§ Order for Second Beading read.
§ The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Mr. Neal)
I beg to move, "That the Bill be now read a Second time."
This Bill has received consideration in another place, and I do not think that it contains much, if anything, of a controversial nature. To understand exactly what the scope and object of the Bill are it may be convenient if I remind the House in a few sentences of the history of legislation affecting the electrical industry. It is only within comparatively recent years that electricity has attained such a practical aspect as to render it necessary for Parliament to deal with the matter. In 1882 there was passed the first Act of Parliament which is still the foundation of most of the electrical laws. At that time the only use of electrical energy which was contemplated was the production of light. The first Act authorised the Board of Trade by provisional Order to bring into being undertakers for the supply of light. It was clearly the intention of Parliament to give a preferential position to municipal undertakings, and not only were they unable to become undertakers themselves, but the Act contained a provision enabling them at the end of 21 years to 176 purchase the undertakings which had been established by private enterprise.
It was soon discovered that such an operation of the law had a deterrent and somewhat paralysing influence over the development of this system, and accordingly, several years later, in 1888, an amending Act was passed which extended the tenure of what was called the provisional company undertaker by another 21 years, making in all a period of 42 years. The next step arose about the year 1898. At that time electrical science had developed. By the invention which resulted in the electric motor it was realised that electricity had a much greater future before it than that limited by its power as an illuminant, and that it-was calculated to become in time the great motive force which might rival, if not ultimately supplant, the steam engine. In that year there was a Joint Select Committee of both Houses of Parliament appointed, and presided over by the late Lord Privy Seal, Lord Cross, which considered in the light of the experience which had been gained as to whether there was not now a much wider outlook open than was contemplated by the legislation of 1882 and 1888. The systems which have come into being under the Electric Lighting Orders were limited in area and outlook, and that Committee reported in favour of Parliament granting by private Bills powers to undertakers who should supply mainly for power over a much wider area the energy the development of which had become possible owing to higher voltages and was capable of transmission over greater areas.
We advanced from the stage when the alternating current was the only system. The direct current had come into being, and later the one-phase system had given place to the multiple-phase system, with enormous improvements and great possibilities. In consequence, about 1900, there came into being another class of undertakers than those which had been established since the Act of 1882, namely, the power companies, and those companies were all the subject of legislative creation or assistance. They were given rights and powers to supply electricity in bulk and for power purposes over large areas, but they were restricted from supplying electricity in the districts of the existing undertakers. There are, therefore, in existence at the present time some four 177 different kinds of electrical undertakers. There are the Provisional Order municipal undertakers, the Provisional Order private venture undertakers, the power companies, which were established by Statute, and those which established themselves under the limited liability laws and fortified themselves with additional powers given by Parliament.
He would be a bold man who would prophesy what is the limit at which electricity in the future may aim in industrial development in our midst. Both classes of undertakers were handicapped; the provisional order companies by the fact that they had a limited tenure and were subject to purchase; the power companies by the fact that they were excluded by their statute from operation in places where there were already existing undertakings, and that kept them from the large industrial districts. That was the state of things when the War broke out. I think I am right in saying that the development of electricity in our land has been slower than in any other civilised country. On the outbreak of War, the total output was in the region of 2,000,000,000 Board of Trade units. The War called forth an immediate increase in power, and during the period of the War the output increased by more than double; in fact, to 4,628,000,000 units. In 1918, two or three committees considered this matter. There was the very important Committee presided over by Lord Haldane, dealing with coal conservation. If hon. Members care to consult the Report of that Committee they will find some extremely interesting figures. It was there estimated that in the production of steam power as a motive in this land there were consumed 80,000,000 tons of coal per annum. That Committee, having heard evidence, came to the conclusion that if that coal were used in the production of electrical energy there would be a reduction of no less than 55,000,000 tons out of the 80,000,000 tons. I do not suppose there can be two opinions that our manufacturing supremacy has been built up on the fact that we have had an abundance of coal supply in our own land. To-day that it challenged, other forms of production of power are being used in other lands, notably in places where they have abundant water power. In Sweden there is no less than six times the volume of electricity per head produced that there is in our own land.
§ Mr. NEAL
We have not got the water power. That makes it more and more important that we should conserve our coal supplies, and that we should not lose our pre-eminence gained by the fact that we had those coal supplies when other countries were short of the means of producing energy. Following Lord Haldane's Committee on coal conservation, there was a Board of Trade Committee, presided over by the right hon. Member for Moray and Nairn (Sir Archibald Williamson). Upon the basis of its Report came the Bill passed by this House in 1919. That Bill had for its object the establishment of an Electricity Commission, which should view the problem impartially as between the rival interests that had arisen, but should consider the national interests, which are the over-riding interests. There had been no less than 13,000 Provisional Orders made, of which some 835 were still in operation. There had been created some 26 power companies, of which 21 were in operation. The whole system was chaotic. In Greater London there were 70 generating stations, some 50 different systems, 34 different voltages and 10 different frequencies. All that spelt waste and confusion. It meant the overlapping of plant, because an electrical undertaking has to have two sets of reserves. It has to have a reserve against the peak load and a reserve against breakdowns. Therefore, the Bill contemplated something in the nature of a national outlook upon the electrical industry in our midst.
