HC Deb 10 November 1926 vol 199 cc1139-50
Mr. HERBERT

I beg to move, in page 8, line 8, after the word "electricity," to insert the words as may be required by the Board for the purposes of the scheme (in addition to the electricity required by the owners for the purposes of their undertaking or business). The effect of this and the following Amendment, which is consequential, would be that the owners of a selected station would be entitled to retain so much of the electricity as they required for the purposes of their own undertaking or business, and it is subject to the retention of what they require for their own business that they would operate their station under the orders of the Board and supply electricity to the Board. To put it in another way, it is intended to simplify the machinery of one of the great points of the Bill, which is that the selected stations are to generate electricity, sell it to the Board and buy it back again for the purposes of distribution. One realises, of course, that that is in order to create a kind of pool of electricity by which a deficiency in one part may be made up by the surplus in another, but if you allow the selected stations to retain what they require for their own purposes you simplify the proceedings very much indeed while maintaining the power of the Board over the stations which is intended by the scheme of the Bill. I do not think this matter was gone into in the same way in Committee. This would do away with the kind of dual control and the friction which would be likely to result from the selected station having to sell what it required for its own purposes and to buy it back, and would surely simplify the working of the Bill without making any radical alteration in the scheme.

Sir J. NALL

I beg to second the Amendment.

This is a point that has been urged on the Government by the Association of Chambers of Commerce, who ask that an efficient undertaking should be allowed to continue to supply direct to consumers in their own area. I think it could be shown that it will be very much more convenient for the operation of the Board and will in fact facilitate the carrying out of their schemes if, instead of being involved in working out a redistribution for those from whom they acquire it, they are devoting their energy to supplying current to those in need of it. It will be very much simpler and it will considerably lighten their duties if the existing undertakers are left in the position of being able to supply their own needs as and when they wish from their own stations. Obvously, in their own interest they will do that in the most efficient way. There need be no difficulty in requiring the owners of those stations to supply the Board, as and when the Board requires, with such quantity as they find necessary for their purposes elsewhere. It is fairly obvious that if the system at present in the Bill is adhered to the Board, in allocating the distribution from the particular selected stations, will first of all have to have regard to the needs of the consumer distributed from the undertaker who owns and works that station. Therefore, they will only have to do what at present the owners do for themselves, that is, to meet their own needs in the most efficient and most convenient way. This Amendment will go a long way to smooth out the working of the scheme. It need not be regarded in any way as hampering the operation of the scheme. On the contrary, it will tend towards efficiency and economy and it will minimise the disturbance to existing undertakings.

On that point, may I mention such a system as the north-east coast, where some 20 stations feed into a common system. Under the provisions of the Bill, the Board may select one of those stations and disturb the balance of the working of the other 19. It is important that in any area where several stations are already feeding into a common system the selection of one or more of those several stations should not cause a dislocation of the working in that area. This Amendment, which would leave the owner of the selected station in the position of being able to continue his scheme for the efficient supply of his own area, by working the seleected station so as to give himself the supply necessary for the working of the scheme, would materially assist the smooth operation of the scheme as a whole.

The ATTORNEY-GENERAL

This is a fundamental Amendment which goes to the root of the Bill. Although my hon. Friend the Member for the Hulme Division (Sir J. Nall), who seconded the Amendment, said that it would go a long way to smooth out the working of the scheme, I think he might more correctly have said that it would go a long way to roll the scheme out of existence altogether. The plan which the Bill embodies is one under which the current generated by the owners of the selected stations is acquired by the Board and is then supplied by them to the authorised undertakers, including the owners of the selected stations who may desire it. The plan which the Mover and Seconder of the Amendment propose is that the owners of the selected stations shall merely sell to the Board their surplus current. The House will remember that this proposal was discussed in the Weir Report. In paragraphs 40 to 45 of that Report, hon. Members will find that the suggestion contained in the present Amendment is discussed and shown to be impracticable and unworkable, and definitely rejected, and the proposal which forms part of the Bill is substituted for it.

In addition to the arguments set out in these particular paragraphs, which I have no doubt are familiar to the House, there is another point which seems to me conclusive against the proposal in the Amendment. If the Amendment were carried, the result would be that only the surplus current which the selected owners did not require would go into the Board's pool. It would follow, therefore, that the expenses of the Board which, of course, are spread in the Bill over the whole of the units producing the current, would be all paid by the people who did not own the selected stations, and the owners of the selected stations would be in the happy position of bearing no part of them, while at the same time these owners would get the whole benefit of the scheme, because they would get all the advantages of the interconnection, of the improved load factor and the other benefits which the scheme involves.

Mr. HERBERT

That was not the intention of the Amendment. If this Amendment were carried it might require certain consequential alterations in order to avoid the particular point which the Attorney-General has been arguing against the Amendment, so that what they would pay should be calculated, not only on their surplus, but on what they retained for their own undertakings as well.

