§ Order for Second Reading read.
§ 3.29 p.m.
§ Mr. EMMOTT
I desire, Sir, to raise a point of Order. My point of Order is that this Bill should not receive a Second Reading until it has been referred to the Examiners. The Standing Order on which I base my submission is Standing Order No. 216, which reads:Where a public Bill (not being a Bill to confirm a Provisional Order or Certificate) is ordered to be read a Second time, on a day appointed, and it appears that the Standing Orders relative to private Bills may be applicable to the Bill, the Examiners of Petitions for private Bills shall examine the Bill.I do not read the remaining part of the Standing Order because it refers to the contingency which arises when the Examiners have examined the Bill. There is no doubt that a Bill for the supply of electricity is a Bill to which the Standing Orders relative to private Bills may be applicable, for a Bill for the supply of electricity falls within the first class of private Bills under the Standing Order which divides them into classes. Now what is the essence of the Standing Orders relating to private Bills? It is the notice which these Standing Orders enjoin to be given to persons who may be affected thereby. What is the reason for this notice? The reason is given in Sir Erskine May's Parliamentary Practice, 13th edition, page 387. There the learned author states:If it appears, after its introduction, that a public Bill may affect private rights, notice of this circumstance is sent from the Public Bill Office to the member in charge of the Bill; and the Examiners of Petitions for private Bills are ordered to examine the Bill with respect to compliance with the Standing Orders relative to private Bills.It is plain, in my submission, from this passage that the reason for notice is the fact that the Bill may affect private rights. Therefore, I submit that to establish my case, I have only to show that this Bill may affect private rights. I submit that the first Clause of the Bill may affect private rights. The powers which under Clause 1 will be conferred upon the Central Electricity Board and undertakers are the powers which were 1022 sought by the Corporation of Taunton in a Bill which that Corporation promoted during the last Session of Parliament. The very question that is raised by the first Clause of this Bill was raised by the Taunton Corporation Bill. The Taunton Bill was opposed by the Corporation of Bristol. The House debated the matter on 20th June of this year. The Clauses in the Taunton Bill which are relevant to this point were Clauses 3 and 4. On 20th June the House carried an Instruction to the Committee to omit Clauses 3 and 4. Subsequently, the Bill was withdrawn. It is plain, I submit, from the circumstance that the Bristol Corporation thought that its rights were affected by the Bill of the Taunton Corporation, that by the first Clause of this Bill private rights may be affected. But further I contend that the matter is made very plain by the terms of the Clause itself. The proviso to the Clause states that the Electricity Commissioners shall not give their consent to an agreement made under Sub-section (1) of the Clause:Unless they are satisfied that the arrangements will not result in any substantial prejudice to any such authorised undertakers.Then by Clause 2 of the Bill I submit that private rights may be affected. Under that Clause the Central Electricity Board has power to supply electricity to authorised undertakers at special rates in order that those undertakers may pass on electricity at those rates to particular consumers. The object of this Clause is that preferential rates may be quoted by means of authorised undertakers to particular consumers—to industrial consumers it may be, but in any case to consumers. In my submission, that constitutes a preference. A certain principle was laid down in the Electric Lighting Act of 1882—the first Act to deal with the supply of electricity in this country, which has been faithfully observed ever since. That principle is that there shall be no preference given by an undertaker supplying electricity to one person or corporation as against another. In other words, any person to whom electricity is supplied by an undertaker has a right that no other person to whom electricity is supplied shall receive preferential treatment as against himself. I say that by Clause 2 of this Bill that right is infringed: there is a private right that may be affected.
1023 I apologise for detaining the House so long, but it would be discourteous to you, Mr. Speaker, and I should not do justice to my argument if I failed to make plain the grounds of my submission. By the fourth Clause also I submit that private rights may be affected. Sub-section (3) of that Clause lays down that no electricity supplied under the Clause to any railway company shall, within the area of supply of any authorised undertakers who own a selected station, be used for certain purposes without the consent of those undertakers. Consent implies a right. Therefore, here again private rights may be affected.
But there is another part of this question to which I ought to refer. It may be that this Bill is in fact what is known as a hybrid Bill. At page 387 of Erskine May I read this:If the Examiners find that Standing Orders relative to private Bills are applicable and have been complied with, or, if when not so complied with, the Select Committee on Standing Orders report that the Standing Orders should be dispensed with, the Bill is preceded with as a 'hybrid' or 'quasi-private' Bill. That is to say, after being read a Second time it is committed to a Select Committee, nominated partly by the House and partly by the Committee of Selection; and the Committee may be empowered to hear suitors, their agents and counsel, for and against the Bill.Then at page 657 the learned author writes:Bills for the particular interest or benefit of any person or persons are treated, in Parliament, as private Bills. Whether they be for the interest of an individual, of a public company or corporation"—I particularly stress those words—or of a parish, city, county, or other locality, they are equally distinguished from Measures of public policy.Then further on he writes:While the distinction between public and private Bills may be thus generally defined, considerable difficulties often arise in determining to which description particular Bills properly belong. Thus, upon a public Bill, the question not infrequently arises whether it ought not more properly to have been introduced as a private Bill. And private Bills have often been objected to, and have been debarred from proceeding, on the ground that, from their scope or objects, or from the principles involved in them, they should have been introduced as public Bills.And later he says:It has already been explained that there are certain Bills—clearly belonging, in 1024 part, to both descriptions—that are regularly recognised as 'hybrid' Bills: they are those Bills which, though brought in as public Bills, are referred before their Second Reading to the Examiners and are proved to affect private rights and to be within the application of the Standing Orders relative to private Bills.I believe I am correct in stating that it has come to be generally understood that while a Bill may be regarded as a public Bill because it is of general application, it is a hybrid Bill if, while affecting particular categories of persons, it affects only some members of those categories, or affects in a different way different members of those categories of persons. I do not find this principle actually laid down in Sir Erskine May's book, though I may have overlooked a passage in which it is to be found. Without doubt, however, a hybrid Bill is a Bill which is partly public and partly private, and the essence of the matter appears to be this: that a Bill is a hybrid Bill if, while of general application, it affects only particular members of a class of persons or organisations, or affects in a different manner different members of a class, though affecting all the members of that class. If I can satisfy you, Sir, that this Bill will affect only some members of a class, or will affect in a different manner separate members of a class of persons or organisations, then I submit that I shall have succeeded in establishing that this Bill ought to be regarded as a hybrid Bill; that it will be found to be, in fact, a hybrid Bill and that as such it ought to be sent to the Examiners.
Under Clause 1, the Central Electricity Board is given power, by agreement with any authorised undertakers, who are the owners of or control a generating station which is not a selected station, to enter into arrangements with them for certain purposes which I need not enumerate. I submit that under that provision, the Board can differentiate between different undertakers who are not owners of selected stations. Again, under Clause 2, I submit that the same thing happens, because the Central Electricity Board is there given power to supply electricity to authorised undertakers at particular prices and on particular conditions, in order that this electricity may be supplied at special rates to particular consumers. There, too, I submit is the power to 1025 differentiate between undertakers. Not all undertakers are equally affected. Certain undertakers will be singled out for preferential treatment. By those two Clauses, conditions are established which make this Bill in truth and in fact a hybrid Bill.
Finally—and I should like to express my gratitude to the House for having allowed me to take up so much of its time upon this matter—I do in all seriousness submit that regard should be had to the meaning and the intention of the Standing Order. I submit that this Bill partakes of the nature of a private Bill. Whatever may be the exact meaning of the words of the Order as they stand, I submit that the meaning and intention of the Standing Order has to be regarded and examined, and that, within that meaning and intention, this Bill partakes of the nature of a private Bill, and should now go before the Examiners.
§ 3.45 p.m.
§ Mr. SPEAKER
The hon. Member for Springburn (Mr. Emmott) kindly gave me notice that he was going to raise this point of Order, and consequently I have been able to look pretty deeply into the question. As I understand it, his submission is that under Standing Order 216 this Bill should be sent to the Examiners and that, if I thought so, it should be my duty to send it to the Examiners before it receives a Second Reading. In 1926, when the Electricity (Supply) Bill was first introduced, it will be remembered that a point of Order of a very similar character was raised on that occasion. My predecessor gave a Ruling on, practically the same point as that which the hon. Member has raised to-day, and, as far as I can see, I, can find no reason why I should alter the Ruling, that my predecessor gave on that occasion. The hon. Member has sought to make the case that this Bill ought to be referred to the Examiners as a Bill affecting private rights on account of the provisions in Clause 1. That Clause, I think he will agree, deals with all undertakers who own or control generating stations which are not selected stations, so that all members of the class are affected alike. Also, this Bill is not local in its application, but appears to me to be a Bill which deals with a matter of public policy. Therefore, as far as I can understand it, 1026 and as I interpret Standing Order 216, which is all I have to do, I cannot see that this Bill should go to the Examiners before it receives a Second Reading.
§ 3.47 p.m.
§ Mr. HERBERT WILLIAMS
May I point out that the decision in 1926 related to a Bill creating the Central Electricity Board? Therefore there was no Central Electricity Board then in existence which might, of itself, have brought such a Bill before the House. This Bill, however, is a Bill promoted, in fact if not in theory, by the board created under the Act of 1926, and the position is therefore, quite different from what it was when there was no such board in existence. With regard to Clause 1 of the Bill, you. Sir, take the view that the Clause deals with all members of the class of non-selected stations. I think that, briefly, I can show that such is not the case. The non-selected stations are to buy their electricity from the board on terms known as grid tariff rates. If all are treated under Clause 1, the tariff ceases to exist and the finance of the Bill ceases to exist. Clause 1 cannot operate if all non-selected stations are included in its operation. If the operation of the Clause becomes universal, it destroys the basis of the finance of the 1926 Act. It cannot be within the contemplation of the board that they should supply, under Clause 1, every non-selected station. If they did so they would be in the position of being unable to meet their obligations.
§ 3.49 p.m.
§ Sir JOSEPH NALL
May I with great respect submit a point relating to Clause 2 which would seem to go further than Clause 1, in that it enables a supply to be given to a particular person in a particular class beyond the actual undertaker. To give a particular supply to a particular person in a particular class, and at preferential rates, is specifically prevented by the Act of 1926. As the matter stands, the provisions of the earlier Acts apropos of preferential treatment will be overridden by this proposal and it will be possible to facilitate preferential supplies at preferential tariffs to a particular person within a class, thereby conferring upon that person a distinct advantage as compared with other persons in the same industry to the possible damnification of those other persons in the same industry.
§ Mr. SPEAKER
All those points, and also those raised by the hon. Member for South Croydon (Mr. H. Williams), I had in mind in coming to my decision, and I do not think they affect the main point, with which I have already dealt. This Bill is not local in its character, but of general application, and therefore Standing Order 216 would not apply.
§ 3.51 p.m.
§ The MINISTER of TRANSPORT (Mr. Hore-Belisha)
I beg to move, "That the Bill be now read a Second time."
The Bill has for a long time been before Parliament. Indeed, so far back as May last it passed through all its stages in another place, and but for the congestion of business it would undoubtedly have been commended to this House shortly after that date. It is intended to clarify and amplify certain provisions of the Electricity Supply Act of 1926, the greatest constructive measure of planning, as it is now called, ever undertaken for a single industry in Great Britain. Although that Act has been upon the Statute Book for eight years, it is noteworthy that this is the first occasion on which it has been felt desirable to ask for any Amendment of any of its Clauses. This is probably largely due to the fact that the Central Electricity Board, which was created by that legislation, has proceeded by negotiation and agreement wherever that course seemed open to it, in order to achieve the purpose which Parliament had in view.
What was that purpose? Parliament having decided that the generation of electricity, a form of energy which knows no natural parochial frontiers, in a multiplicity of unco-ordinated stations was technically indefensible and commercially disadvantageous, set up the Board to concentrate supply in a limited number of large stations favourably situated and suitably equipped. These stations were to be linked to one another under the central direction of the Board, so that the load could at any given time or season be borne at the most advantageous points and economies made in the provision of spare plant, which could be pooled. These selected stations, whose owners, of course, retained their own distribution lines, were in turn to be connected with the systems of other authorised undertakers, so that these 1028 acquiring their power from the main source could confine their energies to distribution. The Board's network of high tension mains thus evolved is, of course, known as the grid.
The choice of selected stations having been made (subject to such additions as from time to time might prove advisable) the Board was confronted with the problem of determining its relations with those authorised undertakers whose stations had not been selected. Some of these were plainly uneconomic, in that their running costs for the generation of electricity were actually greater than the initial grid tariff, a tariff which, it must be remembered, includes the Board's liabilities in respect not only of running costs but of capital charges as well. As no one would be likely to insist on making for oneself what one could buy more profitably elsewhere, such stations would of their own accord, even in the absence of the compulsory powers contained in the Act, cease to generate for themselves and take their requirements from the grid.
But there are other stations having some economic life remaining, capable, while their present plant endures, of producing energy at running costs lower than the grid tariff, although, when their capital charges are added, at higher total costs and in some exceptional cases at lower costs, than the grid tariff. In regard to each one of these stations, it falls to the Board to ask: "Is the station suitable for permanent use and therefore for selection?" Where the answer is "No," either because the total cost of production is too high, or because the site is unsuitable, or because the plant is non standard, is the Board on this account to leave the undertaking outside, the scheme altogether to renew and extend its station from time to time and to develop independently? Plainly it cannot do so within the purpose of the 1926 Act, which was to co-ordinate, as I have said, the wholesale side of the industry. Accordingly, the Board has made it a practice to enter into agreements with such undertakings, under which the Board obtains the use of the stations for peak loads, importing into the stations at other times electricity produced at less cost at the more efficient selected stations, and thereby obtaining a contribution to the expenses of the grid 1029 which it would not otherwise receive. The agreements provide for the gradual elimination of the plants instead of their perpetuation, thus hastening the day when they will take all their requirements from the grid, to the considerable advantage of selected station owners on the one hand and consumers on the other. Even if during this process the grid receives a net price in some cases less than the tariff, it still sells beneficially to itself. It must be borne in mind that it also sells below the tariff to many selected stations themselves. May I emphasise to the House that these agreements are entirely voluntary, made between two bodies of business men in each case. It is hardly conceivable that the owners of these stations would make arrangements whereby they are finally to obtain all their supplies from the grid instead of generating them for themselves, if they thought such a course would be detrimental to them. Nor is it conceivable that the Board would sell supplies which were uneconomical to the grid, with whose success it is identified. Indeed, it is explicitly forbidden to do so.
The House will permit me to remind it why it is that this Bill comes before it at all. Agreements on these lines had been made by the Board with non-selected station owners in the ordinary course of business for some time past. It happened, however, last year, that two such undertakers about to enter into agreements with the Board were advised that because there is no specific reference to agreement-making power in the 1926 Act, the Board was acting ultra vires. So anxious, however, were they to conclude the agreements, that they promoted private legislation. It was at this stage that my right hon. Friend who preceded me in my office had to consider the position. Parliament was likely to be confronted with a number of private Bills all seeking exactly the same object, and my right hon. Friend and the Government thought it would be more convenient if Parliament dealt with the matter comprehensively in a public Bill applying to all. My right hon. Friend, therefore, came down to this House on the Second Reading of the first Bill—the Taunton Bill—and undertook that legislation in this sense would be expedited. His argument was sustained by the opponents of these private Bills—therefore presumably supporters of this Bill who thought it 1030 was unreasonable that individual authorities should be put to the trouble of private legislation which, analogous as it is to Select Committee procedure, may involve delay and expense, the briefing of counsel and the calling of witnesses. It was, indeed, on his advice that Taunton was not allowed to proceed, and now, like other authorised undertakers, it awaits patiently the passage of this Bill.
It is by virtue of its status as an authorised undertaker, which it is made by Section 20 of the Act of 1926, that the Board, like other authorised undertakers, in accordance with the practice of the industry, has entered into such arrangements as are referred to in Clause 2. Every large electricity undertaker makes special prices for an exceptional supply, because the load fits in with his other demands, and lowers the incidence of his capital charges. But small undertakers are not in a position to offer special prices to large industries within their area. The object of the Clause, then, is to enable the resources of the grid to be used by all undertakers, great and small, for this purpose. The House will recognise at once that in this matter we are endorsing the ordinary business practice. The alternative is that large industrial undertakings would instal their own generating plants, and their load would be lost to the grid and to the electricity supply industry as a whole. Thus the advantages which the Act was intended to bring to the industrial community would be gravely restricted.