The Commission was appointed. The Bill as originally introduced to the House contemplated one class of authority only, namely, District Electricity Boards, which should acquire, all the generating stations and main transmission lines. As the Bill passed through Committee an alternative authority was set up, namely, a Joint Electricity Authority, which might or might not, according to the scheme-under which it was created, acquire and own the generating stations and the main transmission lines. The Bill had also in it financial Clauses which might have involved the State in an advance of money or a pledging of credit to the extent of £45,000,000. The Bill went to another place for consideration very late in the Session, and it was not unreasonably 179 said by the Noble Lords in their discussion that it was much too late for them to give due consideration to a Bill of that magnitude, with the result that they made amendments in it which struck out the District Boards with their compulsory powers of acquisition of property, and cut out the financial Clauses and left in existence the Joint Electricity Authority or any form that might be found suitable and convenient, according to the varying needs of the district, but with no power compulsorily to acquire the generating stations or the main transmission lines.
The Government accepted that Measure at the end of 1919, but it was stated from this Box by the then Minister of Transport (Sir Eric Geddes) and by the Home Secretary that they intended to re-introduce and pass in the next Session the balance of the Bill. Parliamentary time did not permit. The Electricity Com missioners got to work. They found throughout the land, and I think I may say without exception, good will to that part of the Measure which was passed and a desire by undertakers to make that a serviceable and popular Measure. It is because the Electricity Commissioners have been met in that, spirit in the various districts in which their inquiries have been made that the Government have found it possible to introduce a much smaller Measure, which, I trust, is devoid of the points of controversy that arose around the other Measure, and yet one which, with the co-operation that is desirable of the various authorities concerned, may result in our getting a development of the electrical industry, and the provision of a cheap supply, widespread throughout the land. This Bill, therefore, is not ambitious. It proposes only to complete and make serviceable and workable the Measure of 1919, which was certainly left incomplete owing to the circumstances described.
It follows that if you are to have these authorities, they must have financial powers to carry on their business. The undertakers who are combined in these authorities have borrowing powers. They are limited only by their statutory powers or by their memorandum and articles of association if they are registered as limited companies. If they are Provisional Order companies they have borrowing powers which they must and do exercise. The electrical undertaker gives 180 his pledge to Parliament that he will supply the demand of the district in the area allotted to him. To do that calls for perpetually borrowing out of capital. The increasing demand for development, which comes constantly, calls for further expansion. The result is that the undertakers are compelled to expand, and, as the law stands, the Electricity Commissioners are compelled to consider their applications for loans and to sanction them; and the only question is whether the money which is to be expended shall be wisely and economically expended upon stations of suitable size, having regard to the necessity of the district, and upon stations suitably placed. This is a matter of great importance, because a station which is placed in a position merely to supply a small area may be altogether uneconomical. They must be stations suitably supplied with modern plant. If this were a new field it would call for the scrapping of a great deal of existing plant. But one has to go with care and prudence in these matters.
Therefore it is that applications are being made from day to day to the Commissioners. They have, in the very short tenure of their existence, sanctioned advances to an extent of £29,000,000. This expenditure must be borne by someone, and the question is whether the expenditure is to be on prudent and economical lines which have a larger outlook, or whether it should be an expenditure upon obsolete, inefficient, small and ill-designed stations and plant. I am told that no fewer than 930 applications for borrowing sanction have been made to the Commissioners since they came into being, and they have dealt with 865 of them. No fewer than 253 applications relating to price revision have come under their review, and they have dealt with 243 of them. There have been no fewer than 75 applications for special Orders, and they have made those Orders, subject to Parliament. In these circumstances, I may be asked—and in fact I know the question is agitating the minds of hon. Members of this House and of people outside—is Parliament giving up its control in these matters? My answer is no. To those who read the Bill as it has come from another place, where it received the most careful and scrupulous consideration, it is obvious there is no intention of withdrawing these matters from the purview of Parliament. Applications for borrowing 181 powers in general, by electricity authorities, in the Bill as it, was presented in another place, were to come before Parliament, and that view was strengthened by an Amendment which the Government accepted that not only should there be stated in the scheme which received Parliamentary sanction, the limit of the borrowing power, but that any further borrowing powers required should be laid in the form of special Orders, requiring an affirmative Resolution by both Houses of Parliament before becoming law.
In the scheme of the Haldane Committee was put forward prominently the desirability of having main transmission lines that should follow routes that might lend themselves not only to giving out supply where it was demanded, but of picking up supply which might be available at collieries or works and distributing such supply through the land. This Bill is mainly a Bill dealing with such points. There are other matters in the Bill to which I shall briefly call the attention of the House. There are powers in connection with the working of generating stations; there are powers, by consent of the authorities concerned, in regard to the periods of purchase rights vested in local authorities which are a handicap upon provisional undertakings, and as the date of possible purchase draws near, make it almost impossible for the undertakers to carry out their views. It follows there should be some control of the price charged. In accordance with the common practice of the House in dealing with public utility undertakings, when the price to be paid by the consumer has some relationehip to the dividend or profit earned by the undertaking, there are powers conferred by the Bill to revise prices more frequently than at present is permissible. Under the law as it stands, the Ministry of Transport may revise these powers once every five years, but in these days of change and of fluctuation in values, five years is thought to be much too long a period, and it is proposed to reduce that period to three years. I have briefly indicated the main provisions of the Bill; I am not aware that it raises any great point of public controversy, or that it is likely to receive very great alteration in Committee But I am quite aware that Bills of this description necessitate microscopic examination by Committees of the 182 House, and that examination will be welcomed. All I want to say further upon the matter is that if improvements can be suggested by hon. Members in Committee, the Government will receive those suggestions and give them the most the careful consideration.
