HC Deb 24 November 1919 vol 121 cc1556-72

(1) Any local authority being authorised distributors may, with the consent of the electricity Commissioners, agree with the district electricity board of the district in which the a ea of supply of the authority or any part thereof is situated for the transfer to the board of the whole or any part of the undertaking or the authority within that district in considerat on for the payment of one or more annuities of such amount or amounts and containing; for such period or periods as an auditor appointed by the Electricity Commissioners may certify to be required to indemnify the local authcrity against their liabilities for interest and sinkng fund charges in respect of SO much of the money borrowed for the purposes of the undertaking or part-thereof as is outstanding at the date of the transfer: Provided that—

  1. (a) where part of the area of supply of the authority is situated in a l cality which is not included in an e ectricity district the powers of purchasing that part may, if the Electricity Commissioners consent, be exercised by a district electricity board within whose district any part of the area of supply is situated; and
  2. (b) where any generating station or main transmission line belonging to the local authority has previously been vested in 1557 or acquired by the district electricity board under this Act, the interest and sinking fund charges in respect of any money borrowed for the purpose of providing the generating station or main transmission line shall not be taken into account.
  3. (2) Where under the Electric Lighting Act?, or under any Order made thereunder or under any special or local Act, any right to purchase the whole or any part of the undertaking of any authorised distributors is vested in any local authority (including a county council), the right shall on the constitution of a district electricity board for the district comprising the area of the local authority be transferred to and vest in the board, and any Order or Act conferring any such right shall be construed accordingly:
  4. (4) Where by virtue of this Act any generating station or main transmission line belonging to a company or person being authorised distributors is vested in a district electricity beard, that board shall, if so required by tile company or person within two years from the date of vesting, purchase the whole of the remaining part of the undertaking of that company or person upon the terms of paying a sum equal to the amount certified by an auditor appointed by the Board of Trade to be the amount of capital expenditure on the whole undertaking properly standing in the books of the company or person, less any sum paid or payable as purchase money in respect of any generating station or main transmission line so vested as aforesaid.

Mr. BRIDGEMAN

I beg to move, in Sub-section (1), to leave out the words of one or more annuities of such amount or amounts and continuing for such period or periods as an auditor appointed by the Electricity Commissioners may certify to be required to indemnify the local authority against their liabilities for interest and sinking fund charges in respect of so much of the money borrowed for the purposes of the undertaking or part thereof as is outstanding at the date of the transfer, and to insert instead thereof the words at the option of the local authority of either one or more annuities or a capital sum, calculated in like manner and on the like principles as the standard price in the case of a generating station is to be calculated. This Amendment is moved in pursuance of an assurance given to the hon. Member for Middlesbrough (Mr. Thomson) in Committee, and what the Home Secretary undertook was that the local authority should be given the option to adopt the standard price as an alternative to the other arrangement.

Amendment agreed to.

Further Amendment made: Leave out. the words and (b) where any generating station or main transmission line belonging to the local authority has previously been vested in or acquired by the district electricity board under this Act, the interest and sinking fund charges in respect of any money borrowed for the purpose of providing the generating station or main transmission line shall not be taken into account."—[Mr. Bridgeman.]

Mr. WADDINGTON

I beg to move, in Sub-section (2), after the word "shall" ["the right shall on the constitution"], to-insert the words "as regards the generating station and main transmission lines of such authorised distributors."

The object of this Amendment is to-secure uniformity for the local authorities. Under the Clause the local authorities are differently treated. Those which fire now distributing electricity will have all the-rights which they now possess reserved to them, but those which have leased their undertakings to a company will have the right taken away from them to purchase their undertakings at the expiration of the period for which they have been leased. It seems singular that in a measure like this there should be two different standards set up to govern the local authorities, and this differentiation affects some very important districts, such as Newcastle-upon-Tyne, Preston, and Market Drayton. There are a large number who feel that the distributing portion of the undertaking should be in the hands of the local authority and not of the district electricity board. The duties of the board are to provide for the cheap and abundant generation of electricity. The finding of customers, the distributing of the electricity, the enterprise shown in the locality can best be done by local authorities on the spot, and if this Amendment is carried it will give to the Government all that they have taken in any other form from other local authorities. It will give them the absolute right to acquire the generating station and main transmission line, but it will leave to important places like Newcastle and Preston, and so many other districts their local rights as distributors.