The third Clause of the Bill is machinery, and is necessary in order to provide a practical means whereby the Commissioners can carry out the duties, imposed on them by the Act of 1926, of apportioning certain transmission costs. That brings me to the last operative Clause of the Bill—Clause 4. It will be recalled that the Weir Committee, on whose report the Act of 1926 was based, although they considered the subject of railway electrification to be outside their terms of reference, could not forbear from observing thatThe existence of the 'gridiron,' the lay-out of which from the point of view of way-leaves must necessarily conform in a considerable measure to that of the railways, cannot but have a vital influence on reducing the amount of capital required for electrification. The availability of ample supplies of cheap energy from the 'grid- 1031 iron' would also relieve the railway companies from the necessity of heavy expenditure for power stations. At the same time a railway demand for energy, which might approximate to 20 per cent, of the whole national demand for other purposes would most favourably affect the national load factor, and thus reduce still further the cost of energy.The Government, at a later stage, decided to penetrate more deeply into the considerations which weighed with the Committee at that time, and accordingly they joined to Lord Weir the assistance of Sir Ralph Wedgwood and Sir William McClintock, and I venture to say with confidence to the House that anyone who has read their cogent and Stimulating report must find that the provisions of Clause 4 of this Bill are amply justified. Perhaps they summarise their views and the arguments most succinctly in paragraph 25, where they say:The outstanding reason for the recommendation in the Weir Report is obvious, as a railway runs through the territory of many authorised undertakers, some small, others large. In a great main line electrification scheme, it is clearly impracticable for a railway company to make individual agreements, which are necessarily elaborate, with a number of independent undertakers. Such divided responsibility and the difficulties of co-ordination would be definitely harmful to a comprehensive scheme of supply. Moreover, it is clear that the demands for electrical energy from the substations along a main line will not coincide in time, and were such individual demands to form the basis of the charge to be made by each undertaker, the result would be inequitable and uneconomic. Nevertheless, any arrangement designed to co-ordinate the several contracts with different undertakers to provide against this would be so complex as to be well-nigh impossible. We conclude, therefore, that the original proposal should be adopted, and the Central Board be given power to afford direct supplies for railway electrification schemes.It will hardly be necessary for me to amplify that statement of the case. It is, of course, my duty to tell the House that I have received from the Railway Companies' Association a letter informing me of the great importance which they attach to the passage of this Clause, and stating quite categorically that if any further schemes for the electrification of the railways are to be entertained, the companies consider it essential that they should have power to negotiate with and obtain their supplies of electricity direct from, the Central Board. So this Clause in no 1032 sense prejudices the question of the electrification of the railways. It only provides that where a railway company decides to electrify its lines, it shall be able to make a single contract covering its whole system.
Such are the proposals of this Bill. Adequate safeguards are provided for all interests that can reasonably claim to be affected, by appending to each Clause a provision that the Electricity Commissioners, the impartial authority established by Parliament to determine this kind of question, should wherever necessary examine and pronounce upon all the arrangements contemplated. I observe that the Bill is not opposed by any reasoned Amendment on the Paper. It is not opposed by the National Consultative Committee contemplated by the Act of 1926, comprised as that committee is of the leading men in the industry. Nor is it opposed by the Incorporated Municipal Electrical Association, nor by the Association of Electrical Power Companies, bodies which together represent 80 per cent. of the industry. I trust that the House may view this Bill from a national point of view, and regard it as advancing the main purpose of Parliament in 1926 of making the supply of light, heat and power more cheaply and readily accessible for domestic and industrial uses in Great Britain.
§ 4.13 p.m.
§ Mr. PARKINSON
I am sure that no one will grumble at the statement made by the Minister. He has not put forward any grandiose schemes which could not be accepted by those who have been listening to him. He first of all said that it was a Bill to clarify and amplify the provisions of the Act of 1926. I believe that is quite true, and that it will go a very long way in that direction. Further, it will co-ordinate the working of the 1926 Act. He went on to speak of the elimination of the unprofitable stations until the whole of the power required was supplied by the grid. I am quite sure that, practically speaking, everyone on the other side of the House will agree that it is a business proposition to cut down costs, to supply at the cheapest-possible price and, of course, reserve to themselves a fair margin of profit. Unless he have the elimination of the unprofitable stations, we are going to be burdened, so far as the electricity supply 1033 of the country is concerned, for a very long time to come with something which we really ought not to have. The Minister also stated that there would be a special price for exceptional demands as this lowers the overhead charges. That is confirmed by the extracts which he has read from the Weir Report.
The hon. Gentleman mentioned that there was no opposition to the Measure from a large number of organisations. There is, however, still a certain amount of opposition, as we have seen in the House this afternoon, to get the Bill referred to the Examiners and from the Motion on the Paper that it shall be referred to a Select Committee. I do not know why the business people of the country should take upon themselves this particular point of view, because one would naturally think that anything in the interests of the nation as a whole would be accepted by the business people and that they would try to make the best of matters. I notice that the chairman of the Provincial Electric Supply Association rather went out of his way in a speech to attack the Measure, and probably we shall hear more about it during the Debate. In a statement which he made at the annual meeting of the association on the 29th October this year, Mr. Selwyn S. Grant said:I think that it is fitting to report to you the action taken by your association in conjunction with the Power Companies' Association and the London Association, in connection with the Electricity (Supply) Bill which was introduced in the House of Lords by the Government in March of this year. This is the Bill which seeks to give power to the Central Electricity Board to make preferential arrangements with certain authorised undertakers, and to give that board power to enter the distribution business by supplying electricity direct to railway companies. Mainly through the agency of your association, the Bill was very considerably altered during its passage through the House of Lords. The Bill comes up before the House of Commons some time this week, and your committee feel very strongly that its provisions are prejudicial to the interests of our members. It appears that a Motion has been tabled by a large number of Members of Parliament that the Bill should go to a Select Committee, and with this reasonable request your association is in wholehearted support. Before a Select Committee of this Bill the promoters will have to justify what they seek.The gentleman who made that statement must be a man of great authority in connection with the electrical trade, because I notice he is a director of about a dozen 1034 different companies in various parts of the country. We must take it, therefore, that he is speaking with some authority on behalf of the various companies. If all these associations are going to put private interests before the common good, we shall never make any progress. Private interests ought really to yield to the desire to help the whole nation rather than adhere to the hard stiff line to which they have always adhered of seeing that their interests are not interfered with. That may be a rather strong statement, but it is about time the capitalists of this country came down from their high perch and began to realise that there is somebody else in the world to be provided for beside the companies with which they are associated.
Speaking on behalf of the Labour party, I am able to say that we look upon this Measure as a step in the right direction, and we believe it will prove to be useful and constructive. I say that because it tends in the direction of the policy which we pursue, and towards the erection of one great organisation which will help to supply the needs of the community as a whole in the place of the competing elements of the capitalist system. We believe that the Bill may eventually lead to the first nationalised service, along with the Post Office, whose activities will be distributed throughout Britain in the interests of the community. Some hon. Members will call that Socialism, and I agree with them. We believe the Bill is a step in the direction of the nationalisation of a particular industry, and that it will help other industries in the same direction. When the Act of 1926 was introduced, it will be remembered, it was intended that the Central Electricity Board should have the power to distribute, but, owing to strong opposition, the power was largely-curtailed, and it did not get so far as the promoters of the Bill expected it would. They are now asking that the power should be given to them in order to be able to supply direct to the railway companies, and thereby take a step which is so necessary for the electrification of the railways. We look upon the Bill as a step forward, and we shall give what support we can to it during its passage.
There are many points with which I will not deal, because I am neither an electrical engineer nor a lawyer. I look 1035 at the matter from a common-sense point of view, and I believe the Bill to be a step forward which will give to the ordinary people a feeling that something is being done in the direction of eradicating that stranglehold which has been put upon the industry by the capitalists, and will give them an opportunity later on of being served by something in which they are directly interested. I understand that Clause 1 enables the Central Board and the owners of non-selected stations to make arrangements on such terms as may be agreed for the control of the stations by the board. I do not think there is anything wrong about that. When we have a great national organisation like the Central Electricity Board with the grid and all its ability to supply electricity, power ought to be given to it if it can be secured by agreement. It is explicitly laid down in Clause 1 that it must be by agreement with the owners of the non-selected stations. I am informed that there are nearly 500 existing generating stations of authorised undertakers in Great Britain, and that the national scheme embraces 135 of these stations, or about one-third of the stations in actual production. Under the Act of 1926 the Electricity Commissioners have power to close down non-selected stations where the cost of production is greater than the electricity supplied by the Central Electricity Board. The Minister made a point of that, and said that supplies could be obtained from the grid at a cheaper rate than electricity was being produced in some instances by non-selected stations.
I want to refer to paragraph (a) of the proviso to Clause 1 which says that the commissioners shall not consent to any arrangement unlessthey are satisfied that the arrangements will not result in a financial loss to the Board.That is a rather big order, because it means that you are making your arrangements and guaranteeing a profit to yourself before you begin. If that be so, the calculations must be very sound and correct, but oftentimes calculations are wrong, and you inevitably come to the point when you make a loss instead of a profit. If some of these arrangements are made and a loss results, who will 1036 have to meet the deficit? There is nothing in the Bill relating to finances, but perhaps during the Debate something may be said about it.
The question of compensation, which is dealt with in Sub-section (3) affects the workers in the industry. Provision is made in the Act of 1926 that officers and servants of authorised undertakers affected by the closing of undertakings permanently or temporarily shall be compensated for loss of employment. What will be the position of the people who may become redundant under this new scheme? I can see the possibility of a large number of railway workers on the electrical side becoming redundant because, immediately railway companies are hitched up to the grid, they will closedown their production stations, and a large number of people will not be able to get work. That will mean that they will be added to the unemployed of the country, and they will be registered as unemployed. It is only fair that the Minister should give further consideration to the question, because this provision for compensation applies only to authorised undertakers under the Act of 1926, and will not apply to railway companies who may close down their stations in order to take a supply from the Central Electricity Board. We cannot keep enlarging industries and throwing people on the employment market without some means whereby they can live. I hope that during the passage of the Bill the Minister will suggest something which will help to cover that difficulty.
The Act of 1926 stated definitely that direct supply to railways should not be allowed. [An HON. MEMBER: "Hear, hear! "] That, of course, is the old idea of "Live to themselves alone and never mind the rest." If the Central Electricity Board can supply at a cheaper rate and in greater volume to the railway companies or any other great industrial company, they ought to have the opportunity of doing it with a view to making supplies efficient and as widespread as possible. The provision of the Act of 1926 is now reversed and in future supplies may be given direct to railway companies by the board. I think that is justified and that it will extend the use of electricity throughout the country. It will increase production and distribution and be a factor in levelling the prices charged to consumers throughout the country. That 1037 is urgently required so that the supply of electricity shall not have the great divergence of price that exists at the present time. We already have evidence of strong opposition to the board being granted this power, but in cases of grievances the people aggrieved have a right to make an appeal in nearly all cases to the Central Electricity Commissioners. If they had been precluded from having that recourse to an appeal, there would have been cause for complaint of being unfairly treated, but in this case I do not think they will be unfairly treated. The Bill goes as far as it can be expected to go by providing that if a person is aggrieved he shall have an appeal to the Electricity Commissioners. The electrification of railways is looming before us. When reading the Weir Report I was impressed by what was said on the subject, and we cannot get away from the fact that in the near future the electrification of railways must be seriously considered and urged forward in the interests of transport generally and of the country as a whole. Combined efforts by the railway companies and bulk supplies of electricity direct by the board are the two things needed to achieve success. Here I wish to urge once more the point that workmen who are displaced owing to the closing down of electricity stations shall be given compensation for the loss of their employment. I was glancing the other night at the Debate in another place, and was very much struck by the emphasis placed upon the demand for compensation for the companies which were to be displaced or were to lose the opportunity of supplying electricity to railway companies. If we are to compensate one side of the business we ought to compensate the other side, and if the people owning the stations have a right to expect compensation for their losses surely the workman ought to be compensated for the loss of his employment, because in many cases that means everything to him.
Though we desire to help forward this Bill, and shall do so in every way, there is another side of the question which is of great importance and ought to receive attention. The coal industry is linked up not only with the electricity supply industry but with every one of our other industries. Coal is the basic ingredient in the production of electricity, in hydrogenation, in the manufacture of by-pro- 1038 ducts and of chemicals and of gas. Every one of these industries is prosperous, whereas the mining industry is in the most depressed condition. Although it supplies the motive power there is no possibility, under the present agreements, of anything coming its way as the result of the prosperity of the other industries. Coal being the basic ingredient in the production of these other things, some co-ordination ought to be introduced in order to give the coal miners and the coal mining companies a better return than they are getting at the moment. Other industries ought not to become prosperous and profitable out of the poverty of the mining industry. Strong and prosperous industries ought not to be built up on a weak industry, and something ought to be coming from those industries to relieve the hard-pressed workers in the mining industry.
§ Mr. H. WILLIAMS
Do I understand that the hon. Member wants electricity companies to pay a higher price for coal?
§ Mr. PARKINSON
Well, that is what it amounts to. It means either paying a higher price for the coal, or handing over some of the profits they are making under a co-ordinated agreement. The mining community will be affected by the operations of this Bill. It is becoming an isolated industry, non-provided for, though it is providing the life blood of many dependent industries which are prospering. Co-ordination is necessary, by agreement, even if those other industries have to pay a little more for their coal in order to provide a little more sustenance for a section of the community which is very much depressed at present but which has always played its part in the history of this nation. Those engaged in the mining industry have never shirked their responsibilities or their obligations, but at the moment they are the most depressed workers in the whole industrial community, and I think the time is coming when they ought to have something to say about their basic product being used to build up prosperous industries in which they have no part whatever.
We do not want to see injustice done to the non-selected stations or the others; we want everyone to be treated as they ought to be treated. Agreements must be made, and we hope they will 1039 be fair as between party and party. We do not want the people who are pioneers in the electricity industry to be penalised to a heavy extent, but while their interests should be watched there ought to be safeguards, also, for the interests of the consumers, and we feel that all this can be done without putting any obstacles in the way of the progressive development of what will prove to be one of our greatest industries. The opportunity is here for those who are opposing this Measure to take the wider and the broader view of the whole position. They ought to think in terms of the nation instead of in terms of the companies, and to realise that the community as a whole ought to be served rather than the interests of an isolated section. I should like the capitalist interest to sink many of their differences and help us in the co-ordination of a great scheme which will be of untold benefit to the country. That is all I wish to say now. We in the Labour party reserve the right to put down some Amendments later, probably directed to the points which I have indicated, or other points. I see that the Committee stage is to be taken next week, so that it does appear that the Government are intent upon getting the Bill passed into law at the earliest possible moment, and I sincerely hope that all well-meaning people in the House will lend their support to the Government in getting through what I believe to be a great and essential Measure.
§ 4.38 p.m.
§ Mr. ALED ROBERTS
I thought the speech of the Minister of Transport in introducing this Bill was a very clear and very fair statement of the reasons underlying it, though perhaps I may be inclined to regard his speech the more favourably because I agree with it. I feel that to enact Clause 1 by means of a general Bill of this character, and so avoid so many private Bills dealing with the same point, is a proposal with which probably all will agree. As to Clause 2, there does not seem very much doubt that the principle there is to encourage the making of special arrangements to secure an increase in the consumption of current, and it is only ordinary business that where there are special consumers in special circumstances who can 1040 help with the overhead charges they should be given special terms. With regard to Clause 4, if there is to be a development of electric railways the House must show itself willing to give the railway companies every assistance in obtaining cheap and abundant supplies of electricity, without the trouble of having to make multifarious agreements. In commending that Clause to the House the Minister made use of one argument which I propose to apply to another Clause. He pointed out, in connection with industrialists, that unless they could be given special terms some of them might put up their own plants and would not take their supplies from the "grid." That is a point I wish to bring forward in connection with Clause 3.
In dealing with Clause 3 all the Minister said was, "This is merely a machinery Clause to enable charges to be worked out under the Act of 1926." If he can get away with it like that I do not blame him; but I do not take his view. I think Clause 3 will have a greater interest for the ordinary consumer than any of the other Clauses. It proposes an arrangement by which an authorised undertaker may pool the charges of the transmission lines with which he distributes his supply, but I do not think it goes nearly far enough. I appreciate the fact that in many cases it would be extremely difficult for an authorised undertaker to allocate the cost of user of a particular line as between two or three users or two or three different parties, and I can agree with the principle that where an authorised undertaker is supplying a number of consumers in a certain area over secondary lines or transmission lines it is easier and probably more equitable in the long run that the cost of all those lines and their maintenance charges should be pooled and added to the cost of the electricity distributed in that area. But I do not think the area is big enough. It is quite right for the Bill to give the authorised undertaker the power to pool his charges, but there is a graver injustice which agricultural areas, and several other areas, will suffer unless something more is done. The Bill is obviously brought forward with the intention of clearing up difficulties in connection with the Act of 1926. This question of the pooling of charges is a difficulty arising out of the Act of 1926, and one which 1041 the House ought now to take the opportunity of rectifying.
I do not want to weary the House by going into too many details of specific cases, but when considering a principle of this kind it is often valuable to have specific cases before us, and one has already arisen. The Electricity Commissioners have approved an electrical area known as the North-West England and North Wales Electricity Area. It extends from the South of Scotland down to the Midlands, and from the Yorkshire boundary to St. George's Channel. The whole of Lancashire, Cumberland, Westmorland and all the counties of North Wales are in the area. It is an area of 9,000 square miles. Pooling is in operation in that area at the present time. By that I mean that the Central Electricity Board, in developing electricity in the area, and in coupling up selected stations and making the best use of their supplies, have naturally laid down main transmission lines. They have laid down main transmission lines all over Lancashire, Westmorland and Cumberland; in some cases they have purchased lines, and in many cases have erected secondary transmission lines—low voltage transmission lines. The cost of all primary and secondary lines in Wales that have been erected by the North Wales Power Company, together, in the English portion of the area, with maintenance and all other charges, are included in the grid price which applies to North-West England and the North Wales area. That grid price has to be paid by people in the six counties of North Wales, and it includes the cost of the transmission lines belonging to the Central Electricity Board all over Lancashire, Cumberland and Westmorland. When the North Wales people pay their grid price, they therefore pay a proportion of those costs and for the whole of their own lines on top of that. There is a pooling arrangement which applies over the area, to the exclusion of North Wales. Under this Clause, an authorised undertaker is taken to be a joint electricity authority. The whole of the North Wales area is a joint electricity area, and the consequence is that North Wales pay this contribution towards Lancashire, Cheshire and the North-West of England, and they have to pay for their own lines in addition.
