HC Deb 25 November 1919 vol 121 cc1732-7

  1. (1) The prices charged by a district electricity board for electricity shall be fixed by the board subject to the approval of the Electricity Commissioners.
  2. (2) In addition to any provisions contained in any special Act or Order limiting the prices to 1733 be charged by authorised undertakers in respect of the supply of electricity, the Electricity Commissioners, may regulate such prices with a view to securing that the benefit of any reduction in the cost of electricity or in the capital employed in the production thereof attributable to the provisions of this Act shall ensure to consumers.

Sir C. COBB

I beg to move, at the end of Sub-section (1), to insert the words and shall be such that so far as reasonably practicable the receipts derived by the board therefrom will be sufficient to cover their expenditure on income account (including interest and sinking fund charges). I should like, to know the reason why the treatment of a district electricity board in this matter differs from the treatment of the Board of Trade under Section 19, Subsection (4), which provides— The prices fixed by the Board of Trade for electricity supplied by them from generating stations established under this Section, shall be such that their receipts therefrom will be sufficient to cover their expenditure on income account (including interest and sinking fund charges in respect of such advances as aforesaid with such margin as the Board may think fit I do not understand why there is a difference between the Board of Trade and district electricity board. The electricity board cannot make a levy upon the rates. Does the Home Secretary contemplate that the deficiency will come out of taxation?

Major GRAY

I beg to second the Amendment.

I gathered from the remarks of the Home Secretary earlier that in the event of a deficiency the Treasury would step in. If so, a very important principle is involved, namely, whether the consumer is to pay the full cost of the commodity he receives or whether he should pay part of it under certain conditions and the remainder shall be provided by the taxpayer. I should like to hear what the Home Secretary has to say.

Mr. SHORTT

I tried to explain to the House when it was dealing with Clause 19 that the reason why I had to insist, as far as possible, on fighting for those words, and asking the House to accept them, was that it was part of an arrangement with the Treasury. It was a purely temporary matter, only lasting for a period of two years after the establishment of the board. That being the arrangement with the Treasury, I was bound to ask the House to abide by it. The words in the present instance were actually in the Bill when it went to Committee, but, after discussion on an Amendment moved by the hon. Member for Hampstead, who pointed out how impracticable the words were, the Committee decided to reject them. For that reason we have not sought to reinstate them. With regard to the question of payment of any loss, that cannot possibly fall upon the taxpayer. In no case could it fall upon the taxpayer. It must eventually be spread over the industry as a whole, but if you insist upon the charges for any one year meeting all the necessary expenditure, including sinking fund, interest, charges, and so on, you remove that elasticity which exists under the Bill as it, stands, because there will be a suspensory account, and they will be able to put on to future years any unavoidable loss in one year which ought not fairly to fall upon that year. That is the reason why I felt bound to ask the House to keep in the words in Clause 19, and why it is not right that the House should be asked to insist upon their being included in this Clause.

Sir C. COBB

I thank the Home Secretary for his explanation. This is only another illustration of the disadvantage which we who were not members of the Committee upstairs suffer from. I beg to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. R. RICHARDSON

I beg to move, in Sub-section (2), to leave out the word "may" ["may regulate"], and to insert the word "shall."

Surely it is the duty of the board to regulate prices with a view to any benefit going to the consumer and not to private individuals or companies!. This Subsection is permissive. I trust the Home Secretary will see his way to accept the Amendment.

Mr. SHORTT

I hope the hon. Member will not press the Amendment. This matter was discussed in Committee. It would be tying the hands of the Electricity Commissioners if the Amendment were adopted. There is sufficient power for them to act where it is necessary, but if they are bound to take certain steps it would tie their hands and it would deprive them of that discretion which really is essential for the successful carrying out of this great scheme.

Amendment negatived.

Sir F. HALL

I beg to move, in Subsection (2), after the word "that," to insert the words, "a fair proportion of."