Mr. SUGDEN

I beg to second the Amendment.

I do so for the reason that one feels that if this Bill is to become a successful Act there must be equality of treatment between all sections of those who are to carry out its obligations. One feels that right through the Bill those to whom powers are given will be working one against the other unless everything is made equal for them, and I am most perturbed that such Clauses as this will be detrimental to the experimental work. Unless the local authorities are given full powers for experimental work they will not in the least concern themselves how and in what way they should distribute the current.

Mr. BRIDGEMAN

I cannot help thinking that the hon. Gentleman who moved this Amendment is under some misapprehension. This Sub-section merely transfers to the district authority the right local authorities had for purchasing the whole of the undertaking under the Electric Lighting Acts. He seems to be confusing this Clause with Clause 7, and, as I understand it, his Amendment is not applicable here. I noticed that he mentioned Market Drayton as one of the places affected, but they have not made any representations to me on the subject.

Mr. WADDINGTON

The point is that, wherever a local authority have leased their undertaking to a company, the right which they now have of purchasing the company at the end of its period is vested in the district electricity board. This particular Clause says that any right to purchase vested in the authority shall vest in the board, and that right, which is acknowledged in this Clause, is going to be taken directly away from them. The towns which I have mentioned, and all places where companies are in possession at the present moment, will cease to have the same rights as all other towns have, and it is to remedy that injustice that I move this Amendment.

Mr. NEAL

I have tried very hard to follow the object of this Amendment, but I confess that I cannot do so. The Clause is a very simple one. It deals with rights which are accruing at various dates in certain local authorities to purchase existing undertakings. The Amendment says that that right is only to be exercised with regard to the generating station and main transmission line of such authorised distributors; but surely that is a contradiction in terms. The right given by Statute is to buy the whole of the undertaking and not a part of it, or only to buy a part of it where it so happens that geographically the areas do not coincide. But where the undertaking is wholly within the district, the statutory right is to buy the whole. To put these words in the Bill is to transfer a right which does not exist—namely, to say that the district board may purchase the generating station and main transmission line only of such authorised distributors, instead of purchasing the whole, as is implied and expressly stated in Section 2 of the Act of 1888. I trust this Amendment will not he accepted.

Amendment negatived.

Mr. W. R. SMITH

I beg to move, to leave out Sub-section (1).

This Amendment is put down because it seems to some of us that the wording of this Sub-section gives to the bodies which are possessed of these undertakings an opportunity of disposing of concerns which may not be very profitable, and the authority will have no option but to purchase them if this Sub-section stands. If they are running concerns and paying well, they need not do it, but if there is any difficulty in that respect, according to this, they have, after two years, the power of compelling the authority to take them over. That is how the matter reads to us, and we feel that it is not a fair basis in regard to this particular point. I should like to have some explanation as to whether the interpretation placed upon it is a correct one, and, if so, whether it is fair to retain words which will give opportunities to these bodies to dispose of concerns which may not be doing well, whilst not giving the authority an opportunity of taking over in the same way concerns which may be running at a profit.

Mr. ROYCE

I beg to second the Amendment.

Captain BOWYER

I do hope the hon. Gentleman in charge of the bill will not accede to this Amendment. This Subsection, as I understand it, says that where a company has had its generating station taken away under Clause 7, and finds that it cannot go on with any success in the business of distribution, the district electricity board shall buy up, lock, stock and barrel, in the same way as it has taken its generating station. I would submit that, as compared with Section 2 terms of the Act of 1888, this is the; very least the Government can do for these companies. There is, as we have heard earlier in the evening, this debt of honour—I prefer that term to a bargain—existing between Parliament and the Provisional Order companies under the 1888 Act, and if Section 2 terms are not to be given—that is, if the company are not to be able to go into the open market and say, "You shall buy me out at my true market value"—I do submit the company should be able to say, "You have taken my generating station, and my distribution cannot be run possibly as a going concern. Now buy me out, lock, stock and barrel."