I wonder whether hon. Members realise what the effect of that is going to be 1042 upon the principle of the Electricity Acts? As the Minister said, those Acts have been introduced for the purpose of making a cheap and abundant supply of electricity, and he has said this afternoon that the greater the consumption the cheaper the price. There are very good reasons, ordinary business reasons, for that. He has said that if you cannot give good terms to some people they will put up their own plant. I will tell lion. Members the effect of the charges in North Wales. In the English portion of the area, charges are cheap in many districts, and people who have plants of their own are either running them off and not replacing them, or are seriously considering taking their supplies from the grid as being more economical and thus reducing their working costs. In the same electricity area, in North Wales, owing to the manner in which pooling is applied, people are doing precisely the reverse. In September of last year, I was at a chemical works 12 or 13 miles over the English border, whore a new electricity power station was being opened by the owners of the works at a cost of £70,000 or £80,000, because they could not get their supplies of electricity from the grid. The main transmission line ran but a short distance from those works.
I understand that a colliery company in that area, whose plant is also in close proximity to the main transmission line, are about to lay down their own electricity plant because they cannot afford to buy current. The city of Chester, in England, and the town of Wrexham, are 12 miles apart. A brook runs six miles between the two and is the boundary. If a firm desired to open works in that area, they would do so on the English side where they could buy current at a ½d. per unit. If they put the works 20 yards away, on the Welsh side, the cost would be 1¼d. per unit. People like myself and many of my friends have been struggling very hard to get industries to come into our area, where we have coal, transport and everything else, but every time we come up against this question of power. The difficulty results from local pooling. We have received figures in North Wales which are going to apply to the authorised undertakers and to pooled charges.
It is true that the Central Electricity Board have done their very best to keep costs down without altering their scheme 1043 and to give certain contributions to our main transmission lines which have meant a reduction of about 5 per cent., but the ultimate position is that for those nine electricity undertakers in South Wales, who have been taking their supplies from the grid since the beginning of this year, the average cost of raw current before it is distributed to the consumer is 1.101d., whereas in South Lancashire, the same current from the same electricity area and from the same section of the grid can be purchased, delivered on the premises and including distribution costs, at.367d. I was at several works in this area on Monday making inquiries, and they showed that that is the result of the bad operation of the pooling arrangement. In the one electricity area, raw current in bulk for distribution is three times the price in one place that it is in another place where it is distributed.
That is a dreadful condition of affairs which will entirely prevent the development of electricity over an area of 4,400 square miles. The main object I have in putting forward this point is to show that here is an opportunity. The Minister and the Government are bringing forward a Bill which introduces the principle of pooling. It says that a local electrical undertaker may pool over an area. I agree with that, because I think it is right. Why should it not state the ultimate object to which the Government are committed—and they must commit themselves? The electricity industry is, in fact, nationalised. We might as well make no nonsense about it. The industry is just as much nationalised as the Post Office. The Post Office cannot send a letter from John o' Groats to London for 1½d., because that is not economical, but it has pooled its charges and the result is that everybody can get a reasonable rate of postage. That principle must be applied to electricity, and that, as I understand it, is the object of this legislation. If that be so, obviously, there must ultimately be a pooled cost for all main and secondary transmission lines all over the country. That ought to be the object ultimately, if it is not so now, and it may be a long time coming. Surely the first step is to insert something in the Bill to say "That is what we are going to do in the end." The first step is to pool the costs over the whole of the 1044 electricity area; not pool it for Lancashire, Cheshire and Westmorland and leave North Wales upon a different basis.
Some hon. Members might object that the cost of electricity in the industrial areas of Lancashire would be increased. I do not know, as I am not an electrician, but I have made inquiries of people who know what they are talking about, and they tell me that to take over the whole of the North Wales transmission lines and to pool them with Lancashire and Cheshire would make so small a difference that the cost of current to the consumer would probably be increased by only four or five decimal points of a penny. The increase would not be noticed. I understand that the whole cost of the transmission lines in North Wales, including sub-stations and land, is from £140,000 to £150,000. Even if the value were £250,000, that is only one-nineteenth of what the Central Electricity Board estimated they would expend upon transmission lines in that area
The cost of doing a job like that would be so small that it would hurt nobody, but it would be an extension of the scheme and would remove the very great grievance which the people in North Wales are entitled to feel because of the way in which they are being treated by this Electricity Bill. I hope that the Government will look at this as a matter of distant policy, as something which is to be aimed at, and that they will take powers while they have a Bill before the House. If they cannot do that, I hope they will take steps to see that conditions in North Wales are made such as will enable us to develop, to get a fair show, and to have this grievance properly dealt with.
§ 4.55 p.m.
§ Sir GEOFFREY ELLIS
The Minister introduced this Bill rather in the sense of it being a Bill of four or five Clauses and there being very little in it. Then the hon. Member who spoke for the Opposition took the opportunity to descant upon nationalisation. I cannot blame him, because that is his point of view. I would like to point out that short as this Bill is, and detailed as it may be for discussion in Committee, there is behind it a very broad and important principle, and I want to devote a few moments to that principle. 1045 The Act of 1926 definitely laid down certain principles by which the Central Electricity Board were to be a coordinator rather than a competitor of any undertaking producing electricity. I am not in the least afraid of representing what has been called the capitalist element in this ease. My own company is a very large one covering a great many undertakers, some of whom are very small men with very small interests. That is not to say that those men do not take the very keenest interest in what is going on and are not most anxious for protection. Not only have we to consider the capitalist concerns, but there are the big corporations. I do not think that the Minister will deny that when he is negotiating with the interests in the electrical industry he finds the great corporations no more easy to get on with than the electricity companies.
The principle is a very simple one. It is that for the first time, the Minister of Transport and the Central Electricity Board have agreed that in future the board shall be permitted definitely to compete with those who are supplying current. That principle needs very careful examination. One reason is that the municipal corporations and the great companies concerned have expanded their electrical systems and have been to considerable expense in putting down transmission lines and cables and extending their stations. All that work has been based upon the faith that the word given when the 1926 Act was passed was to be kept. They are now met with the beginning of something which we are afraid will go on. Some of us believe that this is the first step in whittling down the goodwill that has been built up. During the process of the whittling down, our goodwill will pass, apparently without any compensation, to authorities, in the process of nationalisation. That is something which no body can face with equanimity, least of all those who have asked the public to subscribe to their undertakings in the belief that the good faith, once established, would be kept.
Let us take one or two details of the Bill in order to see whether what I am saying is justified. Let me take Clause 1. A considerable number of authorities are concerned here, and what is to happen? In the long run, a certain number of 1046 people who are supplying these authorities will probably be replaced by the Central Board who will supply direct, and those people will be put out. What is complained of, and not unjustly, is this: When we are working on the grid prices, as we are to-day, we know exactly where we are. We know the principle behind the charges, and it is not difficult to find out what we are working upon. Power is now being asked for to legalise the agreements that have been made in the past, and in effect power is to be given to the board in the future to enter into such agreements, but there is no undertaking that any of these agreements will be made public, and apparently there will be no opportunity for those concerned to see what these agreements are. The nature of the preference given will not be disclosed, and it will be impossible to see upon what basis the board is working these agreements. A system under which preferential treatment in regard to charges is not disclosed generally is certainly not for the good either of the producing concerns or of the customers.
Let it also be borne in mind that apparently it does not matter whether the board makes a loss or not. Indeed, can the board make a loss? Need the board disclose a loss? If it makes a loss, cannot it always put it back on the charges which it levies on the producers? Then the producers will be driven to put that charge on to the consumers. One of the things which struck us when the last Bill was before the House was the refusal of the Government then to accept a proposal that the accounting of the board should be subject to the Comptroller and Auditor-General and come before the Public Accounts Committee in the U3ual way. We felt that, if we had that kind of check, the principles on which the board would be working could be laid down and would have to be adhered to. Now that this extension is taking place, the position becomes all the more grave, because the accounts of the board are not subject to any audit other than their own, it will not be possible to discuss them here in Parliament, and, furthermore, they cannot be examined in the way in which public accounts ought to be examined.
To take the Clause a little further, the Minister said that there were only two parties to the agreement, as is ordinarily the case in business; but to this agree- 1047 ment there are four parties. There are the two people who make the agreement, there is the Electricity Board, who can charge what it likes, and, finally, there is the consumer who has to pay the bill when the charge is made. Therefore, I do not think that the analogy is at all a good one. Under Clause 2, the board can charge practically any price that it likes. The grid tariff is entirely abrogated. This introduces an entirely new principle into what we all considered was a settled question. I would ask the Minister why it has been found necessary to cut out Sub-section (3) of Clause 3 from the Bill, because it seems to some of us that that is going to lead to a serious prejudice against the undertakers. I was interested to hear what was said by the hon. Member for Wigan (Mr. Parkinson), because he seems to think that all the railways some day are going to be electrified, and that the main lines are going to take—
§ Mr. PARKINSON
I did not make that suggestion at all. What I said was that progress was necessary, and that a larger number ought to be electrified.
§ Sir G. ELLIS
I beg the hon. Gentleman's pardon; that was my impression. I want to point out that, so far from main-line electrification being probable, it is not at all unlikely that the other forms of traction—one need not go into them—which are now being so carefully examined on the various railways may get rid of the necessity for traction by electricity except for comparatively short journeys, and, if that should be so, a good deal of the argument that has been introduced is really of no effect. Let the House mark this, that the board is seeking, not only to sell current direct for purposes of traction, but to supply electricity to the undertaker for all other purposes, and, naturally, the undertakers who are now supplying current regard that as a serious infringement of their rights, and a taking away of their goodwill. But presuming that one accepts the necessity or the justice of these proposals, and that the railways are electrified, is the system suggested in Clause 3 the right one, and are those who are seriously interested properly protected as regards the rights which they have at present? I have never seen a Bill so small, and without a Schedule, which deals in this drastic way with private 1048 rights without any conditions being laid down as to the kind of notices to be given to the people who have any rights. The whole thing is to come under the strict authority of the Minister of Transport, and he, apparently, will be able to issue whatever regulations he likes. That really means in the long run that he will be the person who will decide what shall be done throughout the whole country. It is always presumed that, if you have been given a right by Parliament, and that right is to be taken away, you are entitled to compensation, especially if you have, under the rights previously given you, built up a large undertaking and taken public money for the purpose. But apparently that is not to be considered at all. Apparently, if people who have been supplying railway companies are to be prevented from giving that supply, they are going to lose the whole of the capital which they have expended in establishing their transmission lines and stations for the purpose of giving that supply, and the Ministry or the Central Electricity Board will take over on terms, to be settled by the Ministry, in connection with which the word "compensation" is not mentioned or considered. That is not a position which one can in any way regard as fair.
The speech of the hon. Member for Wrexham (Mr. Aled Roberts) raises another question. It is a question which is dependent on the Bill, and it is a very important one. The House must always notice, when these technical questions of electricity come before it, that Members who have not themselves technical knowledge of these matters find the whole subject extremely difficult to understand. Therefore, the House as a body is unable to understand whether many interests which ought to be heard and represented are getting what I may vulgarly term a "fair show" in the proceedings, and, not unnaturally, they rely on the Minister and the Whips and come in and vote as they are told. This Bill is to be taken in Committee of the whole House. It would have been far better if it could have been managed by a Select Committee, but apparently the Government think that that would take too long. The question is eminently one for a Committee, who can hear evidence and cross-examination and before whom the general principles of the whole matter can be elucidated and extracted.
1049 I put it to the Minister that a process has been begun of whittling down the good will both of the great corporations and of the great companies in this country, and, in that process of whittling down, no disposition has been shown to admit the right to compensation. It is admitted on all hands that the conditions for obsolescence and what ought to be done in regard to pooling so far as obsolescence and other arrangements are concerned have arrived at a stage when they must be looked into, and cannot continue as they are at present. It is admitted that the whole question of distribution in relation to production needs careful overhauling and very close consideration. It is admitted that all of these questions need immediate consideration, and it seems to me also—though probably some of my friends will laugh at me for saying this—that no industry needs more planning than the electrical industry does to-day. I would suggest, therefore, to the Minister that one is not asking anything unreasonable if one asks him before long either to appoint a Select Committee or to have a Royal Commission appointed, or some body whose business it shall be to look into all these questions in proper perspective, and to give us the opportunity of coming before that body, of being examined, and of putting our point of view, the points of view of the Government, the Central Electricity Board and the Electricity Commissioners being also put, so that they may all be put together and a fair examination may be made of the whole matter in proper perspective. If the Minister were to do that, I think he would discover that the companies and the corporations are not against the general principle of combinations, and that they will be only too glad to go into the whole question in all its aspects and in every possible way. I believe that, if that were done, the Minister would as a result get an agreed basis for a Bill which would be taken on its merits and would not be opposed in the House, and there would be no need for him to come here year after year, as he will have to do if he does not follow that suggestion, with all these peddling little Bills to meet difficulties as they occur instead of looking ahead and dealing with the whole lot together.
§ 5.13 p.m.
§ Mr. JOHN WILMOT
It was as pleasing to myself as to my hon. Friend the Member for Wigan (Mr. Parkinson) to hear the Minister of Transport, in that charming and lucid way of his, introducing a Bill to extend the area of public enterprise, and to note with what pleasure he paid tribute to the success of the great experiment in national planning which we have had in this country. It is also very satisfactory that the Minister should have found, as we have all found, that the public ownership of the electricity supply industry has proved a boon to every class of the community—so great a boon that even the present Government come to the House with this Bill asking for an extension of the basic principle of public enterprise. It is not for me, nor do I desire, in any way to criticise this very necessary and desirable extension of that principle, but there is one aspect of the matter on which I would venture to detain the House for a few moments.
This Bill, in Clause 2 and elsewhere, makes reference to the charges which under the scheme will be made ultimately to the consumer, and those charges include, of course, as the Minister said, the necessary charges for interest and sinking fund on the capital raised by the Central Electricity Board. I would like to ask the Minister if he can give the House some explanation of, and if possible consider some improvement in, the machinery of this side of the question, in order to prevent what I can only regard as a very serious state of affairs. The Central Electricity Board and the whole national electricity scheme are of vital importance to the nation, and I am sure the Minister will join with us in desiring that no handicap shall be placed in the way of their success. The point to which I desire to direct the attention of the House is the very remarkable history of the finance of the Central Electricity Board. The Board's borrowings have now reached a figure of £50,000,000, with the issue of £6,000,000 made a month ago, and the price that has been paid for it is the subject upon which I wish to make these few remarks. Surely we shall all agree that the credit standard of a great national enterprise of this character, with an assured market and very valu- 1051 able visible assets, assured of a growing market—
§ Sir G. ELLIS
Up to a certain you have a virtual monopoly, but the moment that your price for any reason gets beyond a certain stage you will have complications.
§ Mr. WILMOT
I am very much obliged to the hon. Gentleman, whose knowledge of these matters is much wider and deeper than my own. Be that as it may, I am sure he will agree that the credit standing of this great enterprise is certainly not lower than, shall we say, that of medium-sized municipal authorities. I will not even say that its credit standing is necessarily as high as some of our greater cities, but I think he will agree that it is, or ought to be, as high as our medium-sized and smaller municipal authorities. If we take the history of the borrowing of the Central Electricity Board beginning in May, 1929, right down to the last issue of £6,000,000 last month, we find that in every case these issues have been made at a very substantial discount, and that the Board has in fact paid very much more for its money than it need have done, if we can assume that it could have borrowed at the same sort of rates and prices as secondary municipal undertakings. I have made a calculation based upon this aspect of the matter, assuming that the Central Electricity Board could have borrowed at the ruling rate at the time that the second-class municipal authorities borrowed, and I find that upon that basis the saving in interest and redemption would have amounted to no less than £8,500,000.
I will not trouble the House with a complicated series of calculations and comparisons by which one arrives at that figure, but perhaps I might give an example of the type of calculation upon which it was based. The issue of £7,000,000 in February, 1932, was made at 95 and the interest rate was 5 per cent. May I couple with it the further issue in June, 1932, of no less than £10,000,000 of 4½ per cent. stock at 96. These issues were made, as all the issues of this board are made, on the advice of the Bank of England and the Treasury, and they were made on the very eve of the vast conversion operations which were so successfully carried through by the Chancellor of the Exchequer. It seems to me in- 1052 comprehensible that the board's advisers should have been in ignorance of the plans that were maturing in the Treasury for the conversion of Wav Loan. Nevertheless, although they must have known that the condition of the market was going to undergo a revolution, they brought forward a major offer of capital just at the very time when the worst possible conditions were ruling. If the issue bad been delayed for a few months, assuming that they could have borrowed on the municipal basis, instead of at the very high rate of 5 per cent. issued at 95 and 4½ per cent. issued at 96 they could have borrowed at 3¾ per cent. issued at par, which was the municipal rate ruling a couple of months after these operations had closed and, taking these two issues alone, the saving to the community, had that course been followed, and had their advisers given them the same sort of advice that they gave to the Government, would have been £3,822,000.
I am not alone in feeling uneasy about this matter. I should like to quote the words of the "Economist" newspaper of 16th June last. Referring to the whole question of the financial advice tendered to the Central Electricity Board, the leading article in this reputable paper said:As to the cost of borrowing and the currency of Central Electricity Board stock, it is a point of criticism frequently made that the board is handicapped by an excessive interest charge which, in the absence of early maturity dates, cannot be reduced for a long time ahead, and there is substance in this criticism. The interest charge works out at under 4¾ per cent. on the actual sum raised and the earliest opportunity of redemption is as far off as 1950. There is, therefore, no possibility of scaling down the average interest rate during the next 15 years. The board was certainly unfortunate in lighting upon June, 1932, less than a month before the War Loan Conversion and its attendant sharp drop in interest rates, as the appropriate moment to raise £10,000,000 at 4¾ per cent. It may seem regrettable, in view of the subsequent market tendencies, that the board did not claim earlier options of redemption, which it could have done at the cost of little or no concession in the price.I think the House will agree that these considerations are worthy of our attention, because there is no shadow of doubt that, had a different policy been followed, and had better advice been given, and had the market been watched in order to take the best possible opportunity, the consumers of electricity, the public as a whole, would have been saved an enormous burden of interest charges.
