undertakings was shown by a Return made to this House a few years ago. That Return showed that, allowing for the burden of the sinking fund and the interest upon the capital which had to be raised, electrical undertakings were not a burden upon municipalities which had undertaken this work. He also pointed out that in Germany where municipalities possessed freedom of action, electrical municipal undertakings were a great success. He would quote the cases of Munich and Breslau as instances in which, by means of these undertakings, not only had the interest on the capital been paid, but a sufficient sum been set aside for the sinking fund, and in addition handsome sums had been given in relief of taxation. In Munich in the last year for which he had figures the profits so handed over were £17,000 and in Breslau £20,000. Even taking the case of Berlin, which was more backward in these respects than other portions of the German Empire, the lease which had been granted expired in 1915, and in that year there could be no doubt whatever that the undertaking would be taken over by the town council of Berlin. These results had been attained and were undeniable, and yet they found that in regard to this great city, which was the capital of the Empire and he might almost say the capital of the world, there was this want of trust in the managing ability of the people of London, and they found it alleged by hon. Members opposite that there was risk in the matter. If there was such risk as hon. Members opposite alleged, why were so many keen company promoters desirous to undertake this business? His hon. friend the Member for the St. Rollox Division had mentioned many advantages which the London County Council possessed as compared with a private capitalist, but he had not mentioned one of the chief of them, viz., access to cheap money. The London County Council could command capital for this undertaking at probably 1 per cent. less than the company promoters. At the end of the lease the undertaking would have to be bought back loaded with unnecessary capital. The London County Council started with a magnificent business already made in their tramway undertaking. He asked what guidance the Government would give in this situation, which he compared to the 441 situation many years ago, when Governments failed to realise what the future of railways must be in this country. As a consequence we now had privately owned railways, loaded with watered capital, depressing wages while keeping up railway rates. Today, however, the Government could not plead ignorance of the tremendous future of electricity. They knew that 10,000,000 or 12,000,000 or even 15,000,000 who were going to live upon all these square miles must he the customers of the municipality for light and power in their homes, and in their manufacturing and business premises. Therefore a large number of customers was certain, and this number was no less certain to grow, and yet, knowing this, it was proposed that we should actually resign our interest in the question to some unknown party to whom would be committed the future of electrical power in London. It was not merely a question of ordinary economic development, but there was a question of social development behind it, because means should be provided which would enable us to remove our industrial enterprises to the borders of London. That could not be done without a proper distribution of electrical power. Finally, there was the great labour question, of which he would remind his friends on the Labour Benches opposite. What was the use of complaining about poverty and the distribution of wealth so long as they allowed these great national monopolies to be the prey of private capital? He invited the House to reject the measure unless they could obtain the entire deletion of Clause 66 or unless such an instruction to the Committee was agreed to as would ensure that, if a lease were granted to a private undertaking, it should terminate not later than 1931, and unless proper safeguards were inserted on the points of price, time, and dividends.
§ MR. PICKERSGILL (Bethnal Green, S. W.)
said it was very embarrassing to be called upon to vote on the Second Reading of a Bill which was not at all the Bill which the promoters intended to ask the House to pass into law. A great local body asked for a great monopoly of franchise, and at the fame time declared that the moment they got it they proposed to confer the whole power on a private company. He hoped that before 442 the powers included in Clause 66 were granted the promoters would set out the leading terms and conditions of the contract under which they proposed to lease them. It did not seem to him either an unpractical or unreasonable proposal, and he based himself upon what was said by the Chairman of the London County Council the other day. He said, "Give us one or perhaps two years that we may have plenty of time to make our negotiations with any company or companies which may come before us." If they were asking for one or two years why should they not consent, when this Bill went into Committee upstairs, to a clause binding them, before carrying into effect the powers of Clause 66, to come to Parliament and set out the terms and conditions of the lease which they proposed to give? He had said that he had grave doubt as to the vote he should give on the Second Reading of this Bill, but on the whole he had come to the conclusion to vote for the Second Reading. For many years now they had been engaged in the work of keeping a number of syndicates and companies from obtaining a great monopoly for the supply of electric power. It had been a difficult work; it had required all their efforts; and, no doubt, if the Bill should be rejected by the House that night the companies would renew their efforts, and he was very much afraid that they would not be able to resist them. He thought it would be better to give this great monopoly to the County Council even though they handed it over to a private company, rather than that it should go to a private company direct without the intervention of the London County Council. That was the result which he feared might follow if this Bill were rejected that night. Therefore, for the reasons he had given he intended to record his vote in favour of the Second Reading.
