§ Ordeir for Second Reading read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."
§ Mr. KING
I am afraid I shall lose my right of addressing the House if I give way to the hon. Gentleman, but I will make a few observations on this Bill which will enable him to know the line he ought to take in reply. This is an extremely good Bill, at any rate in its object. The object is quite admirable, and in saying that at once I say it without any qualification. I wish to see achieved that object, which is to substitute for the illuminating standard of gas a standard of heating 1442 power. In the old days when we had open flame burners, and people used gas for lighting purposes with open flame burners, it was of the utmost importance to have good illuminating gas, but now there are hardly any illuminating burners of that kind. We use gas with mantles from which we obtain light from heat and not really from illuminating power. We also use a great deal of gas for cooking and stoves, and it is altogether right that we should alter the standard of power. Why is this done at the present time? It is not emergency legislation at all. It is legislation that is very belated, very belated indeed, and which ought to have been carried through long ago. It is all very well to say that it is better to carry it now than to put off the time. I think very likely that is so; but what does this Bill do? It enables the Board of Trade, or in the case of gas undertakings which are under local authorities the Local Government Board, to make Orders by which any gas undertaking may alter its standard of power. That is quite right; but how many gas undertakings are there? There is an enormous number in this country, and they will all be immediately benefited to this extent: that they can at once, if they get an Order made on their behalf, reduce their illuminating power with very great advantage to themselves, and also to the consumer if they reduce the price to the consumer. The result will be that as soon as this Bill is passed you will have applications from all the various gas undertakings in the country for Orders in this direction, which, no doubt, will be quite a right policy. How many gas undertakings are there? We have a very large and voluminous Return issued every year. The last one was ordered to be printed by this House on the 26th July, 1915, and I presume that very few Members have really studied this very long and really rather uninteresting and unnecessary Return. I will give to the House the total at the conclusion of the Return, which shows the number of undertakings, and which also shows what a very great industry this gas industry is. There are 831 gas undertakings in this country. Are they all coming at once for Orders to the Local Government Board, or the Board of Trade? That is the point to which I hope my hon. Friend will reply. If we have 831 applications from the various gas undertakings in the country for Orders in this direction immediately this Act is passed, are you prepared to give them Orders at once?
§ Mr. KING
I should very much like to know that. I will put my point in another way. If you are going to pass legislation of this kind, it is for some immediate purpose. What is it? So far as I can make out it is only to issue Orders. There are 831 undertakings which are available for receiving these Orders, and how are you going to cope with them all at once? It is a very important point indeed whether you are going to use the powers in this Bill at once, and, if so, whether you are in a position at a time like this to cope with them adequately. No less than £160,000,000 are invested in these gas undertakings in the country. The expenditure for the year is £28,000,000, so that, of course, in order to alter the whole basis of the gas industry, as this Bill does, you are not undertaking a small task, and I think we ought to have some assurance as to how this Act is to be worked, why it is wanted at the present time, and whether the authorities are in a position to deal fairly with all the localities at one time.
§ Mr. KING
We may have a satisfactory answer. I come to another point. We have here in Sub-section (2) of this Bill a very important provision, which says:
"In considering the expediency of making such an Order the Department shall have special regard to whether the undertakers have erected—and worked or are prepared to erect and work—suitable crude benzol recovery plant for the production of benzol and toluol."