9.0 P.M.

Mr. BRIDGEMAN

I certainly cannot accept this Amendment The arrangement was arrived at after very careful discussion in Committee upstairs, and it was considered that this was the best way of dealing with a very difficult situation. It is quite possible that in some cases the authority might make a good bargain, and in some cases a bad bargain, in having to buy up the whole of the undertaking, but I think the important consideration is that, after having had the generating station and transmission line taken away from them, if they are to make any success of their distribution, which has been held over and over again during the Debate in this House to-day to be the valuable part of their concern, they will certainly have in some cases to raise fresh capital to carry out the distribution of electricity. That would be impossible for them unless those who are invited to subscribe have some sort of security for their money, and this provision was put in very largely to meet that difficulty—to enable the companies, in order to carry out the duties imposed upon them by this Act, to appeal to the public to subscribe capital for their undertakings, and for the new duties that would be imposed upon them.

Mr. GRIFFITHS

The hon. Gentleman has not given a reply to the question put to him. Is it a fact that the authorities will have power to take over a concern that is not paying, and will not have power to take over a concern that is paying?

Mr. BRIDGEMAN

It is a question of giving a right to the companies from whom you are—at any rate, they think—taking privileges which they enjoyed under the Acts which exist up to this day.

Amendment negatived.

Sir F. HALL

I beg to move, in Subsection (4), after the word "board" ["is vested in a district electricity board"], to insert the words "or joint electricity authority."

I am not at all sure the Government will not say that this is covered by Clause 5. If it is, so much the better; let us put it in and make it perfectly plain. What is the position1! The Government has said, "We are desirous of seeing various private persons join together, and we are desirous of seeing joint electricity authorities, so that they can work together for the good of the public in general requiring a supply "This Sub-section says, "Where by virtue of this Act any generating station or main transmission line belonging to a company or person being authorised distributors is vested in a district electricity board, that board shall, if so required by the company or person within two years of the date of vesting," pay so and so. Yes; but what about the joint electricity authority? They have been divested of their generating stations and all their main transmission lines. This Clause was put in so that you should not turn round and say after, for instance, taking the vitals away, "What I have left shall be sold as scrap." The Government recognise the fact that if it were sold in that way the authority would practically get nothing for it, because it is useless to-anybody else. If you take a man's generating station and also the main transmission lines, and he has only got the distributing plant left it is worth practically only scrap. I have read Clause 5 very carefully. I see the intention is that it should be included. If the intention is there let us make it perfectly plain, in. order that if this Bill, as it possibly will, come before the Law Courts, it will be seen that it is clearly laid down that, at all events these joint authorities are-treated on exactly the same terms as the others.

Captain BOWYER

I beg to second the Amendment

I have at the back of my mind the idea that the joint electricity authority will be clothed in the future with exactly the same power as the district board—at least where those powers are now. Though this Amendment is perfectly reasonable, I am rather hoping that my hon. Friend the Parliamentary Secretary will tell me that it is unnecessary. If the point is not absolutely covered, I think the proposed words will do no harm. They will tend to make the position clear, and will give, even in the area where the joint electricity authority and the companies are operating, the same opportunity, the same option, of coming in under Sub-section (4) of Clause 12.

Mr. BRIDGEMAN

My hon. and gallant Friend behind me is quite right in prophesying that I should say that his Amendment is unnecessary. May I call the attention of the hon. Members to Sub-section: (6) of Clause 5 which speaks of applying in relation to the joint electricity authority any of the provisions of this Act relating to district electricity boards. That completely covers a point which has been raised by the Mover and Seconder of the Amendment. We had this discussed many a time in Committee, and there were many Resolutions put forward. They were all withdrawn whenever it was pointed out that the master as covered, as it is, by the Sub-section of Clause 5 which I have just quoted.

