HC Deb 24 November 1919 vol 121 cc1572-81

(1) The Electricity Commissioners may on the application of a district electricity board by Order exclude from the area of supply of any power company any part of that area which at the time of the application is not being sup plied by the company, and which it appears to the Electricity Commissioners could be better served by the district electricity board, and in consideration therefor may, if they think fit, confer on the power company power to supply electricity for all purposes, in other parts of their area of supply which do not at the time form part of the area of supply of any authorised distributors:

Provided that unless the power company agree to the making of the Order the Order shall be a. special Order.

(2) Where a generating station of a power company is, by virtue of thin Act, vested in a district electricity board the date fixed for the vesting thereof shall not be earlier than one year after the Order constituting the board comes into operation, and if within that year the power company so require the district electricity board shall purchase the whole of the undertaking of the power company upon the terms of paying to the power company the fair market value of the undertaking as a going concern at the date of the constitution of the district electricity board, that value to be determined in default of agreement by arbitration in accordance with the Arbitration Act, 1889, and no part of the under taking of the power company shall vest in the board until the completion of the purchase.

For the purposes of this Sub-section the undertaking of a power company shall be deemed to include the undertaking of any subsidiary company which is under the control of the power company, whether by reason of the majority of the voting power being vested in the power company or their nominees or otherwise, as is operated in connection with the undertaking of the power company.

If the area of supply of the power company (including the area of supply of any such subsidiary company) is situate partly in one electricity district and partly in another, each district electricity board shall purchase the part of the undertaking within its district at the same time, and if the price is referred for determination by arbitration shall be determined at the same arbitration, and the amount to be paid to the company shall be apportioned between the district electricity boards in such manner as the Electricity Commissioners may think just.

Mr. BALFOUR

I beg to move, in Subsection (1), after the word "company" ["is not being supplied by the company"], to insert the words "and in which the company declines to give a supply."

An Amendment in very much the same terms was discussed in Committee upstairs. Since then I have carefully considered whether the omission of these words would really be an injustice to the company. The more I have thought of the matter the more I have come to the conclusion that these words should be in-sorted. I submit that these words should be inserted in order to give reasonable protection. The simple effect of the Clause as it stands without the Amendment is that a supply will be given in the area of an authorised undertaker where a supply is not at the present moment given by an authorised undertaker, but where the authorised undertaker is quite willing to give a supply if called upon by any consumer so to do. The simple statement I have given is self-explanatory of the Amendment.

Sir F. BANBURY

I beg to second the Amendment. It seems to be a reasonable Amendment, because I understand the purport of it is that where a company is not giving a supply in certain districts certain things follow, and that by the Amendment the company must first decline to give the supply.

Mr. SHORTT

This was a matter which was thrashed out in Committee upstairs. It is really quite well met by the proviso to the Sub-section which says Provided that unless the power company agree to the making of the Order the Order shall be a special Order. A special Order requires certain procedure which involves it coming before this House. It is really a better procedure for the protection of the companies than merely asking them if they will agree. Certainly it would defeat, or might easily defeat, the operation of the Bill if a company, by merely saying, "We are willing" were able to defeat the object of Clause 13. You might have a company which said, "We are willing," and then wasting considerable time trying to supply at a higher price than the district electricity board or the joint authority might have done. What we suggest is a perfectly fair way of meeting what is a perfectly fair object, namely, that where a company do not agree, then the Order will have to be a special Order which the company can fight. It would be going too far to say that the company, by saying, "We will do it," could impose great delay, before the district electricity board could come and prove their case to some- body. We should have to put in provisions for cases where, although the company had consented to do it, they were not able to do it. If these words are inserted you must, in order to meet them, insert other words providing that if the company, having agreed to do it, does fail in so doing it, then the district board should be able to come in. It is much better to rest upon a proviso that the district board can come into a district which is not being supplied by making an Order for the supply, and, if the company in the area do not agree and say, "We should like to do this ourselves," then it is to be a special Order. The matter then has to be discussed. You get just as much protection for your company and you avoid any probability of delay. If we insert the words" and in which the company declines to give a supply," that means that where they have not declined but say, "We are willing to do it," you must provide machinery to enable the district board to do it if the company say they are perfectly willing but do not do it. By making it a special Order we provide perfect protection for the company.

