HC Deb 09 November 1926 vol 199 cc947-55

"In Section twenty-three (Prohibiting unauthorised undertakers from competing with statutory undertakers) of the Act of 1909, the following proviso shall be substituted for the first proviso to that section: Provided that this Section shall not prevent any company or person whose business is not primarily that of the supply of electricity to consumers and who has not installed or provided, or is not using any greater amount of plant or machinery for the generation of electri- city than is reasonably necessary for such business, from supplying to any other company or person any electricity, which is generated by the first-mentioned company or person by means of the said plant or machinery and is in excess of the electricity which the first-mentioned company or person may from time to time require for the purposes of such business."—[Sir J. Nall.]

Brought up, and read the First time.

Sir J. NALL

I beg to move, "That the Clause be read a Second time."

Since this Clause was put on the Order Paper, it has been suggested to me that it might have a result, or series of results, not intended in the draft, and, therefore, as I have said before, we are not at all bound by the exact form of words. The principle is the thing, and it can be very shortly explained. Section 23 of the Act of 1909 sought to prevent unauthorised undertakers competing for the supply of electricity with the established undertakers in the locality. It does not, in fact, achieve that result, but there are certain instances in the country, and there are indications that these instances will be largely multiplied in the near future, where private plant is used for the purpose of giving a supply to people who are in no way associated or connected with the owners of the station, in competition with the authorised established undertaker in the vicinity. There are certain instances where distribution may be made along the same street, parallel and competing with the established undertaking. It was that kind of contingency which Section 23 of the Act of 1909 sought to avoid. It is only lately that its failure is becoming apparent. It is to meet the legitimate case which arises in those circumstances that this Clause has been put down.

As the present law is functioning, it would appear to be the case that the owner of any cinema could put in a 200-kilowatt plant, say, and sell 180 out of the 200 kilowatts to his neighbours, in competition with the electricity undertaking of a local authority or local company. If that is allowed to go on, the whole system of authorised electricity undertakings is open to frustration, for we shall get a series of private plants competing with established, authorised plants. It has been intimated to me that the actual wording of the proposed new Clause might interfere with some quite proper co-operative arrangements come to by dock authorities, colliery companies or other large firms who find it convenient to supply a neighbour from their private mains. Cases of that kind should be considered and allowed for on their merits. The Clause is intended to deal with obvious abuses, which are growing, and which, if allowed to go on unchecked, will have disastrous effects on the extension of authorised undertakings in certain cases. If we are to facilitate and encourage the distribution of electricity, this anomaly ought to be cleared up; the words of the Act of 1909, which appear to be insufficient to achieve the object for which they were intended, should be augmented in order that the position may he safeguarded. It is on those grounds that this Clause has been put down, and if the Government can see their way to accept it—I understand that at one time they were disposed to agree to the main principle of the thing—the words on the Paper can easily he amended to meet the views of those who take exception to it in its present form.

Mr. BALFOUR

I beg to second the Motion.

It has been openly admitted by the Electricity Commissioners—I am sure they will keep my right hon. Friend right if say anything in excess of what is the fact—that when Section 23 was inserted in the Act of 1909 the intention was to prohibit the unlawful supply of electricity; in other words, a supply of electricity could not be distributed through mains along the streets except by people duly recognised by Parliament under either a special Act of Parliament or a Provisional Order. This Section 23 was specially designed to make sure that the electricity supply throughout the whole country should be directly under the control of some Parliamentary Provisional Order or Statute. The proviso was inserted, quite properly, in order that any person generating a supply of electricity slightly in excess of his own needs should not be prohibited from passing on that surplus to a neighbour. It was recognised that it was right and proper that, if a large factory or colliery found its installation was in excess of its requirements, it should be entitled to sell some part of its supply to another factory or premises. But, in fact, it was found—or, at least, it was held by certain parties—that this proviso went much further than that, and that a supply could be furnished to some one even when miles away from the colliery olfactory. It is now freely admitted that that was not the intention of the 1909 Act, and all that we seek in this Amendment is to limit the supply from such factory or works to any company or persons in the near vicinity who can readily absorb it, and to make sure that the proprietors of works will not instal plant to be used primarily for the purpose of supplying electricity outside their premises and not primarily for use in their own works. Any words which my right hon. Friend can suggest to make sure that no injustice will be done to anyone legitimately using the right conferred by the 1909 Act and to protect the rights of factory or workshop owners who wish to co-operate or interconnect their supply, will be readily accepted by those who think with my hon. and gallant Friend the Member for Hulme (Sir J. Nall) and myself. My right hon. Friend will remember that when this subject was debated in Committee upstairs he was good enough to say to me at the end of the day that the matter would receive consideration.