Sir F. HALL

I thought my hon. Friend would say the thing was covered. I still, however, adhere with all deference to him, to my view of the matter. I cannot for the life of me see why the words I propose, "joint electricity authority," should not be inserted. The ideas of my hon. Friend and myself are synonomous. We both are desirous of making the Bill as clear as possible, so as to avoid the slightest difficulty hereafter. After what he said I admit the point is covered by the Clause quoted, and I am bound to accept it; but I should have been more satisfied if he had accepted the words of my Amendment.

Amendment, by leave, withdrawn.

Mr. BALFOUR

I beg to move, in Subsection (4), after the word "amount" ["paying a sum equal to the amount"], to insert the words "which has been." This Amendment is followed by a couple of others which, if accepted, would make the Sub-section read to the following effect: purchase the whole of the remaining part of the undertaking… upon the team of paying a sum equal to the amount which has been certified by the auditor appointed by the Hoard of Trade under the Electric Lighting Acts to have been the amount of capital expenditure on the whole undertaking standing in the books of the company… It is common knowledge that under the Electric Lighting Acts every authorised undertaker, from the first moment, is saddled with two auditors; that is as a joint stock company it has the auditor appointed by the company in general meeting. That is not, nor ever has been, sufficient for the purposes of the Government audit. The Board of Trade, therefore, by virtue of the powers conferred upon them have, in every case so far as I know, appointed a separate and distinct auditor for the purpose of the Board of Trade audit of the electric lighting accounts. I submit that it is only reasonable that the account, as audited by the Board of Trade auditor, should be accepted for the purpose of any settlement publicly effected under this Act. The sole object of this Amendment, and the subsequent Amendments, is to substitute for an auditor who has yet to be appointed by the Board of Trade the audit certificate granted by the auditor who has always audited the accounts, and has already been appointed by the Board of Trade. I trust the Parliamentary Secretary will see his way to accept this Amendment. It is very simple and makes for smooth working in the future, and will facilitate business in connection with the transfer of these properties.

Sir W. PEARCE

I beg to second the Amendment.

Mr. BRIDGEMAN

I do not quite understand what particular merit there is in this form of drafting, or what my hon. Friend thinks there is better in the words he desires to introduce as against those in the Bill. They seem to me to be quite unnecessary.

Mr. BALFOUR

May I try to make them clear? The change in the wording is simply intended to mean that, the auditor's accounts up to the 30th September and the certificate of the Board of Trade auditor should be accepted instead of appointing, as by the Bill you do, a "new" auditor. My object is to avoid the appointment of two auditors, and to make the certification of the accounts and balance sheet by "the" auditor appointed by the Board of Trade sufficient.

Mr. BRIDGEMAN

I am afraid I cannot accept that Amendment, and I hope the hon. Member will not persist in it. I am willing to accept the Amendment standing in the hon. Member's name to insert the words "prior to the dace of vesting together with any additional capital expenditure since that date."

Mr. BALFOUR

I have no desire to press my proposal if the hon. Gentleman does not think it is an improvement, but perhaps he will give attention to that point in another place. I ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Amendment made: In Sub-section (4), after the word "person" ["properly standing in the books of the company or person"], insert the words "prior to the date of vesting together with any additional capital expenditure since that date."— [Mr. Bridgeman.]

Mr. T. THOMSON

I beg to move, after the words last inserted, to insert the words "less depreciation and."

