§ (1) Where by virtue of any Act or Order confirmed by Act of Parliament regulating the undertaking of any company, authority, or person authorised to supply gas in any area in the United Kingdom (hereinafter referred to as the undertakers), the gas supplied by the undertakers is required to be of a prescribed illuminating power, and the undertakers are liable to penalties in the case of the illuminating power of the gas provided by them being less than, or being less by a prescribed extent than such proscribed illuminating power, then on application being made by the undertakers the appropriate Government Department may, if they think it expedient, and subject to such conditions, if any, as they consider proper, by order—
- (a) substitute for the prescribed standard of illuminating power a prescribed standard of calorific power;
- (b) exempt the undertakers from penalties in respect of a deficiency in illuminating power and substitute for the provisions imposing such penalties provisions imposing penalties in the case of deficiency in calorific power; and
- (c) substitute for the provisions as to testing for illuminating power provisions as to testing for calorific power;
§ (2) 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.
§ (3) Before making an Order under this Section the appropriate Government Department shall require the undertakers to give public notice in such manner as the Department may consider best adapted for informing persons affected of the application for an Order under this Section, and of the calorific standard proposed to be adopted, and as to the manner in which and time within which objections may be made, and shall consider any objections which may be duly made, and shall where they think it expedient to do so hold an inquiry, and the costs (if any) incurred by the Department in connection with the inquiry shall be borne by the undertakers.
§ (4) For the purposes of this Section' "the appropriate Government Department" means—
- (a) in cases where the undertakers are a local authority, the Local Govern ment Board or the Secretary for Scotland, or the Local Government Board for Ireland, as the case may be; and
- (b) in any other case the Board of Trade.
§ Mr. KING
May I begin by making an appeal to the Parliamentary Secretary to the Board of Trade, who will, if he falls in with what I have to say, facilitate business. On the Second Reading this Bill was very warmly approved. Personally, I welcome it very much. The criticism which I directed to it, which was enforced by the hon. Member for Limehouse (Sir W. Pearce) whose experience and authority in this matter are much greater than mine, was that in' lowering the calorific power of gas and in encouraging gas undertakers to take up chemicals you were going to give the consumers of gas a cheaper article without any assurance that a lower price would be charged, and, on the other hand, that you were encouraging gas companies to go in for a chemical business which they did not understand and which might 1715 not be profitable, but very much the reverse. The Amendments which I have put down—I confess they were hurriedly put together; we have only had two days 'to consider them—are directed with that object.
§ The CHAIRMAN
Do I understand that the hon. Member is not moving the first two Amendments on the Paper?
§ Mr. KING
I am going to ask the hon. Gentleman whether he will not move to report Progress, and, if possible, bring up Amendments to attain my object, in which case, so far as I am concerned, I will let the Bill go through unopposed at eleven o'clock. I do not know whether I can have a reply to that appeal.
§ The CHAIRMAN
I think the first Amendment which the hon. Member has moved is a purely drafting one, is it not?
§ Amendment, by leave, withdrawn.1716
§ Mr. KING
I beg to move, at the end of Sub-section (2), to insert the words, "In any Order made under this Section, which is made having special regard to the production of benzol and toluol, conditions may be imposed on the undertakers that they shall show by their accounts the relative cost of their production of gas and of benzol and toluol, and to preserve the rights of the consumers to a supply of gas at a cost commensurate with the cost of the production of the gas supplied."
May I appeal to the hon. Member either to put off this Bill or to give an assurance that if we allow it to go through at once that he will consider our point of view, and will not only consult the gas undertakers—I know they are against separate accounts and any safeguard we should propose for the consumers—but also those who represent the consumers. I know there are technical and plausible difficulties in the way of the proposals I am making for separate accounts. I know the one object is to get as large a supply of chemicals at once as is possible. Will he consult not only with gas undertakers and the Ministry of Munitions, but also with some definite authoritative people who can speak for consumers and trades, such as the chemical trade? I think that is a fair offer to make. If he will do that, I will not press the Amendment.
