HC Deb 20 December 1934 vol 296 cc1377-408

5.3 p.m.


I beg to move: in page 5, to leave out lines 24 to 35, and to insert: (1) Where electricity is required by a railway company for haulage or traction, and for the lighting of vehicles for the haulage or traction of which electricity so supplied is used, the authorised undertakers concerned in affording such supply shall act jointly and with the Central Electricity Board for the purpose of giving the supply required under a single agreement with the railway company, and the prices and terms upon which such supply is to be given shall be such as maybe agreed, and in no case shall the prices be in excess of those chargeable under Section twelve of the Electricity (Supply) Act, 1926, as amended by this Act. Provided that if any such authorised undertaker is unable or unwilling to join in such an agreement, the power company (if any) concerned, or, failing the power company, the Central Electricity Board may supply in place of such undertaker. When we debated this matter in Committee the right hon. Member for Spark-brook (Mr. Amery) raised certain objections and maintained that what was really wanted was something like the scheme which the Southern Railway has now, by which they get their supply indirectly from the grid, and if that is not available local undertakers come in. In putting the Amendment in this form I have tried to meet the objections of the right hon. Member and also those of the right hon. Member for Hillhead (Sir R. Horne). In Section 2 of the Act of 1926 there is a provision which contemplates the formation of associations of undertakers, who may accept contracts and operate together. I do not know why that Section could not have met the railway case, with some consequential Amendments to meet the special circumstances which now arise. At any rate, Section 2 gives an indication that in the 1926 Act the kind of circumstances about which the railway companies have been talking were contemplated, and that associations of under takers were contemplated as a reasonable way out in any case where a number of authorised undertakers are concerned.

Hon. Members associated with railway companies have been arguing—there has indeed been a little propaganda—that the whole purpose of this Bill is to deal with the railway supply. I do not believe it. I do not know a single railway scheme for electrification which is held up or in any way prejudiced by the lack of this Bill or any part of it. The fact of the matter is that railway companies have no such schemes awaiting the passage of this Measure. On the contrary, the one company which has made substantial and marked progress in electrification, the Southern Railway, is, as far as I know, working perfectly happily with its suppliers. Nothing has been said to the contrary, and there is no reason to believe that they have the slightest difficulty in getting their supplies. Nor is there any reason to suppose that any other railway company would meet with any more difficulty. We are constantly referred to the report of the Weir Committee on the prospects for large scale main-line electrification. The Weir Report itself indicated that it was very unlikely anything of the sort would be adopted. They laid down certain points and said: The full benefit of electrification can only be obtained by a complete substitution of steam by electricity. That would involve a new capital expenditure of over £260,000,000. That is the estimate of the Weir Committee; and we have had some experience of the Weir Committee. They are usually wide of the mark. The Weir houses entirely failed to play any part in the housing problem of a few years ago. But the £260,000,000, the estimate of the Weir Committee, is only part of the picture. The Board would have to put up another £80,000,000 before it started earning any interest on the £60,000,000 which has already gone down the drain. The Weir Committee also say— Assuming general electrification on a 20 years programme, and assuming that existing traffics are maintained, it is estimated that there will be a surplus of approximately 2 per cent. available after meeting interest charges on the new capital involved. I ask the House to note that the only surplus available is 2 per cent. for replacement and all the rest of it. Their final comment is— Such a return by itself would not appear from a business point of view to warrant the adoption of a scheme of such exceptional magnitude. Why has railway electrification been brought into this Bill at all? So far as a case is made out for a simplification of the contracting system under which railway companies can get their supplies, and so far as a case has been made that a multiplicity of undertakers along the line of route is inconvenient, I suggest that the Amendment meets the case, and that it is entirely in line with the original intention of the 1926 Act. After all, what is involved in the so-called multiplicity of authorities? Ever since the railways opened they have been buying locomotive coal from every pit on the line and it has never been suggested that there should be a concentrated colliery agency for the purpose of selling coal through one central selling agency. On the contrary, the railway policy has always been to disperse their contracts and have a diversity of sources of supply so as to have a safeguard against the breakdown of any individual in that chain of supply. If there was a breakdown of supplies at one colliery it did not matter so long as the volume of supply was always made up from elsewhere.

Never in the history of railways has it been suggested that the slightest inconvenience has been found in buying coal from practically every colliery on the line. Now, when the Government or the Central Electricity Board want to get through a Bill which will legalise a sort of Harris-Rickards agreement for disposing of other people's surpluses, this railway question is dragged in in aid, and we are asked to upset the basis of the 1926 Act. Having regard to what the railway companies have said on this matter, and admitting that it might in some circumstances be inconvenient to have a variety of undertakers involved in giving a supply, I submit that the proposal in the Amendment offers a most reasonable and fair basis to meet the difficulty. The suppliers concerned generally act together, and if any of them or all of them failed, the grid would then take over. The Amendment does not debar the grid from coming in as a partner in the scheme of things. I hope at any rate that the Government will further review this question.

5.12 p.m.


I bog to second the Amendment.

I am sorry that we are discussing this question in the absence of the right hon. Member for Hillhead (Sir R. Horne) and his rather numerous colleagues, who at the moment are represented only by the hon. and gallant Member for Rye (Sir C. Courthope). In Committee it was strongly represented that the difficulties in negotiations were so grave that Clause 4 was vitally necessary if more progress was to be made with railway electrification. It is true that the bulk of hon. Members who are associated with railway companies have not themselves had much experience of this particular difficulty, except the right hon. Member for Spark-brook (Mr. Amery), but those who took the opposite point of view were impressed by their arguments. We want to preserve the principle that the Central Electricity Board should not go into the distribution business, while at the same time making a substantial concession to the alleged difficulties of the railway interests. The Amendment has been drafted in that sense. If there is electrification over a long stretch of line, then all the undertakers are to act together in unison with the Central Electricity Board, and if any authorised undertaker will not join, then the board can act on his behalf. That seems to provide every reasonable concession from the point of view expressed by railway companies, and at the same time avoids establishing the new and undesirable principle of the board itself entering into the distribution business.