I think it is possible that the drafting of this Clause may embody some slight weaknesses, though I am not able to see them myself. If they are pointed out, and any amendment be necessary, I shall be only to glad to see the requisite modification made in another place. But what I would like is to have some indication from my right hon. Friend that he is able to take this opportunity of amending the 1909 Act so as to make its intentions clear, and not force us to go to the Law Courts for a decision. At the present moment I know of cases—I am not mentioning any names, because I think it is undesirable to mention the name of any industrial concern in this House—where many hundreds of consumers are being supplied—where mains are being laid under the streets in order to establish a business of electricity supply as an adjunct to a general industrial organisation. I think I am not exaggerating when I say that within the last two or three months several hundreds of consumers have been connected up; and it has been done with the intention of putting that industrial organisation in the position of competing with an undertaking working under a Provisional Order, the very thing which the 1909 Act wished to avoid. All we ask is that we should not be forced into the Law Courts and subjected, to years of delay possibly, through appeals and counter-appeals, in getting a decision as to the interpretation of that Act, which, I think, is generally understood by all parties connected with the supply of electricity, but that this opportunity should be taken of making the Act quite clear.

The ATTORNEY-GENERAL

The first observation I wish to make with regard to this proposed new Clause is that, as the House will appreciate, it has nothing whatever to do with the scheme which the present Bill seeks to set up. It is, of course, within the scope of the Bill, because the Bill is a measure to amend the law with regard to the supply of electricity; but it deals with a matter entirely outside and unconnected with the proposals which we are seeking to carry through by this Bill.

Mr. BALFOUR

I quite agree.

The ATTORNEY-GENERAL

In bringing the Bill before the House, and in piloting it through Committee, the Government have tried to limit its operations, as far as possible, to matters which are germane to the scheme; except in one or two cases where there has been general agreement as to the desirability of amending the law, accepted on all sides. It would not be true to say of the present proposal that it is accepted on all sides, because it was dissented from and opposed in Committee, as my hon. Friend will remember, by hon. Members on his own side. We are anxious not to overload this Bill by bringing in every sort of disputable point in regard to the law relating to the supply of electricity. If I discuss the merits of the proposed new Clause I would only like to say this. The present law prohibits unauthorised undertakers from competing with statutory undertakings, but has this proviso, that the Section shall not prevent any company or person from affording a supply of electrical energy to any other company or person where the business of the company or person affording the supply is not primarily that of the supply of electrical energy to consumers. The effect of the proposed alteration is to add to that prohibition a qualification so as not, to prevent a supply of electricity by a person who is not using any greater amount of plant or machinery for the generation of electricity than is reasonably necessary for such business. My hon. Friend said, and I have no doubt sincerely said, that he wished to make the Act clear, so that people might not be forced into the Law Courts; but speaking for the moment as a lawyer, I think that if we inserted a Clause under which it were made a criminal offence for a person to supply electricity if he happened to be using a greater amount of plant or machinery for the generation of that electricity than was reasonably necessary for his business, people would be almost certain to be landed in the Courts. It would be an extraordinarily difficult thing for anybody to determine whether a particular piece of plant or machinery was or was not more than was reasonably necessary for the generation of electricity for a particular business, and, if it were, a criminal offence would be committed if they had any intention of supplying electricity to anyone else. Instead of clarifying the law, the proposed alteration makes it more difficult to understand.

Mr. BALFOUR

Would the right hon. Gentleman be prepared to accept some words to this effect: "provided they shall not engage in the generation, sale and distribution of electricity in competition with existing undertakings"?—or anything my right hon. Friend likes, in his own words, as long as it will make clear what the Act of 1909 means.