§ Sir W. PEARCE
May I add one word before the hon. Gentleman replies to the remarks of the hon. Member for Somerset (Mr. King). The production of benzol and toluol is likely to continue after the War. The war conditions which have necessitated the Government increasing the production of these substances justly encourages gas works to embark upon chemical operations. For many years past their chemical operations have increased in magnitude. It is no good disguising the fact that this Clause will accentuate the position. The whole of the war conditions are accentuating it. I know one gas company in particular—I will not mention its name—which has already under consideration whether the production of benzol should not be carried on for the production of aniline, and the production of toluol should not be carried on for the production of tri-nitro-toluol. The time has come when there should be a separation of accounts. If these operations^ are highly profitable, they will 1717 strengthen the position of the gas companies. If they are not so profitable as the gas company managers think they will be, they will lead to the other result. All I am asking is that the Board of Trade should acknowledge the necessity of separate accounts being kept for these two distinct operations. Gas companies were established originally for the production of gas for domestic purposes only. What I am asking the Board of Trade to do now—they do not do it under this Bill— is that they shall secure by yearly audit that the cost and results of the two sets of operations should be known to everybody—not only to the gas companies, but "to the public and the House of Commons.
§ Mr. PRETYMAN
I should like to meet my hon. Friend opposite (Mr. King) if I could, but I think that when I have stated exactly how the matter stands he will not press his appeal. Since he raised the matter two days ago I have gone into it very carefully, not only with those working gas undertakings or with the Munitions Department, but also with those officials at the Board of Trade whose special duty it is to protect the consumer, who have no interest whatever in supporting the gas undertakings, and who look at the matter purely from a national point of view. My hon. Friend has the very laudable desire that the consumer shall not suffer. I think I express his views correctly when I say that he wishes the consumer to get the full reduction in the price of gas where the undertakers, whether they be a gas company or a local authority who are making gas, obtain an additional profit through the secondary undertakings such as the manufacture of toluol and benzol. I do not think my hon. Friend understands the sliding-scale system.
§ Mr. PRETYMAN
Does he realise that if any profit is made in the production of these by-products, under the sliding scale, for every £l which goes to increase dividends, anything from £4, £o or £6, has to go in the direct reduction of the price to the consumer?
§ Mr. KING
Of course I understand that perfectly. I am thinking of what will happen if there is a loss upon the chemical side. That will prevent the dividend being raised. The dividend not being capable of being raised the price of gas will remain higher under the sliding scale. What 1718 I am really afraid of is the loss that may possibly ensue upon these chemical undertakings, not the profit.
§ Mr. PRETYMAN
I understand my hon. Friend's point. I hardly think the gas company would incur a loss as a result of this undertaking. It is hardly likely that the gas company will undertake secondary operations and incur a loss upon them. I admit it might happen, but I do not think a loss will involve an increased dividend, even under the sliding scale. My hon. Friend's point that under the sliding scale a loss on this might result in higher prices to the consumer is a good one. He is perfectly right in that. It might; but I do not think it is at all a likely contingency. He is perfectly correct in attaching importance to it. I understand that that is also the point of the hon. Member for Limehouse (Sir W. Pearce).
§ Sir W. PEARCE
My point is that unless the accounts are separated it is impossible to tell whether there is any profit—if so, how much profit—or whether there is a loss?
§ Mr. PRETYMAN
I can only say that I have gone into the matter very carefully, and, so far as I am at present advised, I do not see how it is possible to keep separate accounts. It is not practicable. I do not understand gas undertakings, but I do understand farming, and the analogy between them is really complete. I say, without hesitation, that it is impossible to separate exactly the cost of production of any single item on a farm. It must be a question of valuation and nothing else. Both in a gas works and on a farm you have separate production. In the one case of wheat and grain and in the other of gas and toluol. When you are trying to distribute either cost or profit or loss between either of those items, you have to value what passes from one form of production to the other. Whether the one will show a loss and the other a profit will depend upon what value you choose to put upon those items. Therefore it is not and cannot be an exact calculation. The only real test of whether or not a farm pays is the bank book. I have found that from practical experience, extending over a good many years. Exactly the same thing will apply to a gas undertaking. If we were to try to differentiate and even to do it as fairly as possible, I say as a practical man that any real difference upon which legislation could be founded would 1719 be impossible. I am convinced of that after having looked into the matter very carefully. Therefore although I should like to meet my hon. Friend I feel we could not get any further because there we are down to bedrock. I will, however, undertake that if either he or the hon. Member for Limehouse is able to send me any facts or particulars which will disprove what I am at present convinced is not disprovable, we will consider them at the Board of Trade. This is not a universal Bill in which such a change as that suggested could properly be made. It would not be a change applying to all gasworks, because all gasworks will not be under the calorific test. If my hon. Friends will send me particulars showing how separate accounts could be kept, I will undertake to consider them. On the information at present before me I cannot see how it could be done, and I hope my hon. Friend will not press me to insert any such provision in this Bill. However desirable it may be from the point of view they have put, I do not think it is practicable. I hope the hon. Member will withdraw his objection to our taking the Committee stage of the Bill now.