§ *MR. BOWERMAN (Deptford)
said he opposed the Bill not on the ground put forward by the mover and seconder of the Amendment, but rather on the ground presented by the hon. Member for North Paddington. If the Bill came before the House presented by the Council with the object of taking full responsibility for running this electric power, then so far as those for whom he spoke were concerned no objection 443 would be raised. They understood, on the contrary, however, that the intention was to ask the House for certain powers, and after those powers had been obtained, to lease them to private companies. It was on this ground that they were entering a protest against the progress of the Bill. It had been stated that the undertaking was of a risky character. They joined in the view that had been expressed already, that if it was of so risky a character there would not be such a keen desire on the part of companies to secure the undertaking. They believed that if the question had been fairly presented the County Council would have had the consent of the ratepayers of London to the running of an electric supply. They had before them the evidence of their capacity to run one of the best tramway services in this country, and if they could do that successfully—and he ventured to submit that they were doing it successfully, certainly in the interests of London and in point of efficiency it was equal to anything that he had experienced in the provinces—if the County Council could do that with the tramways, surely they had a right to assume that, if they were granted these powers for themselves, they would make an equal success of the electric supply. They had some experience in the case of Marylebone, where a company was started, and after certain experience the ratepayers expressed a desire to purchase, and they had purchased at a huge sacrifice of money; and they contended that what had been done in the case of Marylebone, so far as the success of the undertaking was concerned—judging from the expense incurred in buying it — could also be accomplished by the County Council. They believed that the same success would attend an undertaking covering the whole of London and the suburbs; and, that being so, they would welcome the Bill if they thought that the County Council intended to take the full responsibility of giving effect to it; to grant such important and far-reaching powers, knowing beforehand that it was not the intention of the County Council themselves to give effect to those powers, was a proceeding to which they were strongly opposed. Was it to be said that 444 the great municipality of London was unable to do that which other municipalities of the country were doing day by day with the utmost success? If that opinion was entertained, it was not only a grave reflection on the capacity of the London authorities, but he was inclined to say that it was almost an insult to suggest it. If these powers were allowed to pass from the hands of the County Council it was only a question of time before history would repeat itself, and they would have to make overtures to those private companies, with the result that Londoners would find themselves compelled to buy them out at some extravagant rate.
§ *MR. WATERLOW (Islington, N.)