I am certain that if the Amendment is accepted a substantial proportion of the opposition to this Bill will have gone. It is true that just before a Christmas Recess the amount of interest in this subject actually in the House is not very great. Nevertheless, there is a substantial body of opinion that views the Bill as a whole with some measure of suspicion. Possibly some of the suspicions are exaggerated; but the fact remains that suspicion is not diminished by the fact that the Government on this occasion is receiving the full and enthusiastic support of the Socialist party. The full support of the Socialist party for a Government Measure is generally an indication that the Measure should be regarded with some suspicion. A great statesman once said: The liberties of Britain are only imperilled when both Front benches are in agreement. I think there is a great deal in that. It is always a healthy thing when one Front Bench opposes the other. When the two Front Benches are at issue, the people have some chance of having their liberties preserved. But when the two Front Benches are in conspiracy, the liberties of the people may be imperilled. I should look with more enthusiasm on this Bill if it had not the support of the Socialist party. I ask the Minister to give most careful and sympathetic consideration to this Amendment. If he does not like the exact wording, or if he says he cannot accept it now, will he refrain-from closing the door to accepting some Amendment to the same purpose at some other time or at some more suitable place. I make a most urgent appeal for this Amendment.

5.18 p.m.


I quite agree with my hon. Friend the Member for Croydon (Mr. H. Williams) that there are important principles involved; and I agree with him also that some of the fears about this Bill are exaggerated. But this Amendment must be judged on its merits, both literally and generally. It is destined to destroy the Clause which it purports to amend. At present the railway companies can obtain their supplies on Section 12 terms, that is to say, at the Board's tariff plus transmission costs; but they suffer from this disadvantage, that whereas they are potentially extremely large consumers—they might in fact be, if they electrified their lines, the largest consumers in the country—they suffer from the disability of not being able to profit by the size of their potential demand. Accordingly it is suggested, following the proposal in the Weir Report, that they shall be able to make one firm contract for electrifying their lines, or rather that each railway company shall be able to make one firm contract for the whole of its requirements at a price to be known in advance, thereby being freed from the inconvenience of negotiating with a number of separate undertakings offering at different prices, prices which are not always known in advance.

The purpose of the Clause, or the main purpose of the Clause, being to free the railway company from this inconvenience of having to negotiate with many different organisations, my hon. Friend comes along and puts down art Amendment which, I think, in the judgment of impartial persons, would aggravate that very difficulty. For what does his Amendment say? It says that where a railway company require a supply of electricity they shall bring together, if I understand it correctly, all the authorised undertakers along their line, and the Central Electricity Board, and shall proceed to negotiate with all of them. Well, as I suggest to the House, that is no improvement on the present position. What is to ensue from this conference? An undertaker who is going to give a supply at Crewe has no direct interest in the price that is going to be charged by an undertaken in Manchester. There is no direct community of interest between these people who may be at different points along the line. Some of them may not even be called upon in any circumstances to supply the railway company. But this large meeting of interested parties, or supposedly interested parties, is to take place, and out of its deliberations is to come a single agreement, which in no circumstances is to be at a price greater than is chargeable under Section 12. Under Section 12 there is not one price; there may be a number of different prices. Therefore, I do not see that you are at any greater advantage than you were before.

But you have this additional disadvantage placed on the various undertakers that, this being apparently a joint agreement made by them all, they are all liable for the failure of one. If the supply breaks down at any particular point, all the other undertakers are to be liable. This agreement with the railway company is to be held up pending this negotiation, and apparently they cannot take any action whatever as long as only one of these authorised undertakers is willing to join in an agreement. Of course, all authorised undertakers would be willing to join in the agreement provided you paid them their terms; and I do suggest to the House, quite seriously, that this Amendment would create complete chaos. I understand the desire of my hon. Friends to preserve the legitimate interests of authorised undertakers, and I hope to show them, before this Clause passes through the Committee, that so far as I can practically meet their point, I am going to try to do so. But I do submit to the Committee that I have affered a perfectly serious objection to this Amendment, and I have shown that, so far from being an improvement on the present position, it would make the present difficulties even worse than they now are.

Amendment negatived.

5.25 p.m.


I beg to move, in page 6, line 26, at the end, to insert: The consent shall not be deemed to be unreasonably withheld if the undertakers are willing and in a position to give the supply within a reasonable time and at the price specified in section twelve of, and the Third Schedule to, the Electricity (Supply) Act, 1926, as amended by this Act. Whether it is now much use seeking to argue this Clause I do not know. I do not want to waste the time of my hon. Friend or the time of the House, because it seems to me that, having regard to the indication he has given with regard to a later Amendment which he is likely to accept, it may not be worth while for me to move this. I am very anxious that we should not waste time. If the Minister will give any indication at all that he is likely to consider seriously this Amendment, I would like to press it, but if his attitude is going to be the attitude of complete refusal, I would rather not waste the time of the House.


I am very much obliged to my hon. Friend for the spirit in which he took my remarks. I should be prepared to accept the Amendment relating to line 26 in the name of my hon. Friend the Member for Hulme (Sir J. Nail) if the Committee would be prepared to pass that Amendment.


In the circumstances' I do not propose to press the Amendment.

Amendment, by leave, withdrawn.


I beg to move, in page 6, line 26, at the end, to insert: (4) Notwithstanding anything in this section no electricity supplied thereunder to a railway company by the Central Electricity Board shall, within the area of supply of any authorised undertakers, be used without the consent of those undertakers otherwise than for purposes of the company's railway undertaking. The object of this Amendment is that, having settled the general principle that electricity may be supplied, by special agreement, by the board to a railway company, at least they shall not upset the whole of the existing supplies by using that electricity for other purposes, or future supplies for other purposes. It would be only reasonable that these supplies by the local undertakers should continue. As a matter of fact, since I put this Amendment on the paper, I have been doubtful about the last words—"railway undertaking," because that is a pretty wide description. Up and down the country large supplies are taken by the railway companies from the existing undertakings, municipal and other, and there is no trouble about these things. But if they come along with area electrification and then incidentally say, "Oh, well, we have a wagon short in this place and we will cease to take a supply from the local company or the local municipality," they will completely upset the load which the local undertakers have been handling. It will be altogether unreasonable that a supply which is specially provided under Clause 4 should be diverted or used for purposes not really contemplated when the board was set up. Therefore, I hope my hon. Friend may settle this; though, perhaps, as I say, he may prefer some other words than "railway undertaking."