The ATTORNEY-GENERAL

I quite accept my hon. Friend's assurance that he had in mind some other Amendments which I do not think he has put down, which would prevent that advantage accruing to the owners of these selected stations. At any rate, on the Amendment as it is framed and before the House, I do not think it can be doubted that that is the effect of it. That is the only effect of it beyond making the scheme unworkable. Under the scheme in the Bill the Board, which co-ordinates the supply of electricity, is able to tell how much it wants from each selected station and is able to ensure that it shall get a supply which is adequate for the total consumption with which it has to deal. If instead of that you allow the owners of selected stations merely to hand over to the Board their surplus current, a position of great insecurity and instability, to use the words of the Weir Report, would be created, because the Board would always be uncertain as to what supply they would get. The only fair and reasonable way of dealing with the matter is that provided by the Bill, namely, that the Board shall acquire all the current which it requires from the selected stations and shall then let it be sold back to the selected stations, in common with the other authorised undertakers, at cost price, with the additional advantage to the owners of the selected stations that they have two further options, one of them being that in no event can they pay more for the current than it would have cost them to produce it had the Board not come along. The scheme outlined in the Bill is the proper one, and the authors of the Weir Report were right when they condemned the proposals in the Amendment as unworkable and impracticable.

Mr. BALFOUR

My right hon. and learned Friend said, referring to the remarks of my hon. Friend the Member for the Hulme Division (Sir J. Nall), who seconded the Amendment, that the Amendment would go a long way to roll out the scheme. Having said that, I have not heard a single word from him to satisfy us on that point. Again, as on so many occasions, we have had words but no facts. My right hon. and learned Friend referred to the Weir Report, paragraph 45. Paragraph 45 says: Briefly, therefore, we recommend that all High Tension energy generated by authorised undertakers in this country after a certain date should be generated under control in accordance with a technical scheme for the country, and sold through the Board to all authorised undertakers at cost price. That, I think, summarises the recommendation of the Weir Report on this point, and it is in no way in conflict with the Amendment which has been moved by my hon. Friend. There is nothing in conflict between the Weir Report and the Amendment. My right hon. and learned Friend said that the Board in the distribution of the current from all these stations will have to say how much they want from each selected station. Can they take from a selected station more than that selected station can sell, over and above what that selected station requires for the immediate use and purposes of the current which must be distributed from that selected station? I think not. If my right hon. and learned Friend can give me a typical instance where a generating station is working and supplying its area and putting out its current for the purpose for which that station was erected, and able to deliver a surplus to some other authority, and it can deliver more than it is using for its own purposes, we might see some reason for dealing with this matter in another way. It must be clear to anyone familiar with this business that when a station is selected, it is already operating and turning out a large amount of current. It must continue to operate and it must continue to turn out that amount of current for its own purposes. Surely, the Board can take from that station no more than the capacity of the plant to produce a surplus in excess of its requirements.

We are urging this point as one of practical working and not for the wrecking of the Bill. So far as engineering, accountancy and finance are concerned, surely the simplest operation is that if you have a selected station turning out, say, 100,000,000 units per annum and 80,000,000 units of the output of that station are used by the owner of the selected station, who is an undertaker for the purposes of his undertaking, it is better to deduct the 80,000,000 at the first, and then for the Board to keep an account of the surplus 20,000,000 which is used by the Board under, of course, proper Regulations, so that the price which the Board pays for the surplus shall be based on the cost of the output from the station, corrected only as to load factor, so that the Board suffers no disability whatever in regard to price, and gets a proper distribution for the surplus current taken over. There may be some different meaning in retaining the present method in the Bill. It may be to camouflage in the eyes of the public the total expenditure incurred in operating this scheme, by distributing the expense over not only the amount of current dealt with by the Board, but also over an amount of current with which the Board has nothing to do, which goes directly from the station for the purpose of the undertaking. That would mean dividing the expenses of the Board and of the Commissioners by the larger amount of units, thereby making the unit figure of expense much lower than would otherwise have been the case. If my right hon. and learned Friend can produce any other arguments to show that the Amendment is technically, commercially or financially unworkable, I am open to conviction, but up to the present I am satisfied that he is unable to do more than say that this is the scheme which the Executive have determined upon, which they determined upon before the Weir Report saw the light of day, which the Weir Report does not definitely lay down, and which is carrying out the policy of the Executive at the moment controlling His Majesty's Government.

Amendment negatived.

The following Amendments stood on the Order Pepper in the name of Sir J. NALL: In page 8: In line 15, to leave out Sub-section (2). In line 28, to leave out the words 'the cost of production,' and to insert the words 'such proportion of the cost of production of all the electricity generated at the station.' In line 30, at the end to insert the words 'as the quantity of electricity generated at the station and sold to the Board bears to the total quantity of electricity generated at the station.'

