HC Deb 05 December 1934 vol 295 cc1656-68

6.57 p.m.

Sir J. NALL

I beg to move, in page 3, line 25, at the end, to insert: Provided that in no case shall the board have the right of negotiating directly with such persons aforesaid and shall have power only as to supply at the request of authorised undertakers. The object of this Amendment is to guard against the board setting up an organisation of its own to deal direct with consumers of large supplies. This raises an important issue, because the board was set up as a co-ordinating and cencentrating authority for the purpose of generation and to secure all the great economies upon which the Weir Committee so ludicrously went wrong. While, of course, the board has mainly and generally concentrated on that work, it has actually set up all over the country officers who are getting into direct touch with consumers, going behind the backs of authorised undertakers, and considerable doubt now prevails whether this Clause will not in effect enable the board to handle large supplies in much the same way as Clause 4 proposes that they shall handle the supplies of railway companies. I ask my hon. Friend to consider where the Central Board is getting to in this matter of direct trading. Why have these trading officers been established all over the country canvassing consumers? If a consumer wants a supply, he cannot get it without the aid of the Central Board, and he goes to the board and negotiates whatever arrangement may be reasonable in the circumstances. There is no reason for anyone to go without a supply, because the board has an officer to control and negotiate. Big consumers can complain to the commissioners and get redress if any distributing undertakers do not do their duty. Why then should the Central Electricity Board want to set up these trade offices, with trade canvassers duplicating each other, and getting in the way of the ordinary routine of the distributing undertakings?

I do ask the right hon. Gentleman to regard this Amendment as important. If inserted, it would relieve considerable anxiety as to the possibility of the board quoting uneconomic rates, the result of which would be that a charge would be thrown on somebody else. If the intention of the 1926 Act regarding the incidence of charges is to be properly observed, then at least we ought not unnecessarily to develop this extra agreement side of the business. I hope my hon. Friend or the Attorney-General will be good enough in reply to indicate acceptance of the Amendment.

7.2 p.m.

Mr. H. WILLIAMS

This Amendment, to which my name is also attached, raises a variety of issues. It was always understood at the time of the 1926 Act—which I voted for and the Member for mime (Sir J. Nall) voted against, which shows that we were not in total agreement—that the Central Electricity Board was not to enter into the business of distribution. Upon that municipalities and companies are agreed. If in connection with these exceptional supplies the board is to be the negotiating instrument, then quite frankly the board is going to start in the business of distribution, and to duplicate the work already done by authorised undertakings. Obviously there is going to be a measure of waste that ought to be avoided. Quite apart from that there is another point. I am not one of those who believe in the modern doctrine of national economic planning. Whether I believe in it or not, since some other nation is conducting an experiment of this description on a large scale, which, in my judgment, will be disastrous—the nation of which I am thinking is not Russia but the United States; in Russia it is Socialistic and in the United States private enterprise nationally directed—we ought to wait and sea what happens there.

The suggestion is that the Central. Electricity Board is going to negotiate direct with companies who want exceptional terms for an exceptional load. Suppose an undertaking were founded to produce calcium carbide, which is used for the production of acetylene gas. At present it mainly produced in Norway because the factories adjoin hydroelectric plants that provide cheap electricity. It is not yet realised that we are now getting from coal in this country electricity on terms which could compete, in my judgment, satisfactorily with that obtained by water power. I see no reason why, in due course, we should not manufacture calcium carbide, though I am not a chemist and have not inquired into the process. But no one is likely to start this manufacture, because the President of the Board of Trade in making an agreement with Norway has put calcium carbide in a favourable position. However, if somebody decided to undertake such an enterprise, you might have circumstances in which the Central Electricity Board, with their organisation, might be able to decide where this undertaking was to settle. If the promoters of the undertaking started negotiations direct with the board, the latter could say that they would give them such-and-such terms in a certain part of the country. The board might take unto themselves that power. I can see circumstances in which that power might be widely exercised, but I do not want the Central Electricity Board to be the determining factor in the location of industrial enterprises in this country.