Mr. BALFOUR

If you do not insert these words this Clause wil be contrary to the whole intention of Clause 11, Subsection (1, b).

Mr. SHORTT

I do not follow that.

Mr. BALFOUR

If the right hon. Gentleman refers to Clause 11, Sub-section (1, b), he will find there that the point is fully covered, and that without these words being inserted in this Clause there will be a contradiction in the Bill.

Amendment negatived.

Amendment made: In Sub-section (1), leave out the words "unless the power company agree to the making of the Order the Order shall be a," and insert instead thereof the words if the power company, or any county council, local authority, or authorised undertakers which appear to the Electricity Commissioners to be interested, object to the proposed Order, effect shall not be given to the proposals except by."—[Mr. Shortt.]

Mr. SPEAKER

Mr. Marriott,

Major BARNES

On a point of Order. I have an Amendment in Sub-section (2), to leave out the word "purchase" and insert instead thereof the word "acquire," and a further Amendment on the next line.

Mr. SPEAKER

Are not those Amendments covered by the decision already arrived at? I understood that these Amendments were consequential upon the hon. Member's first Amendment which was taken to-day.

Major BARNES

The first was an Amendment to apply the principle of the Land Acquisition Act to the standard price. This is an Amendment to apply to a provision which is not covered by the standard price, and therefore not consequential on the Amendment I moved before.

Mr. SPEAKER

I should think probably the hon. and gallant Gentleman will use exactly the same arguments.

Major BARNES

I beg to move, in Subsection (2), to leave out the word "purchase" ["the district electricity board shall purchase"], and insert instead thereof the word "acquire."

The Clause provides for the purchase of the remaining part of an undertaking if the undertakers desire it to be purchased. It provides that where the generating station and main transmission lines of a power company have been acquired, the power company may call upon the Board to take over their undertaking. In other words it is the application by the power company of compulsory powers to the board and the power company applying compulsory powers of purchase to the board get market value as a going concern. I am asking that the market value shall be determined under the provisions of the Land Acquisition Compensation Act, otherwise the undertaking must get both an addition for compulsory purchase, which would seem to be a very unfair thing in view of the fact that they are applying the compulsion, and also may get payment for special adaptability and suitability. It seems to me it would be very unfair if owners of this class of property should be able to obtain a market value which includes elements excluded from any payment made for any other class of property which could be acquired under compulsory power. It appears to me that the power companies are the favourite children in this Bill, and they get terms of purchase which the owners of no other class of property in the country can get. I should like to hear some reasons which have induced the Government, through the Home Secretary, to agree to give the power companies these favoured terms of purchase, which would permit them to get an allowance for compulsory powers and also to get value for special adaptability and suitability.

10.0 P.M.

Mr. T. THOMSON

I beg to second the, Amendment.

There are in this Bill anomalies, inasmuch as you have at least three standards of fair value for taking over various concerns. The differentiation seems to be based on to whom these particular undertakings belong. If they belong to a local authority you come down to the lowest scale. Power companies under the 1888 Act get somewhat better treatment, and finally we come to this Clause 13, which gives better terms still to power companies which are not governed by any particular Act but have a freehold in their undertaking. We spent considerable time in the early part of the Session in passing the Land Acquisition Act, to provide more fair and reasonable terms of purchase of freeholds in land than the existing power's. Very good cause should be shown why this particular class of freeholder power companies should have more advantageous terms than the landlords, with whom we dealt earlier on. The Land Acquisition Bill is the latest pronouncement of Parliament as to what are fair terms for the compulsory acquisition of property. It would only be in keeping with what the House has already decided that the same basis which is given for the landlord should apply equally to power companies.