1053 May I refer to two other instances of comparisons with municipal borrowing in order to establish the point that I am not comparing the Central Electricity Board for this purpose with the highest class of municipal borrowing. In June, 1933, the board borrowed at 3½ per cent. issuing at 93½. In the following month the Rochdale Corporation borrowed also at 3½ issuing at 99—five points higher than the Central Electricity Board.
§ Mr. HANNON
On a point of Order. May I ask you, Sir, whether all this discussion with regard to the circumstances under which and the rates at which issues are made by the Central Electricity Board comes within the purview of the Second Beading of the Bill. We are not examining into the conditions under which loans are issued in relation to the provision and distribution of electricity. We are discussing certain powers conferred on the board under the Bill. I submit that the hon. Member is far exceeding the limits of the Bill in the arguments that he is now putting forward.
§ Mr. DEPUTY-SPEAKER (Sir Dennis Herbert)
On the whole, this is a Bill that deals very much with the position of the Electricity Board, and, as long as the hon. Member can relate the arguments that he is using to the provisions of the Bill, he-is in order in discussing the general financial administration and position of the board.
§ Mr. HANNON
But there is no question in this Bill in relation to further borrowing powers for the board. The Bill provides for certain powers in relation to non-certified stations. I submit that the hon. Member cannot enter into a long disquisition on the finance of the board.
§ Mr. DEPUTY-SPEAKER
It is quite clear from the earlier part of the Debate that the question of the possible burden upon the consumers of electricity and the expenses of the commissioners are distinctly matters that come under the consideration of the Bill.
§ Mr. WILMOT
The hon. Member will probably appreciate that the price at which the money is borrowed has a direct relation to the price at which current is sold, and, inasmuch as the Bill has a connection with the price at which 1054 current is to be sold, and since that price is fixed having regard to the price at which money is borrowed, the sort of policy and the value of the advice that the board is bound to take, it seems to me to be relevant to the cost of current to the consumer.
May I refer to the last issue of the Board, which in many ways is an extreme example of the most reckless financial policy. It was made on 18th October last. It was for £6,000,000 of 3¼ per cent. stock at the enormous discount of 93. For some reason which I find it extremely difficult to comprehend, the board advanced the date of its redemption and made it as long as it possibly could, and it has now gone forward to 1974. The result of a discount of this magnitude the House will not be slow to appreciate. The board has to pay back £6,000,000 of this particular issue, it has to pay interest on £6,000,000, and it receives only £5,580,000 or £420,000 less than the amount which it will eventually be called upon to repay and the amount upon which all the time it has to pay interest. This issue gives the safety yield to the investor of £3 9s. 9½d. per cent., which is out of all proportion to the yield of stock with corresponding security issued about the same time. The hon. Member shakes his head. I will quote him one or two parallel instances of stock floated about the same time. The Blackpool Corporation issued a 3 per cent. stock at 98, the Plymouth Corporation a 3 per cent. security at 97½, the Salford Corporation a 3¼ per cent. security at par, and the Stretford Corporation—and these are the small municipal bodies—issued a 3¼ per cent. security also at par. How comes it that while the municipality of Salford, which is not one our prosperous towns, could get money at par for a return of 3¼ per cent., the Central Electricity Board has to give a discount of £7 in order to raise money at 3¼ per cent.? I submit that on the rates of interest and the price at which the issues have been made the Central Electricity Board has been exceedingly badly advised.
Another aspect of this matter is the astonishing way in which the board has been advised right through its financial history to issue its loans at the worst possible time. In every case the advice given has been wrong. It has chosen the bottom of the market, and to give long 1055 redemption periods, thus denying itself of the option of converting the loans to a lower rate of interest now that money rates have fallen. I will take two cases of this remarkable perversity of the advisers of the board as to the time at which these loans should be issued. I have in my hand the well-known chart showing the course of the gilt-edged market, and, picking out the dates upon which these issues were made, it is astonishing to observe that, whenever the price of Government securities has shown a drop on the chart, that has been the exact point at which the Electricity Board has been forced into the market. Between September and December of 1931 there were practically no dealings of any kind except one small commercial loan in which the redemption rate——
§ Mr. HANNON
On a point of Order, Mr. Deputy-Speaker. I am extremely sorry to intervene again, but I would call your attention to what this Bill provides. It is a Bill to confer certain power on the Central Electricity Board to supply electricity to railway companies and to amend Sections 11 and 12 of the Electricity (Supply) Act, 1926. There is not a single thing in the Bill dealing with the issue of loans or relating to the raising of money for electricity purposes. The limits of the Bill are set forth in the prefatory Clauses at the head of the Bill, and I suggest that to refer to the issue of loans is entirely out of order.
There is no doubt that the Bill, in a sense extends the powers of the Central Electricity Board, and they hope that it will lead to some expansion in the electricity world which will involve further costs. I submit that further costs may involve further loans. Therefore, the question of how those loans should be raised and the circumstances of the raising is important and relative to the Bill.
§ Sir J. NALL
May I also submit that, as one of the provisions of the Bill is to enable the board to sell their product at uneconomic prices, it is all the more necessary to go into matters of finance.
§ Mr. MACQUISTEN
If the hon. Gentleman is showing that they have mismanaged their finances it is all the more reason why they should get no more power.
§ Mr. DEPUTY-SPEAKER
I think that the hon. Member who raised this point has perhaps a little too much in mind our procedure in Committee. It may be that there are certain matters which could not be dealt with by Amendments in Committee because they would be outside the scope of the Bill, but those matters nevertheless may be matters for consideration in a Second Reading Debate when we have a much wider scope than is the case in Committee discussions. I do not want to stretch the point too far, but perhaps it would not be unfair to say that the Bill gives considerable opportunity where extra powers are given to this body to discuss their methods in the past. I do not think that we can say that the hon. Member has transgressed so far the limits of a Second Reading Debate.
§ Mr. HANNON
Is it in order, where the substance of the Bill is laid down in the prefatory Clause at the head of the Bill, in subsequent discussions for hon. Members to spread themselves over the whole range of subjects? There is not a single reference in the Bill to financial arrangements.
I do not think the remarks of the hon. Member affect the explanation which I tried to give of the decision at which I have arrived.
§ Mr. WILMOT
If the hon. Member had not intervened, I should have finished by now, and I can only feel that shortness of time may only be added to some other reason why the exposure of this device is distasteful to him. I am sorry that in the matter of time as well as of rates at which those borrowings have been effected, the advice which has been given to the board has proved to be disastrous. The hon. Member will appreciate that the board is bound to take this advice. Between September and December, 1931, there were practically no borrowings at all in the market except one small early redeemable commercial issue, but the Central Electricity Board was not deterred, and on 22nd October and again on 12th November it came into the market, on both occasions at the very worst possible time, for an issue of £1,000,000 each time. A few days later, to the amazement of the City, there was a borrowing for the Galloway Water 1057 Power Company whose interest charges are payable by the Central Electricity Board. This issue again was made when everybody knew that the worst possible rates would be obtained. The same is true in a lesser degree of the first two months of 1932. An examination of the list of issues might well display that this was an absolutely dead patch and that nobody who knew the market was borrowing at this time. On 22nd February the Central Electricity Board came forward with £7,000,000 of stock at 5 per cent. which it was proposed to issue at the unique price of 95, and had to extend its repayment date to 1955. If any further proof were needed of the disastrous advice which the Bank has tendered to the Central Electricity Board, it can be found in an examination of to-day's official Stock Exchange list. The 5 per cent. Central Electricity Board stock which was issued at 97½ is now at a premium of 116, and the 5 per cent., redeemable in 1955, which was issued at 95, is to-day quoted at 119.
§ Mr. WILMOT
The hon. Member is wrong. You do not get the same rise in all other securities. I have taken particular pains to see whether those rises bear the same relation to the rises in Government and municipal stocks, and they do not, for the reason that these stocks were issued at an unjustifiable discount. The enormous rises which have taken place in the capital values of these stocks is evidence not of the fact that general money rates have fallen, but of the fact that the investor has "cashed in" on the bank. Let me take the last issue of stock at 3½ per cent. That stock was issued at this time last month at 93½. My hon. Friend here will notice that there has been no great change in general among rates during the last month.
§ Mr. WILMOT
I will leave the matter, which is one of comparison. Since October of this year this stock has risen from the issue price of 93½ to the present price.
§ Mr. H. WILLIAMS
Can the hon. Gentleman say by how much the 3½ per 1058 cent. War Loan has risen in the same period, just for comparison?
§ Mr. WILMOT
The hon. Member will appreciate that a private Member of this House cannot carry about an unlimited amount of statistics, but I think I have said enough to show that the rise in these stocks and the enormous premiums at which they now stand, compared with the very substantial discount at which they were issued, is evidence of the fact that the advice which caused them to be issued at the time at the rates and prices at which they were issued was of a very unsatisfactory character. This business fills with concern not only the Members on these benches, but people in all parties—all men, in fact, who are concerned about public probity and the welfare of public credit and of the consumer in a great national scheme of this kind. It fills them with uneasiness, and sometimes a little more than uneasiness. We ask ourselves, Why is it? These questions are being asked not only in the House of Commons and in Labour party rooms, but in bankers' parlours. They are being asked in stockbrokers' offices. They are being asked by the "Economist" and by everybody who is concerned with these matters from a non-party point of view. Why is it that the Bank of England has chosen the Central Electricity Board as the body to which it gives bad advice? Why is it that in regard to the Bank of England and the Treasury—who know better than any other source of information what is the trend of market rates, and who know better than any private investor or private broker can ever hope to know—that mistakes are made not once but every time in regard to advice, and that the worst possible conditions and the worst possible opportunities are always taken? I should like the Minister to pay some attention to this matter. It is suggested—and there are many suspicions tending in this direction—that the Bank of England, as the central pivot of the (mechanism of private profit, is not friendly disposed towards the Central Electricity Board.
§ Mr. DEPUTY-SPEAKER
The hon. Member is now developing his argument on lines which go beyond what my earlier ruling permitted: the relations of the Treasury and the Bank of England with 1059 the Electricity Board are not relevant to this Second Reading Debate.
§ Mr. WILMOT
I thank you for calling attention to the fact that I have strayed. Perhaps I may put it in this way. The public are entitled to ask how it is that these mistakes are made. There are some reasons which do not appear on the surface which account for this remarkable series of errors and financial tragedies, for which the public will have to pay. I listened to the President of the Board of Trade the other evening and to his remarkable outburst, which was nothing less than the apotheosis of profiteering. I wondered whether that sort of attitude of mind is going to be adopted generally towards successful enterprises and whether the Central Electricity Board has done too well and justified too firmly the hopes and beliefs of those who think that public enterprise can be run with efficiency and economy to give a public service not only equal but superior to that of the old, worn-out competitive private system.
§ 5.50 p.m.
§ Mr. AMERY
I think the House will agree with me in regretting that the Central Electricity Board has been so unfortunate as to have been guided throughout in its finances by the incompetent, if not sinister, advice of the Bank of England and not by the superior advice of the hon. Member who has just addressed us. I should like to make a few observations on that part of the Bill before us which deals with the extension of railway electrification. I want to lay before the House the point of view from which that part of the Measure is regarded by the railway companies, and in particular by the Southern Railway Company, of which I have the honour to be a director, which has been a pioneer in the matter of electrification. There are a good many hon. Members who view with some anxiety the proposal that current should be supplied directly to the railway companies by the grid and not through the authorised local undertakers, and who feel that that is breaking down the principle that the grid should not compete with the ordinary electrical supplier. I submit on that issue of general principle that there is a very considerable distinction between the ordinary private individual or limited 1060 liability company operating in a particular area and the nation-wide system of the railways, which are great public utilities, like the grid itself, and which, like the grid itself, are statutorily controlled. I think there is a very profound distinction of principle between those cases.
§ Sir G. ELLIS
The traction part certainly is under statutory control, but the engineering workshops and certain other activities are not under statutory control. This Bill is going to give you both.
§ Mr. AMERY
Yes, but subject to the right to make representations. I am, however, dealing with the main purpose of Clause 4, and I want to put the case not so much from the point of view of general principle as from that of practical convenience in the carrying out of schemes of immense value to the country as a whole. The grid system and the railway system are extended parallel throughout the whole country. The electrification of the railways, certainly the electrification carried out by the Southern Railway, has been directly with the grid. There is no question, and there never has been a question, of the supply of current to, for instance, the main electrified line between London and Brighton directly by any of the local undertakers. The grid supply and the electrical equipment of the railway run side by side. The electricity which works the trains is collected directly from the grid. From the point of view of working, electrically and technically, the railway is electrified directly from the grid, and there is no intermediary of any sort. That, I think, meets in some measure the anxiety expressed by the hon. Member for Wigan (Mr. Parkinson), a very natural anxiety, that if this change should throw men out of work their case should be sympathetically considered. I entirely agree with that view, but, as a matter of fact, there are no men to be thrown out of work. In the actual working no changes are going to take place. When the hon. Member for Winchester (Sir G. Ellis) talks of big capital expenditure incurred by the local electrical undertakings in order to supply the railways, I would point out that the expenditure has been incurred not by those undertakers for that purpose but by the grid or by the railway itself. They have played no part in the actual constructional work. It is 1061 not even a case of the loss of profits by these local undertakers, because they are under an undertaking to supply current to the railways at the cost at which it is supplied to them by the grid, plus certain necessary charges.
§ Mr. H. WILLIAMS
There are certain transmission lines now in being. When any of these lines are used for supply to the railways part of the cost of these transmission lines will be borne by the railway load, and this will make the cost cheaper to other consumers.
§ Mr. AMERY
I think that is a doubtful point, but I hope that my hon. Friend will develop it in his own speech. What I want to point out is that so far as the railways are concerned, any portion which is electrified is worked in conjunction with the grid. The railway makes itself, or gets the grid to make, the necessary transmission lines and connections, and then it draws its current from the grid and has nothing whatever to do with the local undertakings. Where the snag comes in, and where the difficulty arises, from which this Bill will liberate them, is that before the railway company begins electrifying its line, it has to negotiate separately with every one of the electrical authorities whose area it traverses in the operation of its system, with results which were described by the Weir Committee in the following terms:In a great main line electrification scheme, it is clearly impracticable for a railway company to make individual agreements, which are necessarily elaborate, with a number of independent undertakers. Such divided responsibility and the difficulties of co-ordination would be definitely harmful to a comprehensive system of supply … Any arrangement designed to co-ordinate the several contracts with different undertakers to provide against this would be so complex as to be well high impossible.In one sense that is an overstatement, because the Southern Railway was able to deal with seven different authorities in its main extension and has now to deal with four more authorities for the relatively small extension to Hastings. But the varying demands of the different authorities and their difficulty in understanding the problem was such that matters had practically come to a deadlock, and had it not been for the inter- 1062 vention of the Minister of Transport and of the Electricity Commissioners the scheme might have been held up almost indefinitely. From the point of view of a railway operating what is a single piece of electrical work, it is incredibly difficult to try to come to arrangements for separate bits of that work with different authorities who look at it from a purely local point of view.
I venture with some hesitation to touch upon the technical side of the question. As I understand it, these electrical charges are very regularly made under two heads, on what, I think, is called a two-part tariff. A certain charge is made with a view to the maximum consumption which the consumer may have to draw at any time, including the time of day, at which he is to draw it. It is a charge which is imposed by the supplier of electricity in order to secure himself against a demand which may involve capital outlay. There is one item of charge in that respect. Another item of charge covers current costs for producing the electricity. When the owners of a big factory in a particular district come to deal with the local authority, it is perfectly easy to work out what and when the maximum demand may be and how it affects that particular supply, but when it comes to a railway the maximum demand in what is technically the area of one supplying authority may be parallelled by a very small demand at another point, and may not in that sense increase the maximum demand for the service as a whole. The consequence is that the local authority views the maximum demand from the local point of view and not from that from which the Electricity Board would view it as affecting the whole of the railway system in operation. I give that as one instance of the kind of difficulty that is involved when you are negotiating with people who are not in fact going to do the work, and who cannot look at it from the point of view of those who are doing the work. I. can assure the House that those who are concerned with the problem of increasing the electrification, of our railway systems regard the present situation as one which very definitely hampers their work, and places serious obstacles in their way. That is an objection which I do not think needs any emphasis.
1063 Every step that is taken in the development of the electrification of our railway systems means a great deal of immediate additional work of the most skilled kind throughout the country. Its subsequent success, by giving a much steadier and larger load factor, whoever supplies the electricity, must tend to bring down the cost of electricity to the consumer, and thus benefit every one of our industries. Lastly, it is possible that a large extension of electricity supply throughout the country, first to the railways and through the railways to consumers generally, may make a contribution to the great problem of our mining industry. From all these points of view it seems to me that we should do nothing to put purely vexatious or technical obstacles in the way of the extension of the electrification of our railway systems. No technical change is being made. The railways already work directly with the Central Electricity Board. It is purely a matter of cutting out what experience has proved to be an obstacle to a prompt, business-like and effective settlement of this question.
§ Mr. AUSTIN HOPKINSON
The right hon. Member says that he is speaking for the railway companies. I should like to ask him whether it is not the fact that one main reason why the railway companies are so enthusiastic in their support of the Bill is that they want to get into direct communication with the Electricity Board, so that when it comes to getting money out of the taxpayer to effect electrification they will have the political influence of the Electricity Board to aid in getting that legislation through.
§ 6.4 p.m.