When speaking on this point on Friday I was guilty of a misstatement of fact. I said that originally the Bill excluded railway generating stations from its scope. I think I may be pardoned for this mistake because the Bill has changed so often, and I find that the Government agreed to exclude railway generating stations, but in the original Bill they were in, and I wish to apologise to the House for that misstatement of fact. "With regard to this question, we had a discussion in Committee, as well as the discussion we have had in the House today, on the question of depreciation, arid I would submit that a fail-value of price which is sound and just with regard to the acquisition of generating stations and main transmission lines is equally sound and just when you come to the distributing section. The hon. Member opposite said he could not understand how the Government could maintain in Clause 7 the inclusion of depreciation and not include it in Clause 12, and it should be the same in both Clauses precisely. The House has passed Clause 7 providing that depreciation should be taken into account, and they cannot do less in Clause 12 than to agree that depreciation must be taken into account when arriving at a value for purchase.

It seems reasonable that when taking over a concern or arriving at a value you should take into account depreciate on. You may have an undertaking with a new and up-to-date plant, and another where the plant is obsolete and behind the times, as well as inefficient, and yet according to this Clause you are to have no regard to the condition of those two plants, whether modern or obsolete. If this proposal is just in Clause 7 it is equally just in Clause 12. The Parliamentary Secretary will probably say that this was the arrangement come to with the various undertakings, but this is a question which the House must settle on a basis of justice, irrespective of any pledges given during private negotiations. Clause 7, which fixes the basis, is dependent upon the fact that the main distributing lines are left to the companies, and unless they choose otherwise they have all the rights and powers which they possess under the Act of 1888. They can demand from the new generating stations the supply of that power upon the same terms and conditions as they were generating for themselves. That is a protection they had against the terms of purchase in Clause 7.

I am willing to admit if Clause 12 had been compulsory and you had Said that district boards may acquire a distributing section on these terms there would be great cause for complaint, and inj stice would be done. This Clause is put in at the request of the competing companies, and is merely optional, as they choose themselves. As it is purely optional and put in at their request, if they prefer to maintain the rights they have under the Act of 1888, and maintain their distributing sections until those lights expire, I think they should be, allowed to do so. Current would be supplied to them from the generating power stations, and they hold and maintain all their rights as distributors under the Act of 1888, but if they choose to come to the Commissioners and abrogate their rights under the Act of 1888 it is only right that the basis on which they are taken over should take into account depreciation.

The Home Secretary admitted that he could riddle the Clause with arguments and, that it was clumsy, and he went on to say that if it did not unduly rob the company we need not quarrel any more about it. We do not want to unduly rob anyone, and we must not rob the company or the boards, who would be landed with these distributing stations on terms manifestly unfair if depreciation is not taken into account The right hon. Gentleman argued that a lump sum paid to the companies would be in the main fair, and he said that it did not matter if in particular cases the amount paid was not just, provided that the company was not unduly robbed. It is vital to each district board. It is essential for the cheap production of electricity that these district boards should not be mulcted with obsolete plant and not be unduly robbed, and have put upon them charges in that particular area which the plant will not stand. It is vital to each district board that they should acquire these undertakings if they have to acquire them on fair terms, and they cannot have fair terms unless depreciation is taken into account. In the interests of the provision of cheap electricity I submit to the House that you must take depreciation into account; otherwise your district boards will be handicapped from the first, because they will be landed with obsolete plant at an extravagant price, and instead of getting cheap electricity they will be burdened with heavy capital charges and be unable to provide that cheap electricity which we all desire.