§ Mr. KING
I recognise the very fair and patient spirit in which the hon. Gentleman has replied to me. I am convinced still that I am right, because the hon. Gentleman has chosen surely the one instance—farms—in which it is notorious that no accounts are ever kept. Why, for instance, until just recently have farmers never had Income Tax on the same basis as all the other people in the country? Simply because they have no accounts on which you could base their income at all, because it was felt that it was quite impossible to teach the farmer how to keep accounts. Does not the Board of Trade at present insist that all railway undertakings shall present accounts on certain lines showing what their profits and expenditure, and so on, are in various directions? Are they not all arranged on certain schedules which the Board of Trade imposes? Is it inconceivable that similar schedules should not be imposed on gas undertakings? That is the sort of thing we want.
§ Sir W. PEARCE
I think the hon. Gentleman has hardly realised how large the chemical undertakings of some of the largess gas companies are. What he has said about farming in some degree may be 1720 applied to the small gasworks, but there are gasworks to-day of a larger size which have invested hundreds of thousands of pounds in chemical plant, and which are extending their operations. When it comes to converting benzol into nitro-benzol, and then aniline, these are very large chemical works. Anyone who goes to the Gas Light and Coke Company's works will see an enormous chemical plant which is absolutely distinct from the gas undertaking, and I am surprised to hear the hon. Gentleman say the Department considers this kind of account cannot be kept separate. It is often necessary to-separate the cost of half a dozen articles which you are making in the same factory, and it is not difficult to do, and you are obliged to do it unless you want to find yourself in the workhouse, and you may be making a heavy loss on a particular operation without knowing anything about it. The success of these operations has been questioned very much. I have heard it said, and I do not think it can be disproved, that in certain cases where chemical operations have been conducted, less money is put into the pool in the reduction of the price of gas to consumers. What I am asking is to have this question cleared up. It is a large and a growing question, and it is going to be one of great magnitude. I believe it is in the interests of the gas companies themselves that it should be done, but I am sure it is in the interest of the general public, and I am sure it is in the interest of the chemical industry, a certain portion of which feels now that chemical operations are being conducted by gas works, which really are of no profit to the gas company and yet set up a competition which it is impossible to meet. If it is to the public advantage for the gas companies to continue this operation everyone will submit, especially in war time, but I feel very strongly that it is high time that these accounts, especially when chemical operations are carried on on such an extensive scale, should be separated from gas accounts, and I am convinced from the instances I have in mind that it is quite feasible. The hon. Gentleman has been very kind, and is prepared to reconsider the case if proof can be given him, and I ask him to consider the particulars of two of the London gas companies, the Gas Light and Coke Company and the South Metropolitan, and he will find that their chemical operations are really of enormous magnitude. When 1721 he realises their size I hope he will come to my opinion, that it is full time the accounts were kept separate and that the financial result is known.
§ Sir D. GODDARD
There are very few cases where gas companies are manufacturing these chemicals that my hon. Friend has mentioned. In London it is only the very largest companies which could do it at all. In the cases he has mentioned there might be some reason for having a working account made out, but I think he will find that where gas companies are producing these chemicals in that way they keep separate accounts. But that is not at all what the Bill proposes. The Bill is not dealing with these details. It is simply a process in the gas making by which certain things may be produced which are not now produced. It is simply an extension of the washing of gas in a certain way so that these toluols and products of that kind can come out and be utilised for the nation at present. Out of the large number of gas companies or gasworks in the country you could count on your hand, or certainly on your two hands, the number which go in for more extensive operations than are proposed in this Bill, and you could no more give a detailed account of the cost of washing gas in order to produce toluol and benzol than you could do it for producing tar or any other products which are produced in the ordinary processes of gas manufacture. It should be remembered, too, that even now almost all gas companies produce sulphate of ammonia, but they are not required under any Act or power of the Board of Trade to render specially separate accounts of the cost of making it. They may lose or they may gain on it, and the gas consumers and shareholders are, no doubt, affected in that way; but they cannot produce separate accounts, and I do not see for the life of me, though I am acquainted with the processes, how you could segregate those processes from the general processes of a gas works and say it costs so much or you lose so much. It is not practicable to do it. If there were powers to carry those processes much further into detail, as the hon. Member has indicated, and to manufacture aniline and other things, it might become a question. But that is really going into a different industry altogether. It is done, but it is only done in very few cases. I do not know whether my hon. Friend can point out more than two or three gas under- 1722 takings which produce these minute details. I do not think they can fairly come within the meaning of this Bill. Gas accounts could not be divided up as between the cost of making gas, the cost of making tar and the cost of making these distillations from which the other products will be obtained.