I beg formally to second the Amendment.

5.30 p.m.


During the Committee stage the main purpose of the Amendments seemed to be to secure that a direct supply of electricity given to a railway company for traction purposes should not be used for any purposes not legitimately connected with what I would now call "the railway undertaking." I said that I did not think I could concede the demands of my hon. Friends to the fullest extent, but that I would be willing to meet them in so far as it was practicable to do so. My hon. Friend the Member for Hulme (Sir J. Nail) has now put down an Amendment with which I understand he is not himself completely satisfied, because of the vagueness of the term "railway undertaking." He is in the difficulty which we all experience in finding a precise form of language which will not prevent the legitimate use of these supplies in a reasonable way. I apprehend that the reason why my hon. Friend has used these words with which he is not completely satisfied is because they are to be found in the London Electricity Supply Corporation, Special Order, 1926, which says: Provided that nothing in this Section shall be deemed to authorise the undertakers to supply electricity to be used in or upon any premises belonging to the Southern Railway Company which are not used for the purposes of their railway undertaking. If I accept this Amendment, it will give the authorised undertakers a protection which they do not at present possess. It will be adding to the terms of Section 47. But I may reassure my hon. Friend if I tell him that he has a double safeguard. I tried to convince him during the Committee stage that he had my discretion behind him. No supply given for traction purposes can be used for other purposes except with the consent of the Minister. That was a provision inserted in the Act of 1926, and I believe it is also in the 1919 Act, and it is a protection which the House hitherto has thought to be sufficient. My hon. Friend's Amendment goes even further and says that the consent of the authorised undertakers must be obtained. It goes very much further than any previous Act of Parliament, but as I am anxious to carry out the undertaking which I have given, I shall not stand in the way of its acceptance if the House desires to carry it.


I think this is rather dangerous. The Minister is now accepting a Sub-section the phraseology of which is not understood by the Mover of the Amendment.


No. I think I pointed out with complete justice that these words had been taken from a Special Order of 1926. The Mover himself said that he would like the Amendment to be in different language, but he thought the present Amendment represented the most that he could obtain. I understood that to be the gist of his remarks. He took these words "railway undertaking" from the Order to which I have referred, but he would have preferred stronger words if he could have devised them. I think that was the subject of his discontent.


That may be so, but there is another side to the question. We want to know whether these words are not too strong from the point of view of other interests concerned. If the Minister can assure me on this point it will be all right but we have not got a definition of "railway undertaking" in this connection.


I myself sought the satisfaction which I am now asked to give to the hon. Gentleman. The proposal made by my hon. Friend the Member for Hulme seems to be reasonable in essence. It is that if the Board supply a railway company direct, that direct traction supply shall not be applied to hotels and other undertakings which have no immediate connection with the railway undertaking. The question is: How is that to be expressed in the proper language? My hon. Friend the Member for Hulme takes the wording of a Special Order in which the term "railway undertaking" is used. I do not think that those words have ever been defined as a result of litigation but they are in existence in that Special Order and I think their purport is clear. On those grounds I am willing to accept them. I admit that they have never been closely defined as a result of a case in the law courts and I do not think that such a point would ever arise, for this reason, that there is the other safeguard, namely, the necessity to have the Minister's consent in any event before a supply can be used for purposes other than traction purposes.


I understand then that the words "railway undertaking" would not cover railway hotels and that the intention of the Minister in accepting the Amendmeent is to tie it down to definite means of transport, to the actual means of propulsion and so forth in the running of the railway service.


I think that my hon. Friend had better not pursue the matter if he does not wish to destroy the Amendment. I think the ordinary common sense meaning of "railway undertaking" is plain. If my hon. Friend is going to make a very subtle analysis of the term and try to make it mean something else then I shall be very chary about accepting the Amendment. But I think the ordinary reasonable man will understand what it means. It has been in an Electricity Order already. It means the purposes of the railway undertaking—signalling, or lighting or anything that can be connected with the railway undertaking. I am trying to exclude things which are outside the railway undertaking.


I have no wish to tie the Minister down too strictly, but I thought a difficulty had arisen and that it might be possible to simplify it. I fully accept the position which the Minister takes up and I realise that he is accepting the Amendment in the widest spirit.

Amendment agreed to.

The following Amendment stood upon the Order Paper: In page 6, line 43, at the end, to insert: (5) Paragraph (a) of sub-section (4) of section seven of the Electricity (Supply) Act, 1926, shall have effect as if the words 'or sale' were inserted after the word 'generation.'"—[Mr. H. Williams.]

Mr. DEPUTY-SPEAKER (Captain Bourne)

I should like to hear an explanation of this Amendment from the hon. Member before I decide whether it should be called or not.

5.38 p.m.


This purports to be an Amendment to Section 7 of the Act of 1926 and might at first sight appear to be outside the scope of the Bill but I think I can show that it is not. If reference is made to the Section in question, it will be seen that in the relationship between the board and the selected stations there are certain expenses which the board cannot charge to the selected stations because they are expenses which have nothing to do with the authorised undertakers, for the purposes of this levy. In this Bill we are authorising the board to enter into the work of negotiating contracts with railway companies and obviously they will have to create a staff for that purpose. It will be necessary for them to have people who can spend all or at least part of their time in those negotiations. It seems clear that the expenses of that staff ought not to be included in the levy upon the selected station owners against whom there is to be this competition. These proposals which make it possible for the Central Electricity Board to give direct supplies must alter the general financial arrangements between the board and the undertakers. New expenditure incurred by the board as a result of having become a competitor with authorised undertakers ought not to be included in the expenses which the board can subsequently charge against those with whom they are in competition. The Amendment seeks to deal with that point.


I am obliged to the hon. Member for his explanation. It confirms the opinion which I had formed that, whether or not this Amendment is outside the scope of the Bill, it is certainly outside the scope of this Clause.

5.42 p.m.


