HC Deb 04 July 1928 vol 219 cc1527-36

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a Second time."


May I ask you, Mr. Speaker, whether it would be in order for me to make now what remarks I want to make both on this Bill and on the Wessex Electricity Bill, which is also on the Order Paper, so as to save the time of the House, rather than discuss them separately, the two Divisions, if desired, being taken at the end of the discussion?


I understand that the same principle is involved in both Bills, and, therefore, the hon. Member will save the time of the House if he makes his remarks on both at the same time.


I have been looking at the Weald Electricity Supply Bill, and, as far as I know, it is a very different Bill from the other.


It may be a different Bill, but I understand that the principle is the same.


So far as I know, it is not.


I beg to move, to leave out the word "now," and, at the end of the Question, to add the words "upon this day three months."

The object which I and my hon. Friends have in bringing this matter before the House is to get from the Minister certain information as to the general policy that the Government are following in connection with the granting of these large concessions. I am specially referring now to the Wessex Electricity Bill. I may say, in order to satisfy the hon. and learned Member for East Grinstead (Sir H. Cautley), that our chief line of argument is connected with the Wessex Electricity Bill. It deals only with one special point, a point which those responsible for the Paper issued this morning have already brought out, and it is only that point that we want to stress in connection with the Weald proposal.

The House, perhaps, hardly realises, or, at any rate, it has not been brought prominently before the House, the largeness of the sums of money that are being expended at the present time in connection with these new electricity proposals. In the last Report of the Electricity Commissioners it is stated that about £75,000,000 of capital has been expended in connection with new companies during the last four years, and, since 1920, the number of undertakings holding statutory powers to supply electricity has increased from 532 to 623. There are certain points that I want specially to put to the Minister, more in regard to the financial aspect of the floating of these new companies. Of the two proposals that we are now discussing, the larger is that in connection with the Wessex Electricity Company, a company which was started last year, and has powers over Oxfordshire, Berkshire, Wiltshire, Gloucestershire and Buckinghamshire; and, as hon. Members may have noticed, in the Paper which, strangely enough, has been supplied by the Weald Electricity Company, they have informed us that the Wessex Company has an area which must cover some 6,000 square miles. The proposal now before us in connection with the Wessex scheme asks for still larger powers to supply a greater area. One of the peculiar things in connection with the electricity companies which are being started in different parts of the country is the relationship existing between one and another. I need hardly remind the House that the Government, in connection with their electricity scheme, refused to accept the proposal made from these benches urging that the whole of the electricity service should be in the hands either of the State or the municipalities. It is to be regretted that the reorganisation of this vast industry was not carried out on those lines, and even some who sit opposite will agree that if there is a case for any great public service being in the hands of the public, there is such a case for the electricity service.

I leave that side of the question, however, because in the queries which I wish to put to the Minister, I accept the position, that the Government are working on these lines—that the Electricity Commissioners look impartially at private companies and municipal undertakings, and select generating stations here and there and receive proposals for enlargement of areas from both municipal and private undertakings, and give their consent as they think these schemes satisfactory. This has given the opportunity to certain financial interests to plan out large districts for the extension of electricity undertakings. As a member of the London County Council I have watched with interest what the London companies have been doing and now on a larger scale it is interesting to see the developments that are taking place. The "Daily Express," in March of this year, gave a certain amount of information from their City correspondent. They said: Important developments affecting electricity supplies for lighting and power in the South of England outside London are expected to follow the formation of the recently formed trust, the Greater London and Counties Trust, Limited. The Trust is to provide for the supply of electricity in the southern counties. It goes on: Electricity is in the hands of a number of small companies but it is the intention of the new trust to consolidate such companies under one combine. American capital is being used in connection with this enterprise…but the control is entirely under British management. I confess to a certain amount of hesitation in believing that. One's experience is that control ultimately rests where the money comes from. They go on to point out that the Trust has taken control of a number of companies, including Edmondson's Electricity Corporation, Limited, the East Anglian Electricity Company, the Oxford Electricity Company and that it was said to have made an offer for the Sevenoaks Electricity Company. About the same time the "Financial Times," in a somewhat similar fashion wrote about this Trust, which comes under the category of an ordinary investment trust, and said it had already secured holdings in a number of well-established supply companies. The interesting point is that among other companies mentioned in which they have secured a certain amount of control were the North Metropolitan Electricity Supply Company, Edmondson's Electricity Corporation, Limited, the Oxford Electricity Company, the Western Electricity Distributing Company, the East Anglian Electricity Company and the Wessex Electricity Company—one of the concerns from which we now have a proposal before the House. It goes on to say: It is obvious that with a capital of £300,000 the Trust is not in a position to carry out such an ambitious programme without assistance. This assistance has been granted from American financial quarters, not connected in any way with the American electrical manufacturing industry but interested solely in this matter as an investment. The fact that these trusts have been formed and that the Wessex Company is definitely connected with one of them has induced me to look at the board of the Wessex Company which is making application to the House of Commons for these powers. I find that out of six or seven directors, one of them is a director of the North Metropolitan Electric Supply Company, another a director of the Edmonton Electricity Company, two of them directors of the Oxfordshire Electrical Company, one a director of the East Anglian Electricity Company, and another is on the board of the Bedford- shire, Cambridgeshire and Hunts Electricity Company. The question which I want to bring before the Minister is, how far, when applications come before the Electricity Commissioners, the financial arrangements are considered. I do not mean whether these concerns have the money to promote an undertaking, but how far the Minister really considers the fact that all over England these different companies, though nominally possessing different names, are closely connected, much more closely than we think. With regard to the Oxfordshire Electrical Company which is mentioned here, I know that recently in the Oxford Corporation the question came up as to the figure which was being charged and as to whether the Oxford Corporation should purchase the company, and I believe that many members of the Oxford Corporation did not realise at that time that this concern which they looked upon as having something to do with Oxford was really under the control of one of the great combines. This is really the point where I want to bring in the extraordinary position of the Weald Electricity Company, because it seems to me to be an illustration of the complexity and the linking together of these different companies. The people of Crowborough at the present time are supplied with electricity by a company which supplies gas and electricity at the same time. I understand that it is not satisfactory, and that arrangements have been made with the Weald Electricity Company to take over the electricity supply. This is the only thing that can be done from a business standpoint.