If the board is going to deal direct with people with exceptional loads, then I think the influence of the board is going to be undue in deciding these factors. There are a great many other factors, other than those which the board would take into account in dealing with such a problem. Take Merthyr Tydvil, a distressed area—I am going there to- morrow and they always welcome me—it might well be the case that it would be an ideal place to start some new enterprise. If influence is going to be brought to bear, it ought to be a national one. If the Electricity Board are thinking solely of equalising the load on the grid, they might say, go to some other place. You might have the wrong direction given. I do not want to over-emphasise its importance in this respect. Fundamentally, however, this country has practically its whole territory covered by authorised distributors, companies and municipalities. They are responsible for the distribution of electricity. When the question of negotiations of a special character arises, they ought to be in the hands of authorised distributors. Parliament has placed on them responsibility for the supply of this power, and ought not to split this with any organisation that has not responsibility at the present time. In. these circumstances, I very strongly support the Amendment.

7.7 p.m.

The ATTORNEY-GENERAL

My hon. Friend who has just spoken has invited the Committee to range over far wider considerations than are raised, as I understand, by this Clause or Amendment. If I understand my hon. Friend's thesis aright, it is that the board should not be in a position to initiate arrangements of the sort contemplated by Clause 2, because that will give them great power in settling the future re-organisation or organisation of the industrial system of this country; if anybody is to make arrangements which result in large industrial undertakings springing up in any particular place, it should not be the Electricity Board who are responsible but some other authority. I do not propose to enter into that sort of discussion. If the argument is sound it would apply altogether to Clause 2. The arguments are arguments which, if valid, can be used against all the conditions in the Clause. What my hon. Friend has not considered, I venture to suggest, is that if the Clause is a good Clause, if it is desirable that these new powers should be given to the board, they should not, so to speak, be kept under a cloak—not be hidden, but used.

The only difference between the Clause as it is and as it would stand if the Amendment were passed, is that the board would be required to sit in its office and wait until some proposal was made for powers under the Clause to be used. Under the Bill as it stands it would be necessary for them to be satisfied that the special circumstances exist, and that the undertakers who are supplied with electricity will be enabled to supply the persons whose needs are of an exceptional nature with an amount of electricity corresponding to the electricity to be supplied by the board. If they are to be satisfied of the existence of these circumstances, obviously sooner or later they will have to get into touch with these persons in regard to whom these special circumstances are said to exist. It seems to me that this idea is implicit in Clause 2, and that it would be undesirable to subject those persons to this condition. The Amendment would have the effect of preventing the board from taking the initiative, from calling the attention of those persons to special rates having regard to the special circumstances that do exist.. It does not seem reasonable to qualify in this way the powers proposed to be given to the board. The hon. Member for South Croydon (Mr. H. Williams) used certain arguments, but these were arguments, as I have already suggested, against the Clause as a whole, and are not valid because they deprive these new powers of their usefulness by fettering the board.

7.13 p.m.

Sir J. NALL

My hon. Friend's speech, with all respect, is another example of the extraordinary Government policy. They are saying that the wholesalers should employ canvassers to find buyers and bring them to the retailers in order to buy goods from the counters of the retailer. The wholesaler should only have to find the retailer and supply that retailer when he finds it necessary to replenish his stock.

Amendment negatived.

7.14 p.m.

Mr. LAW

I beg to move, in page 3, line 32, at the end, to insert: and provided further that any such agreements which have already been entered into by the board shall be terminated unless the Electricity Commissioners have been satisfied by the board in accordance with the provisions of this subsection. The Clause we are discussing has the same ultimate object as Clause 1, that is to say, it. is legalising certain irregularities of the board. I think it is reasonable for us to suggest, as we do in this Amendment, that the same safeguards should be applied to this Clause as the Minister applied to Clause 1 when he accepted a similar Amendment. As Clause 2 stands, the board can only perform these operations, which are at present irregular, if they satisfy the Minister on certain points. The purpose of the Amendment is to ensure that the commissioners shall have the same power to review past irregularities of the board. The point is exactly the same as that which was raised by a similar Amendment which I moved on Clause 1, the principle of which my hon. Friend the Minister accepted. On Clause 1 the Minister said he was willing to accept the principle of the Amendment although he did not like the form of words. I suggest that he might take the same view in regard to Clause 2, and that he should accept the intention of the Amendment and introduce on the Report stage an Amendment which would satisfy him as to form and satisfy us as to substance and give effect to the objects which we have in view.