I beg to move, in page 6, line 43, at the end, to insert: (5) Where by reason of any supply of electricity given by the Central Electricity Board to a railway company under this Section any capital expenditure incurred by any authorised undertakers for the purpose of supplying electricity to the railway company is rendered wholly or partly unremunerative the Central Electricity Board shall pay to the authorised undertakers a turn equal to the then value of the works represented by such capital expenditure or a fair proportion of such value as may be reasonable in the circumstances. Any dispute between the Central Electricity Board and any authorised undertakers under this Section shall be settled by arbitration. This Amendment differs in form from a similar Amendment which we discussed in Committee. I would remind the Minister that after a similar proposal had been negatived in Committee hon. Gentlemen on the Front Opposition Bench proceeded to bring up the question of compensation for workers, and the Committee very properly inserted Amendments in the Bill with the object of compensating workmen who were displaced as a result of the operations of this Clause. It was pointed out in objection to my Amendment on that occasion that the words which I then proposed asked for compensation for loss of profits. The present Amendment is in a revised form, and its purport is that where plant has been installed for the purposes of a supply and the supply has to be discontinued as a result of the operation of this Measure, compensation should be made available to the parties concerned in respect of the plant thus rendered redundant. It is no answer to say, as was said in Committee, "If the undertakers make an agreement for a specified term and the specified term lapses, it is up to them to deal with the plant which is no longer required." This Bill changes the whole circumstances in which such contracts exist. If this Measure had been in existence when some of the present contracts were made it is reasonable to suppose that those contracts never would have been made on the existing terms.

There are existing contracts which were entered into in the almost certain hope and with the obvious possibility that they would be renewed, possibly under revised conditions, but in such a way that there would be continuity of supply and an implied continuity of the original contract. All that is changed as the result of the Bill. Some of these contracts may not be renewed, and in that event the cervices with which they are concerned will come to a premature end, and the under- taker, who has put up perhaps several miles of overhead lines and installed substations and so on, will be left with all that equipment on his hands. The House having accepted the principle of compensation for the individual whose capital, in the form of his ability to work, has been taken from him, it is reasonable to ask that plant made redundant by the operation of this Measure should rank for reasonable reimbursement to the people who put it down.


I beg to second the Amendment.

5.46 p.m.


My hon. Friend the Member for Hulme (Sir J Nall) moved this Amendment in very clear terms. He made it, I think, quite clear—what it is important to remember—that there is no question under this Clause of any contract being broken. No railway company has any right, by reason of this Clause, to break any contract which it has entered into, and it would be at least a novel principle to give compensation because one contracting party did not renew a contract with another contracting party. After all, the situation may arise at present. There is nothing to prevent a railway company which has made a contract with a joint authority or a power company deciding that it could more usefully use the power if it were obtained at a different point and from some other authority, and changing its source of supply.


I do not want to mislead my hon. and learned Friend or the House, but if a particular hotel, or dock, or harbour is in the area of a particular undertaker, it cannot get a supply from another undertaker in another area.


My hon. Friend really has in mind what I may call the incidental purposes, and I will deal with that question in a moment, because there is a further safeguard on another matter on that account; but if you take haulage, there is nothing to prevent, under the present law, a railway company making an agreement at one time with one power company, and when that agreement comes to an end, making an agreement with another company to take the power at another point. When people enter into contracts they can negotiate and agree to such terms as they think fit, and if a contract involves considerable capital expenditure, it is open to those negotiating it to see that it is for a term which would reasonably cover that capital expenditure; but it would be a very novel principle, and a principle which could not really be justified, if you introduced into this Clause a provision that there should be compensation, in effect, for the fact that a contract was not renewed. There are individual cases of hardship whenever changes are produced, either by Parliament or by special circumstances in industry. I am sure my hon. Friend would have many examples of that sort in his mind, but here, as we see it, there is no novelty in such a position as may arise, and nothing which could justify any compensation for the fact that a contract is not renewed.

I would like to point out this further, that where, in so far as my hon. Friend has in mind what are called the incidental purposes, purposes other than haulage and traction, a railway company is proposing to get a supply from the board for haulage, no undertaker could be prejudiced by action under that part of the Clause except with the consent of the Minister. Therefore, in the case which I think my hon. Friend has in mind, where some authority or power company has been supplying a hotel or a dock and has been put to considerable capital expenditure, which has not had time to get a proper return, and that will all be thrown out of action if the board supplies, my hon. Friend the Minister will have to be asked for his consent within the terms of the proviso, surely this House can trust the Minister that consent should not unreasonably be given for a supply for incidental purposes—unreasonable for this reason, that the power company which has given the supply has incurred large capital expenditure for that particular purpose and has not been provident enough to get a sufficiently long-term contract to give it a reasonable return. For these reasons, we are unable to accept this Amendment.

5.52 p.m.


I must confess that I have listened with great disappointment to the speech of my hon. and learned Friend the Solicitor-General, if only for this reason, that when we were dealing with this Clause in Committee a week ago, an Amendment was moved from an Opposition bench—and I was very glad to see that it was accepted by the Government—granting compensation for the benefit of railway servants who might find themselves dismissed as a result of this Bill coming into operation. Surely it is not very much to ask that a Government so constituted as this one is should not only consent to compensation to the worker, with which we cordially agree, but that they should also allow some compensation to the unfortunate capitalist. I am a little bit puzzled as to exactly where my hon. and learned Friend draws his distinction in this matter. We inserted this new Sub-section (5) during the Committee stage, and one is entitled to ask why that Sub-section was accepted and inserted if the principle is immediately to be rejected when we ask that similar compensation should be granted to the capitalist.

If we are told that it is merely a question of a contract of service not being renewed, that is the situation of these railway servants under the Sub-section which we inserted. They too would find themselves in the position of their contract not being renewed, and surely they too would receive compensation under that Clause. I am sorry the hon. Member for Rotherham (Mr. Dobbie) is not in his place, because he spoke with great knowledge of this matter in Committee and expressed satisfaction at the insertion in yet another Act of Parliament of a compensation Clause of this kind. The two situations are exactly the same. It is a question of a contract not being renewed, and I do not think it is unreasonable to ask a Government of the political complexion of this one to consider the Amendment favourably.

5.55 p.m.