In conclusion, may I point out that while other countries are developing their motive power from the resources of their water supply; which competition in industry and trade is getting keener than ever it was; while we are dealing with a wasting asset in our coal supply: while it is a scientific fact, not capable of controversy, that we are losing in the production of steam power at least 80 per cent, of the calorific value of the coal; while we are polluting the atmosphere with smoke; while we are putting individual manufacturers to the cost of installing their own power-producing plant, be it steam of electric—we are, by all these things, handicapping the development of trade in our midst. A few months ago the Minister of Health asked me to join him when he received a deputation from the representatives of all those interested in the electrical trades, masters and men. They were pressing upon my right hon. Friend the extreme importance of getting some work in hand quickly, in these great industries—industries which are large in themselves but are of much greater value in the fact that they tend to assist all other industries. It was seriously considered by the Government having regard to the state of employment in our midst, whether this Measure might not have been introduced to deal with the relief of unemployment, because there can be no better way to deal with the problem of unemployment than by giving the means of production and finding work for men in the normal channel, and thus setting the wheels of industry revolving naturally and normally again. I believe the provisions of this Bill, and the work of the Electricity Commissioners, to which I would like to pay a tribute, tend directly to the sustaining of our national supremacy as a manufacturing country in the world, and that it will help to find work for those who so sadly need it. The Bill has received an extraordinary measure of support from those who have studied it; it is complementary to, and necessary for the Act of 1919 in order to make that Act an accomplished and satisfactory piece of legislation, and 183 therefore I submit it to the House and ask that it shall be given a Second Reading.
§ Mr. G. BALFOUR
I beg to move to leave out the word "now," and at the end of the Question to add the words "upon this day six months."
This is the formal method of moving the rejection of the Measure. Allow me to say at the outset that my object in putting this Amendment on the Paper is not any desire to see the Measure rejected, but it is to secure a proper and adequate control by this House over the finances of these large authorities which are to be set up. Having said that, before I turn to that particular issue to which I shall address myself, I must say that the speech to which we have just listened from the Parliamentary Secretary leaves me cold. I am amazed that such a speech should be delivered in this House, and should claim to be a speech in support of this Bill, when, as a matter of fact, nine-tenths of that speech could have appropriately been delivered as a side issue in the presentation of the Bill of 1919, which became an Act, and is is no way particularly directed to commend the present Bill. I think it is hardly necessary to deal in detail with the speech of the hon. Gentleman, as I am afraid it would occupy the whole of my time until the rising of the House to make clear the fallacy of the statement that has been presented. All this talk about the relief of unemployment if we could only get such a measure as this going—I express myself mildly when I say it is utter nonsense. I do so with great respect and deference to my hon. Friend, but any milder term would be scarcely the truth. I heard so much in 1919, when that Bill was presented, I have heard so much to-night on the presentation of this Bill, about electricity, the. conservation of coal, the development of industry, and so on, but not one word have I heard of a Second Reading speech, either from Sir Eric Geddes, when he stood at that box, or from the Parliamentary Secretary. I could quite understand if I were not perhaps more fully informed on these matters than most hon. Members, some hon. Members believing that these things were vital in the interests of the public, and it is because I believe I have a fuller knowledge on this subject than falls to 184 the lot of most hon. Members that I feel it my bounden duty to stand here and make this protest.
My opposition to this Measure is founded entirely upon grounds of public policy, and has nothing whatever to do in particular with the question of the supply of electricity and nothing to do with the technical or the commercial side or vested interests, but is entirely due to the fact that the joint electricity authority principle and the methods of finance proposed by this Bill are, in my opinion, utterly bad public policy, and will lead, not, as my hon. Friend suggests, to progress and prosperity, but to stagnation. When the 1919 Bill was passing through this House, I searched and searched in an endeavour to discover any pressure of public opinion clamouring for such a Measure as was then presented, and I have searched further since that Bill became an Act to discover any pressure of public opinion demanding such a Bill as this to-night, but I have failed to find any. It is quite true that many municipal authorities, town clerks, borough electrical engineers, and associations of those authorities have clamoured for this Bill, but I ask the Parliamentary Secretary, can he tell me if there is any place in the length and breadth of Great Britain where there has been convened by these associations a public meeting instructing them on the proposals which they intended to press upon the attention of Parliament and asking them for their blessing upon them? I am fairly well informed, and I know of none. Surely it is necessary that we should protect the public in these matters. In the question of housing, a question which is perhaps more easily understood by every average member of the British public than almost any other question, did they understand the financial proposals of the Government when the Housing Bill was introduced into this House? No! The Government said it would accomplish certain things, and even on housing the people of this country trusted the Government, and we all know the result. How much more is it necessary for Members of this House to see the public protected against the Executive and the Government in a complicated matter such as the question of electricity supply on a national or quasi-national scale!