§ Mr. BAILEY
I approach this matter from the point of view of a layman, a member of the general public. We have been told by the Minister of Transport in an admirable speech that the Measure is extremely simple to understand, but already we have had at least half a dozen most valuable contributions to the Debate which do nothing but make us realise that very substantial and intricate principles are involved. The Minister has told us that Clause 3—upon which at the 1064 moment I feel utterly incapable of voting—is merely a matter of machinery. I am sure he has gone into this matter with the same care that he gives to the regulations which have been issued by the Ministry of Transport. He says Clause 3 is purely machinery, but the hon. Member for Wrexham (Mr. A. Roberts) says that it is the most important of the lot, and would have a most profound effect on the public. What is the difference between these two explanations? There seems to be a profound difference of opinion between two persons who are naturally sympathetic towards one another, and who would do nothing to neutralise the arguments of each other, because they are both supporters of the Bill. One says that Clause 3 is machinery, and the other that it is the most important Clause. What am I, a poor, simple layman who has to vote upon the matter, to understand by that?
Let me deal with Cluause 1, which allows the Electricity Board to make arrangements with undertakers who have not selected stations whereby these undertakers come into the grid. That is the principle of Clause 1. In justification of this Clause the Minister said that the Act of 1926 was introduced in order that there might be a great electrical co-ordination all over the country; that private enterprise was standing in the way of efficiency and that, in order to carry out the great principle of the Act of 1926, means must be taken to enable these outside stations to be absorbed. There was another great principle in the Act of 1926 which, apparently, the Minister has temporarily forgotten in the midst of his many duties. The Act of 1926 designed co-ordination of the electrical industry throughout the country, but that co-ordination was not to take place at the expense of efficiency. And a check upon inefficiency was that private enterprise was to be allowed to compete. That fundamental principle is being violated by this Bill.
I am not surprised that the right hon. Member for Sparkbrook (Mr. Amery) is the only Conservative who has hitherto supported the Measure. Hon. Members opposite, of course, desire nationalisation upon any terms. I would suggest that the best check upon such very alarming things as were disclosed by the hon. Member for East Fulham (Mr. Wilmot) is the effective check of private 1065 competition. You are taking away a check upon inefficiency which the Electricity Commissioners possess now, and that is efficiently-run private enterprise, which will not borrow money in dearer markets than necessary. We should do nothing to take away the one check upon bureaucratic inefficiency which now exists. The independent private station, small though it may be, deserves to continue if in fact it is able to compete at lower rates than the great co-ordinated body. There is no virtue in co-ordination and rationalisation unless it produces greater efficiency. If private concerns can by greater efficiency maintain themselves in legal areas, it is not merely a principle of conservatism but a fundamental principle of common sense that they should be allowed to continue.
I regard with the greatest suspicion a measure which indicates that the grid has failed on its merits and attempts to bribe private concerns, which are now prosperous, not teo compete with them. It is nothing more than that. As you cannot drive them out, you are now proposing to pay extra money to bribe them not to compete. I have never heard a more disgraceful proposition adumbrated by any Government. It is a sad thing for loyal supporters of the Government to see day after day legislation being introduced which must be a joy to hon. Members opposite. They could not introduce it half so well.
Clause 2 seems to be even more objectionable than Clause 1. It says that the Central Electricity Board may supply in certain circumstances at rates under the tariff allowed to undertakers outside the selected area of stations. I shall have to be a little technical here in order that the House may understand fully the abomination of this Clause. The last thing I wish to do is to say anything which would wound the departmental feelings of the Minister of Transport. The position is this. Under the 1926 Act certain stations were allowed to be selected. Those stations having been selected, the board made arrangements with them that they would take from the board a certain number of units of electricty. Say it was 80,000 units for a particular selected station. The board pay that station for it in this way. It takes account of the capital charges involved to the undertakers in the production of electricity. It takes account of the neces- 1066 sity of the firm to make a profit, and it pays a surplus to the firm for lending its undertaking to the board. That is what it comes to; and the board in return repurchases for its own use the units of electricity which it requires for its own consumption.
There may be another area with a smaller station—this is where Clause comes in—producing only 40,000 units. The board may come to the conclusion that the amount of units to be consumed in the second area could be raised to 60,000 units, and they come along to the first area generating station and say: "You are now providing us with 80,000 units. You are being paid sufficient to give you a profit on your capital and to cover working expenses. We want another 20,000 units from you, and we are entitled under our arangements to say that we are not going to pay you an economic price for the extra 20,000 units but only your actual out-of-pocket costs, because we have already given you the interest on your capital in our previous arrangement." What happens then. They go to area number two with 20,000 units made by area number one, and say: "We are anxious to push the consumption of electricity in this area, and we will let you have 20,000 units at a cheap rate, an uneconomic rate. We will dump 20,000 units upon you, and you must in your turn dump the 20,000 units on the consumers in your area."
The result is that in one area, in area A, a consumer has to pay at the current rate, but in area B, because they have had these units dumped upon them, the consumer, say a timber merchant, gets his electricity much cheaper because he is getting dumped electricity. Thus two persons engaged in exactly the same kind of business get their electricity at different prices. That is the reason why some of us oppose this Bill, not because we have vested interests such as one hon. Member suggested in what was an admirable speech apart from that, but because we think it illogical and improper, and because we do not think a thing of this kind should be pushed through without examination. But there are safeguards in this particular Clause. I am bound to say that that word "safeguards" is coming to have a very ominous sound in my ears, because when I look at the safeguards in any Measure of the Gov- 1067 ernment I frequently find that they are intended to camouflage confusion of thought. Let us look at the safeguards in this Clause. The Clause says:The Central Electricity Board shall have power, and shall be deemed always to have had power, to supply electricity to authorised undertakers at prices and on conditions other than those specified in the appropriate tariff"—that is the dumped electricity to which I have referred—fixed under that section, in cases where they are satisfied that special circumstances exist,What are "special circumstances"? Will the Minister do the House the honour of telling us the type of circumstances that are conceived to be special? Do these words merely mean that the commissioners think it would be convenient to dump electricity? Is this merely an omnibus Clause to excuse complete lack of clarity of thought and in order to avoid more careful drafting? Let us look at safeguard number two. The Clause continues:special circumstances exist and that those undertakers, or other authorised undertakers who are supplied with electricity by those undertakers, will thereby be enabled to supply to persons whose needs for electricity are of an exceptional nature—What is an "exceptional need" of electricity? Sometimes I have had electrical massage. Is that "exceptional need" of electricity? I sometimes think the Government have an exceptional need of electricity. All this wording is confusing to a poor layman like myself, but if I can discover these gaps in the Clause what must they seem like to an expert? We have two exceptional safeguards here, though there are other ordinary safeguards; and we shall probably have more in connection with another Measure later on. "Special circumstances" must exist in the first half of the Clause, and now we see that the need for electricity must be of an exceptional nature. What do the Government mean by these words? Do they use language in order to mean nothing, so that they can have the right to everything? If so, I could understand them. It is disgraceful that we should have in a Bill language which pretends to contain sense but conveys nothing. The Minister might put into the Bill a provision which declared "We want to have the right of dumping electricity in 1068 a place, and when it suits us we will dump it, and sell it at what price we like and say that there are exceptional circumstances, and of the exceptional circumstances we are to be the judges." Why not say that and be straight with the House for once? The Government are occasionally straight; I do not want to overstate the matter at all. I am sure that it is not intentional to be confusing here; but I think that when a Member has been on the Front Bench a certain time he feels that there is something improper in saying what he means in plain and direct English; he feels that he may be giving something away, and that it is better to wrap up his meaning so that when the time comes he can give any answer he likes.
§ Mr. BAILEY
I am bound to say that I do not want my soul destroyed too young in life. But perhaps it may be my lot to share for a certain time the tribulations of the candid friend, which have not landed my hon. Friends opposite on the front bench. I am greatly obliged to the hon. Member for Silvertown (Mr. J. Jones) for his flattering observation. I do think seriously about this matter. One is always anxious to vote for the Government, but the Government do introduce Measures that no sane man can vote for, and I find my position becoming exceedingly difficult. Let me come to Clause 4. On that the Minister, with that ingenuousness which is such a distinguishing mark of his administration, said: "We must have these concessions for the railways because the railways have written to us and told us that we must have them." I do not suppose there is a single big undertaking in the country that would not write to the Minister and say: "We think it necessary, in the interests of the State, that we should be supplied with things cheaper than other people." I realise that my right hon. Friend the Member for Sparkbrook has also been on the front bench, and I hope he will find himself there again. He spoke to-day in the front bench manner. He dresses up his language with a wealth of phrases; he gets a little bit technical and says 1069 he does not want to do so. But that is merely to mystify us.
As a matter of fact what does the argument of the railways come to? The railways say that if there is to be progress they should be supplied with electricity at cheaper rates than anyone else. It may be that there is some soundness in the argument, or they would not be so keen about it. We may well agree with the right hon. Member for Spark-brook that since the grid is a great coordinating undertaking, and since the railways are a great co-ordinated undertaking, special terms should be given. But what would we have said if a Socialist Government had allowed such terms without a single specification of the lines on which they were to go? We should have said that they were unworthy of office, that they were squandering the public money, that they were unworthy of their trust. Probably if the Socialists had introduced a Measure of that kind the present Minister of Transport and myself would be saying something of that sort now. If there are to be special terms given to the railways for special reasons, those special circumstances ought to be laid down; they ought not to he left vaguely, to be settled over lunch. Quite seriously I feel that before special terms are granted even to the railways there should be some kind of judicial inquiry as to what those special terms ought to be.
This Measure seems to me to have been conceived in a hurry, and I hope it will die in a hurry, because I feel that this House is not the proper body—it is a body of laymen on this subject—to deal with a Measure which is of a highly technical character, although great public principles are involved. I very much hope that the Government will find it possible even now to agree to the Bill going to a Select Committee. After all, we have heard this afternoon different points of view of a technical kind. There was a very admirable speech from the hon. Member for Winchester (Sir G. Ellis). Even if we go into the Government Lobby by request, or into the Opposition Lobby by request, we know nothing about what we are doing. It is essential that this Measure should be finally put in a good form, that it should be examined and that there should be inquiry. It has been urged that the Bill is important. I do not believe it is so 1070 important that the matter of a few months can make all the difference. But it is a very important Measure and there has been a very valuable suggestion made. Obviously we cannot go on putting in new things piecemeal one day after another. Would it not be possible if the Bill were sent upstairs for a great deal that would be of permanent value to emerge? We could then do a really good job of work, instead of a poor job.
If we proceed slowly in this matter we shall be making far greater advances towards quicker electrification in this country. Perhaps we might have some inquiry as to whether the present commissioners are the best body to undertake this work. Surely the Government might show a little patience in the matter. Although I am and always shall be a most loyal supporter of the Government, yet I do hope that on this occasion the Minister, with the elasticity of mind which he possesses, may realise that concession is not surrender, and that to be reasonable in this matter would increase and not lower the prestige of the Government of which he is such a distinguished representative.
§ 6.26 p.m.
§ Sir CHARLES BARRIE
I shall detain the House for only a short time in amplifying what has been said by my-right hon. Friend the Member for Spark-brook (Mr. Amery), if for nothing else to show that the railway companies, of which I am one of the representatives, carefully considered this Measure before supporting it. I think the House will agree that the first object of the grid system was to spread the use of electricity more evenly over the country and eventually to create a good supply at a cheaper price. In doing so they had in mind the supply of electricity to industries localised in certain sections of the country. I do not think they had particularly in mind the supply of electricity to railway companies such as the right hon. Member for Sparkbrook mentioned. It is true that the Southern Railway Company had very great difficulty when they came to negotiate with the local electricity companies for their supply of electricity. If the Southern Railway had difficulties of that kind, I ask the House to consider what would be the difficulty of a railway which extends from London as far almost as the north of Scotland. I believe that there are some 650 separate electricity authorities in the country.
1071 If it should be that the London and North Eastern Railway Company and the London, Midland and Scottish Company, with two main trunk systems connecting Scotland and England, had to go out, and, after having decided for main line electrification, tried to make contracts with 200 or 300 different authorities, I ask the House to consider the difficulties in which they would be if they had to make those various contracts. Surely it would be much easier for them to make their contract with one authority although, in the main it would not be that particular authority which would actually supply the electricity to them. The supply would be done eventually through the local companies. The railway companies in supporting this Measure have no desire to cut out the smaller companies. Their sole desire is that when they come to main line electrification if indeed they ever do come to it—[An HON. MEMBER: "They never will"]. The hon. Member seems to know. At the moment, at any rate, I do not think there is any intention on the part of the main line companies to go in for big schemes of electrification. But if they did go in for such schemes it would be much better if they could make a contract with one authority instead of having to deal with 200 or 300 authorities.
§ Mr. H. WILLIAMS
Has the hon. Member any figures to support his suggestion that 200 or 300 authorities would be involved in such a case?
§ Sir C. BARRIE
I have already said that there are some 650 authorities throughout the country. That is my information. I have not counted up the number of electricity companies spread along the various railway lines but certainly a very large number would be involved. It might not be 200 or 300 but it would be a very large number. There has been a demand that a Select Committee should examine or rather reexamine this matter before anything further is done. We had the Weir Committee which reported in 1925 and another committee also under the chairmanship of Lord Weir reported later on, I think in 1931. The Weir Committee in 1925 recommended that in the case of railways power to supply should be granted to the Central Electricity Board and the second committee reported: 1072The outstanding reason for the recommendation in the Weir report (of 1925) is obvious, as a railway runs through the territories of many authorised undertakers, some small, others large. In a great main line electrification scheme it is clearly impracticable for a railway company to make individual agreements which are necessarily elaborate with a number of independent undertakers.The railway companies base themselves on the recommendations of those committees and I am content to stand on the reports made by those two committees. They spent a long time in discussing these matters and went into the question very fully. I would prefer to base myself on their reports rather than go through the long process of setting up a select committee, to get probably some other verdict from them. [HON MEMBERS: "Hear, hear!"] I have nothing to add beyond that amplification of what has already been stated by my right hon. Friend the Member for Spark-brook. I support the Bill.
§ 6.35 p.m.
I agree with some of the statements made by the hon. Member for Gorton (Mr. Bailey). I thought they were very well put and perhaps the most effective sentence that he used was one to the effect that no sane man could vote for some of the Measures of this Government. I think he probably meant the Incitement to Disaffection Bill or the Unemployment Bill of a few months ago. At any rate the last by-election result shows that thousands of people in Putney share the hon. Member's view.
§ Mr. BAILEY
Since the hon. Member has referred to me I wish to correct a mistaken impression that he has given. He suggests that when I said that the Government had introduced Measures which no sane man could vote for, I was referring to the Incitement to Disaffection Bill. I was not. I will not mention the Measures but they were Measures which my hon. Friend opposite and his colleagues generally supported.
That may be so, but the hon. Member made another statement to the effect that private enterprise ought to be allowed to compete fairly in electricity. I cannot believe that he was sincere in that statement. He must know that private enterprise in this industry has generally had a very fair chance of competing. Indeed this House, apart 1073 from the Measures of the Labour Government, has always been most generous in looking after the interests of private enterprise. But wherever there has been a fair opportunity for public authorities to compete with private companies it can be said with truth that the public authorities have generally shown themselves to be much more efficient than the private companies from the point of view of the general interest.
I have no wish to go into details, but if hon. Members doubt my statement I can give instances. I have had the privilege of representing in this House first, North Kensington and later North Hammersmith and those two districts afford a very good comparison in this respect. In North Kensington we had a good example of private enterprise in the electricity industry, a fairly efficient company, which, when I was Member for that division, produced electricity for lighting at 5½d. per unit. Next door in Hammersmith there was a public undertaking with similar conditions as to wages, transport and so forth—identical conditions, I might say—which was selling electricity at 4d. per unit. Whatever hon. Members opposite may say I believe that 4d. is less than 5½d. To-day the price of electricity in the private company area which I have mentioned is 4½d. and in my division of North Hammersmith under a public authority it is 2¾d. I still believe 2¾d. to be less than 4½d., although it may seem stupid to some hon. Members opposite. When I was a member of the Hammersmith Borough Council we used to sell electricity in bulk to a private company in Chiswick at 1d. per unit and the private company retailed it at 7d. per unit, although the only additional cost involved was that of transformation down to a different voltage which was estimated to be about 1d. per unit.
If we take the whole of London we discover that of undertakers charging more than 4d. per unit for electricity for lighting purposes, 46 are companies and only 25 are public authorities. On the other hand if we consider those with low charges, those charging under 4d. a unit in the Greater London area, we find that only two are companies while 18 are public authorities and there are ten public authorities which charge less than 3½d. Hon. Members may suggest that there are special circumstances in 1074 London and that it is an unfair example but if we take the whole country, as regards domestic supplies at any rate, it will be found that two years ago private companies were charging rates for lighting which were from 25 to 50 per cent. above the rates of the public authorities. That was two years ago and I have not the latest figures but I do not think there has been any great variation in the last two years. Perhaps the hon. Member for South Croydon (Mr. H. Williams) when he addresses the House will be able to give more up-to-date figures.
The hon. Member for Southampton (Sir C. Barrie) referred to the advantages of Clause 4 and pointed out how under that Clause railway companies would be supplied with electricity by the board in future. I think Clause 4 is the most important Clause in the Bill. Before the recommendations of the Weir Committee's report can be put into operation it is vital that this Clause should be passed because it gives the board powers which are essential to it. I believe that the electrification of the railways is of paramount importance not only from the transport point of view—although that is important—but also from the general trade point of view and as regards its effect upon industry and employment. It is estimated by the Weir Committee that £260,000,000 would be the cost and I think that expenditure would be one of the greatest investments that this country could undertake. I regard Clause 4 as very welcome.