Might I have an explanation of this point? Suppose a contract was entered into in which an undertaker had put in a very large generating plant for providing current for traction purposes. At the time it was entered into there was nothing in front of him like this Bill, and therefore, if the contract was not a long one, the undertaker could not possibly have foreseen the damage that would result to him from the operation of this Measure. Therefore, without trying to understand the lack of continuation in the argument of the Solicitor-General, when he said that they agreed with compensation to the individual but not to the undertaker himself for plant, and that they agreed with compensation for subsidiary services such as docks, hotels, and so forth, I do not follow, from an engineering point of view, and imagining myself as one who had put in a plant for an undertaker and who had no prospect then of seeing anything which might upset its continuation, how it can be said that the undertaker would not suffer very severe loss, and should not be compensated.

5.56 p.m.


I rise because of the observations which were made by my hon. Friend the Member for Hillsborough (Mr. G. Braithwaite). It would be extremely dangerous if we allowed it to go forth that there was any considerable body of opinion in this House which was in favour of granting compensation to a body which had failed to get a renewal of a contract. I think there is the widest difference, the most positive difference, between such a case and the case which I was very glad to see, by analogy with what appeared in the Railway Act of 1921, was inserted in Committee and now appears in Subsection (5) of Clause 4 of this Bill. It seems to me that if you suggest that because some body of persons who are either capitalists, whatever that means precisely, or organising a big public supply, are going to be deprived of a contract, and a certain amount of plant is thereby rendered unfit, you should grant compensation, it is indeed to open the door to a principle to which I could not subscribe for a moment.

Amendment negatived.

5.58 p.m.


I beg to move, "That the Bill be now read the Third time."

I have tried, to the best of my ability, to meet certain powerful objections raised by my hon. Friends and in one case by His Majesty's Opposition, and the Bill has been modified in its passage through the House. On the first Clause there is now to be a review of past agreements, which was not originally provided for in the Bill. Under the second Clause, the agreements are to be reviewed when they come to the end of their period, and before they are renewed; the servants of railway companies who may be displaced from their generating stations as a result of direct supply being taken from the board are to be compensated; and authorised undertakers are to obtain a Protection against supplies which were obtained for the purposes of traction and for the purposes of the railway undertaking generaly being used in competition with what they might legitimately claim to have a monopoly to supply. I have tried to meet the wishes of all sections of the House so far as I have been able.

The House has reciprocated by giving an easy, though a closely scrutinised, passage to this Bill. I could well have understood, considering the number of names that were down on the Order Paper of those who were discontented with the Bill, if instead of our now being at the beginning of the Third Reading we had still been discussing the first Clause; but because my hon. Friends have not been obstructive but have been constructive, and have concentrated on what they thought was practical, it has been possible to get through a difficult and contentious Measure without, I hope, ill will. I am particularly grateful for the spirit in which all my hon. Friends have spoken, and particularly my hon. Friend the Member for Hulme (Sir J. Nail), who is the leader in this matter of the friendly opposition. We have now reached the Third Reading, and I hope that some, at any rate, of the misgivings have been allayed, and that, while my hon. Friends may not be completely satisfied, they are not so full of disapproval as they were when our discussions began.

6.2 p.m.


I think that all Members will join with me in congratulating the Minister on the way in which he has conducted this Bill through the House. It is a Bill that has presented some difficulties, but the hon. Gentleman has overcome them and has been successful in bringing it before the House for the Third Reading. The Measure is a step in the right direction. Electricity is a national service, and the Bill will tend towards helping the whole community rather than a section. It is a general bringing together of all the production plants and it will bring about the avoidance of many separate interests to deal with this matter. We wish particularly to thank the Minister for conceding the Amendment which we had down. While hon. Members on the other side have not been able to get their compensation Clause, the question was very fully discussed in another place and dealt with there from every point of view. The Bill will lead to a greater supply of electricity from the grid, and I take it that that is the principal point with which we have to deal. Not only will it make for a greater production and distribution of electricity, but it will remove many difficulties which were evident in the Act of 1926. It will remove the difficulty against producing the cheapest and most effective supply.

A paragraph that appeared in the Press yesterday, pointed out that the Central Electricity Board have been able in a new housing area in South Devon to supply electricity at 1d. per unit as against 1s. which was to be charged by the private companies there. Some compromise was arrived at whereby they got power to work distributing stations on their own, and instead of the current costing 1s. the people have got off with 1d. We want that kind of thing to operate everywhere. We do not want people to have to produce electricity at a loss, but at the same time we want a reasonable amount charged so that people will not be bled. The Bill will be one of the ways to cheapen the price, to level the whole system of distribution, and to bring about greater uniformity throughout the country than there has been before. It will and ought to be accepted by the community as an evidence of a desire to clear away many of the difficulties and to yield to the consumer a general and plentiful supply of current at a uniform price as far as possible.

The Debates on the Bill have been carried out in perfectly good temper. We have had no exhibition of maliciousness or any desire to wreck the Bill. Everybody has seemed to realise the importance of the Measure, and, while there have been many Amendments, they have been debated with good sense and feeling, and I am sure that whatever was said in moving the Amendments was accepted in the spirit in which it was meant. The proceedings on the Bill have been brought to a close in a spirit of understanding, if not of real peace, which will help forward the greater production and the better distribution of electricity throughout the country.

6.7 p.m.


I would like to join in the congratulations to the Minister on the Very good-tempered way in which he has carried through the discussions on a highly technical Measure. He has, as he admitted himself, done his best to meet all the legitimate Amendments which have been put forward. He expressed himself in regard to one which I attempted to move, and I hope that, although he was not able to accept it, his good wishes will not stop there, but that he will do what he can with his powers outside. I wish to join with the hon. Member for Wigan (Mr. Parkinson) in the great optimism which he expressed as to the benefits of this Measure. I will support it because I think, after considering it very carefully, that it is more likely to do good than otherwise. At any rate, it will bring cheap electricity immediately within the reach of some people who could not get it otherwise. I am not sure that I take the view that it is so radical in its changes that it will enable electricity to be cheaper and more abundant to the whole community. There are, however, cases in certain areas which will be affected by the pooling system. Some places have to pay very high charges owing to transmission costs, and they will be able to get the benefit of pooling with other places in the same area which are nearer to a generating station. To that extent, it will cheapen electricity to some consumers in local areas.