185 This is not a question of His Majesty's Government or the Executive yielding to the pressure of public opinion. It is in my view the other way about—the Executive compelling their view both upon the Government and upon the people of this country—and it is time that we took a decided stand to see that the views of the people shall prevail and be pressed in this House, to compel both the Executive and the Government to obey this House, and not for this House to be absolutely controlled by the Executive. I should, perhaps, in view of what the Parliamentary Secretary has said about the progress of the 1919 Act through this House and subsequent events, refresh the minds of hon. Members as to the origin and terms of that Act. Hon. Members will remember that this resulted from a Bill which proposed very large areas of supply, compulsory district boards to serve those very large areas of supply, power to acquire undertakings compulsorily, and many other subsidiary things. The Act finally passed, purporting to provide a cheap and abundant supply of electricity through the medium of the joint electricity authorities. Owing to efforts in this House by certain hon. Members, and particularly due to a valiant fight and action in another place, the more socialistic proposals of His Majesty's Government were eliminated from the Bill, and it emerged in a manner that would not do any particular harm. The Bill was pushed through, as several Bills were pushed through at that time, as a matter urgently needed—not a moment's delay—for the purpose of reconstruction after the War.
§ Mr. BALFOUR
That Bill became an Act nearly 2½ years ago. What has been done since that time, what have we found in the way of reconstruction, so urgently needed? This period since the Armistice surely has been a period when reconstruction should take place, but nothing whatever has been done under that Act. What is the reason? Is it due to the fact that they had not financial powers? My hon. Friend would say so, perhaps, but the real reason, I suppose, is that a State-controlled scheme really depends upon the possession of unlimited powers, and the scheme cannot be created until they are assured of the fact that an unlimited fund is to be available, so as to force 186 the scheme through to an appearance of success while its authors, at any rate, remain in power. Why is it we have not had any joint electricity authorities created? The absence of financial power in no way militated against, or need not militate against, the setting up of the authorities. If the authorities had been set up, it would be a perfectly simple matter to come to this House and ask for, and if the scheme was anything like sound, obtain, the necessary financial powers in order to make the scheme operative. I should like the Parliamentary Secretary to the Ministry of Transport to answer that question.
It is a remarkable fact that in Lancashire, which, I think, is the home of the idea of district boards and joint authorities, which first of all proposed a linking up scheme, a district where the first inquiry was held to institute a joint authority, that inquiry, which was attended by representatives of the Lancashire municipalities and several companies, refused to have anything to do with the joint electricity authorities, and they have now set up, and the Electricity Commissioners have approved of, a voluntary Joint Advisory Board, absolutely autonomous. In the Birmingham area the same thing has taken place. Nowhere can you find any clamour for a joint electricity authority. Nowhere can you find any clamour for legislation of this kind. We are asked: "What about London?" London surely is a special case, a very special case. London covers 8.000,000 of population, a problem big enough to be dealt with by a special Act for itself, and not mixed up with a Bill applicable to the whole length and breadth of Great Britain.
In the 1919 Act a joint electricity authority might be set up, and the scheme approved by the Commissioners, but that scheme is only operative when it has been approved by both Houses, either with or without modification. The scheme deals with the limit of area, the constitution of the authority, technical details, plans, etc., but does not provide for finance. I admit that we must either abolish the joint electricity authorities set up by the Act of 1919 or we must provide the necessary machinery to clothe them with financial powers. It is the principle involved in providing the financial powers of the joint electricity authorities which causes me to move this Amendment. The 187 Bill proposes to confer power on the joint electricity authorities set up in the 1919 Act to borrow very large sums of money. In Clause 1 there is power to borrow for capital purposes, an obviously proper purpose; there is power to borrow for payment of interest while capital is unremunerative, a rather remarkable proposal. There is power to borrow for working capital for an indefinite period. In Clause 2 there is power to suspend the sinking fund on unremunerative undertakings for five or six years. In Clause 5 extensive powers are given to local authorities to lend money to the joint electricity authority, to subscribe for any securities issued by the joint electricity authority, and to give guarantees for the payment of interest on money borrowed by or securities issued by that authority. Also authorised undertakers, are compelled to contribute to the joint electricity authorities' expenses.
The Bill proposes that all the powers I have recited shall be conferred upon the joint electricity authority by the Electricity Commissioners, with only the confirmation of the Ministry of Transport, and the approval of the Treasury. There is one tiny protection. There is in Sub-section (4) of Clause 1 a limit of the borrowing power to be fixed in the scheme, that is, that when Electricity Commissioners frame their scheme they must put into that scheme the limit to which the joint electricity authority may borrow. They only have to put the limit high enough to make it absolutely valueless. All the other financial powers are to be conferred upon the joint electricity authority by the Bill, with the exception of the limit to be conferred according to the terms of the principal Act. These authorities are to be established for all time presumably. They are to operate over very large areas. They are to play, if they are set up, and where they are set up, a very important part in our national life. I think it is likely that very few such authorities will be set up. If they are set up they will be of the greatest possible importance, and probably much more important than such an institution as the Metropolitan Water Board.
The sole protection is the limit I have mentioned unless somebody is wide awake enough when the scheme is presented to the House, where it has to be passed by Resolution, to make some interruption 188 and stop it at that time. We all know what it means, a hurried mumbled word, when everybody is leaving the House, the people interested perhaps not here, and the Resolution is passed. The Commissioners are responsible for the scheme. They fix the powers, the provision as to borrowing, and how can the Ministry of Transport or the Treasury prevail against the Electricity Commissioners, who are to them the experts in the matter? I, therefore, propose that the control of the financial powers should remain entirely with Parliament. The right method is for the authority to be set up under the terms of the 1919 Act, which gives the whole particulars of the scheme, limits its area, names the authority, mentions the amount of money, and the representation on the authority.