What does that mean? It means this: That these undertakings, companies, or local authorities which are to have the benefit of these Orders are to be encouraged to go into the chemical trade—a very desirable thing at this time—for the purpose of obtaining as plentifully, as possible the raw materials of munitions, especially explosives, and the raw materials of many of our industries for which we have in times past been largely 1444 dependent on Germany. What does it mean? It means that gas companies, which were not established to do chemical work primarily and principally, are to be encouraged to set up plants. Are all of these 831 undertakings to be encouraged to set up special plants for the production of benzol and toluol, and to be told that they are not to be allowed to have the benefits of this Act unless they do? That is a point which really is very serious, because it may mean, and very possibly will mean, that if there is an enormous increased production of all these byproducts the price will go down, and there will be an over-production of them. I have no doubt that is a matter which has had some consideration at the hands of the Board of Trade—indeed, I hope so. We ought to have some indication of what this policy means. I will go further and ask whether, when you are encouraging companies to make chemicals which have had Acts of Parliament given to them to make gas, and for that purpose alone, are you going to keep the accounts separate? You ought to keep the accounts of the gas companies separate for their gas undertakings and for their chemical undertakings. Otherwise, you would be allowing them to give to the public at no reduction of price possibly an inferior article, while all the time they are speculating and possibly losing very heavily in their chemical industry. It is all very well to say that in this way we are going to encourage the chemical industry of the country, and that is a very good object. I quite admit it. These companies, however, were formed and had special privileges given to them for the purposes of gas, mainly or solely, and so I think the public ought to have some assurance and some safeguard that their interests as gas consumers are going to be properly conserved. How does the hon. Gentleman propose to safeguard the rights of the public as consumers of gas? So far as I can make out, there is in the Bill no provision at all for that object. I do not see one. I have tried to draft a provision of this nature which I shall put on the Order Paper, and which we may possibly consider in Committee. It may be that the hon. Gentleman may be able to satisfy me that that is not necessary. I may, of course, here refer to the sliding scale. All gas companies are now under the sliding scale; which means that if they reduce the price of gas, then they can increase their dividends payable to their shareholders, and 1445 only as they reduce the price of gas may their dividends be increased. That, of course, is an excellent provision, and a great security to the public. But there is no reference to a sliding scale here. The illuminating power, the quality of the gas, may be reduced, and the public may be getting an article which is going to be produced very much more cheaply by the company; but there is no provision whatever that I see that when a cheaper article is given to consumers by the company then the consumers are to pay less, or, indeed, to get any benefit at all. There is another point on which I think there ought to be some assurance given. Of course, this Bill is not entirely clear, because it leaves a good deal to the Board of Trade or the Local Government Board as to the forms and conditions under which the Orders will be granted, and perhaps quite rightly. I have thrown out a few points which I think worthy of consideration, and I hope we shall have some answer to meet possibly the objections and difficulties which I foresee, and which I think are quite real and worthy of attention.
§ Sir NORVAL HELME
I rise to support the Bill. The fact is that at the present time it may be taken that some 95 per cent, of gas is consumed for heating purposes and through the incandescent lights, 5 per cent, only remaining which is used for purely illuminating purposes. Hence, in asking the House to accede to this Bill, I think the public are to be advantaged by the principle that is now before it. As a matter of fact, in many of the recent private legislation Bills application has been made for powers, which have been granted, to vary the standard which has been given in former days, and when you remember that the greater the calorific power of the gas the more illumination you get from it, from the incandescent burners, it makes a great difference to the arguments which have just been pressed. There is economy for the public in the use of such burners, and I think, therefore, that we should support this Bill, and that we can trust the Government to see to justice and equity in its administration. The old tests are obsolete. The prescribed quality of the gas, which had to be fourteen candles, tested in a surface burner and so on—all this test was very difficult. At the same time we now have an advance in the system of illumination, and the Government are requiring the extraction of toluol, thus reducing the illuminating power of the gas supplied under the old 1446 standard. I think the Government is to be congratulated that now, in this Bill, for which it asks the consent of the House, it is going to bring the practice of the day into harmony with the general law. I beg to support the Bill.
§ Sir W. PEARCE
We do not often find a Bill dealing with gas companies generally: but I welcome this Bill to-day because I think it does deal with a point that really requires a change. The substitution of the calorific power standard for illuminating power is, of course, some small financial help to gas companies. On the other hand, I do not know that the public is disadvantaged in any way. The gas companies certainly require some return for the large operations many of them have undertaken at the instance of the Ministry of Munitions in increasing the supply of benzol and toluol, and I am glad to see that this is an important condition in the Bill. Although I say this, I do feel very much the point which was made by the hon. Member opposite, that in view of the fact that these operations of the gas companies are becoming very, very considerable, and in come cases more than considerable—almost a larger production than the gas itself—I should have been glad if the Government had included in this Bill a Clause dealing with the financial separation of the two operations. It really is required in everybody's interests. It is required in the interest of the gas companies, so that they should know exactly how much profit they are making on their various operations; in the interest of the public and in the interest of the consumers. The point is one which has often been raised, but there has seldom been an opportunity of introducing it into a Bill. Here we have a Bill which deals with the gas companies generally, and although I welcome what the Bill contains, my complaint is that the Bill does not include the other point for the a lvantage of the whole country.