It remains to be seen how Clause 3 will be applied. I should like to see it applied over the whole electricity area, but I realise, as anybody who has been through the discussions on this Bill must, that there are very powerful interests with which to contend if any pooling on a large scale is to take place. Those who have been representing those interests have not hesitated to make their views heard in the House. That is one of the things with which the Minister and the commissioners will have to contend, and if we are really to get what the hon. Member for Wigan appears to think we shall as a result of this Bill, one of the first things to be done is to have some application by the commissioners under this Bill and under the Act whch it amends to bring some of the power companies' lines within their own control. I can see that the railway companies are likely to do very well out of this Bill. I think they are entitled to so. They carry on a public srevice, and they ought to get their current as cheaply as possible. That is one of the features in the Bill about which I have no qualms.

I see, however, a danger in the powers in the Bill to give special terms to special undertakers and consumers. There is also the question of undue preference. The Central Electricity Board, in applying the powers under this Bill, will in many cases supply current without any profit. All they have to do is to show that they are not making a loss. If you are to supply a large amount of current on that basis without making a loss, and have to keep up a certain standard revenue as in the case of railway companies, it may be some time before the general consumer gets a considerable reduction. That is one of the matters which I presume the Minister and the commissioners will watch carefully in the operation of the Bill. I support the Measure, and I hope optimistically that it will have better effects than I was at first inclined to believe.

6.11 p.m.


I should be ungrateful if I did not respond as warmly as I could to the kind expressions of the Minister. It has been no part or wish of mine to obstruct the proceedings, and I hope I have been long enough in the House to realise that when a Minister brings in a Bill he does so for the purpose of seeing it passed in to law, and he is not disposed to take it back or tear it up. Therefore, it is only natural that my hon. Friend, having brought in the Bill, should stick to it and see it through. I should like to express my personal appreciation of the manner in which he has tolerated the various proposals which I have made and for his acceptance in one or two instances of small Amendments which make the Bill perhaps less objectionable than it was. I am sure my hon. Friend will appreciate it when I say that the general objection to the Bill still remains and that it has not been affected in any way by the manner in which he has dealt with our objections.

That our general objection remains can be illustrated by reference to the hon. Member for Wigan (Mr. Parkinson), who spoke so strongly in support of the Bill. Of course the Front Opposition Bench support it. It is part of their programme. But what is intolerable is that the Central Board itself should be pressing on the socialisation of the electricity industry instead of attending to its proper job of concentrating on and controlling the generation of electricity. I have seen a book issued by the Fabian Research Bureau by "H.G." It does not disclose the author's name, but it is generally known who he is. He is an officer actively engaged in advising the Central Board on many aspects of their work. He writes this book, and in the foreword there is a note which states: The conclusions reached, and the proposals forward are substantially similar to those of the Labour Party Policy Report No. 3. So is this Bill. As my hon. Friend the Member for Wrexham (Mr. A. Roberts) said, the House ought to be concerned about the expectations aroused by the Act of 1926, and whether electricity as a result of that Act will be cheaper all over the country. This Bill is putting back the day when it can be. It is deliberately enabling certain consumers, certain particular persons, to get an advantage in a way in which they could not have got it under the 1926 Act. It is, therefore, putting off the day when all the persons concerned can secure an advantage. It is true that under the Act of 1926 electricity cannot cost more than it would have done without the Act. The intention of the Act was that electricity should cost less.

As a result of the board's activities in the matter of concentration and generation and all the rest of it there should be an advantage to everybody who is consuming electricity, but this Bill postpones indefinitely—and for all time if the present policy of the board is pursued—the realisation of the hopes of 1926, and for that reason I think the passing of this Bill is very bad Government policy. After all, the board is not a commercial body in the ordinary way; the conduct of its finances and its inability to reduce charges make one realise that it is not being actuated by ordinary commercial considerations. It is supposed to be a technical body to control the generation of electricity, with the ultimate result of securing economies in the interests of the consumers of electricity. Under this Bill the fruition of the 1926 Act is indefinitely postponed. I hope the Minister will have regard to the objections which have been raised so long as remains in his present office, which we hope will be for some time, and until he gets a better one, and that he will see, so far as it is within his power, that this Bill is reasonably worked, and not applied in the quite irregular and quite harmful manner to which the activities of the board have recently been directed.

In these days of the creation of authorities which are not directly responsible to this House we must take note of these things, and realise that if we are not careful we shall get into a position where all the public utilities are in the hands of people not even appointed by Ministers but appointed by curious "colleges" of the Ancient Order of Buffaloes, the Musicians' Union, the Royal Academy, the College of Surgeons and so on—people who know nothing about the practical working of the undertakings for which they are to appoint the directors. We have had the London Transport Board and this board appointed. It is far better to let the stockholders appoint the directors—to go back to the ordinary system of a board appointed by the people who provide the capital. Failing that, there must be some more direct control over these public boards. In this Bill my hon. Friend has, fortunately, retained in some respects control over what can be done, and I do urge him and his Department that that control should be made a real thing, and that this board, responsible to nobody and not to be made chargeable for their faults and fallacies, should not be allowed to get the finances into a bigger muddle than some of us believe them to be at the present time.

6.19 p.m.


I am afraid I do not agree with the argument used by my hon. and gallant Friend the Member for Hulme (Sir J. Nall), but I would join in congratulating the Minister on the way he has handled a very complex question and on conceding several important points which we think are essential for the provision of cheap electricity throughout the land—a provision which we all wish to see. The hon. and gallant Member for Hulme constantly opposed the 1926 Act and predicted that it would be a failure, and in these Debates he has attempted to justify his prognostications, but I suggest that his condemnation of the board at the present time is utterly futile. They have only just had a chance to make a start. Two of the sections started less than two years ago, the other five started at the beginning of this year, and the remaining two will not start till the beginning of next year. Surely it is rather early to suggest that the results anticipated by those who promoted and supported the Act of 1926 have not been achieved. It is a very remarkable fact that the board's policy as regards the joining up of various stations and transmissions is the policy which is being followed to-day, as it has been for many years past, by all the other industrial countries. We find it done in America, in France, in Switzerland and in Italy. It is a policy which has gained justification, and I believe it is one which in this country will justify the Act of 1926 and the Amendments introduced into that Act by the present Bill.