When that is done—and that is a big task separate, apart from the financial powers—and only when that is done will they know the limit of their financial requirements. Surely, when that has been done, this Bill under the existing provisions of Clause I could empower the Commissioners by Provisional Order to grant to the joint electricity authority power to borrow. Such Provisional Order would contain the terms applicable in each case. The terms will naturally vary, as, for instance, the terms for a London area, and the terms possibly applicable to a rural area in the northern parts of Scotland. This Amendment in no way hampers the joint electricity authority being first established. When the Provisional Order clothing this machine with its financial powers was presented to this House, if there was any strenuous opposition by any one of the constituent members of that joint electricity authority, or by any of the local authorities otherwise interested, it would be the best proof possible of the wisdom of the course I proposed that that opposition should be dealt with in this House, and not surreptitiously by the Electricity Commissioners, without the public having an opportunity of making a protest. It is 2½ years since the Act of 1919 was passed. Nothing has been done! I submit to the common judgment of every hon. Member here that it is not too much to ask that the financial powers should be given by way of Provisional Order, which if unopposed may take six or seven weeks, and if opposed 10 or 12 weeks, to get through. 189 Surely there is no need to rush this matter through from the point of view of saving a few weeks and some trivial expense.
I have had some considerable experience of Provisional Orders. There is seldom a Session that I have not a provisional Order going through for schemes varying in amount from a few hundreds to thousands of pounds. Surely it is not too much to put oneself on the safe side in connection with joint authorities which may have to deal with schemes costing from £5,000,000 to £20,000,000 in order to protect the public, and to make sure there is nothing wrong? I have endeavoured to put forward a plain statement of the facts of the case. I trust I have made clear to hon. Members the true facts. If so, I shall be content. I would just like to say, in conclusion, that I remember a few words of one of our constitutional writers who said:To watch and control the Ministry in the interests of the people is the characteristic function of the House of Commons.I would ask the hon. Gentleman in charge of the Bill to allow the House of Commons control of finance in this matter which is so vital to, and affects so much, the interests of the people of this country.
§ Sir R. CLOUGH
I beg to second the Amendment. I believe there is no one in this House who can speak with such authority on the subject before us as the hon. Member for Haropstead (Mr. G. Balfour). As I do not wish myself to take up any time, I will merely express in a sentence one opinion, and one only: that is, that this Bill is against public policy, and that no Bill should be passed through this House where Parliament has so little control over finance as is given by this Bill.
§ Sir PHILIP DAWSON
I have been asked to take part in this discussion by some of the hon. Members of the industrial group in consequence of the fact that, for very many years past, I have devoted my energies to questions connected with those dealt with in the Bill now before us. I have listened with the greatest interest to the way in which my hon. Friend the Parliamentary Secretary to the Ministry of Transport exposed the objects of the Bill, but I waited in vain for him to refer to what I thought was the principal object of this Bill, namely, to produce a cheap and abundant supply of electricity. I have also listened to 190 the Amendment proposed by my hon. Friend the Member for Hampstead (Mr. G. Balfour), and although I agree with him on some points, I am afraid I cannot agree to go quite as far as he does. May I just go a little back into the history of electrical enterprises in this country, so that the House may realise the number of causes which have brought it about that at the present moment we are one of the backward nations in electrical development? And then consider whether the Act of 1919 assists matters, and whether the Bill now before us, if passed either in its present form or with certain alterations, will contribute to those improvements to which we all look forward. I would immediately associate myself with the words of the Parliamentary Secretary to the Ministry of Transport as regards the importance of electricity, and a6 regards the great economies in our coal resources which could be obtained by a proper and legitimate development of that industry.
As regards economy, I will refer to what was said in another place in reference to the necessity for this Bill, namely, that unless this or some similar Bill becomes law, a great number of the provisions of the 1919 Act become useless. Unless some additional Bill becomes law the main principles of the 1919 Act become unworkable. May I now refer to what the 1919 Bill, when it was originally introduced, was really meant to do. It was one of those Measures introduced immediately after the War, when it was hoped that by an Act of Parliament we should be able to create a new electrical heaven and earth Unfortunately, it is impossible to so rapidly produce those results to which we all should like to look forward.
The scheme was introduced by the Secretary of State for the Home Department, although it was really a scheme intimately connected with the very wonderful ideas of the then Minister of Transport, and if the Bill, as originally brought forward, had actually passed, it appears to me it would have resulted in wholesale municipalisation and. probably, nationalisation of the whole of our electrical industries. It is quite likely that that may have been at the back of the mind of the Government, and, as an outsider at the time, I thought it was their intention to nationalise all our means of transport with which the use of electricity 191 is so closely associated. Fortunately, in fact, very fortunately, all those proposals were very carefully criticised and looked into in another place, and those Clauses which were compulsory, and would have resulted in the evil to which I have just referred, were eliminated when that Bill came back to this House from another place.