§ Mr. W. THORNE
I would like to ask the right hon. Gentleman in charge of the Bill whether the Government intend to make provision to give gas consumers some compensating advantage for the value which they lose by this Bill, which is of general application. If I remember rightly, when the South Metropolitan Gas Company, the Gas Light and Coke Company, and one or two others of the gas companies of London, were promoting private Bills for the purpose of reducing the illuminating power of their gas from 1447 sixteen to fourteen-candle power, there was a Clause in all these Bills which made it compulsory for the gas company to reduce the price of gas 2d. per 1,000 feet. The reason that concession was made was that by reducing the candle-power from sixteen to fourteen a saving of many thousands of pounds was made by some of the larger gas companies. It was the purification for the extra two candle-power that cost the companies a good deal of money. At one time a great deal of Cannel coal was used for illuminating purposes, and in consequence of there being a shortage of this coal the companies used other coal. The result was that it saved the companies many thousands of pounds, therefore the consumers were entitled to the reduction of 2d. per 1,000 feet. If this is going to be of general application, the Government should see that these particular gas companies reduce the price of gas at least 2d. per 1,000 feet. It is upon those lines that the hon. Member for North Somerset has raised this particular question. I do not know whether there is anything in the Bill giving the Government power to reduce the gas 2d. per 1,000 feet; if not, I think there should be. If it had not been for the introduction of gas-mantles the gas company would not have been allowed to supply gas of the quality they do now. If you were to discard your gas-mantles and fit on old burners you would soon find out what I might call the various kinds of impurities that pass through in consequence of the candle-power being reduced. I contend that the consumer is entitled to a reduction of 2d. per 1,000 feet in consequence of the change to which I have referred.
§ Mr. PRETYMAN
I am glad I did not rise to explain the Bill in the first instance, or I should have had no opportunity of replying on the points raised. I think all the points which have been mentioned have been met in this Bill. The object of the Bill is twofold. First of all, it is a war measure in that the present object of the Bill is to do everything possible to induce gas companies to increase the supply of benzol and toluol required by the Ministry of Munitions. The reason that the Bill has been drafted is that we wish, and intend, during the War to confine the permission given to companies which are prepared to erect plant for the purpose of producing benzol and toluol, which are badly re 1448 quired. I am glad to see from the speeches which have been made on this Rill that the House itself supports the idea of this change being made permanent—that is to say, it is quite obvious that it is quite out of date to insist upon the quality of gas being gauged by its illuminant power simply as gas in old-fashioned burners. My hon. Friend who has just spoken pointed out that this is a matter of past ages, for the old class of burner in an inhabited room is a thing to be by no means encouraged, but rather discouraged, because, from the impurities of the gas, it is a distinct danger to health. Many of us remember the kind of atmosphere we used to encounter in places of amusement, for instance, where the light was obtained from the old-fashioned gas burner, and all must agree that any legislation which intends to prolong that state of things was not only mischievous, but very much out of date now, and that we ought to have altered our standard long ago. The standard has been altered in this sense: that in all the separate Orders which have recently come before Parliament—and that covers already a very large proportion of gas companies and includes the Gas Light and Coke Company, which had an enormous output of something like 13 per cent, of the whole output of the country—the companies are now under the system to which my hon. Friend referred. Therefore, we are only really carrying out a principle of which Parliament has already approved, and which it inserts in the private Bills which gas companies bring to this House.