Mr. SHORTT

The proposal in this Subsection is not at all on the same footing as the acquisition by public authorities which is armed at in the Land Acquisition Bill. There you are buying a pact of a man's property for the purpose of some public work. Here you are buying an industry which is on the lines of nationalisation. You are doing something which would come within the scope of the nationalisation of electricity. You take a power company which has a statutory right to existence and has its rights for all time. If it were purchased in the open market it could only be purchased as a going concern. That is the only way you can treat it. Buying the whole concern as a going concern is a very different thing from purchasing a man's field, or something of that sort, for the purpose of some public work. If you take this upon the basis of reinstatement I am not at all sure that the power companies would not be better off under the provisions of the Land Acquisition Act than they are under this. You are dealing with the case where the State is taking over the whole of a man's concern as a going concern for the purpose of carrying it on for the State. That is what the object of it is. It is that the State shall say, "At your request we will take over the whole of your concern, buy you out of it and run it ourselves for the sake of such profit as we can make ourselves." That is a very different thing from saying, "Here we have to carry out a drainage scheme or build a new hospital, and we will take one of your fields, a portion of your property, and leave you to carry on your business with the rest." That is equivalent to the generating station being taken over. I gave very fully the reasons why the Land Acquisition Act did not apply to that. They were different arrangements altogether. I thought, and I still think, they were more equitable to the State. This is not a question of that kind. It is a question of buying them out entirely, and therefore I hope the House will come to the conclusion that the fair market value as a going concern is really the proper price to be paid to people who are entitled to that price and who are interfered with for the purposes of this Bill. If they can carry on their business successfully without the generating station they can do so, and if they cannot or if they think they cannot, and they therefore demand that the State shall take it, the State can carry it on just as well as they could themselves and will make the profit which they would have made. The State will not be the loser. No injustice will be done and, therefore, I ask the House to leave this Clause as it is and not accept the Amendment.

Amendment negatived.

Mr. MARRIOTT

I beg to move, in Sub-section (2), to leave out the word "at" ["concern at the"], and to insert thereof the words; "immediately before." This is merely a, drafting Amendment.

Captain BOWYER

I beg to second the Amendment.

Amendment agreed to.

Mr. SHORTT

I beg to move, in Subsection (2), after "1889" ["Arbitration Act, 1889"], to insert the words together with, if the arbitrator thinks fit, such sum as the arbitrator determines to be the costs properly incurred by the company in or as incidental to the arbitration and the transfer of the undertaking.

Mr. BALFOUR

I beg to move, as an Amendment to the proposed Amendment, to leave out the words "if the arbitrator thinks fit." The Amendment would hon. read: "Together with such sum as the arbitrator determines to the costs properly incurred, etc." That seems to be complete without the words "if the arbitrator thinks fit."

Mr. SUGDEN

I beg to second the Amendment to the proposed Amendment.

Mr. SHORTT

I hope my hon. Friend will not press his Amendment. It is clearly fair to the tribunal, no matter whether it is the High Court or an arbitrator or whatever it may be, to have a discretion in cases where they think it necessary to fine one of the parties. It is one of the greatest safeguards we have for ensuring reasonableness in the conduct of any kind of litigation that if a person is unreasonable there should be some power to deprive him of costs in consequence. You may have costs which are proper and reasonable, and you may have costs which are incurred unreasonably, and you must give the arbitrator and the tribunal the power to say, "In this case this offer ought to have been accepted, or the suggestion ought to have been adopted. All these costs, have been thrown away, and the party who has been guilty of that by not adopting the suggestion or accepting the offer shall be deprived of the costs." This is only giving a discretion which I think every tribunal ought to have.

Amendment to proposed Amendment negatived.

Words proposed there inserted in the Bill.

Mr. MARRIOTT

I beg to move, after the words last inserted, to insert the words and in arming at such value neither tin; fact of the passing of this Act, not any circumstances arising therefrom, shall be taken into account. I hope the Government will be able to accept this Amendment, as they accepted my drafting Amendment. It really follows the lines of the last Amendment which has been accepted. It is obvious that depreciation in Stock Exchange values, or any other values, which may be due to the introduction of this Act ought not to be allowed to influence the award. That is the sole point.