I should like to refer to what was thought of the attempts of the 1919 Bill by some of the best authorities in this country, as published in one of the electrical papers shortly afterwards. Before I do that, however, may J just go back to what happened before the 1919 Bill was introduced and what rendered that Bill necessary. The electrical industries in this country started in the early eighties, and they had a very good start, so good that in 1881 electrical apparatus was being exported from this country to Germany and to many continental countries. Then came a Bill which was, I believe, intended by this House to assist the electrical industry—the 1882 Bill—but which practically put it into a strait jacket. and limited the number of years over which the concession was to run to 21. The result was that the electrical industry was practically killed. Then the 1888 Act was introduced. It improved the state of affairs, but it still retained the strangling Clauses as to production, although it prolonged the life of the concession to 40 years. That was particularly noted later on when a Committee under Lord Cross examined the whole question and recommended legislation to the House which, unfortunately, was not passed. There was an additional Bill brought in in 1909 which gave the industry a certain amount of assistance by enabling the different electrical authorities to combine in order to supply each other.
But that was not enough and, in consequence of the War, a further development took place and, as a result, the Bill of 1919 was introduced. That Bill contained many Clauses which were objected to and which, at the time, the Government did not press, because as they told this House the time was too short, and that certain legislation was necessary, but they stated that they would come to the House again in order to re-introduce those Clauses which had been expurgated in another place. I am 192 glad to see that in the Bill now before the House the Clauses which in the old Bill were compulsory are now made optional. There are many Clauses in the present Bill, however, which are very dangerous from the point of view of the economical production of electrical energy. One of the things contemplated by this Bill is the creation of joint electricity authorities. These joint electricity authorities are going to be very vast bodies—bodies which I think it will be very difficult to deal with. The House will agree they are not the most economical methods for administering a great undertaking such as is involved in the production of electrical current. In the inquiry which was held before the Electricity Commissioners last summer, among the various proposals for a joint electricity authority for London one of the best was that of the London County Council. It was a joint electricity authority which, it was proposed, should look after and control the generation of. electricity within the huge area which had been proposed by the Electricity Commissioners. It was to consist of six representatives of local authorities, six of electricity supply companies, eight of the London County Council, four of other public authorities, two representatives of the railways, and two workers—in all 28. Out of this 28, the railway companies, which would be the greatest consumers of all, were only to have two representatives!
I would ask the House whether a body of this kind is one which can reasonably be expected to economically control the generation of electricity, or to whom the expenditure of vast sums can be entrusted with the likelihood of bringing about the best possible financial results. The fact that those authorities who recommend this Bill do not themselves believe in producing cheap electricity appears to me to be borne out by the circumstance that one of the Clauses of the 1919 Bill is not contained in this Bill, namely, the Clause which provided that existing electricity undertakings should have the right to be supplied by a joint electricity authority at the same price at which they can produce electricity themselves. It appears to me that any existing undertaker who may be forced by the Commissioners to purchase electricity from a joint electricity authority should not be 193 penalised in so doing. It may be argued that existing undertakers are entirely free to come or not to come in under such a joint scheme, and that is true, but on the other hand no existing electrical undertaker can put in any fresh plant, either to increase his existing plant or to replace old, antiquated plant, without first having obtained the permission of the Commissioners, who may tell him that he will have to take all his future supply from the joint electricity authority, and in those circumstances the interests of the existing authorities should certainly be safeguarded. If those who are responsible for the promotion of this Bill really believe that cheap supplies will result from it, then a Clause of that kind should once more be inserted in the Bill.
Clause 1 of the Bill provides that joint electricity authorities shall be empowered to raise funds, and my hon. Friend the Member for Hampstead (Mr. G. Balfour) has already referred to this. If a joint electricity authority is formed, it is obvious that it should have some means of raising the capital required for developing the undertaking. But when we come to the methods by which those funds should be raised, we ought to consider very carefully whether authorisation should be granted for the mortgage of rates—either of county councils, borough councils, or urban district councils—as provided in Clause 3 of the Bill. That Clause provides that for any amount of capital required by a joint electricity authority, the urban districts will be allowed to mortgage their rates. It seems to me to be a very dangerous precedent to allow undertakings which must necessarily mean a certain amount of risk, like these huge electric power stations, to be rate-guaranteed. The objection to that is supposed to be avoided by Clause 17, in which it is provided—and it is here that I want to point out that this is not really a Bill for the supply of cheap electricity—that if the amount received in payment for the electricity delivered is not sufficient to pay interest and sinking fund on the capital, the prices shall be varied accordingly, so as to enable those amounts to be paid. A great railway company that wishes to enter into a contract for the supply of very large amounts of electricity, say 200,000,000,000 or 300,000,000,000 kilowatt hours per annum—when it enters into such a contract, wishes to be quite 194 certain that the prices which have been agreed upon for the supply of that energy are those which will be charged. If a contract of that kind is entered into with a joint electricity authority, there is no certainty, because, if later on the generation of the electricity has not been carried out in the most economical manner, and consequently the prices received do not cover interest and sinking fund on the capital, that railway company will have to pay whatever amount may be necessary in order to pay interest and sinking fund.