§ Amendment negatived.
§ Mr. KING
I beg to move, after Sub-section (3), to insert the following new Sub-section:(4) In any Order made under this Section, due regard shall be had to the interests of the consumers of gas for domestic and trade purposes; and a maximum price to such consumers may be fixed by the Order, which the appropriate Government Department from time to time may vary, having regard to the cost of gas production and other material circumstances.This Amendment is directed to the same point, but in another form. I will simply ask: Are you going, in the Orders that you are going to make enabling gas undertakings to reduce the standard of gas for enumerating purposes, to protect consumers directly in any way? [An HON. MEMBER: "The sliding scale."] You do it by no other means than the sliding scale, and the sliding scale only comes into operation when you have an alteration of dividend. What will happen if this Bill comes into force, is that the company will reduce its standard of gas very much, and there is still a great number of people, especially in the poorer quarters of any town, in small rooms who will suffer very severely by having a much duller light and a very great deal more of abominable gas air, and you will be charging them just the same price as before. You have nothing in the Bill to protect the consumer as consumer, and especially the poor consumer. The only protection comes in when you alter the dividend, and with the increased cost of coal and all the labour difficulties and all the rest of it, an increase of dividend is most unlikely. I must therefore appeal most strongly for some consideration of this point of view. In the Bill as it stands there is nothing whatever to protect the consumer, and that is why I move this Amendment.
§ Sir F. FLANNERY
My hon. Friend appears to have quite insufficiently equipped himself with knowledge of the 1723 subject. He does not appear to understand the meaning, the effect or the scope of the sliding scale, which is in the constitution of practically every gas company's Act of Parliament. The sliding scale may be described in this way. No gas company subject to it can increase its dividend unless it reduces the price, and reduction of price must necessarily be the forerunner of an increased dividend. Gas companies are just as desirous of giving good dividends to the shareholders as any other company, and if the dividend of the shareholder is absolutely dependent, as it is, upon cheapness of gas the protection which the hon. Member desires for poor consumers is already secured. The object of this Bill is a national object. I have personal knowledge of the grave difficulties which existed at the outbreak of the War in obtaining explosives. The Government had to refer to gas companies, as well as to other manufacturers, and to ask them to modify their manufacture in such a way as to increase the cost and reduce the possibility of profits for national purposes. The gas companies responded. They acted, on the whole, most patriotically, and the result has been what we now witness in France and what we read of—an unlimited supply of explosives. Anything in the direction indicated by the Amendment, which would interfere with the gas companies in that patriotic endeavour, is something which is to be deprecated and opposed. If the Amendment were carried, it would tie the hands of gas companies and reduce their power of national service and would add a grave injustice to them, which, after all, is a secondary consideration as compared with the national consideration. Every con of coal which is burnt in the ordinary way is burnt as a national loss, from the point of view of explosives. Every ton of coal which is carbonised and turned into gas is at the same time serving for illumination, serving for heating, and serving for a national purpose in regard to explosives. I do appeal to the Committee to do nothing, and to entertain no suggestion which would have the effect of increasing the direct consumption of coal by ordinary burning, and of reducing the use of coal through the medium of gas for the purpose of manufacture and heating, for which it is now available, whilst at the same time it is being used for the urgent national service with which the Committee is familiar. I will not detain the House with technicalities, though 1724 there are many, which, if added, would have helped to strengthen my argument. I hope for the general [...]easons I have given the Committee will reject the Amendment of my hon. Friend, if, after he has heard the explanation, he does not see that it would be wise and patriotic to withdraw his Amendment.
§ Mr. BRUNNER
The remarks just made by the hon. Member (Sir F. Flannery) seem to me to be quite irrelevant to this proposal of the hon. Member for North Somerset. They may have been absolutely correct, but they have nothing to to do with this Amendment. The Amendment says that due regard shall be had to the interests of the consumers of gas. It is quite obvious that if the lighting power of the gas is reduced, the poor customers will be very badly hit.