said he had not troubled the House on any previous occasion, and therefore he asked their indulgence. He rose to support this Bill as a London Member. He believed that London wanted cheap electricity for power purposes, and although he would prefer to see the London County Council do that work itself, yet he was prepared to support the Second Reading of the Bill on the principle that it was better to have half a loaf than no bread. The advantage of cheap electricity in London, and especially for small manufacturers, was of enormous importance. Cheap electricity meant cheap power. If cheap electricity could not be supplied, and London manufacturers could not get cheap power as compared with those in other cities, then London would be at a disadvantage as compared with other cities. He believed that the future of small industries in London depended on cheap power and to that extent on cheap electricity. London was the greatest city of manufacturers and small industries in the world, so that this was a matter of the utmost importance to her. The Bill embraced an area known as Greater London, and as a consequence it involved a population of perhaps 6,000,000; and, by the time this undertaking was fairly started, it would probably involve a population of 7,000,000 or 8,000,000, perhaps in a few years' time a population of 10,000,000. In giving this power to any company or corporation Parliament required to be very careful about the particulars and the details. Within the area which the Bill covered there were now working 445 forty-five public authorities and twenty-seven public companies. All of them supplied electricity in one form or another. All these authorities were supplying electricity on a comparatively small scale compared with the scale on which this Bill proposed to proceed. As a consequence, most of the authorities were not able to produce electricity as this Bill would enable the County Council to do, no matter whether it leased the undertaking or worked it itself. The problem of cheap electricity was what was known as the problem of the "load factor." In other words, they wanted equality of load during the twenty-four hours to produce the electricity on the cheapest scale possible. They could not do that with an electric lighting company, because the maximum load was only required during a few hours of darkness, morning and night; but they could do it if they combined power to supply electricity to a much greater extent with lighting electricity. Therefore the larger the area, the larger the scale on which the thing was done, the bigger the average load, and consequently the greater cheapness. With a big undertaking like that, they could get rid of small steam engines, and small gas engines, and small methods of producing power throughout a vast number of factories, and then they would have advanced very considerably in giving benefits to London. If they could substitute for small power-producing machines various kinds of electric motors, the benefit to London would be enormous. With a big electric power producing undertaking all small manufacturers would be in the hands of that undertaking in the future. Those who used bulk electricity would be in the hands of that undertaking in the future. That would be the serious position of affairs if this Bill passed into law and those powers were leased to a company. That company would to a large extent control the power supply of a vast number of manufacturing concerns in London. Then there were the existing companies and the existing borough councils dealing with electricity in London. If this undertaking was put forward, the big concern must eventually swallow up the small ones, and they would have in London one big monopoly. That was why he thought this business ought to be kept in the hands of the public authority. Therefore, the supreme importance of 446 this question to London was largely complicated by the existence of these electric supply companies and the existence of the borough councils. If there was to be any leasing then he attached the greatest importance to the date of 1931. In that year the existing companies, or almost all the existing companies, had all their powers purchasable by the borough councils, as the law stood at present. If leasing there was to be it must not extend beyond the year 1931, or at all events, the whole question of electric power for London must, in some form or another, come up for review in 1931, and any lease now granted by the London County Council should be capable of being reviewed when all these companies fell in for purchase. He could plainly see that this Bill involved the whole future of London as a manufacturing city, and it embraced thousands of manufacturers both large and small. It embraced the supplying of electric power for docks, harbours, railways, and tramways, and also electricity for private houses. It was not at all improbable that in the near future they might see electricity produced so cheaply that it would be a practical thing for everybody to have electric fires in the place of coal fires. That would be an enormous advantage to London and greatly for the benefit of its people who had coal fires now, not only in the way of convenience and cleanliness, but also in ameliorating the atmospheric conditions from which they all suffered so much in the shape of fogs in winter time. The area this Bill covered was so large, the population so great, and the issues involved so momentous to the future welfare of London, that he was prepared to vote for the Second Reading.
§ MR. BONAR LAW (Camberwell, Dulwich)
said that as hon. Members who were in the last Parliament knew, this was a subject which occupied the attention of the Board of Trade to a very great extent a few years ago, and he might, perhaps, be permitted to say one or two words only in regard to it. What struck him in reference to the debate to which they had listened so far was the remarkable difference between the speech of the hon. Member for St. Rollox and the speech of the hon. Member for North Paddington. The former realised that there had been a County 447 Council election, but the latter seemed to think for the moment that he was addressing an audience on the issue which was before the constituencies in that election. He did not think that it was the business of the House now to go into the question of the merits or demerits to any extent of private trading as against municipal enterprise. [MINISTERIAL cries of "Oh, oh."] Hon. Gentlemen below the Gangway and hon. Gentlemen opposite were now very indignant with another Assembly because it interfered with the mandate which was given to them at the last General Election. They were now setting themselves up as a House of Lords to obstruct the action of the deliberately chosen members of the London County Council. ["Oh, oh."] The hon. Member for North Paddington had spoken as if it depended upon the rate at which capital could be got—