There is in Clause 1 a little phrase which I do not understand. It provides that only by agreement with authorised undertakers can new arrangements be made. I think it is regrettable that words to this effect should come into all our Electricity Acts. I believe that similar words appear in all the Acts since 1926 and I think this is one of the great causes why our electricity industry so seriously lags behind electrical development in other countries. When we consider that the output of electricity per head of the population in Canada and the United States is over 1,000 units, while in this country it is not more than one-third of that figure, it is obvious how far we are behind other countries in, this respect. Norway and Sweden both have double our output. These restrictive phrases and Clauses have pre- 1075 vented the proper development of our electricity industry. If these new arrangements can be shown to be beneficial nationally, then it is wrong to provide that they are not to be put into operation until the authorised undertakers agree to them.
Clause 1, sub-section (3) relates to the question of compensation of officers and servants. I hope we shall have some further enlightenment from the representative of the Government upon that provision. Will this compensation Clause apply to all, or any stations which may be closed down in future? Take for example the Great Western Railway Company of which we have a distinguished representative in this House. It is conceivable that the Great Western Railway generating station might in the next year be closed down, or might work under this new Measure. If the station is closed down, will the workers at present employed there come under this compensation Clause It may be that the board will not close the station down, but that the railway company itself may close it down. In any event, I would like to be assured that the servants and officers who will probably be dismissed in that case will have adequate compensation, ns others have done under the 1926 Act.
I cannot understand the opposition of so many hon. Members to this Bill. I may be very ignorant about the implications generally, but it seems to me that the chief reason why they oppose the Measure is that they suspect it to be an expansion of public ownership and control. I agree that it is, but I cannot understand why they should be so bitterly opposed to it. [An HON. MEMBER: "We are not Socialists."] No, but they frequently say that we ought to vote for the interests of the country rather than for vested interests. If, however, that be so, we should only oppose the extension of public ownership to an industry if we believed it would be inimical to the interests of the majority, and I would like to hear any hon. Member give any facts to show that the extension of public ownership to this industry has been bad from the point of view of the community. I believe, not as a politician, but as an ordinary student, that the opposite is true.
I do not know any industry in the country that has more public control than 1076 this industry. I believe that two-thirds of the electrical undertakings are now under either national or municipal control. Has that been a bad thing from the national point of view? Is it not true to say that the electrical industry is one of the most prosperous industries in the country? If we were talking about coal or cotton, it would be another matter, because both of those industries have full, unfettered, private enterprise control, and they are almost bankrupt. That is a good argument to show that private enterprise has failed in those industries, but I assert that there is no industry with so much public control as the electrical industry, and that there are very few industries more profitable, more prosperous, than this industry, with so little unemployment, with such high profits, with the value of its shares increasing year by year, and with dividends of enormous size. In Notting Hill one knows that the shares have been paying 1,400 per cent. for many years, and that the over-all return on capital has been from 14 to 16 per cent.
That board has been in operation only for a very few years, and the grid system has been working only for about a couple of years, or even less. It is, therefore, premature to judge of the success or otherwise of that undertaking. But on the general question of the electrical industry, there is no doubt that it is very prosperous and successful, in spite of the fact, as hon. Members opposite would say, that it has such a large measure of public control. All the facts show that the industry, especially that part of it which is publicly controlled, is perhaps the most prosperous of any industry in the country.
Some hon. Members believe that this is a Socialistic Bill, a Bill that we on this side should enthusiastically approve. If this is a Socialistic Bill, I can only say that it is a very thin and wishy-washy Bill, in our judgment. If hon. Members think we should entertain this as our idea of what should be done, they do us a great injustice. We believe that the only way to make this a first-class industry from every point of view is to have national control, not only of the 1077 productive side, but of the distributive side as well. We believe it is wrong that there should be these 400 or 500 tin-pot little distributive companies, each with its little area of supply, each with its little area of cables being laid, with separate offices, separate clerks, separate administration, and so on.
If the distributive side of this industry were put on a national basis, there could be tremendous economies and advantages to the whole community, so I hope that no hon. Member opposite will really believe that this is a Socialist Bill. It is far too pink a Measure to have our enthusiastic support. The only reason why we support it is that it is a little step, a tiny and very faltering step, towards removing in a slight degree the worst disabilities of private enterprise, and providing a little more of the useful medicine of public control. I believe that most of my colleagues will support the Bill, not because we think it is ideal, but because we believe that the only way in which the electrical industry will ever be made into what we want it to be is by electrocuting the private interest companies which have done so well out of the industry and hampered every attempt to make the progress which the industry needs.
§ 6.53 p.m.
§ Mr. RICHARD LAW
I want to say a few words as one who is connected with one or two electricity supply undertakings, and I may say, in spite of the remarks of the hon. Member for North Hammersmith (Mr. West), that I make that confession without the slightest feeling of shame, because I regard the electricity supply undertakings as performing a function at least as useful and important as that performed by the grid. But the House has a right to know from what angle any Member who is speaking is addressing it. The hon. Member for North Hammersmith devoted some time to his support of the Bill because it was, in his view, a step towards Socialism. I am not sure that it is such a step as he imagines, because a large number of these authorised undertakings which are being penalised to some extent under the Bill are not privately owned but municipal undertakings, and to a very large extent the Bill is a blow to municipal trading. The hon. Member also devoted some time at the beginning of his speech to a com- 1078 parison of various charges for electricity in different parts of the country, but I would suggest to him that those comparisons were not really of very much value unless he also informed the House as to whether he was or was not comparing like with like, and as to whether in one case a standing charge might or might not be higher than in another.
However, I did not rise to follow the hon. Member, but rather to reinforce the plea which has been put forward this afternoon in a most stimulating speech by my hon. Friend the Member for Gorton (Mr. Bailey), and others, that the Bill is not a very suitable Measure for discussion in this way, and that a far better result would be achieved if it were referred to a Select Committee. There is a very large number of reasons that one could advance why this is, not the best procedure. In the first place, it is obvious on the face of the Bill that it deals with highly technical matters and with matters which, I think I may say without disrespect, very few Members of the House completely understand. Certainly, I cannot claim myself completely to understand the whole implications of the Bill, and quite a number of Members who have spoken to-day have suffered under the same disability.
In particular, I think there were one or two observations which were let fall by my right hon. Friend the Member for Sparkbrook (Mr. Amery) which showed that he, too, was, like myself and so many other hon. Members, not an absolute master of the many very important points involved in the Bill. I would go further and say, without disrespect to the hon. Gentleman, that it is very unlikely that the Minister of Transport himself has a complete understanding of the Bill, and I would suggest to him that he is dealing here with a matter which is rather different from the traffic problems to which he has been devoting so much time in the last few months, and that we are discussing to-day, not Belisha beacons or and of those processes of trial and error, of which he is so admirable an exponent, and which work very well in some fields, though not in this, but one of the most complicated and technical industries in the country.
Again, I would suggest that the Bill does raise a principle of very great importance. It is true that when it was 1079 introduced in another place it was said, on behalf of the Government, that it did nothing except to resolve certain doubts and difficulties which had arisen in the operation of the 1926 Act. I suggest that that is a very mild way of putting it. It is true that one of the subsidiary objects of the Bill—and it is an object with which I have every sympathy—is to keep Sir Andrew Duncan and his fellow members of the Central Electricity Board out of gaol for various breaches of the 1926 Act which they have committed, and if that were the only object of the Bill, it would have my whole-hearted support, because if the grid is to operate satisfactorily, it is much better that the board managing it should not be in a position to be committing merely technical breaches of the law. The Minister rather abandoned that argument which was used in another place, or so it seemed to me, and adopted the argument, which has been repeated in many speeches, that the Bill really does nothing at all except to provide a certain administrative advantage to the railway companies, in as much as those companies have to enter into a number of contracts and it would be much more convenient that they should be able to enter into only one contract.
I am not sure whether he quoted from the Weir Report, but I know that several other hon. Members have quoted from it, including the right hon. Member for Sparkbrook. It is important to point out that the Weir Report was published some considerable time before the Act of 1926, and that the figures which were quoted by the right hon. Gentleman the Member for Sparkbrook—
§ Mr. LAW
I am much obliged to the right hon. Gentleman and I must apologise to him. The point I was trying to make is that the situation is not nearly so difficult as the speeches this afternoon have implied, because while it is true that the railway companies have to make a variety of contracts, they do not have to make, as the hon. Member for Southampton (Sir C. Barrie) said, 200 or 300 contracts with 200 or 300 separate undertakings. As I understand 1080 the Act of 1926, the railway companies do not have to make a separate contract with every undertaking within whose area the line passes. They have only to make a separate contract with actual undertakings which supply them with electricity. In the case of the Southern Railway, I think that on the main line electrification from London to Brighton there were only four separate contracts that had to be entered into.
§ Mr. LAW
Well, there were seven contracts. So far as one of them is concerned, I do not think it was a very complicated matter and the others could not have been very terribly complicated. We ought, too, when we are talking of this question of contracts, to remember that the Southern Railway Company, before putting into train this process of electrification, had of necessity to enter into a variety of most important contracts with all the various people who were supplying equipment and the material for the electrification of the line.
If the sole purpose of Clause 4 of the Bill is to make it easier for the companies in their contracts, that they should only have seven contracts instead of one, it seems to me that the Bill is very largely unnecessary. If the only thing that prevents railway companies from electrifying is the fact that they have to make these seven comparatively simple contracts instead of one comparatively simple contract, then I must say the direction of the railway companies seems to require a certain amount of gingering up. That excuse does seem to be so flimsy that we are thrown back on the argument advanced by the hon. Member for Winchester (Sir G. Ellis) earlier in the evening. His argument, with which we are all familiar, was that this Bill would give the Central Electricity Board power to supply the railway companies not only direct but at preferential rates—at rates lower than those at present charged by the authorised undertakers. It is true that there is in the Bill a certain safeguard which says that the board must not enter into an arrangement which the commissioners decide would not be to the financial advantage of the board, but that is a very different matter from saying that the board must not enter into any arrangement by which 1081 a railway company will receive a supply below cost price.
It may be quite easy for the board to argue before the commissioners—and to have their argument accepted—that if they supplied electricity in the next five years at an uneconomic rate, taking the long view it would ultimately react to the benefit of the board. If that is so—and I do not see that one could put any other construction on the Bill—the Bill is putting the Central Electricity Board in direct competition with the authorised undertakings throughout the country. That is not just a little alteration to meet the convenience of the railway companies, and it is not just merely a drafting Amendment to the Act of 1926. It cuts right down to one of the fundamental principles of the Act of 1926, that the board should act as wholesalers and the various undertakings as retailers. That is not a principle which an interested party can read into the Act of 1926. It is not only implicit; it was stated emphatically time and time again throughout the long Debates which took place in this House before the Bill was passed. I suggest to the Minister that it is in the highest degree improper that we should, in a Debate on a short winter's afternoon, not only revise but in a sense reverse the work which a previous Parliament did over so many days of debate. For that reason some other treatment for this Measure is advisable.
In the Debate on the depressed areas the other day, the Chancellor of the Exchequer referred to certain suggestions which were made by the Civil Lord of the Admiralty, and said that obviously no Government could just take up suggestions of that kind, which had such far-reaching economic and social consequences, embody them immediately into a Bill and rush it through the House of Commons. A great deal of thought, he said, would have to be taken. Exactly the same arguments can be applied in the case of this Bill. We have heard of the tremendous advantages which would accrue from railway electrification, but can we be quite sure that they will not have some compensating disadvantages which, if we considered them, we would not be willing to accept? If there is a further extensive electrification of the railways, will not that have a serious effect on the coal mining industry? That 1082 ought to be very closely considered. If there is an considerable expansion of electrification, there will be a certain adverse effect on unemployment in the railway industry.
There is a third point, that if electrification of the railways is desirable, and if it is right that we should face these disadvantages for the improvement and possible cheapening of transport, are we quite sure that this kind of electrification which the Bill rather indirectly foreshadows, is the most economical? Can we be quite sure that the solution of the problem does not lie rather in the direction of the Diesel electric train? All these are points of the utmost importance, and it is quite improper that we in this House should discuss them in such a very cursory Debate as we have had this afternoon, and in the Debate of an equally short period which we shall have next week. I cannot see why it is necessary to put the railways in any position better than they are to-day. Under the Act of 1926 they have a position which no other consumer of electricity enjoys. They get their electricity at cost price, and they do not have to pay even the transmission toll which an undertaking, which derives electricity from another undertaking, which in turn derives it from the board, has to pay. They are, at the present moment, in a most advantageous position, and no real, solid case has been made out for putting them in a still more preferential position.
I should like to say one word about the electricity undertakings themselves. At the present time the electricity undertakings supply electricity to the railways without any direct profit whatever. It is true the undertakings get a certain indirect profit, but they derive that profit not at all at the expense of the railways. They derive it, in part, because they get slightly better terms for the unit charge from the Central Electricity Board because they take bulk supplies, and also from the operation of the diversity factor—by the various adjustmemnts they are able to make by skilful management in their load. As the result of this advantage, it is obvious that local undertakings must be in a stronger position, and as a result they have been able to embark on great schemes of development of consumption—which is one of the things we want—and they have been able 1083 to embark on programmes of assisted wiring, and so on, and so greatly to increase the domestic consumption of electricity. If they are suddenly deprived of this very considerable advantage for no other reason than that the railway companies want some very slight administrative advantage, though they claim it is important to them, it seems to me that they are causing a great deal of trouble to achieve a very small result.
Some of the speakers who have addressed us on this subject have objected very strongly to the Bill, because it is in their opinion a form of Socialism. That is a view which I do not hold very strongly, and I think that the further we can get away from all these abstract ideas of Socialism and capitalism and everything else, and the more we can think of the direct result of any particular policy upon industry the better. My objection to this Bill is not that it is Socialism, but that it is such extraordinarily inefficient Socialism. If we are to believe the Government, it is going to do nothing except relieve the railways of certain rather trifling—although they maintain they are very important—defects of management, and on the other side of the balance this Bill is going to impose a terrific strain on the undertakings which are at the present time distributing electricity as cheaply as they can, and progressively more and more cheaply with each year that passes. We have to make up our minds whether we are going to nationalise the distribution side or not. If we are going to nationalise the distribution side let us say so, but, if not, do not let us impose upon the existing organisation for distribution burdens which will only hinder them and which will only put off further and further the day, which we all hope is coming, when we shall have a thoroughly electrified country comparable to other countries in the world.
§ 7.15 p.m.
§ Sir ROBERT HORNE
I should like to compliment my hon. Friend who has just spoken on the very fair and lucid speech which he has made upon this matter. Indeed, he presented an argument which we are bound to consider very seriously and which, I would propose to answer. Many hon. Members would do well in considering this matter to remember that 1084 when there are complaints made against the legislation which has hitherto been passed with regard to electricity on the ground that it has upset the position of private enterprise, the Statute which is in existence was passed by a Conservative Government with the support of the great majority of the Conservative party. Therefore, it seems to me to be somewhat late for those who sit on the same side of the House as I do and who did not oppose that type of legislation at the time to begin complaining about it now. I am a little surprised to hear, as I have heard, some ejaculations from my hon. Friend the Member for Cambridge University (Sir J. Withers), which expressed the current of many remarks that have been made to me in the House from time to time since this legislation was proposed, namely, that this is regarded as a Socialist Measure, and that that is why it is being opposed by Members who sit upon these benches.
It is immaterial to me whether the Bill is supported by Socialists or not. As far as I am concerned, I do not think anyone will regard my position as that of a very ardent Socialist, nor from my past or present utterances can it be said that I support Socialist legislation. I am amazed at that class of comment. I am glad to find my hon. Friend disavowed that there was anything of that kind in his mind. He took the good old Tory attitude. We were never doctrinaires in the Tory party. We never adopted the theories of the Manchester School. The earliest legislation of a Socialist character, if you like to call it so, on behalf of the working classes, and which interfered in many ways with private enterprise, was passed by Conservative statesmen, and we thought that those great measures stood not to our discredit but to our glory. I am not hidebound by doctrines at all. There are certain great institutions which the Tory party exists to support, but, as far as ordinary legislation is concerned, the Tory mind is much more impressed by the practicability of what is suggested than by any doctrines with regard to it.
§ Sir JOHN WITHERS
I should like to ask my right hon. Friend whether it is not a fact that during the Debates on the Acts of 1919 and 1926 an assurance was given that they would not in any way affect direct trade?
§ Sir R. HORNE
I am not prepared to say whether that be true or not, but the particular point which my hon. Friend raises does not make this Measure Socialist or non-Socialist. It is not a relevant consideration with regard to that particular point whether it belongs to the doctrines of one party or another. I am told that there are old ladies who look under their beds every night to see if a burglar is there, and I think there are a certain number of Members of the Conservative party who are always looking under the bed to see whether a Socialist is there. On the present occasion all they have discovered under the bed is Lord Weir. I should certainly never regard him as a very good Socialist. I will ask the House to forgive me for repeating, what has already been quoted, a passage in which Lord Weir deals with this matter. To anybody who is accustomed to reading his reports, many of which are very elaborate and contain much to direct the thoughts of this country on some of the most important industrial problems, will see that Lord Weir always looks at everything from a business point of view. When he is dealing with the electricity question, what does he say? When you hear you will come to the conclusion that there is nothing of political principle in the matter at all, but that it is a pure business question. This is what he says:In a great main line electrification scheme, it is clearly impracticable for a railway company to make individual agreements, which are necessarily elaborate, with a number of independent undertakers. Such divided responsibility and the difficulties of co-ordination would be definitely harmful to a comprehensive scheme of supply. Moreover, it is clear that the demands for electrical energy from the sub-stations along a main line will not coincide in time, and were such individual demands to form the basis of the charge to be made by each undertaker, the result would be inequitable and uneconomic. Nevertheless, any arrangement designed to co-ordinate the several contracts with different undertakers to provide against this would be so complex as to be well nigh impossible. We conclude therefore, that the original proposals should be adopted and the Central Board be given power to afford direct supplies for railway electrification schemes.What has that to do with Socialism? It is nothing but a business arrangement. It is suggested that certain impracticabilities arise when the business is done in one way and that they can be avoided if the business is done in the other way. 1086 There is nothing more to it than that. My hon. Friend who has just spoken suggested that the matter was very much easier for the railway company than we believed, but, after all, there is no person more erudite on this matter than Lord Weir or who has gone into the matter more fully. Therefore, I think that his opinion on the matter is valuable when he says that the variety of contracts to be made becomes so complex as to be really impracticable. Practice and experience have shown that all the considerations that he lays down have proved to be true. My hon. Friend referred to the arrangements made by the Southern Railway Company, but even for the short distance from London to Brighton they found it impossible to make their arrangements with all the independent undertakers. It proved impossible, and they had to bring in the Central Electricity Board to aid them and afterwards the Minister of Transport. I do not wish to go into all the details about that, because it is perhaps not fair to give them in the House, but, at any rate, the result was that it was found impossible to make these arrangements, and, in the circumstances, the Southern Railway had to call in aid the Central Electricity Board.