We do not, however, propose to extend the principle generally until after the War, for the reason which I have given; though we take power to do it, and it is our intention to do it. We do not intend to carry it out during the War beyond the giving of Orders where those concerned will erect this plant, for the first object we have here is to provide for the necessities of the War. We must, therefore, defer till afterwards subsidiary considerations. We thought, however, we had better take the power, if the House would consent, for general purposes. Both during the War and after the War the question will certainly arise as to whether a company will derive considerable advantages by this change, and how far the consumer should share those advantages. The power that is taken in the Bill gives to the appropriate Government Department, which hon. Members will see 1449 from the Bill is the Board of Trade in the case of private companies, and the Local Government Board in the case of public authorities who are undertaking to supply the gas, authority to hold an inquiry before giving an Order. In holding that inquiry it can examine into the question of the advantages which the gas company or the public undertaking will derive from the changed standards. The Departments will be certainly within their powers, and they will certainly exercise the powers, to examine into the advantages obtained, and as a condition of giving the Order, they will be able to insist that any proper and reasonable reduction in the price of gas shall be included. I think, therefore, that meets the point which has been raised. I must point out now, however, that it may be in the Orders which are made during war—in some cases certainly—there will appear advantages which the company will derive on account of this particular situation or opportunities in putting down plant which will be required for national purposes during the War, but which may not in all cases remain profit afterwards, because there may not be such a demand for the products of toluol and benzol. In some cases there may be more, and in some less. That will be a point which the inquiry will have to embrace. It may be that on that point the company will be able to put forward the plea that while it derives profit from the erection of the plant during the War, that plant will be of very little use to it after the War. Up to the point to which that applies that will have to be taken into consideration, and I think my hon. Friends will agree that that could not possibly be left out of account.
As to the point raised by the hon. Members for North Somerset and Lime-house, who spoke in favour of the keeping of separate accounts, I shall certainly have it considered. I would point out, though, that in the selling of gas a company or a public authority takes into account all the profits which it makes by the by-products. The production is treated as one. Perhaps my hon. Friends would like to confer with the officials of the Board of Trade upon the matter, for it does seem to me to be rather necessary to keep these things as one in order that the real ultimate cost of the gas may be arrived at, and in estimating the price at which it should be sold. The prime object of the company, and the object which 1450 it has received the authority of Parliament, is to supply the public with gas, and any subsidiary operation which the company undertake apart from the main undertaking should be credited to the main undertaking, and should be an element in deciding what price the company is entitled to charge for its gas. Though it may be desirable or necessary as a matter of account, I should rather like to go into that matter in detail, for I do not quite appreciate the reasons for the separation of the accounts; and we get back to the fact that whenever chemicals may be produced as by-products that the result, whether it be profit or less in the production of those chemicals, really goes to affect the profits of the company as a whole, and cannot be financially separated from the general statement of accounts upon which the company's rights to charge them is based. I think that really deals with all the points which have been raised, and I think I can undertake that, if the House will be good enough to give authority for this Bill to be passed, that in carrying it out that the Government Departments will have regard to the considerations which have been raised here.
§ Sir R. ADKINS
May I inquire whether the Bill applies to companies which already have special departments for the treatment of benzol or toluol?
§ Mr. PRETYMAN
Certainly. I will certainly see that if the words of the Bill do not cover that, that they shall cover it.
§ Sir R. ADKINS
I take it from the speech of the right hon. Gentleman that this question of the separation of the accounts is not to be inserted in this Bill, but that after the War it will be considered.
§ Sir W. PEARCE
I by no means contended that any profits made in the manufacture of by-products should not go in the reduction of the price of gas. That is what I desire. What I did point out, however, was that these operations were becoming so extensive and complicated that unless separate accounts were kept it would be impossible for any undertaking to know exactly where they were in regard to that particular manufacture. Unless there are separate accounts kept from the gas undertaking, when the gas companies make these other substances, 1451 it will be quite impossible for either the gas company or the Government to know how they stand in the matter.
The necessity for the separation of accounts has come home very much to me just lately. The chemical industry has been made a controlled establishment, especially with regard to productions such as sulphuric acid, and many large companies are making those very chemical substances that the Government control. There is no separation of accounts in those large chemical operations of the purely gas operations of a gas undertaking. It has been impossible to treat them in the same way, so that we have to-day a large number of private traders making certain things similar to what gas companies are making, and the private traders are controlled, whereas the gas companies are out of control. In the discussion last week it was pointed out that one set of operations are subject to 80 per cent, tax and the other to 60 per cent, tax. That is by the way. The operations are becomining so considerable that it would be extremely useful to every one concerned if a separation of accounts were arrived at and were insisted upon by the Government.
§ Question, "That the Bill be now read a second time," put, and agreed to.
§ Bill read a second time, and committed to a Committee of the Whole House for To-morrow.—[Mr. Pea.]