§ MR. BONAE LAW
said that was the factor which struck him as the most important in his speech. There was another factor which was at least as important as the rate at which the capital was raised, and that was the way in which the business was managed. If he believed that municipalities as a whole would manage their business undertakings as well as private enterprise he would be much more in favour of municipal enterprise. He had nothing to say against the gentlemen who were chosen as representatives on county councils and other bodies. They had had good representatives on the whole throughout the United Kingdom, but rightly or wrongly he believed that in business matters the business would be best managed where the man who made the mistake knew that he would have to pay for it out of his own pocket. If a business was to be well managed, the men who were to manage it ought to be selected on account of their quality as business men. Could anyone say that even at the last London County Council election the deciding factor was the view which the electors held as to the business capacity of the men who stood before them? Everybody knew it was not. Those were not the grounds 448 on which his friends secured a majority on the County Council. It was not their business qualities; it was the knowledge of the complete absence of business qualities on the part of their predecessors. In an election of that kind the men were not chosen for their business qualities. Nobody would deny that. In private enterprise there was some kind of a law which governed these things, and it was the law of the survival of the fittest. They might take it as certain that in the long run if they pitted that issue against selection generally on account of their speaking qualities, it was the private enterprise man and not the municipal man who would run the business to the best advantage and make the most money out of it. The thing which impressed him was the strong demand which was expressed on the part of the manufacturers, and especially the small manufacturers of London, that in some way or other a scheme of cheaper electricity should be supplied. Suppose the House took the view of the hon. Member for North Paddington; it would certainly mean that they were not going to have this supply of electricity in any time to which any of them could reasonably look forward. They could not have it in this Parliament because the County Council would not adopt the scheme. Therefore they could never have it until the majority in this House and the majority on the County Council happened to coincide. For that reason alone he was certain that his hon. friend the Member for the St. Rollox Division was right in saying that with proper safeguards it was better to get a cheap supply of electricity now than have the thing hung up indefinitely and practically for ever. He believed that the majority on the County Council were in this matter taking the right course. They were pledged to have the business conducted by private enterprise if they could. Having taken that course their obvious duty was to obtain from Parliament powers which would enable them to make the best bargain they could in the interests of London. He had been afraid that the majority on the County Council might try to make some arrangement with a particular company, and that would be distinctly bad business. What they had got to do was to get the powers, and then try to get competition from different companies. ["Oh!"] Most certainly 449 that was their duty—to get competition from different companies as to the terms of the lease, and to grant the lease to the company which would give to London the best terms, provided they were certain that there was enough capital in that company to carry out the obligations they agreed to undertake. That was precisely the intention of the majority of the London County Council. It was part of their policy to lease this franchise on the distinct understanding that the right of purchase at a reasonable time was to be retained to the County Council. They were going to give it on condition that the rates were to be revised just as was proposed by the administrative company two years ago—that the rates were to be subject to revision by the Board of Trade, that the scale of dividends was to be a moving scale, and that the dividend was not to get too high without a reduction in the rates; and they were also bound to make this arrangement, that they would only lease to a company if they were prepared to treat existing bodies, both municipalities and private companies, on terms which the House of Commons considered fair. If that was what the hon. Gentleman meant by saying that the County Council was bound to state clearly the conditions on which they meant to make the lease, he thought he was right. That was their duty before the Committee, but if, as the hon. Member for Bethnal Green suggested, the County Council was to be bound to come to Parliament with the definite agreement that they were going to make with a definite company, that seemed to him extremely bad business. It would prevent them getting as good an arrangement as they otherwise would if they were tied down in that way. Moreover, if the obligation was placed upon them to come to Parliament, notices would have to be lodged a long time before, and that meant that at least one year, and probably two years, would be lost before any arrangement of the kind could be come to. There was nothing more needed in a great City like London, where there were so many small industries, than that they should have a cheap supply of electricity for all purposes; and they could only get that by an arrangement such as that which was now proposed. If they rejected this proposal there was no reasonable prospect of such an arrangement being made in a reasonable time. 450 Hon. Gentlemen on both sides of the House were quite right to see that the terms of the lease were as favourable as they could get a company, with prospect of raising the necessary capital, to accept; but it was also their duty to give to the manufacturers of London, whose interest was really as great as the profits the ratepayers would make out of running the business themselves, what was, after all, more important, the chance of obtaining a cheap supply of electricity all over London.