Sir F. BANBURY

The hon. Member who has moved this Amendment gave as his reason for doing so that this Clause did not coincide with Clause 7, and he referred to the speech of the hon. Member (Sir Evan Jones) who drew attention to what he called an anomaly. There is no anomaly at all, because the Government, in their defence of the words in Clause 7, said that if they were going to take away the property of the company there might be something for leaving out the words "less depreciation," but they were not going to do so. They were merely going to say, "Hand over your generating station to us, and we will give you at the same cost that which that generating station produced. "That argument seems to me to have some foundation, and the hon. Member will remember that there was no Division upon the Amendment of the hon. Member for Hampstead (Mr. G. Balfour). There is no relationship between the two Clauses. The first Clause deals with the depreciation. The property is not going to be taken over, and the companies are not going to be in a worse position, because they will have that which was produced in that station at the same cost as it was produced by them. Now you come to a totally different set of affairs. You say, "Supposing by this severance you are unable to carry on your business at a profit, then you may come to us and demand the money which you have spent." The hon. Gentleman says that that is going to prevent cheap electricity. However advantageous cheap electricity may be, it is not to be gained at the expense of breaking contracts or doing an injustice to people who have invested their money on the faith of Parliamentary powers. What have these undertakings in the hands of companies been paying. I have not looked it up, but my belief's that at the present time the great majority of them are worth the money which was originally spent upon them. [HON. MEMBERS: "More!"] I do not wish to exaggerate. Under these circumstances, I could understand a shareholder saying: "You are going to force me to sell my generating station, and this may deprive me of a future which I thought secure. You must therefore not only give me back the money which I have spent and which was remunerative, but you must also give me something for my future profits." The Government do not propose to do that. They propose merely to give the money actually spent. Under these circumstances, I hope that the Government will stick to their proposal and will reject the Amendment.

Mr. NEAL

When I addressed the House earlier in the evening on Clause 7 I pointed out that later in the Bill the companies got something better than the 1880 Act better. It was upon this Clause that I founded that observation. The position is very simple. A company which has a generating station and a distributing business finds its generating station taken away from it. It is left with its distribution; but for how long? It is still left with the liability to be bought out, the district board taking the place of the local authority. If it is to carry on its distribution successfully, it will have to continue to lay mains, and anyone who knows anything about electrical undertakings knows that mains have to be put down though they cannot give any present profit; in tact, you have to look well towards the future The directors might very well say: "How can we go and get further money to develop our undertaking and fulfil our statutory obligations?" These companies have not only shareholders, but they have statutory obligations to supply the inhabitants of the district with the electricity which they require. They may say, "Having regard to all the circumstances of the case, how can we properly get the necessary money to carry on our business?" If there is one thing quite clear it is that it is not to the advantage of the country to have a series of laying companies dealing with electricity. Many would have liked it better if this Bill had been bolder and had gone in for complete nationalisation of electricity. [HON. MEMBERS: "No!"] I did not say "all of us"; I said "many of us" This is not a bold and courageous measure of that kind. It still leaves private undertakings with certain undertakings and certain responsibilities. Surely, therefore, we have a right to say, on behalf of the public who are going to take over the undertakings, that we will try and protect the shareholders from actual loss. These shareholders stepped in to fill a public want. Electricity was. not being developed by the municipalities or by the Government to the extent that was desired. Certain persons came forward and risked, their money. They said, "We have faith in the future of electricity; we know that for a period of years we shall probably not see an adequate return on our capital, but, looking forward, we hope to do so." They are now going to have their privileges very materially interfered with, and they come forward and say, "You are putting us in a position whereby we shall not be able to fulfil our obligations in the way that we ought to do, and we ask you to take us over." What does this Clause say? May I point out to my right hon. Friend (Sir F. Banbury) that it does not go quite so far in aid of the shareholders as he seemed to indicate by his speech, because there is one word, the word "properly," which requires judicial interpretation. I confess that I am not quite happy about that word. What is it that is to happen? The company is to give notice that it desires to be taken over, and the district board is to be under an obligation to purchase at a sum equal to the amount certified by an auditor appointed by the Board of Trade as the amount of capital expenditure on the whole undertaking properly standing in the books of the company or person less than which he has already received for the generating station. I can understand very serious differences of opinion arising as to the effect of these words "properly standing in the books of the company." It is plain that they must have sonic meaning given to them. They form a part of the Act of Parliament which cannot be ignored. There may have been expenditure on machinery which has passed out of use, or there may have been expenditure on the flotation of the company which might have to be wiped out. I things these words go a very much longer way in the direction of meeting what the hon. Member for Middlesbrough desires than either he or the right hon. Baronet the Member for the City of London appreciate.