§ Mr. BRUNNER
That is exactly the point I am coming to. Some years age there was a Bill before this House, which I think was the Crystal Palace Gas Company's Bill. It was brought in for the purpose of getting power for gas companies to have a standard of calorific value instead of a standard of lighting value; but a Committee of this House had not the courage at that time to grant powers for the substitution of calorific value for lighting value. In that Bill the gas company proposed to supply incandescent burners and mantles free to the consumers, and I suggest to the Government that in any Order they make under this Bill they should suggest that to the gas companies. With the profits that this Bill will give them they would be well able to afford that. The poor consumer will then be benefited by this Bill. If that provision is not made he will have to go to great expense to put in incandescent burners, because the gas which will be supplied by the companies when this Bill is passed will net be fit for burning in the ordinary flat-flame burners.
§ Mr. PRETYMAN
I hope my hon. Friend will not press this Amendment. I think he will see that the Bill covers the point he has raised. The point he made was that, owing to the cost of coal, and for other obvious reasons, the profits might 1725 easily be swallowed up, so that there could be no increase of dividend possible, and, therefore, there would be no fall in the price of gas. If he follows that argument out he must see that if that were so, in the absence of this Bill, this increased cost would involve a reduction in dividend and an increase in price. That must follow. Therefore, it comes to the same thing. In all cases where the advantage which this Bill gives to a gas company enables that company to increase its dividend, that will automatically carry a decrease in the price of gas. Where, on the other hand, it does not enable the company to increase its dividend, it must merely have the effect of preventing a decrease of dividend. Therefore, it will prevent a rise in price. It is to the advantage of the consumer automatically. Where a sliding scale is in operation it must operate to the advantage of the consumer in a larger proportion than to the gas company. Out of every pound which is gained in profit by this change, something like from one-fifth to one-seventh goes in dividend, and the remainder goes towards decreasing the price. So that of the actual sum earned a much larger proportion will go to the consumer than to the gas company. I hope that answers my hon. Friend's point. I think it is a complete answer. If there should be any case where what I have said does not apply we have power, in making these Orders, to see that the consumer gets fair treatment in proportion to any advantage which the gas company gets, and I think that is really all that that the hon. Member desires.
As to the point raised by my hon. Friend (Mr. Brunner), I hardly think that we can enforce any such condition as the one he suggested. The proportion of gas which is now used in the flat-flame burner for illuminating purposes is, I believe, less than 5 per cent. It may be true that it is only used in very poor dwellings, but I am not quite sure that it is even used there in any large proportion. I think it is more often used in underground passages, and in places where it is not thought worth while replacing the burners. If that burner is used in inhabited rooms, it is clearly greatly to the advantage of the consumers that it should be replaced as soon as possible. If the quality of the gas is reduced there will be all the more reason for replacing those burners as quickly as possible by incandescent burners, which 1726 involve less consumption of gas, and which will mean so much more economy to the consumer instead of being a source of loss. I think the hon. Member will see that when the first Bill was introduced for this purpose it was an experiment which the gas company was anxious to induce the House of Commons to accept. It was a new invention of very great importance, but the House of Commons did not know at that time and the company had to offer some inducement to the House to give it a trial. The House not being convinced, and not having knowledge of the fact that the consumer would benefit as much as the gas company, did not accept it. We know better now. We know that it is just as much in the interests of the consumer as of the company that incandescent burners should be used. If we are to make it a condition, as suggested by the hon. Member, that the gas company should supply incandescent burners to dwelling-houses, we shall only be giving the landlord of the house—perhaps the landlord of slum property—a subsidy, which I do not think the House would feel in the least inclined to do, thereby imposing a burden upon the gas company. I think, considering the matter fairly on its merits, and'; quite accepting the principle which both hon. Members have in view, that the consumer should have full advantage of any saving that this change will effect, I hope that the hon. Member (Mr. King) will agree to withdraw his Amendment and' allow the Bill to go through.
§ Amendment, by leave, withdrawn.
The hon. Member (Mr. King) has handed in a manuscript Amendment which seems to me to be rather outside the scope of the Bill.
§ Clause 1 ordered to stand part of the Bill
§ Clause 2 (Short Title) ordered to stand part of the Bill.
§ Bill reported, without Amendment; read the third time, and passed.