7.16 p.m.

Mr. HORE-BELISHA

My hon. Friend the Member for South-West Hull (Mr. Law) likes to refer to irregularities of the Board which he wishes rectified. The Board has at no stage admitted that there have been any irregularities, but it is others who have received legal advice which has cast doubt upon the powers of the Board with regard to the arrangements mentioned in Clause 1, or the agreements mentioned in Clause 2. We are dealing here with a, rather different state of affairs from that which confronted us in Clause 1. There we were dealing with arrangements between the Board on the one hand, and authorised undertakers on the other whereby the authorised undertakers would take a supply of electricity from the Board. It is true that I accepted an Amendment moved by my hon. Friend which would allow the Commissioners to review the arrangements which had taken place in the past, and if the Commissioners found against them and invalidated them the worst that could be done would be that the authorised undertakers would have to take a supply of electricity from the board as any authorised undertaker can now do. The damage, in other words, would be confined to the authorised undertakers.

But in this Clause there are two agreements to be considered. There is the agreement between the Board and the undertaker, and the agreement between the undertaker and his industrial consumers. All that the Board have done is to stand behind an existing authorised undertaker too small to provide the supply which the exceptional circumstances demand. There is a vast enterprise demanding an enormous supply of electricity which the local undertaker cannot fulfil. Accordingly, the Board step behind him, and, relying upon the Board, this authorised undertaker has made an agreement with the industry. If we were to put under review and possibly run the risk of losing—because otherwise there is no purpose in having a review—agreements which are already made, I ask hon. Members to consider the disturbance which would arise in the whole industry. In the first place, you would have the industry with whom a contract was being made to supply its requirements of electricity saying, "This agreement, as a result of an Amendment carried in the House of Commons last night, is to be under review. If we had known that we should have put down our own generating plant and would never have made an agreement at all." That is the first effect of accepting the Amendment. The next effect is that the undertaker behind whom the Board are standing would still be liable under his contract to supply this vast enterprise which would be entirely beyond his capacity.

I trust that I have drawn a distinction between reviewing the past agreements referred to in Clause 1 and those referred to in Clause 2. I feel that it would be difficult to re-open these agreements without creating confusion and putting doubts into the minds of big industries and of authorised undertakers who have acted in good faith. It is for these reasons that I would ask my hon. Friend, if it seems to him good, not to press the Amendment. The Board have no objection whatever to the Commissioners seeing the agreements which they have made. They have entered into them as a responsible business body and are prepared to stand by them, but it is the effect upon the minds of others that I am asking my hon. Friend to consider. I hope that he will be able to appreciate the point of view I am putting to the Committee, and that I am in no sense trying to conceal from the House or the Commissioners the agreements in question.

7.22 p.m.

Sir J. NALL

I appreciate the very cogent arguments which my hon. Friend the Minister has just advanced and realise the difficulty that might arise in the circumstances to which he referred. But we are dealing with Clause 2, on which the real cases of undue preference involving actual hardship to certain consumers are believed to be arising under these agreements. It is in Clause 2, page 3, line 21, that all this may be done so that the undertaker may be enabled to supply to persons whose needs for electricity are of an exceptional nature. There are a number of industries in which the needs are of an exceptional nature, and it is this kind of case where the undue preference given in one area may involve very considerable hardship to industrial producers, and it leaves no redress. Notwithstanding the arguments of my hon. Friend, the difficulty is as to what is the fair thing to do. Is the newcomer who is found to have got something which he ought not to have had to continue enjoying that undue preference, or is the older established consumer, whose business is suddenly upset through the undue preference which has been given to the newcomer, to be put out of business or go on indefinitely heavily handicapped? It is a question of deciding which is the least objectionable course to pursue.

