HC Deb 07 August 1912 vol 41 cc3303-11
Viscount WOLMER

After that very interesting "last trumpet," I apologise to the house for returning to another subject, which I am bringing forward by courtesy of the Under-Secretary to the Board of Trade. I wish to raise the question of the refusal of the Board of Trade to sanction an Order on behalf of the Newton-in-Makerfield Urban District Council to enable them to manufacture and distribute electricity in their area. This matter is not only of purely local interest, but is important, because forty-one urban district councils have taken the matter up with some keenness and petitioned their representatives in this House on this subject. The point I wish to make is that the Newton Urban District Council in 1903 obtained an Order from the Board of Trade, which was then under different management, empowering the manufacture and distribution of electricity in their district. The council did not take advantage of that Order; they did not feel themselves warranted; they went into the question in great detail and they discovered that there was a danger of financial loss upon the transaction, and they did not avail themselves of the Order, and it was withdrawn by the Board of Trade in 1909. The council applied again this year for an Order to manufacture electricity, and the Board of Trade refused to grant it. The reasons given by the Board of Trade appears to be that in their opinion it would not be a paying proposition, and, consequently, the Order was refused. I want to make this point, the fact that the Newton Urban District Council did not avail themselves of the Order in 1903 shows that they were as they are still a council composed of business men who are in no way anxious to plunge the ratepayers into any financial loss. In 1903, after a close examination, they felt sure that the scheme would not pay. Hon. Members may ask what has happened since then to warrant the supposition that the scheme would be a paying one. In the first place, the population of the district has increased largely, one or two works have come into the district, and, more important than anything else, the manufacture of electricity is a great deal cheaper than six or seven years ago. That is a fundamental fact which has entirely altered the situation and which the Board of Trade refuse to recognise.

7.0 P.M.

I urge that the Newton Urban District Council is composed of business men who are large ratepayers and who have no conceivable object or desire to place the burden upon the rates, and that the former caution they showed in this matter is an additional reason why they should be trusted, and that it is not the business of the Board of Trade to step in and prevent them carrying out their own administration as they desire. The rates are very low; they are only 6s. 3d. in the £, and the rate of the urban council itself is only 1s. 10d. In gas and water enterprises they have been exceedingly successful; they have every facility for the manufacture of electricity in the district, which is on the top of a coalfield and the manufacture can be carried out at the minimum of cost. One of the reasons for refusal alleged by the Board of Trade is that there is no sufficient guarantee that a definite amount of electricity will be taken if the local council manufacture it; but a definite guarantee is a very difficult thing to get, and I would like to ask the representatives of the Board of Trade how many urban councils have obtained guarantees before they could get an Order for a like purpose, and what were those guarantees, because, after all, what the Newton Urban District Council desires to know is what standard it is they have to fulfil before they can be successful in their application to the Board of Trade. As it happens, the council have got very considerable guarantees, and guarantees which, in their opinion—and after all they are the people who stand to lose if the proposition is not successful — absolutely justify them in undertaking this scheme. The Vulcan Foundry have promised to take 2,000,000 units per annum if it can be supplied at ¾d. per unit. The Council can supply electricity in bulk at 2,000,000 units for two-thirds of a penny per unit, and they are absolutely satisfied with this The Vulcan Foundry would be prepared to make a contract with the council for the supply of electricity at that price extending over a certain number of years. The Undersecretary said, in answer to a question, a few weeks ago, that in the opinion of the Board of Trade this council ought not to be dependent upon the custom of one or two big consumers, but if you have a contract with them you are absolutely sure of their custom. I should like to ask what further guarantee the Government want. What guarantee can anybody setting up an enterprise, of this sort get which is superior to the one which the Newton Urban District Council have been able to get from the Vulcan Foundry in this matter. Other large works have also intimated that they will take a supply of the electricity. The whole, district is growing; new factories have been started, and rows of houses are being erected every year. Surely that is ample guarantee that the demand for electricity will not be less to-morrow. The point I want to put to the House is that you have got here the Newton Urban District Council, composed of business men and large ratepayers themselves desirous of supplying electricity to the big works, and with every facility for doing it; you have big works desirous of purchasing electricity from the council, and the Board of Trade steps in, and says it shall not take place.