Hon. Members who have read the paper which they received to-day will have seen that it is not the Weald Company with which they are really dealing at all. You find that the Weald Electricity Supply Company really belongs to, or that the capital is held by, Callender's Share and Investment Trust, Limited. When you investigate what the Callender Share and Investment Trust, Limited, is, you find that it is controlled by the Callender Cable and Construction Company, Limited, which has connections with various electric light companies—the Lancashire Electric Light Company, the Scottish Power Company, the South Wales Power Company, and other interests. Therefore you are not dealing here with a company simply formed for the purpose of supplying electric light, but the moment you bring in the interests of another company who will be well qualified to supply some of the needs of this particular company it seems to me you alter the whole position. One of the greatest difficulties of controlling or deciding what firms should be charged for power is that once you get companies all mixed together in the way that these companies are becoming connected at the present time, the Government have no control whatever, nor can they have any check upon the finances of those companies. We who have watched the traffic problem of London know that one of the most difficult things is to know the exact position of the different traffic bodies, because of the connection which they have with the common pool. It is difficult to know what their profits are. You never know what is going on behind the scenes, or in the transfer from one account to another, what may have taken place. If once you have electrical companies connected with companies that will supply the goods wanted by that electrical company, you have no check whatever upon the real financial position and standing of that company. When you connect a company in southern England with a company in another part of the country, I put it to the Minister that he cannot possibly, as the years go by, keep such a control over the finance of the undertaking that he can really be satisfied as to what the position is and the rate that the company ought to charge for electricity.

The point, in the first place, is the charge that is to be made for electricity. In one of these Bills reference is made to an Act passed last year. I think the juice is laid down and the figure fixed for two or three years, but there is a Clause which says that at the end of two or three years, they can approach the Minister and ask for reconsideration.

The MINISTER of TRANSPORT (Colonel Ashley)

At the end of three years.


That is good enough for me. You may find a request being made to the Minister that there might be an alteration, and that request being made by a company that is connected with other companies in the way that I have outlined. Does the right hon. Gentleman think that it will be possible, as the years go by, not at the present time, to keep any check on the finance of these companies? If they can come to him and say: "We cannot afford to go on at the price we charge, and we must ask for a higher charge" will he be satisfied that the claim is just, and feel that he can agree with it? We go on granting these large concessions. Last year or the year before the Wessex Company had a large tract of land parcelled out. We know that that has been a common thing in connection with other companies, and we know perfectly well that in many cases it is a great hindrance to a scheme perhaps for the planning of a new town. We had an illustration a few years ago in London when the London County Council were starting one of their new towns on the outskirts of London. They wanted a water supply and they found that they were outside the area of the Metropolitan Water Board and that in the part of the country in which they were promoting their scheme there was some water company who had not the financial power to meet the needs of the time, who had been granted a concession. When these concessions are being granted, is there any power to take them away without compensation?