That is not the proper way in which to develop electrical undertakings. Either the undertaking is a good one, in which case it will pay interest and sinking fund, and it is not necessary to state that if it does not pay the charges are going to be increased; or it is a bad one, in which case it is very dangerous to mortgage the local rates in order to encourage the erection of these very large super-stations, which require the utmost skill to work economically. It may be suggested that as there are a good many local authorities which own their power stations, and as they produce current at comparatively low rates, which compare favourably with many privately-owned stations, a big joint electricity authority will probably show equally satisfactory results. I do not agree. We have a larger number of local authorities which supply more or less small areas and areas which are more or less of a similar nature, and therefore, when they publish their accounts, there is a competition between the different authorities in order to produce at least as economically as the adjoining authority, and a comparison is possible because the generation in the different adjoining areas is more or less equal, and, of course, conditions of supply and demand are more or less on the same basis. When we come to these big joint electricity authorities, are we going to have the same thing? I suggest that there will be nothing of the kind. We have this enormous area that is proposed for London, far greater than the Greater London that anyone ever dreamt of. There will be no other great electricity authorities similar to it within miles of London. Possibly the nearest may be Nottingham or the North-East Coast or Birmingham, and the conditions of supply in the London area and of operating expenses will be so totally 195 different from those in the other areas that a comparison will be totally valueless, and the main reason which now exists for local authorities producing cheap electricity will have ceased to exist. Under these circumstances, this Bill, far from promoting cheap electricity supply, may result in producing a dear electricity supply, and I certainly think Clauses 3 and 17 will require material modification in Committee.
Although safeguards are provided by Clause 17 against any possibility of ever coming down upon the rates, yet there are local authorities which are very sceptical that the rates may not be called upon, and I have had a proposal sent me by one of the local authorities to provide against this very contingency, a proof that local authorities themselves do not believe this Bill will bring about that cheap and abundant supply which is, I take it, the principal reason for its introduction. They suggest a Clause somewhat to this effect:Notwithstanding anything to the contrary, whether actual or implied, contained in this Act or the Electricity Supply Acts of 1882 or 1919, no charge whatever shall be made upon the rates in consequence of any deficit or other cause in respect of any district electricity board, joint electricity authority, or any other organisation created under this Act or the Electricity Supply Act, 1882.That proves that I am not the only sceptic as regards the wonderful results of cheap electricity which, it is supposed, will be brought about by this Bill. What are the safeguards which are suggested in this Bill against any contingencies of that kind? The first safeguard is that the capital expenditure shall be fixed by the Electricity Commissioners. I should like to take this opportunity to say that, so far as the present Electricity Commissioners are concerned, they have earned the confidence of all those with whom they have had anything to do. They are men of great experience. They are men who are willing to give up all their time, and they are anxious to assist the electrical industry in every way in their power. I should like to add my testimony with regard to their success to that of the Parliamentary Secretary to the Ministry of Transport. But are these Electricity Commissioners, who, after all, are engineers—I happen to be an engineer, so, perhaps, I may say "only" engineers, 196 and mortal—are they absolutely certain never to make a mistake? Are they not likely, sometimes at any rate, in their anxiety to assist electrical development, to look at the picture a little too much from the rosy side, and therefore to get people to mortgage the rates on undertakings which may eventually fall back on the rates, and cause additional taxation of the ratepayer, and we who are ratepayers know that the rates are already unduly heavily loaded? What other safeguards are there? They have been referred to by my hon. Friend the Member for Hampstead. There is the Ministry of Transport. The Ministry of Transport will be advised by the Electricity Commissioners, who are his authority. The next safeguard is that an Order must lie on the Table of this House. My hon. Friend has already said how little safeguard can be expected from a step of that kind.
I should like to sum up the principal objections, which, it appears to me, are contained in this Bill. The first one is that the credit of all local authorities shall be available in order to promote the carrying out of enormous electricity undertakings which must necessarily be risky. Any super station of that kind must contain a certain amount of risk, because you cannot ascertain, however closely you estimate it, what will be the revenue for some years ahead. That is the first thing which should be carefully considered in Committee. The next point is that we cannot expect cheap electricity if, whenever a business is mismanaged—and it may be mismanaged—the results of that mismanagement shall be placed on the unfortunate consumer, who has in this case to pay whatever charge he is asked for in consequence of bad management. Those are the two main points to which I should like to call attention. I hope they will be duly considered in Committee, and I trust that no powers will be given which may eventually result in greatly increasing the municipal and national expenditure in connection with large electrical undertakings.
§ Mr. MYERS
The hon. Member who moved the rejection of this Bill discounted his advocacy by indicating that his case was one of special pleading. He indicated that he anticipated some difficulty in connection with control over borrowing powers. I would suggest to 197 him that there is just the same protection for borrowing powers under the district authorities as there is now when the local authorities desire to borrow money for the extension of their plant and undertaking. The hon. Member reinforced his argument by a quotation about constitutional practice and Government responsibility. I may reply to that with another quotation made in this House by Edmund Burke:Government is a contrivance of human wisdom to provide for human wants.If we test this Bill by the application of that principle, only one thing can be done with respect to it. Those with whom I am associated desire to give general support to the principle of the Bill. We shall have criticism to make in respect to some of the Clauses, but in so far as it aims at the unification of electricity undertakings in this country, only one decision can be taken from the point of view of public interest. According to the report of the Committee which investigated this question in 1918, there were 557 different undertakings in the country with statutory authority to supply electricity to the public. We believe that to have such a large number of undertakers supplying electricity is not only a waste of effort, of expense, and of fuel, but that it is inefficient so far as the general public are concerned. There are those who believe that we shall get an improvement in the existing system by linking up existing undertakings. I agree that some measure of economy would be effected if that were done, but a much wider scheme than that is necessary. The Act of 1919, as I understand it, made provision not only for linking up existing undertakings, but, if necessary, for scrapping redundant undertakings and converting those stations which were not needed for the production of electricity into distributing stations, if need be. But the Act of 1919 needs some driving power to make it go. This Bill, as I understand, supplies that motive power.