Mr. SHORTT

This Amendment, if accepted, would give to the companies a value which at present they do not possess. It is perfectly true that they have or may have an existing monopoly in an area, but it is not an absolute monopoly. It is governed by the words of Section I of the Act of 1888, part of my hon. Friend's Parliamentary bargain: The grant of authority to any undertaking to supply electricity within any area, whether granted by licence or by means of a Provisional Order, shall not in any way hinder or restrict the granting of a licence or Provisional Order to a local authority, or to any other company or person within the same area. Those who invested money on the strength of the 1888 Act knew perfectly well that they were subject at any time to competitors in their area if Parliament thought fit. Parliament has thought fit, or will have thought fit when this Bill becomes an Act of Parliament. Therefore, it would be manifestly giving to these companies a value which they do not possess if you were to say, "In spite of the fact that you ought to have anticipated that this might happen; in spite of the fact that you ought to have anticipated that either a public Bill of this nature or a private Bill of the same description might come into force in regard to your area, we will give you the value of your undertakings as if that were impossible."That would be very unfair, and I hope the House will not accept the Amendment.

Amendment negatived.

Mr. WADDINGTON

I beg to move, in Sub-section (2), after the word "undertaking" ["include the undertaking"], to insert the words "as regards the generating station and main transmission lines."

This is one of the new Sub-sections introduced in Committee, and it seems to be in contradiction to Sub-section (4) of Clause 12. The purpose is to give to a power company, where it is the owner of a subsidiary company, the right of being bought out on terms of arbitration. I is quite possible that the power company might purchase a distributing company and, if so, it would have advantage over any other distributing company which is not owned by a power company. I move the Amendment in order that the position may be made clear as to whether there is a distinction in the right of purchase where a distributing company is owned by n power company, and whether that distri- buting company has greater rights than a distributing company which is not owned by a power company.

Mr. SUGDEN

I beg to second the Amendment.

Mr. SHORTT

My hon. Friend is under a misapprehension. If a power company purchases a subsidiary company, which is itself a producing company, and, therefore, in the same category as a purchasable company, the subsidiary company would be purchased not on the basis of being a power company which has an existence for all time, but it would be purchased as a going concern on the basis of being a purchasable company. The mere fact that a power company buys a subsidiary company does not do away with the right of the local authority to purchase. Neither would it do away with the difference in value between a purchasable company and a power company. The subsidiary company is a value in itself and it will not become a power company merely because it is subsidiary. It remains what it was a purchasable company, valued as a purchasable company exactly as any other purchasable company. Therefore my hon. Friend's fears are unjustified.

Amendment negatived.

Amendments made: After the word "nominees" insert the words "or shareholders."

Leave out the word "as" ["as is operated"] and insert instead thereof the word "and"—[Mr. Shortt.]

Mr. MARRIOTT

I beg to move, at the end, to insert the; words In the event of a generating station of a power company being vested in a joint electricity authority, the provisions of this Subsection shall apply as if such joint, electricity authority were a district electricity board. This is the first of two Amendments which stand in my name at this point on the Paper. The first applies to a joint authority the obligations of a, district electricity board. Under the Clause the obligations of a district board are clearly defined, so it is obviously desirable that the same principle should be applied to a joint electricity authority because as everybody admits there are circumstances in which a joint authority may be in practically the same position as a district electricity board. I think that the omission of these words must be due to a defect in the original drafting of the Bill.

Captain BOWYER

I beg to second the Amendment.

As I said earlier in the debate, a joint electricity authority is clothed with all the powers of an electricity board. I hope that my right hon. Friend will accept the Amendment.

Mr. SHORTT

If my hon. Friends look at Clause 5, Sub-clause (6), they will see that there is provision for applying in relation to the joint electrical authority any of the provisions of this Act relating to district electricity boards, and including the provisions as to borrowing, lending, and giving financial assistance by and to the said boards. Those words are quite sufficient.

Mr. MARRIOTT

I agree. I beg to ask leave to withdraw.

Amendment, by leave, withdrawn.

Mr. MARRIOTT

I beg to move, at the end, to insert the words All costs and expenses properly incurred by the power company in and incidental to the arbitration, and to the transfer of their undertaking to the district electricity board, shall be paid by the Board. This is in accordance with the ordinary practice in reference to payment of costs when purchase is made under compulsory powers.

Captain BOWYER

I beg to second the Amendment.

Mr. SHORTT

We have already dealt with this question of the cost of arbitration and the House has decided that they are to be in the discretion of the arbitrator.

Amendment negatived.