What is the kind of thing with which you are faced when, as a railway company, you face the possibility of electrification? My hon. Friend suggested as a reason for the House not sanctioning this particular form of legislation that we were not shown that this was the best form of traction for the railway companies to have. But this Bill does not compel the railway companies to adopt electrification under a system such as this Bill indicates. The railway companies are not being compelled to do anything at all. All this Bill provides is that if they wish to electrify they shall have these particular facilities. That is not to say that any railway company has not a free choice as to whether they shall go in for Diesel engines or electrification. Every railway company is calculating out these very things and they are not shutting their eyes to the possibilities of lower costs from Diesel-engine traction. There is nothing to be known about these things that is not known by the boards of the railway companies. Therefore, the fear which my hon. Friend is conjuring up in order to induce the House not to 1087 adopt this legislation is entirely groundless. The situation which he conceives does not exist.
What is the kind of thing which faces a railway company? When my hon. Friend says that the railway companies are in a better position than anyone else let me remind the House that a railway company is not entitled on its own responsibility to generate electricity for itself. It is under that disability. A private undertaker may make electricity for itself, but a railway has in present circumstances to take electricity for traction from the producing undertaking.
On the other hand, the undertaking that sells electricity to a railway company may only sell it at what is described as the cost to the undertaker to get the electricity plus certain added charges for transmission. When you come to ask the question, what is the cost that the undertaker is entitled to put in his contract, you find it has four different varieties. The cost may merely be if the undertaking is a selected station, the cost of production of electricity to the selected station plus the board's expenses; or it may be on the grid tariff; or it may be what it would have cost the undertaker to produce the electricity if the existing legislation had never been passed; or it may be, if the undertaker buys from another undertaker, what it costs that undertaker to get his electricity plus certain added costs of transmission.
Any railway company which starts to consider whether to go in for an electrification scheme or not, cannot by any chance arrive at a figure as to what the cost of electrification will be. There is no way of telling in advance under which of these various heads they will be charged, and whether it will so continue. The result is that very great difficulties beset the railway company when they cannot come to any actual conclusion as to what electrification will cost. As a matter of common sense, it is necessary to get rid of a system like that. If a company electrified between London and York, they would have at least 10 different undertakers with whom they would have to negotiate and they would not know in regard to any one of them under which particular category they would have to pay. They would have to negotiate as best they could and they would be told in many cases that an accurate 1088 figure could not be arrived at. If the electrification of the railways is to be made possible, surely we must get rid of absurd clogging conditions of that kind. Again suppose, there were a cessation of current at one point in the area of an undertaking, but current could be supplied from some other point within the same area. In such a case there is as a rule, an arrangement by which the consumer of the current does not have to pay twice merely because he has had to draw his current from a different station. As one can readily understand, railways will have to take their current from many sub-stations, and if there is a failure in one area which has to be met by current from another area in which there is a different undertaking the railway company will have to pay twice.
These are some of the conditions which confront the railway companies who are considering this matter, and I venture to say to the House that it would be wise for Conservatives to get rid of the suggestion that we are in this Bill going in for something which will uproot all the institutions of this country or turn us all into Socialists. I appreciate what my hon. Friend said about the difficulty of people not possessing adequate technical knowledge discussing such a subject as this, but, after all, we put through the great electricity Measure which is the foundation of this proposed legislation and discussed its innumerable Clauses at great length. If we were able to do that with the main Measures it seems rather unnecessary to set up a Select Committee to deal with this very small Measure, and I entirely approve of the view of the Minister of Transport that after it has passed its Second Reading the Measure should be dealt with on the Floor of the House.
I would add that there is no substantial opposition to this Bill among the electricity interests. Under the electricity legislation a national committee has been set up which the Central Electricity Board are entitled to consult. That national committee is composed of experts drawn from all over the country. It consists of 12 members, and 10 of them voted for this legislation and only two against. The House can take it that this legislation is supported by the great majority of the people who know about the difficulties of the matter and understand the interests of electricity and 1089 electricity supply. The Municipal Engineers Association support this Bill by a substantial majority, and the Municipal Association have put forward no objection whatsoever, and I cannot believe that there exists much opposition within the realm of the industry itself. I do not know from what ultimate source the real opposition has come, but, so far as this House is concerned, it has come from the sort of suggestion that this is not the kind of legislation which a Conservative Government ought to pass. I confess that such a suggestion leaves me entirely cold. I hope I have been able to show the House that the Bill deals with a purely business matter and nothing else; and whether the technical views I have put forward are sound or not, at least this Measure deserves a Second Reading.
§ 7.35 p.m.
§ Sir J. WITHERS
Some hon. Members have very kindly prefaced their speeches by stating their interest in undertakings with which they are concerned, and I should like to preface my remarks by saying that I have no interest, direct or indirect, in any electrical undertaking or in any railway. My point of view, which is an entirely outside view, is that this is simply and solely an effort to bolster up the Central Electricity Board's finance. An hon. Member on the other side scathingly exposed the ineptitude of the board's procedure, and everybody who has studied its finances will come to the conclusion that in due course the Central Electricity Board will "go bust," to use a common phrase. However that may be, during the Debates of 1919 and 1926 very definite undertakings were given that there should be no interference with direct trading, and this is a definite breach of that undertaking. I do not propose to deal with this subject on any question of detail; with me it is simply a question of principle. To my mind this is a case of pure Socialism and the elimination of private enterprise, and if we are to do it in this case there is no earthly reason why we should not do it in every other.
§ Sir J. WITHERS
I quite understand and appreciate the attitude of my hon. Friends opposite. They say that they 1090 approve of Socialism, and therefore they approve of this Bill, and, as a matter of fact, I do not, because it means the elimination of private enterprise, and I object to that. The argument with reference to the railways has been put very strongly, and I understand the point, but I would remind the House that when the railways were built they had to negotiate with innumerable owners of land, and it is my view that a very much better arrangement could have been made, without any question of direct supplies of electricity, by giving the railway companies statutory powers, such as those they have for acquiring land, to come to some arrangement with the individual companies, and where they could not arrange terms that these should be settled by arbitration. I shall not detain the House a second longer, except to say that I object to the Bill root and branch, and shall vote against the Second Reading and against remitting it to any committee of any kind.
§ 7.38 p.m.
§ Major HILLS
I do not wish to enter into a long argument with my hon. Friend the Member for Cambridge University (Sir J. Withers) on whether this Bill is Socialism or not, but I would just make these observations. All extensions of State action are not Socialism. The line between State action and private action is a shifting line, and the Conservative party in the past have never been afraid of extending the action of the State when it has been beneficial to do so. If the hon. Member thinks this is Socialism I wonder what he thinks of the Measures for dealing with the depressed areas, to say nothing of the activities of my right hon. Friend the Minister of Agriculture. But I do not wish to be led away to those points, because I have a few words to say on the Bill in so far as it affects municipalities.
I support the Bill, but I have certain suggestions to put forward which I hope the Minister will consider. Under Clause 1 the board seek power to come to arrangements enabling them to make use of the unselected stations in the same way as with selected stations. I take it that that would put the unselected stations in a better position than they are now in relation to the selected stations, but would not give them quite the same status. The Clause provides that the Electricity Commissioners are to con- 1091 sider representations from the undertakers who are supplying those unselected stations before an Order is made. Cannot we also compel the commissioners to consider representations from the selected stations as well? I take it there were very good reasons for putting those stations in a preferential position but now that position will be—I have no doubt for good reasons—to a certain extent impaired. All I ask is that before these arrangements are come to the owners of the selected stations shall have their view considered, and I hope my right hon. Friend will not regard that as unreasonable.
On Clause 3 I have a small suggestion to make. It is a Clause which enables charges to be amended. Under the Act of 1926 certain maximum and minimum rates of interest are to be taken into account when fixing charges and allowances in respect of transmission lines giving a supply in bulk to other undertakers. The upper limit of interest is 6½per cent. and the lower level 5 per cent. As I read the Act there is no power to vary those limits, and therefore the allowance must be calculated on an interest figure that lies somewhere between 5 and 6½ per cent. I think the House will agree that those limits are quite out of date to-day. In 1926 Government securities yielded a much bigger interest than they do now, and 5 per cent. was perhaps a reasonable minimum, but the interest on Government securities being now 3 per cent., or less, I suggest that a provision should be added to this Clause enabling the commissioners to vary the minimum and maximum rates of interest prescribed in the Third Schedule to the Act of 1926. I should add that this provision would only refer to capital raised in the future.
One word about the railways. My hon. Friend the Member for South-West Hull (Mr. Law) has spoken on the question of the railways, as he always does, with force but with moderation. I do not agree with him, but I will make a suggestion which will perhaps get over his difficulty. If hon. Members will look at Clause 4 which deals with the supply of electricity to railways, they will see that a distinction is made between a supply of electricity for traction or haulage and for lighting the vehicles that are drawn on the one hand and the supply of elec- 1092 tricity for the provision of power and general maintenance on the other hand. That is to say, the supply for haulage or traction is treated as a smaller advantage to the railway than the general supply of power. That is shown by Sub-section (2) which says:Electricity supplied to a railway company under this section may be used for the haulage or traction … and … shall not be used for any other purpose.The Sub-section then goes on, in the proviso, to say that if a request is made for supply in bulk for power and for lighting generally, it can only be given with the consent of the Minister of Transport. Therefore, supply in bulk for power and for general lighting of the railways is regarded as a more serious thing than the supply for haulage or traction. In spite of that, Sub-section (3) gives special protection, upon an application, for the use of electricity for haulage or traction. It says that no electricity supplied to a railway company can be used without the consent of undertakers who already supply electricity for haulage or traction, but that such consent must not be unreasonably withheld. The Electricity Commissioners are to be the judges as to whether the withholding is unreasonable or not. So, before a railway company can take a supply in bulk for haulage or traction, the consent of the undertaker who is then supplying must be obtained, and the undertaker can refuse consent, subject to the right of the Electricity Commissioners to override that refusal if they consider that it is unreasonable.
There is no similar protection for municipalities who, after the passing of the Bill, supply electricity for power generally and for lighting. A great many municipalities have gone to great expense either in creating or adapting works for the purpose of supplying power to railways. The right hon. Gentleman the Member for Hillhead (Sir R. Horne) made an overwhelming case for the railways. I am no longer connected with any railway, and I am trying to make a case for the municipalities. I do not think that I am asking anything unreasonable in suggesting that the same protection should be given to undertakers who have been in the habit of supplying electricity in bulk for power and lighting as the Bill gives in regard to the supply only for haulage or traction. All that I 1093 ask is that Sub-section (3) should say that the consent of the authorised undertakers who own selected stations should be obtained before a supply in bulk is given, but that that consent should not be unreasonably withheld. A great many of the municipalities who have been put to expense in the creation of a supply of electricity probably filled the Bill when nobody else was there to do so. I do not think there will be much opposition from the municipalities if the points that I have made are dealt with, and I hope the Minister will deal with them. If he does, he will improve his Bill and will not do harm to the railway company or to any other user of electricity.
§ 7.52 p.m.
§ Mr. EMMOTT
I do not desire to examine the arguments put before the House in the course of this afternoon's Debate, but in the first place I make this continent: every speech to which I have listened, and particularly the speech of the right hon. Gentleman the Member for Hillhead (Sir R. Horne), who answered, or sought to answer, the speech of my hon. Friend the Member for South-West Hull (Mr. Law), justifies the Motion which stands on the Order Paper in the names of some of my hon. Friends and myself, asking that the Bill be referred to a Select Committee. What arguments could have presented in a clearer light the controversial and technical nature of this Bill than those which the right hon. Gentleman addressed to the House? I think he would agree that my hon. Friend presented to the House an argument full of matter and, from one point of view, of a highly controversial nature, and that the answer which he himself gave was, from the other point of view, equally controversial and technical. The right hon. Gentleman represented that the only real opposition to this Bill came from those who argue that it is a Socialist Measure and should therefore be opposed. Well, on that statement I offer this observation. During the last Session I presented to the House no less than 57 petitions from authorised undertakers praying that the Bill be referred to a Select Committee, and the argument of the petitioners was not at all that to which the right hon. Gentleman has referred. And in this Session, in fact, only two days ago, I presented to the House no less than 89 petitions from authorised undertakers with the 1094 same prayer. Had this matter been any longer delayed, and had time run on, I do not know how many petitions I might have had to present to the House in regard to it.
The Bill plainly affects, or may affect, private interests, though not so as to bring it within the Standing Order which I referred to you, Mr. Speaker, this afternoon. I am not attempting, of course, to go back upon that point. The Bill does not come within the Standing Order, but it is none the less true that the Bill affects the interests of private persons or authorities. The powers to be conferred by Clause 1 upon the Central Electricity Board and undertakers were sought in the last Session by two corporations, those of Taunton and Torquay, by means of Bills promoted in Parliament. Those Bills were opposed, in the first case by the Bristol Corporation, and in the second by many other interests. Eventually one of the Bills, and the relevant Clauses of the other, were withdrawn by the promoters. It is true that a reason, if not the only reason, for the withdrawal, was that the matter of them was to be included in a public Bill. But the point I make is that by those Bills private rights were considered to be affected and that by this Bill, too, private rights are affected. Private rights are not only affected; they will be affected in the most important and injurious manner. All these considerations are reasons why, after the Bill has received a Second Reading, it should be referred to a Select Committee.
Now I desire to say a few words upon an aspect of the matter to which no attention has been paid this afternoon. This Bill is really a Central Electricity Board (Extension of Powers) Bill. That is its purpose and its real nature. Ought it not to be a private Bill? But it comes before us at a public Bill. How will the situation develop in the coming years? A statutory board desires an extension of its powers. Will it seek that extension by this means? This is a procedure which I respectfully suggest to you, Mr. Speaker, will be quite inadequate to the circumstances of our time, and profoundly unsatisfactory. I suggest that the Standing Order which I read to you earlier this afternoon requires revision. I submit that it is no longer adequate to the situation which has now been created 1095 by the establishment of statutory boards or organisations. The Standing Order dates from a period of time when no such boards or organisations existed, and the circumstances which have now arisen were not envisaged at that time. I do not know whether it would be proper for me to invite from you now, Mr. Speaker, a Ruling, or an expression of opinion, or something in the nature of a direction to the House, on the question whether Standing Order No. 216 should not now be revised in the light of the consideration which I have just set before you.
§ Mr. SPEAKER
I do not know whether the hon. Member is asking me to express an opinion on that subject, but it is not for me to express opinions upon Standing Orders. My business is to interpret them. It is entirely for the House to decide what they should do with a Standing Order.
§ Mr. EMMOTT
I am much obliged to you, Sir, for your Ruling. I can, then, carry that matter no further. I would only say that it appears to me to be question which is well worthy of the consideration of the House. A situation quite different from the former one has now been created by the establishment of statutory boards and, if they seek an extension of their powers, I submit that they should seek that extension, not by means of a public Bill, but by private Bill or by some other means. That is a matter which opens up a far larger prospect than can be debated now. Therefore I submit it to you, Sir, and to the House, simply in the form in which I have stated it.
§ 8.3 p.m.
§ Mr. J. JONES
I have heard this Bill described as a Socialistic Bill. I wish that it were so. It is a very poor orphan of the storm so far as Socialists are concerned. It deals with electricity, and I come from a district where we have done something in the matter of electrical development. Although we are far away from the coalfields, and have considerable difficulties in the matter of transportation, we are producing electricity both for power and lighting purposes as cheaply as anywhere in the country. We do not like our district to be isolated, but we are willing to fall in with the common necessities of the nation. Some 1096 of the arguments I have heard this afternoon remind me of the controversy about the railways 100 years ago, when every private interest came in to stop a national development and great compensations had to be paid to these various interests. Thousands of pounds flowed into the pockets of people who had no more interest in the railways than the Connemara pig had in astronomy. Millions of pounds were spent in order to buy out vested interests because of a national development.