Sir F. BANBURY

I am afraid I did not understand them, but I presumed they were put in to enable one learned Gentleman to say that they mean so much and another learned Gentleman to say they mean a different amount.

Mr. NEAL

I find myself in complete accord with the right hon. Gentleman. It is a result most devoutly to be wished for by certain Members, but it will not be equally wished for by all Members. I ask the Home Secretary before this Clause is finally dealt with in another place to give some consideration to words which are capable of two or three different interpretations, and I shall be glad if the Government will find some way of giving effect to their meaning in a little plainer English. It is a matter of drafting rather than substance. On the whole, we are treating the shareholders in these companies somewhat generously, and, as pioneers, they are entitled to such treatment.

Mr. ROYCE

I support the Amendment. Hon. Members seem to have largely lost sight of the question that the remaining portion of the undertaking is to be bought out only at the request of the company I which, if it is not paying, is to be in a position to insist on being bought up by the authority it has the choice in the matter, and, that being so, I do not see why the words "less depreciation" should not be included.

Captain BOWYER

The hon. Member says that the companies have a choice in the matter, but they have no choice under Clause 7. Upstairs the Home Secretary told the Committee clearly that this matter had been very carefully considered, and that these words were put in because the Government realised that many companies would be suffering under a hardship which they could not possibly survive, and it was by only giving them a chance of claiming to be bought out, lock, stock, and barrel, that rough justice could be done. I hope the Government will stand fast in this matter.

Mr. MARRIOTT

I have no doubt that the Government will stand fast. I cannot imagine any fair-minded person taking such an advantage as is here suggested. This is what it really means: You give certain advantages under Clause 7, but under Clause 12 you seek to take them away Surely that is neither a fair nor an honourable proposal. The position at which we arrived upstairs was this, that the undertakers whose stations had been acquired by the district board should have a certain option. They were to have the option of requiring the district boards to take over their whole undertaking on payment of the capital expended. But this Amendment proposes that from that capital there shall be deducted something for depre- ciation although the whole basis of the arrangement was that the undertakings should be taken over on the return of the capital. Depreciation was conceded on Clause 7, but it rested on the fact that you got the whole capital back on Clause 12. [MR. T. THOMSON indicated dissent.]

My hon. Friend shakes his head, but that does not alter the fact. I say that to accept this Amendment would be extraordinarily unfair, I have no doubt the Government will oppose it and in doing so will have the support of every fair minded person in the House.

Mr. SHORTT

I am sure the House will recollect that when we were discussing Clause 7, the very basis on which I justified patting the cost less depreciation was that we were not taking over the whole undertaking but were leaving the company with a right to receive the same amount of electricity as they had generated themselves and therefore in a condition if the obligation were carried out to make the same profits as they would have done had they been left alone. But this Clause is to meet the cases where they cannot do that, and to give such companies the right of insisting on being taken over by the district board—to in fact be bought out. Very different considerations arise when you are taking only a portion of an undertaking and making arrangements which, in your view, prevent any loss arising by taking that portion. Then you can pay the original cost less depreciation. But when you come to buy people out you are buying out people who were in a position, if left alone, to recoup their capital out of future trade, and you must therefore treat them as people who would have had an opportunity of getting back the capital they had invested in the concern. Therefore it is that we felt—I think rightly, and I hope the House will agree with me rightly—that if we came to be in the position of taking over an undertaking which had a statutory right to exit for forty-two years, and then to be bought out on certain terms, the least we could do would be to put them in the position of getting back again the capital they had invested in it. We have tried to do that. We think it fair and equitable. The House will recollect that it was upon that basis that I said over and over again, when we were discussing Clause 7, that the provisions for taking over the whole of an undertaking were in a separate Clause and were on a totally different basis. I therefore hope the House will support us in opposing this Amendment.

Amendment negatived.

Amendment made: In Sub-section (4), leave out the words "as purchase money" ["sum paid or payable as purchase money"]—[Mr. Shortt.]