The ATTORNEY-GENERAL

At present I am only attempting to deal with the words on the Paper, which make the Act of 1909 not clearer but less clear. The objection I have to putting in any alteration is the one I have mentioned—that this matter has nothing to do with the scheme in the Bill, and that if there is to be any amendment of the law outside the particular proposals of the Bill it ought to be an amendment which is agreed upon by the parties interested and can be accepted by the House without discussion. At present nothing of that kind has been proposed in this respect, and unless general agreement is reached by all those interested, I must say, on behalf of the Government, that I could not accept a proposal which would burden the Bill with something which has really nothing to do with it.

Marquess of HARTINGTON

I am very glad, indeed, that my right hon. and learned Friend has not accepted this new Clause, and I hope that he will not at any future date accept a freshly-drafted Clause having the same object. I was agreeably surprised to find that ho did not accept it, because the effect of the Clause, so far as I can see, would be to make electricity scarcer and dearer than it is now, and as that is inevitably going to be the result of the whole of this preposterous Bill, I was surprised when he did not round it off by accepting this addition. I hope very much that the law will be left where it stands under the Act of 1909. That Act seems to be quite sufficient to safeguard authorised undertakers against unreasonable competition, without stopping industrial undertakings such as collieries, which are what I have chiefly in my mind, from disposing of their surplus power.

As an outcome of the great development of the by-product industry in connection with coal mines, many collier companies in my own district, and I dare say in many others, are able to, and do, supply considerable quantities of electricity at very cheap rates. It would be nothing less than disastrous if they were unable to sell their surplus electricity, and the community in those districts would be deprived of the cheap supply which they enjoy at the present time. I attach very great importance to this matter, not only because I contend that these industrial undertakings ought to be allowed to go on selling electricity as they do now, but because there is some faint hope that if they do, we shall still in the future have some producers of electricity who will be free from the strangling grasp of the army of camouflaged Government officials who will be called into existence by this Bill, and that there will thus be some hope for the future development of the industry.

Mr. LOOKER

I welcome the decision of the Government not to accept this new Clause. The hon. Member for Hampstead (Mr. Balfour) stated that the main object of this Bill was to avoid constant and expensive litigation which, in his view, would arise under the Government proposals. But when we look at the wording of this Clause it will be clear from the most superficial perusal that it is likely to be far more fruitful of litigation than the state of things which exists at the present time. Authorities with a surplus supply of electrical energy at the present time can supply it for any purpose for which it can be used, but this new Clause seeks to limit the power to supply that electricity, until they can prove that their plant is not reasonably in excess of the supply required for their ordinary business. I do not see how any concern can prove that to anybody, and if you are going to limit their right to dispose of their surplus power by providing that they must satisfy some tribunal that they have not extended their plant beyond what is reasonably necessary for the purposes of their business, you will prevent them extending their plant when it is necessary to meet some demand which may arise in the near future. These undertakings should not be prevented from extending their plant when it is necessary, and I hope the House will support the opposition of the Government to this new Clause.

Mr. F. LEE

The Nottingham and Derby-Power Company, with which the Mover and Seconder of this Amendment are connected, is an authorised undertaking in my constituency, but it has never attempted to supply any part of North-East Derbyshire with electricity. Large industrial concerns—collieries and iron works—have generated their own electricity, and, under the powers of the 1909 Act, have supplied their neighbours with spare energy, much to the advantage of all concerned. One very large industrial concern has laid down plant with a view to considerable developments in their own undertaking in the more or less immediate future, and for the moment they have a large surplus of power, made by waste gases from their bye-products, after supplying their own five large collieries and iron works and hundreds of their own houses. The adjoining villages are being supplied in hulk, and Chesterfield is also taking part of the supply. Should this Amendment he carried, it could he argued that this Company, which is not primarily engaged in the generation of electricity, had a plant out of proportion to its reasonable requirements, if its present needs only were considered, and considerable litigation might ensue with the object of curbing its activities. The district is being supplied with electricity at a much lower cost than that at which the hon. Member for Hampstead is prepared to supply it, and I hope that the Attorney-General on behalf of the Government is not going to relax in any way upon the Clause as it stands.

Mr. BALFOUR

I only wish to say that the statement just made by the hon. Member for North East Derby (Mr. Lee) is not in any way an accurate representation of the facts.

Question, "That the Clause be read a Second time," put, and negatived.