I fully appreciate what my hon. Friend said. It may be very objectionable to go to consumer "A" and say, "Look here, the agreement which we made with you a week or a month ago may be wrong or may be all right, but, at any rate, it is to be broken up." We might say that this thing must now be reviewed by the commissioners, and that it means that if the commissioners are not satisfied they can stop and cancel it. There may be something to be said for that. But surely it is not as severe as the case of the other man where his business is prejudiced by reason of the undue preference. The Minister and my hon. Friend the Member for South-West Hull (Mr. Law) are obviously in a dilemma as to what is a reasonable way out, hut is it fairer to allow the hardship to continue, or to reopen the case of undue preference to see whether it cannot to some extent be relieved? I suggest that on balance, having regard to the two sets of difficulties, the fairest way is to give an opportunity for investigation not with the certainty of revision, but, may be, with the remote possibility of revision, rather than to leave, in certain instances, a hardship which may permanently prejudice a long-established firm constantly subjected to the difficulties arising from undue preferences. I ask my hon. Friend the Minister, especially as he was good enough to meet us on Clause 1, to see what he can do in regard to Clause 2, if my hon. Friend thinks fit to withdraw the Amendment. The matter is well worth the further attention of the Minister in order to see what can he done to put right What is an undoubted injustice to certain cases already envisaged.

7.26 p,m,

Mr. H WILLIAMS

I was impressed by the speech of the Minister in which he said that this question involves two contracts, whereas Clause 1 only involves one contract. In this case there is the contract between the board and the undertaker, and a separate contract between the undertaker and the industrial consumer. The industrial consumer, in the case of past agreements, may have gone forward in his enterprise because he had obtained certain treatment with regard to electricity supply. I did not receive information officially, and I do not know where it came from, but I believe that Clause 2 owes its existence very largely to a great enterprise in Northamptonshire where they make tubes —the firm of Messrs. Stewarts and Lloyd. Whether this be correct or not, I do not know, but it is probably one of the instances. Naturally when the firm decided to move to Northamptonshire they had to take every factor into account, such as the supply of fuel, iron ore and of electricity. If my information be correct, they have been given very favourable terms. That is to say, the local undertakers have been granted favourable terms by the board, and the undertakers in turn are passing those favourable terms on to Messrs. Stewarts and Lloyd. It is part of the understanding as a result of which they put up their works, and it would be very disturbing to them if there was any drastic review of those terms.

Let us look at the danger which might arise. I mentioned a short time ago Merthyr Tydfil where the famous firm of Guest, Keen and Nettlefold have great steel works which at the moment are out of operation. Let us imagine—I am not supposing that it will happen, because I believe it will not—that other great firm of tube makers decided to put up a tube works in Merthyr Tydfil. Their contract would have to be approved by the commissioners under the provision of Clause 2. The commissioners might decide that the terms proposed to be offered to Messrs. Guest, Keen and Nettlefold by the board, through the local authorised undertakers, would involve the board in loss, and might say, "Oh, no, you cannot offer those terms. You must charge more than that." You would have the extraordinary circumstance that, other things being equal, the Central Electricity Board would be supplying two sets of identical consumers on different terms. A condition of undue preference, because it would be a case of undue preference, would arise.

In these circumstances, I would strongly urge upon the Minister the desirability of reconsidering his attitude. I think the proposal of the hon. Member for South-West Hull (Mr. Law) is rather too strong, having regard to the very sound argument produced by the Minister. If the pass has already partly been sold, if I may use that phrase, one may have to condone that, in part. Nevertheless, I think it ought to be the duty of the commissioners to examine these bargains and find out whether any are calculated to be prejudicial to the general structure of the scheme, or whether they would, if similar bargains were to be concluded in the future, involve an undue degree of preference. If in the future people come along and find that they have been treated differentially, grave trouble will arise. All of us are anxious that those who are responsible, the commissioners and the board, for certain important aspects of the development of the electrical industry shall not be hampered and brought into a measure of disrepute because of circumstances originally beyond their control. They did things which certain lawyers have said they were not entitled to do. The purpose of the Bill is to make the position clear. In future cases are to be treated differently, and it does introduce an element of danger. Therefore., I ask the Minister to reconsider the matter so that on the Report stage he may possibly be able to suggest sonic qualifying words which will meet in principle the point put forward by my hon. Friend.

