HC Deb 11 November 1926 vol 199 cc1363-8
The ATTORNEY-GENERAL

I beg to move, in page 34, line 34, at the end, to insert the words (d) any other expenses on revenue account attributable to the station. This Amendment is another to give effect to a promise made in Committee. It was suggested then that there might be certain charges for which no express provision had been made, and we promised to look into the matter, and we have now put down this paragraph to make sure of covering any other expenses on revenue account which can properly be attributable to the station.

Amendment agreed to.

Mr. HERBERT

I beg to move, in page 35, line 4, to leave out the words "suitable to and," and to insert the words "capable of being."

I hope the learned Attorney-General may be able to accept this Amendment. There may be, probably there are, in many cases, undertakings with new machinery which has been recently purchased and is capable of being used and intended to be used, but is not at the present time actually being used. The fact that it has not been used may be the outcome of some direction received from the Electricity Commissioners. In such circumstances it would be a mistake to shut such machinery out of consideration, and, therefore, I hope the Government will accept these words, which defines the machinery as machinery which is capable of being used for instead of which is "suitable to and used for."

Sir J. NALL

I beg to second the Amendment.

The ATTORNEY-GENERAL

The words in the Bill are words which have been hallowed by usage in previous Acts. They are the words which are found, for instance, in Section 2 of the Electric Lighting Act, 1888, and which have persisted and are to be found in the Acts of 1925, and in so far as my information goes they have not been found to work injustice. I think it is better to stick to language which has been used during a long series of years and has been found to work satisfactorily.

Mr. BALFOUR

I think the advantage will lie in inserting these words. If undertakers have to comply with this Section they will often get machinery in use at an earlier date simply because of possible benefits under this Schedule. I think if machinery is there, capable of being used, if it has not been dealt with under other headings it will be a right and proper charge.

Mr. ATTLEE

The real danger is that if we have these words claims will be made for a whole lot of old junk which possibly could be used but which has been superseded. I have seen attempts of that kind made in other connections.

Amendment negatived.

Mr. HERBERT

I beg to move, in page 3, line 16, to leave out from the word "interest," to the end of paragraph (ii), and to insert instead thereof the words on their share and loan capital in respect of the preceding year such average rate being ascertained by taking—

  1. (i) in respect of any loan capital the rate of interest to which such loan capital is entitled;
  2. (ii) in respect of any share capital entitled to a fixed maximum rate of interest that fixed rate; and
  3. (iii) in respect of all other capital the rate of eight per centum."
The object of this Amendment is slightly to alter the provisions of the Schedule as regards calculating the rate of interest on capital expended on the generating station. The Bill as it stands contains a provision for a minimum of 5 per cent, and a maximum of 6½ per cent. My Amendment adopts the actual interest paid on the loan and on any capital entitled to a fixed maximum rate of interest, and in respect of other capital fixes a rate of 8 per cent., which is the rate usually allowed by Parliament on ordinary capital in undertakings of this kind. I do not think it will make a vast amount of difference either way, though frankly I do not know which way it will work out, but I am quite sure that my Amendment covers loan capital, the interest on which would be less than the minimum of 5 per cent. which is now in the Bill. This Amendment is, I claim, fairer and generally more suitable than the proposals in the Schedule.

Sir J. NALL

I beg to second the Amendment.

8.0 P.M.

The ATTORNEY-GENERAL

A similar Amendment was moved and rejected in Committee. I venture to think the House will say that the return we are here allowing is not an unreasonable one. We are proposing that the average rate of dividend and interest shall be given, but we are conscious that there may be cases in which dividends are too high, and others where capital has not been remunerative, and the average would come out too low. The House will realise that the average 6½ per cent., which we think is a not unreasonable return to propose, is a just one, and I ask them to accept it.