8.0 P.M.

The House will recognise that it is only fair that the distributor should have theopportunity of getting some —I am not asking for all—of the benefit of any reduction in the cost of electricity. The authorised distributors could by statute charge up to 8d. per unit. In pre-war days that was gradually brought down to 4½d.—I am speaking particularly of the London companies—which proved that as far as the authorised undertakers were concerned they were not desirous of charging more to the consumers than would give a reasonable return of the money expended. If the Clause were to pass as it is it will give no interest to the undertakers to do all they can to reduce the cost of electricity to the consumers. They are to be asked to give increased facilities, which mean naturally increased capital, and if they have to find that additional capital then they should be entitled to some at all events of the extra profit that may accrue. In addition it seems to me that the provision that a reduction in cost must enure entirely to the consumers is obviously unjust. A limitation of this kind would leave the industry no interest whatever in trying to reduce the cost or increase the production or undertake productive development work. I quite agree that under the Bill the undertakers can obtain as much electricity as they generated before at a not higher cost, but there is no undertaking, and there could not be, that any increase in the quantity that was to be generated must be given at the same price as the other. I hope that my hon. Friend will accept this Amendment, but if He requires further protection I will be quite satisfied that the "fair proportion" should be decided by the electricity commissioners.

Viscount ELVEDEN

I beg to second the Amendment.

Mr. SHORTT

May I remind the House that the whole provisions of this Sub-clause (2) apply only to those improvements which are attributable to the provisions of this Act. They do not touch the case where the undertakers themselves, by better management or greater energy, or by extending their area of distribution, make geater profits. This only applies to what is attributable to the provisions of the Act, for which the undertakers qua undertakers, are in no way responsible, and it is only any benefit resulting in this way that is to enure to the public. That is perfectly fair. If such benefit, due simply to the Act of Parliament, were to be given to the undertakers it would amount to unearned increment on the part of the undertaker.

Mr. BALFOUR

While I am in sympathy with the Amendment of my hon. and gallant Friend, yet, after careful study of the whole of the provisions of this Bill, I think it improbable that any benefit is going to enure from this Act, so that my hon. and gallant Friend may relieve his mind of any fears as to what should be done under this Clause.

Sir F. HALL

Of course the electricity board or the joint board, will be in the position of wholesalers, and the authorised distributors will be in the position of retailers. Though the hon. Member for Hampstead says that there is not going to be any benefit to the consumer, I sincerely trust that there will be. It is because I am afraid that there may not be any reduction, and that there may be an increase, that I am desirous of putting this in. If the retailers are not going to get any benefit out of it, if there is a higher price, then I am afraid that it is not going to assist the distributors who are not necessarily as business men going to give the assistance which my right hon. Friend so much desires, and which we all hope for.

Amendment negatived.

Sir F. HALL

I beg to move, at the end of the Clause, to insert (3) The Electricity Commissioners shall have power, on application of any authorised undertaker, by Order to authorise any authorised undertaker to charge for the supply of electricity by any method which the Electricity Commissioners may consider just, notwithstanding anything in the Electric Lighting Acts and the Electric Lighting (Clauses) Act, 1899, or in any; agreement with any local authority, whether com firmed by Parliament or otherwise. I put this down as far as possible to assist the Government. I notice that my hon. Friend (Mr. Bridgeman) smiles, but it is my object to assist the Government. This has always been my object, and several of my suggstions have been accepted. At the present time you cannot collect the money due for electricity except on the basis of the number of units actually consumed. The Water Board, when it came into operation, altered the conditionu in which the assessments were made, and I think that the Government would be wise at all events to consider whether they should not take advantage of this Amendment, because it would give them the power, if at any time they deemed it advisable, to change the method of making charges on the consumer. Under the Amendment they would be able to do the same as the Water Board has done—to charge on the valuation. Personally, I do not mind whether the right hon. Gentleman accepts this or not. It is no advantage to the authorised undertakers, but in a Bill of this magnitude, which we hope is going to be of advantage all round, the Government should consider whether it is not wise to take power to charge the price according to assessment. If my hon. Friend cannot accept the Amendment now, perhaps he will consider it before it comes to another place.

Mr. BALFOUR

I beg to second the Amendment.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Bridge-man)

I hope that my hon. and gallant Friend will not think that I was rude in smiling. I quite recognise that the interchange of views between him and the Government has been very advantageous to us, and I am grateful for the help which he has given, but I do not think that he can have realised that the power asked for in the first part of the Amendment already exists in Clause 31 of the Schedule to the Electric Lighting Clauses Act. With regard to the last part of the Amendment the proposal appears to me to confer upon the Electricity Commissioners the power on the application of authorised undertakers to vary agreements already made with local authorities. That I could not accept. I hope that, in view of the safeguards which already exist, the hon. and gallant Member will feel assured that the position he desires to meet is already adequately protected.

Sir F. HALL

After that explanation I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.