§ THE PRESIDENT OF THE BOARD OF TRADE (Mr. LLOYD-GEORGE,) Carnarvon Boroughs
I am rather afraid that the views of hon. Members on this Bill have been very largely coloured by the difference between the political complexion of the County Council of last year and that of the County Council of this year. The Government has nothing to do with that, and I suggest that the House of Commons ought not to consider that. We have got to deal with the Bill on its merits. The Bill is framed on the recommendations of the Committee which considered the whole matter of electric supply in London last year, and on that ground I support its Second Reading. The Bill is in the position of having been framed by a County Council which was Progressive, and it is now being promoted by a Moderate Council. I am glad the majority of London Members have taken what I would call the more temperate and more sensible view, and have decided to support a Bill which they themselves have framed. That is, I think, a very wise decision, and I am surprised they should have hesitated at all, because it is their own Bill. [An Hon. MEMBER: No.] The hon. Member for Bethnal Green says it is not the Bill they framed, but it is. [An Hon. MEMBER: No.] It is true that the promoters have stated that they are not going to proceed with certain clauses, but that is a matter for the Committee. The Bill before the House at this moment is the identical Bill drafted by the late County Council, but if the Committee report that they cannot recommend it if these clauses are withdrawn, then that will be a matter for the House to consider. All kinds of questions have been discussed which really have nothing to do with the Second Reading of the Bill. The question of what the Council should do with its 451 powers afterwards seems to me irrelevant, except upon the principle that you will not allow any authority to part with its powers; but that is not the position of the London County Council. They have incorporated provisions enabling agreements to be made. It may be said the Council should not be allowed to leave the matter to private enterprise under any conditions, but that is not the opinion of most of the representatives of London. The question raised as to terms and conditions is not a question to be settled on Second Reading; it is purely a matter for Committee. I would not say that the House of Commons should part with its authority and give unlimited powers to a municipality to part with this franchise for ever; I agree with the hon. Member for Paddington and North Islington in that, but that is not a question to be discussed on the Second Reading and should not weigh with the House in giving a Second Reading decision. It may be a legitimate question to raise in an Instruction to the Committee, that there should be a limit imposed is a question of general principle, but is not relevant to the Second Reading. The hon. Member for St. Rollox in his able speech said that of course the House reserved the right to deal with the Bill when it came back from Committee—a rational view and in accordance with Parliamentary traditions. The House does not part with the right to deal with a Bill when it is sent to a Committee to be considered and reported upon; the recommendation of the Committee is submitted to the judgment of the House, and any Amendment can be moved on the Report stage. It is left open to my hon. friend after the Bill has gone to the Committee to submit his ideas and those of his friends as to the powers which ought to be given to the London County Council. Matters of detail must be threshed out in Committee. I cannot discuss the Instruction on the Paper, but I sincerely hope my hon. friends will see their way to leave the matter until the Bill returns to the House. I cannot enter into the substance of the Instruction; I will say that in my judgment it is contrary to every procedent and that it would fetter the Council in a matter where, if there is to be leasing at all, there should be freedom to make terms. I recommend my hon. friends to consider the suggestion of the hon. Mem- 452 ber for North Paddington and direct their minds to a limitation of the power of the Council to part with its franchise in point of time. It should be so limited that the County Council in 1931 would be able to deal with the question of purchase as a whole; that is the date when most of the private enterprises might be purchased by the municipality. Some limitation of that kind is a legitimate matter to discuss as a matter of principle, but I trust the House will now give a Second Reading to the Bill. The hon. Member for Rye said that municipal enterprise in this matter had been a failure. It is simply ridiculous to make a sweeping assertion like that in face of the facts. As a matter of fact municipal enterprise in this matter has been a great success. Ten out of twelve municipal enterprises of the kind in London show a profit on a lower rate of charge. That is very important. In a matter of