Perhaps the House will forgive me if I quote a few figures to show what has been achieved during the last two or three years. It may be true that we cannot say that it is all directly traceable to the Act of 1926, but I contend that that has had something to do with the remarkably rapid progress which has been made. If we take the three years from 1931–33 we find the plant installed has increased by 8 per cent., the number of consumers connected by 33 per cent., and the amount of current taken by the consumers by 20 per cent. The most remarkable fact there is the comparatively slight increase in the plant installed and the very large increase in consumption. That shows two things: first, that electricity has been made more generally available; and, secondly, that people are becoming more electrically-minded. As to the latter point, I consider that the propaganda of the Central Electricity Board all over the country has done a considerable amount of good in increasing the number of electrically-minded people.

It is very remarkable how electricity is being extended to rural areas which up to a few years ago had no electricity. There are several companies with which I am connected working in rural areas where there has been an increase in the consumption of electricity of something like 40 per cent., and there are few rural areas in which electricity is available where the increase has not been between 20 and 30 per cent. I feel that those figures justify us in hoping that the future will see a still greater improvement. My hon. Friend suggested that the contracts which the Central Board wishes to make with undertakers who have not got selected stations is a sign of weakness, and that it proves that they themselves are not satisfied with the grid and are seeking further means to carry out their task. I suggest that it shows good business acumen, because where there are areas in which the demand is not sufficiently large to justify the erection of a grid they can, by the means they have selected, supply electricity which otherwise would not become available. In any case I think this can only be regarded as a first step, because in that way they will be able to build up the requirements of the people until at no distant date the grid is extended there and carries out the functions for which it was originally promoted.

The only fear of many of us on this side of the House was that the agreements might be made in such a manner that nobody had any information about them and as might entail injustice to the consumers, because a cheap supply to one person may mean an expensive supply to another, whereas we are anxious to see electricity distributed as cheaply as possible all over the country. Another point about which we were rather afraid was that the powers which are being sought might result in the Central Board becoming the competitors of the authorised undertakers. If anything of that kind were possible it would frustrate the whole intention of the Act of 1926. The Central Board is a body which purchases all the current generated from selected stations and then distributes it and sells it to authorised undertakers. If the board were to go direct to some of the best potential customers of existing undertakers and try to supply them direct that would greatly damage the chances of such undertakers. It is obvious that one must take the fat and the lean together. We cannot expect one authority to supply an area where there are no good customers and leave to another authority an area where the best customers are to be found. Many of the large undertakers, whether private companies or municipal undertakings—particularly the power companies—have spent vast sums, amounting to many millions, and have had to wait sometimes five or 10 years for any return on that expenditure, and if there were any chance of their being robbed of some of those customers who helped them to accelerate the process of getting a return on their money it would largely militate against their success and not encourage people to invest money to enable them to carry on their work.

As the Bill stands now I think that it practically, if not entirely, removes two dangers. One is the danger of unfair contract, which is dealt with by the supervision of the Electricity Commissioners, although I wish my hon. Friend had accepted the Amendment I proposed to make it quite clear that all the interested parties should be able to appear before the Electricity Commissioners and not only those supplying and those taking current. The second danger which has been removed is this: It is clear by the Bill as it stands that the Central Electricity Board will not be allowed to become direct competitors with electrical undertakers. Those two dangers having been removed I certainly propose to support the Bill.

I have also a word to say on an aspect of the matter in which I take considerable interest. If this Bill is going to be of any use to railways I am glad that it is to be passed, but I do not think for one moment that any railway, with the exception of the Southern Railway, intends to do anything at all under it. Any excuse is good enough for them to do nothing. They demonstrate a special locomotive hauling two coaches, and because they can get a speed similar to that attained in America and in Germany by a Diesel-engine train they will say, they need not change their present methods. They do many "stunts" of that kind and they get a very fine press, but the unfortunate traveller who lives on the London and North-Eastern Railway and has to travel up to Liverpool Street every day and home again has the same service now as he had 25 years ago; and as far as we can gather from the statement made on another occasion by my hon. Friend the Member for Southampton (Sir C. Barrie) his railway has no idea of carrying out any large electrification scheme.

I am afraid this Bill will be no inducement to those railway companies to do any more in that direction; but the Southern Railway Company ought to be congratulated on their enterprise and on the results which have attended that enterprise. Not only have they electrified the suburban lines and increased their services and receipts, but they have also electrified main lines. Some 20 years ago I forecast the results of electrification of the railway to Brighton, and those forecasts have been more than realised by the results achieved. They are to continue the electrification to Hastings and they will achieve the same results there. New housing estates have been developed in that part of the country, and if other railway companies followed their example it would not only give employment to tens of thousands of people, but also largely benefit the country through which the lines pass.

In that connection I think the claims made by my right hon. Friend the Member for Sparkbrook (Mr. Amery) when he spoke on Wednesday last were quite justified. To deal with half-a-dozen different bodies and to try to secure from them a supply of electricity is a very difficult proposition. I have had experience of that kind of thing, and I therefore welcome the Bill, as long as it is perfectly clear that the railways will have to stand a fair proportion of the charge—cost, maintenance, depreciation, sinking fund and everything else—in connection with the installation that the Central Electricity Board will have to put up in order to supply them with electricity. As the Bill stands, I support its Third Reading, expressing the hope at the same time that the Minister may see his way to grant one or two slight modifications when it goes to another House.

6.31 p.m.


I have witnessed some magnificent illustrations of Mr. Facing-Both-Ways from hon. Members who, in the first place, opposed the principle of the Bill and are now beginning to bless it. They believed in the nationalisation of the production of electricity but in the individualisation of its distribution. "Produce electricity as cheaply as you can for us," they say, "but when you come to distribute it, where the profits are made, keep you hands off." They are Socialists when it suits them and capitalists all the time. The hon. and gallant Member for Hulme (Sir J. Nail) put the cat among the pigeons. He quoted a certain pamphlet which we accept. We have always believed in the principle that the things which are essential for the life of the people ought not to be private property of any section of the people, and that things which are necessary for the life of all should be the property of all.