On what principle of Local Government can that attitude be justified? Surely with all their wisdom they cannot know as much of the circumstances of the case as the man on the spot. As the men on the spot are prepared to take the risk, and have the largest stake in the matter, and have shown that they are not gamblers and prepared to speculate, but are cautious men, and individual members of very big firms in the district, or have been connected with local government for a great many years; as they have shown they can be trusted not to abuse their powers, I ask the Parliamentary Secretary to the Board of Trade by what right do the Board of Trade interfere with this elementary piece of local self-government? Another complaint I have to make against the Board of Trade in their attitude with regard to this matter is that they have refused to tell £he Newton Council what guarantees they have to get before the Order is granted. They have refused to say what supply they consider a reasonable one; what cost of electricity they think would be safe, and they have simply said that the estimates put forward by the Newton District Council are not satisfactory, and they have refused to give any indication as to the direction in which they should be altered or in which the Board of Trade would like to see them amended. The Property Owners and Shopkeepers Associations in the district have passed resolutions approving of the application of the urban district council, and I have here a large petition which I shall present to the hon. Gentleman, signed by several hundred ratepayers in the district, petitioning the Board of Trade to grant the application. I am informed the council are ready to have a referendum and to have a special ballot of the ratepayers on the subject, and surely, if the ratepayers are anxious to supply their own electricity, why on earth should the Board of Trade step in and stop it? I think the desire of the district council to manufacture its own electricity is a very reasonable and a very proper one. They have every facility for so doing, they know the district is growing, and that whoever gets the monopoly of manufacturing electricity in the district, will get a very good piece of business. It is much better the local authority should make the profit and that the ratepayers should be relieved thereby than that it should go into the pockets of some individual persons. I am all in favour of municipal trading in matters of that sort, and always have been.

The council's estimates as to the cost of manufacturing electricity have been prepared by most experienced firms, but, if the Board of Trade think those estimates are not on sound lines, and they mention any other experts who ought to be consulted on the subject, I am certain the Newton Urban District Council would be grateful. If they would give it the slightest lead, the slightest explanation, or the slightest help in the matter, I am sure the council would follow it up. It is because this is such an opportune moment that I am bringing it before the notice of the House. The manager of the Vulcan Works, which employs over 1,700 men, has stated that, if they are unable to get their electricity from the urban district council, they will have to set up new plant to manufacture it themselves. At the present time the London and North Western Railway Company are hesitating as to how they will get their supply of electricity. They want a very big supply, I believe it is over 2,000,000 units, and I am not aware that they have decided how that supply shall be obtained. Therefore, if the council are prevented from supplying electricity at this juncture, some of their best customers will be shut off, and they will lose a great opportunity. If the Order is granted there will have to be a Local Government Board inquiry in order to raise a loan to set up the plant, and the whole thing will have to be gone into there and then on the spot. It is really not an extravagant demand that the Board of Trade should grant an Order which they granted nine years ago when the circumstances were far less favourable. I think it is a small request that they should grant that Order now, and that the almost unanimous desire of the people of Newton should be allowed to be given effect to in this matter. About ten years ago, when the council started manufacturing their own gas, many of the local firms in the district were manufacturing their gas, but, as the council have done it so efficiently they have given up their private supply. The same thing would happen in regard to electricity, and I therefore ask the right hon. Gentleman to reconsider his non-possumus attitude and to allow the ratepayers to express their view in this matter.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. J. M. Robertson)

I congratulate the Noble Lord on the pertinacity with which he has spoken for a very pertinacious section of his constituents. But the Board of Trade cannot admit that mere importunity should be allowed to override principle. In the first instance, this district council circularised a number of other councils in order to bring pressure to bear on the Board in the hope that it might induce it to do what, after due deliberation, it had come to the conclusion it should not do. The Noble Lord speaks of the Order granted in 1903 which was never used. I do not know under what circumstances that Order was granted, or whether the Noble Lord's predecessor brought his influence to bear on the Board at the time, but the fact remains that for six years after the Order was granted the Board did not use its powers, and that surely justifies the Board in being a little more vigilant before granting another Order.

Viscount WOLMER

I ought to have said that the Board undertakes to make use of this Order at once if it is granted.

Mr. ROBERTSON

I am alluding to the fact that the Order formerly granted was not made use of, and therefore the Board of Trade is bound to be more careful about the issue of such Orders in the future. The Noble Lord has given a very ex-parte statement of the case. He has told us at least five times over that the council have every facility for manufacturing electricity. Can the Noble Lord have gone into the question of facilities? I ask that because on investigation we find that they have no facility for a cheap water supply, and that is a very essential facility. The Noble Lord made allusion to the position of the Local Government Board. Does he know that that Board absolutely concurs with the Board of Trade as to the inexpediency of granting this Order?

Viscount WOLMER

I am not aware of that.