We had last year for a considerable period a Bill which ultimately disappeared. The reason for that disappearance was supposed to be pressure of Parliamentary time, but rumours were abroad and it was understood that those who had vested interests in connection with electricity undertakings did not desire that Bill in its then condition. That view is fortified by the fact that the Bill 198 before us is vastly different in many particulars. The hon. Member for Hampstead complained that following on 1919 very little had been done by the local authorities of the country. Very little could be done with the Act as it stood without the driving power of some financial responsibility. During the three years since the passing of the Act of 1919, local authorities have been clamouring for extensions of their own particular work in order to meet the needs of their own areas; not to extend the areas they supply, but to meet the calls upon them within their areas.
§ Mr. BALFOUR
The local authorities have their borrowing powers now, and there is nothing to prevent them going on.
§ Mr. MYERS
My information is that borrowing powers have been refused when they could reasonably have been expected to be granted, and that local authorities have not had the assistance with their work that could be desired. Not only has the brake been put upon the local authorities, but another tendency is at work. The large power producers have been consolidating their position. Those acquainted with the massive works that have been constructed in different parts of the country are quite aware of the tremendous developments made in that direction. It comes to this, that the activities of local authorities have been restricted and those of the great power companies have been encouraged.
§ Mr. BALFOUR
I would point out to the hon. Member that that is the reverse of the truth, as he will find if he cares to make out a list of the municipal plant which has been authorised and built since the last Bill and the plant of the private companies.
§ Mr. MYERS
The hon. Member for Hampstead considers himself well acquainted with electricity. [HON. MEMBERS: "He is!"] We are aware of that fact. He is acquainted with electricity in the field of private enterprise. Those of us who have been connected with electricity in the field of municipal enterprise are entitled to put our point of view forward. The hon. Member for Hampstead looks upon the development of electricity through the municipalities as something to be avoided.
§ Mr. G. BALFOUR
On a point of Order. I assume that every hon. Member has only one interest here, and that is the public interest. He does not come here representing any private interest, but only the public interest. I beg to call attention to the fact that it is a misrepresentation to say that hon. Members come here representing any one interest or another. Such statements are beside the question. Hon. Members attend the House to represent not particular interests but the public interest and the interests of their constituents.
§ Mr. MYERS
We had it from the hon. Member who introduced the Bill that these great power companies only started their operations round about 1900. It is common knowledge that at that time the field had been prepared for them by the pioneer work of the local authorities of the country. No sooner had these large companies started their operations, than they endeavoured by peaceful penetration to encroach on the activities of the local authorities. By endeavouring to persuade smaller local authorities that they could produce and distribute electricity for them more cheaply than they could themselves, they have greatly encroached on the field of municipal enterprise. There are evidences that since the Armistice that tendency has been encouraged.
This Bill bristles with concessions to the great power companies. The Clauses which were of real advantage in the Bill of last year have been removed. Clause 8 of the Bill of 1921 gave certain compulsory powers to the electricity Authority to take over works, etc. In the present Bill those powers have been removed. In Clause 16 of the present Bill the opera- 200 tions of the electricity Authority are restricted, and the operations of the power companies are encouraged. What is a power company? We are informed in this Bill that certain things cannot be done in the area of a power company. The power companies in this country came up to this House and got certain concessions to supply electric current to users of power. They got a right to supply light to the places where they supplied power. I know of instances where a company has put a fan in a hotel, and has then started to illuminate that hotel with electric light. I know of instances where a power company put power in to run a hay-chopper, and then lit up the farm buildings and adjoining buildings by virtue of the concession. They have been encroaching upon the field of municipal enterprise all the time. It comes to this, that the power companies, encouraged by this Bill, are going to make the municipalities merely retail traders, selling by retail electric current which has been generated by these large companies, which will pass it on to the municipal stations for them to distribute, and the companies will take all the spoil out of the arrangement. I want to draw attention to two points. There are two sorts of undertakings which will be brought within the range of the Bill municipal undertakings and power companies. The Fair Wages Clause is in operation in most municipal under takings, and we ask the Parliamentary Secretary of the Ministry to give us apledge that he will incorporate in this Bill a provision which will make the Fair Wages Clause operative on all types of undertakings. We ask, further, in these days, when we are talking about joint control of industry, that, having regard to the technicalities of this business, he will make provision in the Bill for representation of the workers in the electricity works upon the joint electricity boards which are provided for in the Bill. We give general support to the principles embodied in the Bill. We believe that from the point of view of health, of cleanliness, of cheap motive power, all the advantages are on the side of this unification of electricity upon a local as upon a national basis, subject to the criticisms I have mentioned.
§ Mr. MARRIOTT
It is quite obvious from the last three speeches that this Bill 201 raises issues of very considerable importance. I took a great interest in the Bill of 1919. I wish to represent to the House that the Bill we are now considering is only a truncated form of the Measure which was before us in 1919, not without considerable and salutary Amendment in another place. The House ought to remember, in the discussion of the Bill now before us, what relation it bears to the Bill, or that portion of it, which was rejected in 1919.
§ It being Eleven of the Clock, the Debate stood adjourned.
§ Debate to be resumed To-morrow.