this kind the chief point of view of the House of Commons ought to be, not the dividend paying interest, but the interest of the consumer; and I find that the difference between the charge made by the municipalities and the charge made by the private companies is something like 1d. per unit, or about 30 per cent., lower in favour of the consumer. Moreover, the municipalities make a very considerable profit on their very reduced charges. It is the same in the provinces. I find that the gross profit made by the provincial local authorities upon a capital expenditure of £22,800,000 for the supply of electricity is over £2,000,000. The object of the municipality is not so much to make profit as to supply electricity at the cheapest possible rate. The prime consideration of a company is to make a dividend, and with that view they naturally put their charges as high as possible. Yet here are the provincial municipalities, with every pressure put upon them to fix their charges at the lowest possible point, making the considerable profit of £2,000,000, and, what is more, with £1,265,000 for the purposes of sinking funds. Surely that is a really great triumph for municipal enterprise. This seems to be the only country in the world where there exists this terror of municipal enterprise. Go to Germany, the great bogey of hon. Gentlemen opposite, and you will find the municipalities supplying docks, electricity, water, gas, 453 houses, and land. If I support this Bill with the power which it contains for leasing, it is not because I express any opinion in regard to leasing. I leave the London County Council to take their option. An hon. Member has quoted the example set by foreign countries in regard to railways, and I do not think he could put forward a better illustration. I have always thought it was one of the greatest misfortunes of this country, especially in competition with a country like Germany, which has State railways, that it should have parted with the railways, practically for ever, to private enterprise. Supposing the proposal of leasing that is made here in the case of electricity had been applied long ago to the railways, supposing private enterprise had been allowed to develop the railways and then the State to come in and pay a fair price for them. The whole of the railways would now be in the hands of the people, and they would be worked for the development of native industries, instead of being worked, as they are often at present, in the interest of foreign competitors.
§ MR. LLOYD-GEORGE
I know the hon. Baronet's idea of a fair price. I do not like these City notions of a fair price; it is a very hard bargain. Here we have simply now to decide the question whether we are going to carry out the recommendations of the Committee that the County Council shall have the control, and other questions can be fought out afterwards.
§ MR. CROOKS (Woolwich)
said he could not agree with the right hon. Gentleman that this Bill was identical with that of last year.
§ MR. LLOYD-GEORGE
That is not what I have stated. I said that the Bill of last year was sent upstairs to a Committee, which recommended that there should be a different Bill this year. I have said it was the same Bill as was introduced by the Progressive County Council.
§ MR. CROOKS
asked why it was, in that case, that the Progressive Party had put on the Paper an Instruction to the Committee on the Bill. The leasing clause practically meant that they would be compelled to lease, and then exactly the same thing would happen as they had experienced in the case of tramway leases, under which the County Council had been unable to improve the hours of labour, or rates of wages, or reduce the fares. It was said that as there would be competition they would get a good price; but what would happen would be that there would be an amalgamation of the electrical companies in London who would arrange the price before they went to the County Council. Many of the local authorities had already got electrical plant; were they going to allow a great trust to come in and practically scrap that plant, leaving the authorities to bear the burden of the rates? They had just heard from the President of the Board of Trade the same old official arguments. There had been no change of Government in his life. ["Oh."] There had only been a change of representation in the House of Commons. They always got the same kind of argument from right hon. Gentlemen that everything was all right, and they must allow the present position of things to go on. They could never bring about a revolution merely with a change of representation. The permanent officials were against the proposal. But he urged the House to open its eyes and not give away the inheritance that belonged to the people of London. The Council ought to have full power to supply the electricity, because otherwise the Moderates and their friends on the Stock Exchange would "rig" this electric supply as they "rigged" a loan a few days ago.