Mr. BALFOUR

Within very recent years municipal authorities, with all their credit behind them, have had to raise their money at a higher rate than the average of 6½ per cent. We shall have to deal with a long period of years if this Bill becomes an Act, and there ought to be some machinery for giving some flexibility. I am sure the hon. Member for Limehouse (Mr. Attlee) is aware that undertakings, with the finest credit of any in the world, only three or four years ago paid on a first mortgage charge as high a rate as 7 per cent. and 7½ per cent. interest for debt of comparatively short terms. The best that can be done in the market implies a very high rate. It was impossible, in the cases to which I have referred, to find money at a lower rate on a first charge. It seems to me absurd to put in a Bill rates which are to have the money applied to an actual 6½ per cent. There ought to be a provision to cover abnormal conditions. Obviously some allowance should be made for people who have to pay such high rates on first security. There should be some machinery in this Bill to make it practicable in abnormal times. I am sure the hon. Member for Limehouse must know of municipal authorities who have had to raise money in conditions totally different from those of to-day. If those conditions were prevailing to-day, we should not be inserting such figures as these in the Schedule. If this Bill operates as an Act over a long period of years, then some allowance should be made for abnormal times. If in another place the Government would put in some provision, I think that will go a long way to removing the difficulties as far as this Schedule is concerned.

Mr. ATTLEE

It is very difficult to get a clear view of the money market from the speeches which have been made on this Bill. We have just heard of extreme financial stringency, while before that we have heard of everything being rosy. I think personally that, if anything these rates are too high. The hon. Member for Hampstead (Mr. Balfour) has said, quite rightly, that you have got to take into account different periods. There was a time of financial stringency in the case of our own municipal undertaking. We had to be under very heavy expenditure, but our capital costs are only 4.6d. I hope the Amendment will not be accepted.

Amendment negatived.

Mr. HANNON

I beg to move, in page 35, line 20, at the end, to insert the words Provided that in the case of any corn-pony which is a London company within the meaning of the London and Home Counties Electricity District Order, 1925, such average rate aforesaid shall be taken to be the average rate of the interest payable by the company and of the dividends which such company is entitled to retain or distribute in the year of account under the provisions of the London Electricity (Nos. 1 and 2) Acts, 1923, together with a proper proportion of any co-partnership benefit payable in such year under the said Acts or either of them. I move this Amendment as a proviso to the paragraphs dealing with the interest for the purposes of the Schedule. It has been put down in order to safeguard the, rights of the London companies. The hon. Member for Bow and Bromley (Mr. Lansbury) always smiles when I mention London companies. The rights and privileges of the London companies are protected by two Acts of Parliament which in spite of his genial and kindly opposition, were passed through this House last year. I think the undertakers operating tinder their protection are entitled to have their rights safeguarded under the present Bill. In this Schedule it is laid down on page 35 what the rate of interest is to be for the purposes of the first paragraph in the Schedule. For undertakings that will be affected by the Bill there is a great deal to be said, but apparently the Government will not listen to that. But surely the Government will at least listen to existing rights. Therefore I am quite confident that the Minister of Transport will, with open arms, accept an Amendment to the Bill which will be in entire conformity with the principles for which he has stood so long in this House.

Sir J. NALL

I beg to second the Amendment.

Lieut.-Colonel MOORE-BRABAZON

I do not think the hon. Member for Moseley (Mr. Hannon) can accuse us of being unfriendly towards the London companies. We have, as far as possible, allowed the position to stand as made by the authority of London. I think the hon. Member for Limehouse (Mr. Attlee) has seen the justice many times and has agreed to it, although he has always disapproved of the setting up of the terms of the No. 1 and No. 2 Acts. I cannot help thinking that there is a certain misapprehension in this case. Clause 30 of this Bill clearly puts the questions of sliding scale and dividend apart. In this particular case no question of dividend comes in. All we are doing here is to determine what are the capital charges on selected stations, and really that does not bear any relation to the dividend which shall be paid by the company. We want throughout the country to find the average rate of dividend and to find on what scale charges can be made. It is for that reason that the variation of 6½ per cent. is inserted here, and it bears no relation to the London companies. I do not want to upset the position throughout the country by doing anything to disturb that.

Amendment negatived.

Mr. HANNON

I beg to move, in page 35, line 39, to leave out the word "fund" and to insert instead thereof the word "funds."

I think this is only a matter of use and correct wording.

Mr. BALFOUR

I beg to second the Amendment.

Lieut.-Colonel MOORE-BRABAZON

I am quite prepared to accept this. It is purely a drafting Amendment.

Amendment agreed to.