Colonel ASHLEY

If the hon. Member will take the trouble to read the Bill he will see that all his points are met.


I have read the Bill and there are references to previous Acts which make it exceedingly difficult to follow. I am not discussing the details; I am asking for the general principle upon which he is making these concessions. The Crowborough Corporation were granted a concession, which they did nothing to obtain, and they are selling it to another company. If we grant these concessions, can they be sold to another company? The Minister, in the answer he gave to me on the matter, said that if the local body wanted to obtain part of the land which was now being conceded, warning could be given to the company, and if it did not do something within two months, the concession lapsed. The other point I want to mention is as to what measure of control he retains over these companies. It is a very difficult thing to keep anything like proper control over these great services once they have passed into the hands of private companies. There is a gold mine coming in connection with electricity, and that is why there is this great demand for concessions. We have seen it in London during the last two or three years. In the years to come, when some great Government scheme comes along, the country will be asked to put up large financial contributions in order to get back these powers which we are so easily conceding now.


I beg to second the Amendment. I do not think the House realises what is taking place in regard to the production and distribution of electricity in the South of England. If one looks at the names of the directors of the Wessex Company we find that they have interests in electrical companies traversing 15 or 20 counties, and that so far as the supply of electricity is concerned, there is one mass of intertwined capital controlling the supply from Norfolk and Suffolk in the East to Somerset in the West, and from Shropshire and Staffordshire in the North to Dorset and Hampshire in the South. If a number of private companies controlled by a handful of individuals are to have such a great say in the development of electrical power, we may find ourselves in a very serious condition. It is in order to bring these facts before the House and the country that we are opposing those Bills.

Colonel ASHLEY

I wonder why it is that whenever any private enterprise Motion is put down on the Paper, hon. Members opposite seem to suspect—nay, more than suspect, accuse—the private enterprise concerned of improper motives and a desire to secure certain financial gains at the expense of the community. As a matter of fact, in many parts of the areas of these companies there is no prospect at all of making money. That is perfectly true of the rural areas. Many of these companies have been, for nine or ten years without any dividends at all. I am not going to make a long speech, because I do not think a long speech is required. What hon. Members opposite are entitled to know is, whether the entity—private company or municipality—which is given this territory to look after and supply with electricity is in a position to serve the public properly and well; whether the public interest is sufficiently secured by control of prices, and whether certain precautions are taken to see that the municipality or private company develops the area within a reasonable time. That seems to me to be the only thing that the House of Commons ought to consider in these Bills.

In the first place the hon. Member who moved the Amendment was very doubtful about the finance—on what ground I do not know. At any rate, I can assure him that the Electricity Commissioners, who act under my own general direction, but who are a semi-independent body of very eminent men, always make it their first duty to satisfy themselves that the financial status of the company or municipality is sufficiently good to justify their handing a concession over to it. In the case of the Wessex Bill, I am assured personally by the Electricity Commissioners that they are fully satisfied that the company is in a financial position to undertake all the obligations which are contained in the Bill. The Electricity Commissioners' view is quite sufficient for me. They are my legal and technical advisers, and they are absolutely competent to decide the matter.

There are only two other matters with which we ought to concern ourselves. Are these companies going to charge too much, and is there any provision made that they shall properly develop, not only the good areas, but what I call the bad areas? As regards price, hon. Members can see for themselves that there are maximum prices put down and when the Act of 1926 comes into force—I hope it will within the next year and a half or two years certainly in this Wessex area—then a sliding scale of prices and dividends can be applied. That will ensure that the public will not be exploited as to price. As to the provision that they

shall not shirk their obligations, if hon. Members will turn to Clause 5 they will find the penalties for failure to carry out those obligations. The Clause reads: If the company make default in laying down any distributing mains in accordance with the provisions of any order made by the Commissioners under Sub-section (4) of this Section they shall be liable for each default to a penalty not exceeding five pounds for each day during which the default continues, and if the Minister is of opinion in any case that the default is wilful and unreasonably prolonged he may after considering any representations of the local authority concerned revoke the powers of the company to supply electricity for lighting and general domestic purposes (including office purposes) in the area specified in the Order or any part thereof.

Having put that before the House there is no reason why a Second Reading should not be given.


I am very much concerned about compensation for displacement of those whose services are dispensed with. Is provision made for compensation?

Colonel ASHLEY

The hon. Member knows there is compensation under the Act of 1926, because he and I took part in it upstairs, and I know he is anxious to get some Measure which will extend that. I have not looked up the point. Perhaps he will allow me to look into it and answer him later.