§ *MR. DICKINSON (St. Pancras, N.)
said he hoped the House would pardon his intervention on this occasion, but he spoke on the authority of London Members, and had on their authority put an Instruction on the Paper. The County Council, now representing the opposite Party, put forward a proposal with which he disagreed, but in such a form that he 455 felt it difficult to oppose, because as it stood before the House it was a Bill with a great deal of which he could agree. The London Members felt that London stood at perhaps the most serious crisis in its municipal life. It was important that the House of Commons should understand the position of the Party now in ascendency on the Council. It had been frankly admitted that a subsidiary clause of the Bill—namely, one empowering the Council to transfer its powers to a private undertaking—would in Committee be made the main purpose of the Bill. Therefore this was a Bill which proposed to start a system by which powers given to a local authority might be handed over en bloc to a private undertaking. He thought that consideration ought to alter the position which had been adopted by the President of the Board of Trade. The right hon. Gentleman had told them that he was for acting on principles of local autonomy, and that the London County Council if they had these powers should be left to decide whether they should hand them over to a private company or not. That principle of local autonomy was new, so far as his connection with the London County Council was concerned. Even in the Bill of last year which proposed to give the Council a free hand in dealing with this question of electricity the Board of Trade asked the House not to allow the autonomy that was now suggested. And surely London Members of Parliament had also some right to speak on behalf of London, and they begged the House carefully to consider before it took a step which would grant to the County Council the right to do exactly what it liked in setting up a new system of franchises to private undertakings. The main question was as to whether it was expedient that a public authority should actually work an undertaking such as this or that a private company should do it. It was well that the House should be given an opportunity of really considering the question of the respective merits of public municipal ownership as against private enterprise. The hon. Member for Dulwich had announced himself as absolutely opposed to municipalities carrying on this work, but he had said that if it could be proved that the work of the municipalities was more beneficial than that of companies he would change his opinion. He 456 (Mr. Dickinson) had had opportunities of studying municipal undertakings pretty extensively during many years, and he believed that it could be proved conclusively that work of this character carried on by a public authority was more efficacious and more economical than work carried on by companies. He could give the House many figures with regard to that, but he would avoid too much detail. He would draw the attention of the hon. Member to the Returns which had been given to the House of the respective trading capacity of municipal tramway undertakings and those of private tramway companies. If hon. Gentlemen would look at those Returns they would see that on an average the municipalities had been able to lay down tram lines at a cheaper rate per mile than the companies, that they had worked them with a smaller percentage of working expenses on gross receipts and that their net revenue showed a considerably greater percentage return on the capital expenditure than that of the companies; and moreover the net revenue per mile was larger than the net revenue per mile of the companies, and the average fare charged was smaller than the average fare charged by the companies. He could show that the same thing applied all through England, Scotland and Ireland. If they considered the southern tramway undertaking of the London County Council and compared it with the undertaking of the London United Tramways Company, they would find that the same thing held good throughout — there were cheaper fares, it was more economically worked, and the return in actual percentage on the capital was considerably greater in the ease of the London County Council system. The right hon. Gentleman the President of the Board of Trade had told the House that in his opinion the borough councils carried on their electric lighting undertakings more economically than the companies. That was perfectly correct, and the same thing applied in other countries. In Germany, the municipalities made a point of working their own undertakings, and they did so with the approval of the trading community in those towns. That was one of the reasons why Germany had been so prosperous. And if they went to the United States they would see precisely the other thing happening. Any hon. Gentleman who had been through 457 New York knew perfectly well the condition of the streets in that city. No town he had ever soon was anything like so bad as regarded its paving as New York. He had had the advantage of going through the streets of New York in company with one of the principal officials of the municipalities of New York. He asked him the reason why the streets were in that condition, and he replied that it was due to the fact that the tramways had been leased and handed over to a company, with the control of the repair of the streets in the hands of that company, and he added that the council would not exercise their powers to force the company to repair the streets. If he had had a free hand he could have put the streets of New York into good repair in a few months. He ventured to ask the House, with the knowledge of what the granting of franchises had come to in American cities, whether it was not an important question for them to consider whether they would establish that system in London. He believed no