Mr. SPEAKER

The three Amendments standing in the name of the hon. Member for Hulme are consequential.

The ATTORNEY-GENERAL

I beg to move, in page 8, line 31, to leave out Sub-section (4).

This Amendment is intended to link up with another Amendment to Clause 7 on page 9, line 7. It is little more than a drafting Amendment. In Sub-section (4) it is provided that the Board is to make monthly payments on account for electricity sold to it, at rates to be ascertained. There is no corresponding provision in the Bill whereby the Board shall be paid for the electricity which it supplies back. Obviously, what is intended is that the Board shall make payments for the net amount due, otherwise it would be for 12 months paying for the electricity which it had bought, and there would be no contra payment for the amount bought back by the owners of the selected stations. The later Amendment provides that monthly payments shall be made of the net amount due, instead of a payment in gross without giving credit for the amount supplied back.

Amendment agreed to.

Mr. HERBERT

I beg to move, in page 9, line 4, after the word "electricity," to insert the words "or incurred under or in respect of money borrowed under Section nine of this Act."

I should explain that money borrowed under Section 9 refers to money which has to be paid in respect of the expenses of the standardisation of frequency. The effect of the Clause is that the price to be paid for electricity is to be arrived at by taking the cost of producton with a proper proportion of the Board's expenses, other than the expenses incurred by the Board in the purchase or generation of electricity. I propose to add to that exception, expenses incurred by the Board on standardisation. I feel a little difficulty in moving this Amendment because the matter depends to some extent on what the Government propose to do in regard to Clause 9, which has not yet been reached. I am not quite clear as to how they propose that the expenses of standardisation should be borne, and in the circumstances it would perhaps be better for me formally to move the Amendment in order that the Attorney-General may be able to explain what the Government intend to do in regard to Clause 9.

Sir J. NALL

I beg to second the Amendment.

I think the Attorney-General will find on reflection that it is necessary.

The ATTORNEY-GENERAL

As the mover of the Amendment has quite rightly said, this raises a question with regard to the expenses of standardisation, which is dealt with in a later Clause, and as to which I have an Amendment on the Order Paper to the following effect: () The Board shall be entitled to be repaid by the Electricity Commissioners in each year the sums required to meet the interest and sinking fund charges in respect of money so borrowed, and the payment of such sums shall be treated as part of the expenses of the Electricity Commissioners, but shall be shown as a separate item in their accounts and in their demand notes for contributions towards their expenses. Provided that the apportionment of the expenses of the Electricity Commissioners under this Sub-section, instead of being made in accordance with Section seven of the Electricity (Supply) Act, 1922, shall be made on the basis of the revenue received from the sale of electricity other than electricity sold in bulk to authorised undertakers. This is put down in order to meet a very general view expressed in the Committee when discussing the problem of that expenditure. The intention of the Government is to carry out the wish expressed on all sides in the Committee, that the expenses of standardisation shall be a charge borne by consumers of the country generally and not by one area alone. That is provided for by the Amendment to Clause 9. After that explanation I am bound to resist the present Amendment. If by chance the Government's proposals on Clause 9 were not carried, and the Board were left to pay for the expenses of standardisation, then the effect of the present Amendment would be that whereas all the other authorised undertakers who acquired current would have to pay their quota to the Board's expenses, the owners of selected stations would be excluded from any share in the expenses of standardisation, and the whole of those expenses would fall on the other authorised under- takers. I do not think the Mover of the Amendment intends that, but that would be the effect if this Amendment was carried, and my own, unfortunately, was not accepted. If my Amendment is carried then there is no need for the present proposal, because in that event the cost of standardisation will not form part of the Board's expenses as it will be repaid to the Board by the Electricity Commissioners. I hope the Amendment therefore will be withdrawn.

Mr. HERBERT

I appreciate fully what the Attorney-General has said, but I think the more convenient course would be for him to accept this Amendment now. If he carries his Amendment he will then be able to make the alterations in the Bill that are necessary, and I would suggest therefore that it would be more convenient for him to accept this Amendment and rely on carrying his own Amendment to Clause 9.

The ATTORNEY-GENERAL

If, as I hope, my Amendment on Clause 9 is accepted, then the present Amendment is not needed, because it will not be necessary to exclude the costs of standardisation from the Board's expenses since they will not form part of the Board's expenses. They are paid to the Board by the Electricity Commissioners.

Mr. HERBERT

I did not realise that point, and I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

The ATTORNEY-GENERAL

I beg to move, in page 9, line 7, at the end, to insert the words () The Board shall make to the owners of each selected station monthly payments on account of the net amounts due from the Board to those owners under this Section in accordance with estimates made for the purpose, subject to adjustment as soon after the end of the year of account as the actual liability can be ascertained. This is to carry out what was the intention of Sub-section (4)—namely, to make monthly payments to the owners of selected stations in respect of the current which is taken from them month by month.