Mr. ROBERTSON

The fact is so, at all events. What does the Noble Lord's argument amount to? It amounts to this. The members of the district council are business men. They want this Order, and they wonder why on earth the Board of Trade should intervene to prevent it being granted. My answer is that the Board of Trade interferes by right of its statutory powers. The Noble Lord is a warm advocate of municipal trading—of speculative and unrestricted municipal trading. He suggests that these people have money to lose, and may be trusted to do nothing reckless. But is he prepared to say that this speculative municipal trading should be put in the power of any authority in the land? I can only reply that his argument seems to imply that there should be no supervision on the part of the Board of Trade or the Local Government Board. I cannot agree with him. Those bodies have certain duties, and they must exercise them. The Noble Lord says that his friends can give guarantees, and he complains that the Board of Trade do not state what guarantees are required or what standard is required. It is not the business of the Board of Trade to draw up a table of ready-reckoning for the municipal authorities, stating the exact amount of support they need for any scheme they want to run. I do not see how any such arithmetical standard could be drawn up in that connection at all. The Board of Trade must pursue a broad, common-sense policy, and must make an inquiry as to what are the chances of any given scheme succeeding, and what is the evidence for any facilities for the scheme. What are the facts in connection with this matter? After the Order was first refused, a deputation came to the Board of Trade, which I met. In the course of that discussion I put this question to the consulting engineer, who, I take it, was the most important mouthpiece of the council in the matter. I put this point:— Observe on your statement of the improved position of the Council —The district council had argued that their position had improved— that if the Vulcan Foundry fail you, you are practically derelict, because you are dependent very substantially on one big consumer. The engineer replied:— If terms could not be arranged with the Vulcan Foundry, there would be no proposition to spend £26,000 or anything like that amount. I said:— Then you are staking your municipal expenditure on one customer?—On obtaining that customer, yes, so far us that expenditure is concerned. If that consumer were not obtained the expenditure would be very considerably diminished. There was no evidence of a general demand for electric light.

Viscount WOLMER

They offered to make a contract.

Mr. ROBERTSON

No such statement was made to me. The manager made a conditional promise. There was no guarantee. It depends on the rate at which electricity could be supplied.

Viscount WOLMER

If a promise in writing is made of a contract by the foundry, will the Board of Trade reconsider the matter?

Mr. ROBERTSON

It is a conditional contract of which the Noble Lord talks.

Viscount WOLMER

They cannot make a contract until they get the electricity.

Mr. ROBERTSON

Quite so. What is the Board asked to do? It is asked, if one big consumer will promise to take so much electricity on the condition that it is supplied at a certain rate, to authorise this locality to set up works to undertake to do it, when we have no reason to believe that they can supply it. All other consumers are in a still more speculative position than this particular one. Who would give a municipality, depending for success on the undertaking of a single consumer, a contract for an indefinite period? On the withdrawal of that one supporter from the municipality the scheme would be derelict. There is no general demand for electricity. The district has a cheap gas supply, owned by the municipality. So far as I can see, looking at it from the outside, this desire for electric light is not so much a desire to supply electric light to the inhabitants. The engineer did not suggest that there would be more than 500,000 units wanted for the whole of the private consumption of the district. This appears to be more a matter of preventing some other supply. If there is an indication that there will be a certain number of consumers, and if the undertaking should really rest on the possibility of a number of different, consumers, the Order may be reapplied for. The Board of Trade would be a very careless guardian of the interests of the ratepayers if, on the speculation of getting one large consumer—

Viscount WOLMER

I have given the names of three considerable firms.

Mr. ROBERTSON

I have all those names before me. The engineer could not say in a single case that there was anything like a certainty of getting a supply, and I have read from the report of the interview of the deputation my own express proposition:— if the Vulcan Foundry fail you, you are practically derelict, because you are dependent very substantially on one big consumer. If terms could not be arranged with the Vulcan Foundry there would be no proposition to spend £26,000 or anything like that amount. I am not casting any doubts on the business faculty of the members of the council. They say very frankly, "We are hoping to land a big fish, and if we do not we will spend less money." But this speculative state of things is not a state of things that the Board of Trade desires to see encouraged in regard to municipal electric supply. The object is that municipal authorities should be free to supply electricity when there is a fairly widespread demand and a reasonable prospect of solvency on the part of the concern. In the circumstances I have described, going on with the undertaking would mean a possible mortgaging of the interests of the ratepayers for a scheme which might fail, and which might become insolvent, and it is the duty of the Board of Trade to prevent any such risks taking place. When the Noble Lord said the Board refused to give any guide at all to the council as to what is required he is surely misrepresenting them. We discussed the matter quite amicably. We let the council understand that what is wanted is a reasonable security and a certain distributed consumption. As business men they are well aware that one large consumer is not enough for a municipality to run an undertaking on when there is no prospect of general support from other big consumers or from private consumers of electric light. These are the main points in the case, and I am sure the House will agree that the Board has acted as it ought to have done.