greater disaster could happen to London than that they should establish this system of franchise, which was at present unknown in this country. The President of the Board of Trade had referred to the Committee of this House which sat last year, and had pointed to a recommendation, as he called it, that appeared to indicate that one of the solutions, if not the proper solution, was to have some system of leasing. He wished to point out that this suggestion was not made the subject of any definite recommendation. The Committee of last year brought up a Report which recommended that the powers of supply should be entrusted to the London County Council. That Report when it was drafted had no reference whatever to any question of leasing, and it was not until the proposal was made by the hon. Member for Wolver-hampton that Clause 18 was inserted. Clause 18 read thus—In recommending that the County Council should be the authority, the Committee desire to refer to the statement made by Mr. Llewellyn Smith, on behalf of the Board of Trade, which they regard as of great value. The Committee have in view the fact that the County Council, as this authority, may exercise its powers in more than one way.458 And then they set out the three ways in which the County Council might exercise its powers, namely—It might undertake the whole work, providing every authorised distributor and every private consumer with electricity in bulk at a maximum scale of prices; it might retain for itself one part of the undertaking, while permitting a private enterprise to undertake another part; or it might lease for a substantial consideration the whole enterprise to a private enterprise, to resume possession of it when its initial stages are over; and the Committee add that they are of opinion that the Report of the finance committee of the County Council renders desirable a careful consideration of alternative scheme.That was based evidently on the statement made on behalf of the Board of Trade, and if hon. Members would look at the evidence that was given before that Committee they would find that Mr. Llewellyn Smith, speaking on behalf of the Board of Trade said—I desire to avoid expressing any general opinion of the Board of Trade on this very controversial question of the comparative advantages of public and private management. If it were possible to arrive at some scheme which would combine the advantages of public control with the elasticity and initiative of private enterprise you would have found the ideal solution of a very difficult problem, but that is not one upon which I am here to give any opinion.He ventured to submit that the question of leasing as against working had never really been considered by any Committee of the House, and that Members of the Committee who reported last year would themselves be the first to say that the proposals now before the House were not put forward in accordance with any recommendation they made. Although the Instruction which he had placed on the Paper could not be moved, he hoped the right hon. Gentleman the President of the Board of Trade would consider very carefully whether he was going to force them to have a private company thrust upon the ratepayers of London without any opportunity of the House considering the terms and conditions.
§ MR. J. WARD (Stoke-on-Trent)
said that as a new Member of the House he viewed with pleasure and admiration, and with some amount of jealousy, the special pleading of the hon. Member for Dulwich; but he thought Members both young and old would agree that they never anticipated that the President 459 of the Board of Trade would run the hon. Gentleman such a race, especially in face of some previous discussions that had taken place in the House in regard to this particular subject. He had no intention of making quotations from some of the speeches delivered by the right hon. Gentleman, but if he did so it would show how easy it was to answer the foremost of our statesmen, no matter to which Party they belonged, by their own previous statements. This was not the Bill of the London County Council that they were considering. They were bound, whatever might be said by the President of the Board of Trade, to read into its clauses the expressed and published intentions of its present promoters. It was utterly absurd to pretend that if the Bill as it stood were sent to a Committee, as was suggested by the President of the Board of Trade, the present County Council would accept it as a solution of this particular problem. They were going considerably to modify some of its clauses, and some of its principles they had expressed their intention of entirely removing. What was intended to be a subsidiary sub-section of the Bill was now to be made its main feature. The right hon. Gentleman would have been much better advised if he had suggested to the House that, as this was not the Bill of the present promoters, it would be much more reasonable and much more intelligent to refer the Bill back to them so as to enable them to bring up next year a measure based on their proposals—[Cries of "Divide, divide"]—because it was quite clear that the present proposals were not theirs at all. They had heard from the hon. Member for the City of London and others the absolute necessity of preventing snatch legislation. They had been repeatedly told that it was always advisable when there was a sudden change in public opinion that another opportunity should be given to the doctorate to come to a decision on the now policy. He suggested, therefore, that they were only taking what was usually termed a reasonable position—a conservative position—when they asked the House to reject a Bill which was repudiated by its original promoters and was now promoted by those who intended to alter its character entirely.
460 And, it being Eleven of the clock, the Debate stood adjourned.
Debate to be resumed upon Monday next, at a quarter past Eight of the clock.