Amendment agreed to.

The ATTORNEY-GENERAL

I beg to move, in page 9, line 9, after the word "section," to insert the words then, if it relates to the cost of production, it shall be determined by an auditor appointed by the Minister of Transport, and in any other case. This Amendment is introduced for the determination of financial questions by an auditor instead of as provided by the Bill. It is moved in order to carry out promises which I made during the Committee stage of the Bill. It was suggested in Committee that matters in dispute should be referred to an appeal tribunal, but it was pointed out that this would not do because some of the matters were of a purely technical nature, and I undertook to do something on the lines of the Amendment in order to meet points of dispute on questions which were financial. The Amendment was put down for the Committee stage by the hon. Member for York (Sir J. Marriott) but it was not moved, and, therefore, in order to carry out the promise I made I have put it down for Report stage.

Amendment agreed to.

The ATTORNEY-GENERAL

I beg to move, in page 9, line 12, after the first word "the," to insert the words "auditor or."

This is consequential on the Amendment which I have just moved.

Mr. BALFOUR

I only desire to make one technical observation, and it is to draw attention to the fact that this Amendment introduces these different approving authorities.

Amendment agreed to.

The ATTORNEY-GENERAL

I beg to move, in page 9, line 19, to leave out the word "Commissioners," and to insert instead thereof the word "auditor."

This, again, is consequential.

Amendment agreed to.

Mr. HANNON

I beg to move, in page 9, line 19, at the end, to insert the following new Sub-section: (7) For the purposes of the agreements contained in the Third Schedule to the London Electricity (No. 1) Act, 1925, and the London Electricity (No. 2) Act. 1925, the Board, in relation to the electricity purchased by the Board from the owners of selected stations in pursuance of this Section shall not be deemed to be a consumer within the meaning of paragraph 3 of the schedule to those agreements. This Amendment is moved in order to preserve the position created in London by the passing of the two Electricity Acts last year. In the third Schedule to those Acts there is set forth in a long catalogue the heads under which charges are to be included in the agreements between the London County Council and the various companies, and it is provided that the dividends of each of the companies shall be regulated by the price of electricity sold by the companies in accordance with the sliding scale of prices and dividends set out in the Schedule. It also says that the total revenue arrived at shall be sub-divided and standard prices fixed for supplies to railway and traction supplies, bulk supplies, street lighting, and private consumers. The schedule also provides that the standard price shall be such that when applied to the energy sold there is a sufficient revenue to meet the costs and charges of generating and distributing electricity and certain other charges.

All this is set forth in the Schedule. It may happen that unless the present position is preserved by some such Amendment as the one I am moving, that selected stations would be treated as if they were receiving new supplies, and consequently the standard price would be less than the standard price fixed under the two Acts of 1925, and about 40 stations would not be in a position to discharge the various obligations imposed upon them by those Acts. It is in order that the situation might be made perfectly clear and that the obligations imposed on the London County Council by these two Acts should not be disturbed by the provisions of the present Bill that I am moving the Amendment. I hope nothing will be done to interfere with the existing situation in London, and with the efforts which have been made to supply London with cheap and abundant electricity. All we ask is that the conditions imposed upon the London County Council by the provisions of the Acts of 1925 shall not be so altered as to make it impossible for companies to discharge their obligations. I hope the Attorney-General, who has treated all relevant and constructive proposals very kindly, will see his way to accept the Amendment.

Sir PHILIP DAWSON

I beg to second the Amendment.

The ATTORNEY - GENERAL

The only question is whether this Amendment is strictly necessary, or whether the point is not quite fairly clear already in the Bill. It is not intended that supplies made by the Board to different authorised undertakers in London should be calculated as part of the bulk supplies within the meaning of the agreement reached. But it is obviously not clear, and as there may be a doubt whether that might not be the construction put on the words, I think it is quite permissible that it should be made quite clear, and for that reason I will accept the Amendment.

Mr. ATTLEE

I should like to be sure exactly what this Amendment does. If the hon. Member who moved it had cut out some of the "soft stuff" and given us more information, we should have been much more enlightened as to the real meaning of his proposal. I would like to be assured that by accepting this Amendment we are doing only what is absolutely necessary.

The ATTORNEY-GENERAL

I looked at the Amendment carefully before accepting it, and I think it is clear that we do not go to far. For the purpose of these agreements the Board shall not be deemed to be a consumer. That means obviously that the supplies given to the Board shall not come in, in calculating the price. I do not see how it can be misinterpreted or spread the net too wide. It only excludes supplies to the Board from being calculated as supplies to the consumer.

Amendment agreed to.