The Bill goes a little bit of the way towards that end. Like the Irishman's pup, it follows everybody some part of the way, and therefore it pleases hon. Members opposite while it sometimes pleases us. There is to be a national supply of electricity, and if we are good boys in various districts we may get electricity cheaply. I live in a district, and I am a member of the local authority, many miles away from the coalfields, yet we are able to supply electricity to the manufacturers and people of West Ham more cheaply than they would be able to get it on top of the coalfields. Why is that? Because the supply is publicly controlled and publicly owned. No individual director is getting a thousand pounds a year for doing nothing and doing it very well. No people who have put a certain amount of money into the concern are drawing out more than they have put in—not in dividends exactly but in emoluments, such as putting their sons in as governors, foremen, engineers and in other positions connected with the firm. Although they are making no dividends they are getting their money back in other ways. Some of us know these things because we have sat upon committees where the administration takes place, and we have watched it. It is a fine game played slow. It is very nearly time that the people said "tiggy."

We stand for the Bill in so far as it applies to the production of electricity. Would it not be a magnificent thing if the supply of electricity could be national, not only in production but in distribution. Why should all these various interests cut it up in little bits after it has been produced in bulk and say, "Where does my company come in?" The hon. Member who spoke last let the cat out of the bag. He wanted to know where the power companies come in. I am quite prepared to give them all they are worth, and that is not much. Taking them company by company against the public authorities who are doing the same work, their charges are 50 per cent. more, on the average, than those of the public authorities, and that is a great condemnation. The local authorities are providing electricity and are selling it for about half the price of that supplied by the so-called power companies, but whenever we bring these matters before the House of Commons the power companies come first. The power will eventually be the people's power, and then we shall eventually cut their claws. We support the Bill as far as it goes, but it does not go far enough. We hope that the time will soon come when we shall be able to say that those things which are necessary for the public welfare, public health and public development, shall not be under the control of companies of any kind, but under the control of the people's representatives.

6.37 p.m.


In moving the Third Reading, the Minister paid tribute to the friendly atmosphere in which the discussions have been conducted. It is only fair to say at once that that friendly atmosphere has been due in no small measure to the very courteous and conciliatory manner with which the Minister has met those of us on this side of the House who put forward Amendments intended to improve the scheme. We are grateful to the Minister for such concessions as he has been able to make, and I hope that he will permit me to continue in the same friendly strain on this last opportunity in giving voice to misgivings which still remain, in spite of the concessions which he has made, in the hope that they will be on record and may perhaps receive consideration when further legislation in connection with electricity is formulated.

A great mistake was made in taking a technical, Departmental Bill of this kind on the Floor of the House. An effort was made early in the proceedings through my hon. Friend the Member for Springburn (Mr. Emmott) to send this Bill to a Select Committee. Our experience has shown that, with the very difficult matters that we have been discussing, that would have been a very superior procedure. Many difficult and technical matters have been taken in Committee of the Whole House, but it would have been better if counsel could have appeared on behalf of the selected and non-selected stations and the Committee stage conducted in that way.

Reference has been made to what underlies the Bill and to the necessity of obtaining important customers for the grid. The hon. and gallant Member for Hulme (Sir J. Nall) made some reference just now to the financial position of the Central Electricity Board. That position is not one which can be viewed with any very great optimism. Those who have invested millions in the board see, of course, their stocks standing at a very high figure, and they need have no fear, but I feel that it is only right to give voice to my apprehension, if it is not the apprehension of others, that before many years are past the grid will be financed out of the national Exchequer and will have become a definite charge upon the unfortunate taxpayer. That time is probably not very far distant, and so far from the people—as was eloquently expressed by the hon. Member for Silvertown (Mr. J. Jones)—having the benefit of the scheme, they will have the benefit of paying for it as it gets into deeper and deeper water. I do not think that the Central Electricity Board have distinguished themselves up to date.

In Clause 4, the Bill endeavours to set up an organisation under which railways and the owners of non-selected stations may become customers of the board. The right hon. Gentleman the Member for Hillhead (Sir R. Home), when some of us put forward objections in Committee to the financial arrangements which would be made with the railways, held up before us what I would call the Diesel bogey. He said, "You will not get the railways as customers at all unless you give them very preferential terms." The right hon. Gentleman with his great experience of railways was entitled to make that point. Our case was that in order to obtain those important customers it was proposed that very important overhead charges such as interest and sinking fund were to be paid by someone else, and that someone else was to be the domestic consumer. The Government's formula, and I do not think I am misquoting the Minister, is the olden-time one of swings and roundabouts. What you lose on the swings you get back on the roundabouts. The hon. Member for West Lewisham (Sir P. Dawson) made it very clear that while we are going to lose on the swings it is very doubtful whether the roundabouts will arrive at the fairground at all, and there may be no opportunity to recoup ourselves from that kind of entertainment. The railway argument is very attractive in theory, but in practice it is very doubtful whether the railways will make use of the system which is being laid down by the Bill.

The Minister, whose efficiency in three different offices in this Government and in all the important posts which he has held I greatly admire, inherited this Bill upon taking over the office of Minister of Transport. He has naturally had to do his best with it. There it was, on his desk, and it was his duty to put it through. I am very anxious that he should make a great success of his office. He has been very unfairly criticised about a number of things that he has done in connection with safety on the roads. I hope he will allow me to say, in a very friendly spirit, that I trust that in his electrical administration he will take some note of the things that have been said in this Debate and in the other Debates on the Bill. He must have power to make the grid operate efficiently, but there is something even more important than passing legislation to make the Central Electricity Board and the grid operate efficiently, and it is this: Surely it is the duty of a Government who have done the great things which this Government have done, to do as little as possible to place inconveniences or obstacles in the way of those upon whom they depend for the successful operation of the Central Electricity Board. We are engaged in contradicting the principle which was laid down in 1926, with regard to the supply of power to railways. I suggest, with the greatest respect, that it is unwise to cut the ground from underneath the people upon whom we depend, and who have done the whole of the very important pioneer work in connection with electricity in this country. It is desirable that the Government should take that point into very careful consideration in the future. For the rest, while we still have our misgivings, I congratulate the Minister on the way in which he has piloted his Bill, and I can only hope that the fears which I have expressed will prove to be groundless.