7.33 p.m.

Mr. C. WILLIAMS

There is only a slight difference between the position which the Minister might take up and that of the Amendment. The difference may be slight, but it is vitally important from the Minister's point of view. Surely, the wording of the Amendment is wrong. In the past there have been, I will not say irregularities, but agreements entered into which are working to-day, and we do not wish to upset them unnecessarily. The Amendment lays it down that those agreements shall be terminated unless the Electricity Commissioners have been satisfied by the board. I would rather meet the position by reversing the procedure. I would say that it is the duty of the commissioners to satisfy themselves that these are fair bargains and agreements, without undue preference, but if there was an outstanding case of undue preference, then the commissioners would have to deal with the matter. That is the fair way of dealing with it, rather than laying it down that these agreements and arrangements should be terminated.

It would be better to say that the whole of the agreements should be gone through carefully and that if there was an outstanding case it should be dealt with. Otherwise, there would be no need for any action to be taken. That would apply to all agreements to be made in the future. There ought to be in the Bill some words of the nature of the Amendment, but not in the way in which the Amendment produces them. If the Minister could go a little way to meet us in the spirit of conciliation which he showed earlier it would be an advantage to the Bill. If he could say that he would consider the points raised by the hon. Member for South Croydon (Mr. H. Williams) and others between now and the Report stage he would be doing something to meet what is obviously rather a difficult position in the Bill as it stands.

7.36 p.m.

Mr. HORE-BELISHA

The hon. Member for Torquay (Mr. C. Williams) is preserving his role as an arbitrator and holding the scales evenly, as he does on every occasion, between the Mover of the Amendment on the one hand and the Government on the other. Unfortunately, on some of these matters one has to take a decision to come down on one side or the other, and it is not always easy so nicely to balance the issue as my hon. Friend would desire. The appeals of my hon. Friend the Member for Hulme (Sir Joseph Nall) are very difficult to resist, because he presents the very rare spectacle of a man labouring under great indignation while at the same time stating his case with moderation. I appreciate, and the Committee appreciate that, feeling indignant at the promoters of the Bill, he should show such a remarkable spirit of conciliation as to commend himself to the Committee as a whole. I acknowledge the assistance that I have received in getting through a Bill which otherwise would have been very difficult to get through Committee because my hon. Friend and those associated with him have confined themselves to making constructive criticism and not trying to tear the Bill to pieces in every Clause. I should very much like to meet my hon. Friend if it were possible.

There is no objection whatever in the minds of the Board to these agreements being judged by ordinary business standards. It is not them that we have to consider when we are dealing with an Amendment to have their actions under review, but we must have regard to the effect upon industrialists and authorised undertakers of accepting this Amendment. If a public announcement were made now that all these agreements were to be brought into question I fear that it might have a very disastrous effect, which no one would desire. My hon. Friend the Member for South-West Hull and other hon. Members who have spoken in support of his view recognised that at once. I am confronted with the task of finding some way of overcoming that difficulty, if it can be overcome, and I say readily that if there is a way to overcome it between now and the Report stage I shall be glad to meet his point of view. I do not know that it will be possible, but, there being no theoretical objection to this point of view, it remains to discover whether there is not some practical solution. I would not like to encourage the belief that there is, but I will do my best to discover whether in some way we can accept the intention of the Amendment.

Mr. C. WILLIAMS

Will the Minister approach a review of the matter in a spirit of hopefulness and use a special endeavour? If he acts in that spirit he will find a solution, but if lie acts on the old standards of the Socialist Government he will fail. If he acts with his usual good will, he will do well.

7.40 p.m.

Mr. LAW

The Minister has met the Amendment with some very powerful arguments, and I would only like to point out that the very force of his arguments is a criticism of the Act of 1926, and the way it has worked. His argument is that we cannot remove one injustice without creating an even greater injustice. An Act of Parliament which works out with that result is not a very commendable one. At the same time I should like to thank the Minister not only for the cogency of his arguments but also for the kindness and geniality with which he has met the position put forward by us on this Amendment. In view of his explanation, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.