On the general principle of the Measure, apart from its details, we support the Bill because it goes a little on the way to meet a great national necessity. Electricity is the coming force. Whether the coal mines may benefit or not we do not know, but that is another problem, which can be dealt with at the proper time and place. When we have made the coal mines of the country as national as we have made electricity up to the present, the coal trade will see a big revival and the possibility of greater improvement in the future. Some of us believe that you cannot stop progress by simply sitting back and trying to stop it. My hon. Friend the Member for South Croydon (Mr. H. Williams) knows that he is paying about twice as much for electricity in Croydon as we are in West Ham—
§ Mr. JONES
We had a great fight about 10 years ago to get the price down. Hon. Members believe in private enterprise; I do not. The only enterprise that I believe in is the kind of enterprise that will eliminate people of this sort from public affairs. This Bill simply gives us a small concession in the direction of linking up a public service. I have never been a great friend of the railway companies, and they have never been a great friend to me. When I started work, I worked for a railway company, at 16s. a week, with 2d. stopped for clothes. I had 15s. 10d. a week to keep myself, and after I had paid for my lodgings I had very little left. Therefore, I feel no great gratitude to the 1097 railway companies; they will never go to Heaven for paying high wages. But the railways are only getting here what they have had to spend on development, and, so far as that is concerned, we are not going to stand in their way, because some day we hope to get the railways nationalised, so that we can co-ordinate electricity and the railways and make them a national concern in reality. Then we shall begin to realise the possibilities of the Socialism in which some of us believe. I do not make any kind of apology for being a Socialist. I believe in all public services being publicly owned and publicly controlled in the interests of the people.
§ Mr. JONES
Public ownership of all social services. Everything necessary and essential to the life of the people should be under the control of the people. We believe in democracy in politics and Socialism in economics—the ownership and control by the people of all the things necessary for the livelihood of the people. Because this Bill goes a little way in that direction, I am supporting it. It is not anything like what I would have. It only reminds me of the young lady who was in trouble and explained to her mistress that it was only a little one.
So far as I am personally concerned, I stand for Socialism all the time and every time, and this Bill is a step towards the public control of a great national industry which is in its infancy. Electricity is only in its infancy now, even after 30 years of development. As a new and growing industry, it ought to come under public control, and ought not to be dominated by those who are out merely for personal interest. We have heard here to-night speeches on behalf of various interests. One section of the electrical industry does not want the railways to have a finger in the pie; another section does not want the Government to have any say; the Electricity Commissioners must not touch this, or must not touch that. Various conflicting interests are beginning to try to find out where they can 1098 come in. We stand for the public ownership and control of these essential factors in our national life. Just as we want, as was stated yesterday, a national Army, a national Navy, and a national Air Force, so also we want a national industry controlled by the people in the interests of the nation.
§ 8.12 p.m.
§ Lord BURGHLEY
I think that perhaps one of the most interesting things that was said this afternoon was said by the hon. Member for North Hammersmith (Mr. West) when he put in a special plea for compensation. I hope that we may hear him recommending it on many future occasions. I think it is only fair that I should make my position clear at the start. I am connected with the railways. I say so in no tone of apology, for I am proud of it, but because I think the House should realise that possibly I may look at this question from that point of view.
There are two great matters of unfairness under which the railways are suffering under the present law. They have been touched upon already, but I would like to emphasise them. The first is this: So far as the electrification of the Southern Railway is concerned, I think that at the moment some substations have been set up by the Central Electricity Board, who are supplying direct to the Southern Railway. A charge is made by the authorised undertaking in a particular area towards their overheads, and what is happening is that the railway company are paying a certain sum towards the overheads of the authorised undertaking when not one unit of the power that they are using comes over the cables or lines of that authorised undertaking.
The other matter where great unfairness arises as compared with ordinary industry is the matter of the peak load. In an ordinary industry, which can be divided up into, say, four sections, it may be that each of those sections has a peak load of perhaps 500 kilowatts, but it is very unlikely that the peak load will be reached in all four sections at the same time. Probably, if one is working at the peak load of 500 kilowatts, another will be working at 300 or less, so that, when they come to make their payment for kilowattage, they will only have to pay on a peak load of some 1,600 kilowatts. 1099 It is quite different in the case of the railways. The sections of their industry are, by the very nature of the case, spread throughout the whole country, and on every one of those sections they have to pay on the full peak load separately, that is to say, they pay on the aggregate peak load of every single section, and in that matter they are in an extremely unfair position as compared with ordinary commercial undertakings.
The case has been very fairly put by the right hon. Gentleman the Member for Hillhead (Sir R. Horne) and the right hon. Gentleman the Member for Spark-brook (Mr. Amery). I would like to emphasise what would happen supposing that one of the big main lines should decide to attempt a large scheme of electrification. The Weir Report—and in that committee, presumably, we drew on some of the best brains that we could—recommended that it would be impossible to carry through a scheme dealing with so many small units as the authorised undertakings. Within a comparatively short distance—I think only something like 60 miles—in the South of England, the Southern Railway has had to deal with no fewer than seven separate authorised undertakings, and the number of authorised undertakings that would have to be dealt with in connection with a scheme of electrification in the case of the London and North Eastern or the London Midland and Scottish Railway would be almost impossible to assess. At any rate there would be 50 and probably more. After the prolonged negotiations which have taken place between the Southern Railway and these seven authorised undertakings, it must be obvious to anyone who considers the matter that negotiations on the scale of 50 or 60 would probably take as long as the lifetime of most Members of Parliament. Apart from that, they would be extremely costly. I ask the House to make it possible for the railways to consider schemes of electrification, to look at it from a business point of view, and, therefore, to support the Bill.
§ 8.15 p.m.
§ Mr. MACQUISTEN
I am very interested to hear railway directors on this Bill. I am glad to see that at last we have some first-class brains among them, because as a rule they were the most 1100 behind-the-times type of man you could possibly get, and the railways were always behind the times. They were galvanized into a certain amount of activity by a body of men whom they at first despised, and, instead of trying to get the better of them by legitimate competition, they spent their time in trying to hamstring their opponents. You find the same thing in Africa. They actually will not allow a man to run his own motor lorry to carry his own goods. They must go on a railway lorry. The result is that the people are driven to use that sacred animal, the donkey, and the man who used to have two or three motor lorries now has black boys in charge of donkeys. It is the same in Malaya and in Australia. The vested interest of the railways is endeavouring to crush the up-to-date, modern people, who will ultimately beat them no matter what legislative activities they indulge in. It is a very great pity, and I do not think we should do anything to help them.
It is a strange thing that electricity is not more in use in this country. One of the reasons is that it is far too expensive. It is not expensive in the making. It costs almost nothing to make. I believe Clyde Valley used to make it for less than ½d. a unit, and it was sold by the municipality at 7d. to 10d. The whole cost of electricity is in transmission. It is like water in a Highland loch. It costs nothing if you are beside the loch, but it costs a great deal if you have to pipe it for several scores of miles. When the first. Act was introduced, of which this is the logical sequence, everyone thought that the little farmers would just have to tap a line passing by his farm to get current which would "plough and mow and reap and sow and be a farmer's boy," so that they would not have to pay wages. They were not told about the transformers which would cost thousands of pounds each. The talk about electrifying the countryside was sheer eyewash. You may get it where there is sufficient population to pay for it, but you cannot get it for anything that could be called the countryside. If it had been known that there would be no serious reduction in the cost of electricity, the Bill would have had a much rougher passage. I believe the real reason why it got through was that the hon. Member for Hampstead (Mr. 1101 Balfour) vehemently opposed it. The Socialists said, "This is evidently hitting capitalists hard. We will vote for it." In point of fact, the Bill originated in the brain of Lenin, who said he would put electricity into every village. Our Front Bench, which usually takes its policy from the other side, rushed in and got Lord Weir to investigate it. He made a report, no doubt assisted by some eminent electricians, and the result was that this board was brought into existence. But it has not been making any money. It is in considerable financial straits. Lord Weir is responsible for his child, and now he wants to feed it on the railways. He feels that he has to see that it is nourished. It is his child, he brought it into the world and, of course, he must provide it with sustenance.
I am as good a Conservative as my right hon. Friend the Member for Hill-head (Sir R. Horne), but I was never debarred from going into anything whether it is called Socialist or not. I always notice that, whenever there is to be a dividing up of the joint, any big capitalist combination is very keen to become Socialist if it is going to get a share. They are all very busy at that, they join together with the Labour party and the trade unions and divide up the public among them. They have done that with London transport and with the Shops Act. Something will need to be done to keep this unholy alliance from spreading. I should like to ask my right hon. Friend to ask Lord Weir if he does not provide his own electricity. Does he not find it more economical to make it himself? Everyone who wants a steady supply of electricity makes it for himself. It is infinitely cheaper than buying it from an outside source, just as in the Highlands we used to do our own distillation. We cannot say that the grid has improved the landscape, because it has covered the countryside with pylons, which in the course of time are bound to become a source of danger. They may start with a huge margin of security, but, when the wires begin to droop and have to be tightened up, the margin will become less and less and in time we shall get some great tragedies. They cannot be of any great benefit to those who want to make progress through the air. It would be better to admit that we made a blunder in starting the Electricity Board 1102 and to wind it up, It is no good carrying electricity any distance. You would do much better to make it locally. The right hon. Gentleman the Member for Hillhead talked about pure business. There is one maxim of pure business which has saved many a man—to know when to cut a loss. It is a maxim of good business not to throw good money after bad.
The right hon. Gentleman said also that the railways were not allowed to make their own electricity. Does any one think that the House would refuse to allow any railway company to make their own electricity? Of course they would not. You might as well tell them not to burn their own coal. But no big railway company carrying long distance traffic will electrify. The expense is terrific, and unless you have trains running every few minutes, it is the worst possible form of economy especially when you see the great developments taking place in America and on the continent, where trains are running at 120 miles an hour by means of Diesel engines. That is the line on which we must go. The suggestion of electrifying railways has very definite limits. If you want to electrify, let each train make its own electricity. In the West Highlands we drive our ships with electricity because it is best and economical. When one breaks down you do not have the whole system broken down and things brought to a standstill until the matter is put right. That is the most economical way.
Another reason why I object to the Bill is that I am informed that they have overturned the whole structure of the Act of 1926 and seek to obtain powers to do the very things which were specifically declined when that Act was passed. It was stated at that time that the board would try to introduce a Bill of this kind, and the proposal was indignantly repudiated. The reason why the Bill ought, to be rejected is, that it is a dishonest proposal. It is an attempt to get things stage by stage and little by little. I am not blaming the Electricity Board. They had such an impossible task that they could not possibly do any good. Ostensibly the thing was a complete scientific fallacy. They started a scheme in South Africa with the intention of using the Victoria Falls to make power for Johannesburg, but it was found that the idea was absurd and could not be carried out. 1103 It was a hopeless proposition. The whole scheme is a fallacy, and I do not think that we should put our heads further into the net.
This Bill should not be given a Second Reading, or, at all events, it should at least be sent to a Select Committee and the operations of the board investigated. I do not pay much attention to what the hon. Member for North Hammersmith (Mr. West) said about bad finance. We all know that it is easy to be wise after the event. We have no bankers to-day, only pawnbrokers. Now they ask for collateral security, and are so upsetting the whole theory of banking. That is what has gone wrong. The bankers said of Hatry, "We know that you are a bad lot," and ask, "What is your security?" He said, "I have any amount of it. I print the stuff." You cannot expect this kind of advice to be valuable. They were wrong during the War, and I believe that, but for the banks, we could have borrowed all the money we required for the War at 2½ per cent., but we took the wrong advice. We should not give further opportunities for carrying on an experiment which, scientifically, is fallacious, and can never be a success.
§ 8.29 p.m.
§ Mr. CROOM-JOHNSON
In an amusing and entertaining speech this afternoon, the hon. Member for the Gorton Division of Manchester (Mr. Bailey), in a judicious combination of modesty and affrontery, seemed to suggest that the Minister was a young man in a hurry. I gathered from the speech of the hon. Member that he is a young man himself, and perhaps he will allow me to give him a piece of advice -which he may have an opportunity of reading in the OFFICIAL REPORT tomorrow. It is that it is not much good his practising his modesty in this House, because that will not carry him on to the Front Bench. On the question as to whether this is a Bill in a hurry, I cannot help thinking that the history of the Measure has been lost sight of. I was responsible with the hon. and gallant Member for the Taunton Division of Somerset (Lieut.-Colonel Gault) for raising this question last summer upon the Taunton Electricity Bill, which was eventually rejected on Second Reading 1104 here. We all regret the reason which prevents my hon. and gallant Friend from being here to express, on behalf of his constituents in Somerset, the reason which prompted us at that time to ask the House to permit a Second Reading of that Measure.
When it is suggested that the present Bill is a Measure which has been introduced in a hurry, the House may reflect that the Bill originally was introduced in another place last April, And that we had a Debate upon the situation which had arisen upon the Taunton Bill in the course of last summer, when the present Bill was introduced into this House, but was not given a Second Reading. Upon the introduction of the Taunton Bill, we were told that the present Bill was a Measure which the Government intended to pass, although, naturally, they gave us no pledge as to when Parliamentary time would be available to enable them to ask the House to give it a, Second Reading. I am very much surprised at Members persistently asking that Measures which are urgently needed should be postponed for further inquiry. With regard to what is, after all, a Measure which is intended primarily to remove doubts and difficulties which have arisen with regard to the Act of 1926, I find a plea for delay being advanced in several quarters, and suspect that the delay is associated not only with An attempt to advance the proposals, but with an attempt to destroy them. I hope that the Government will not pay any attention to those appeals and to the request that the Bill should once again, after All these months, go to a Select Committee.
The situation in which the borough of Taunton finds itself, and which they have asked me to impress upon the House, is that they made an agreement with the Central Electricity Board in order that they might carry out their duty as a local authority in providing that which they felt they could not provide for their own inhabitants, except by means of an agreement with the Central Electricity Board. There then emerged a very curious situation, namely, that on the one hand the Central Electricity Board were advised that under the Act of 1926 they had already power to make the agreement which they desired to make, and which they had made, and, on the other hand, the borough of Taunton was advised that the 1105 Central Electricity Board had no power under the Act of 1926 to enter into such an agreement. Anybody in this House or outside it who has had any experience at all of dealing with the doctrine of what the lawyers call ultra vires in the courts knows that it is an extremely difficult matter with which to deal, and extremely difficult sometimes to prognosticate as to what the result will be. In those circumstances, the borough of Taunton introduced a Bill with a view to implementing, and giving Parliamentary authority to, the agreement and removing the doubts which had arisen.
The whole question which is here raised in Clause 1 of the Bill was debated in another place and passed through all its stages. It was also debated here. It was felt, and I have a great deal of sympathy with the point of view, that matters of general legal difficulty affecting the country as a whole should not be dealt with exceptionally by a single Local Government Bill. I have raised, in company with some of my hon. Friends who are opposing this Measure, the same point on other local Bills, and I have no doubt that I shall do it again, but I confess that I was in a state of extreme surprise when I heard the hon. Member for Gorton say that this was a Bill which had been introduced in a hurry, that the Minister was extremely anxious to get it through, that the Government were more or less—so I gathered from his observations, although those are not his exact words—rushing the Bill through the House, without any opportunity for adequate consideration. We have heard in the Debate this afternoon and this evening that these matters have been considered many times and I do not see how it can be said, that this Bill, which is only a reintroduction of a Bill which was fully debated elsewhere last Session and debated here, in a sense, on the Taunton Bill, is a Bill which the Government are trying to rush through. I hope sincerely that the Government will deal with the Bill, as I gather they propose to deal with it, more or less here and now, so that the difficulty in which Taunton finds itself now and will find itself in this winter of riot being able to implement the agreement and not being able to give the supply of electricity which it desires to give to some of its 1106 inhabitants, may be removed and they may put the situation right.
A further spectacle which has been furnished to us as an additional reason for postponing this Measure, namely, that certain hon. Members find themselves in a difficulty in understanding the Bill, leaves me cold. The spectacle of a Member of Parliament, of all people, professing a spirit of deep modesty as to his understanding of public Measures is one which I cannot help feeling, upon a little reflection, is not likely to interest many of us. I think it will be one that will considerably surprise some people outside who are accustomed to think that humility and modesty should not be among the chief attributes of a Member of Parliament as his qualifications for the task of representing them in this House. At the request of the capital town of Somerset I would ask the Government to implement, as I am sure they intend to implement, the promise which they gave us in the summer that this Measure would be brought forward and carried through with such speed as was possible, having regard to the state of public business. For my part, after listening to the Debate, without being in the least an expert on this subject, but having to apply my mind as a Member of the House to many and diverse problems to the best of my ability, and on the best information which is obtainable, I cannot feel that we are really doing any good by further postponing a decision on this subject.
I should like to add one further suggestion. Some of my hon. Friends have been engaged in the task of baiting the Government, which seems to be something which appeals to a certain mentality in this House. I was returned here, certainly at the 1931 election and I hope at the 1929 election, with the object of getting things done, and I see no use in postponing, when the facts are known, decisions upon subject after subject. It seems to me, with great respect to those who have voiced the opposite point of view, to be lacking in that courage which, as public men exercising a public function, we ought to display. To suggest that the Government should once again postpone decision seems to me to be lacking in that resolution which ought to lie at the root of all sound government. I hope that the Government will proceed with the Bill on the Floor of the House, 1107 where all of us can add our little contribution, if contributions be needed, rather than sending the Bill upstairs to the semi-privacy of a Select Committee.
§ 8.42 p.m.
§ Mr. PETHERICK
My hon. and learned Friend has referred to what he described as baiting of the Government. I, too, was returned as a National Conservative to support the Government and I have supported the Government quite consistently through and through, except when I thought that they were making profound errors in tactics. My hon. and learned Friend said that he thought the country would be surprised at the modesty and lack of confidence expressed by various hon. Members at their inability to deal with such a subject as the one we are now discussing. If the country is surprised I shall be even more surprised, because I feel that this is a technical subject which requires very definite technical knowledge. I do not believe that the average Members of the House of Commons, however great their abilities may be in the mass, are really capable of dealing with a subject of such extraordinary difficulty as the present one. I was rather surprised and pained to hear one hon. Member say, quite firmly, that he was a representative of the railways. I am not a representative of the railways. I am a representative of my constituents and of my opinions. I am not a representative of any vested interest.
I hope and believe that the great majority of this House in a Bill of a technical nature of this kind sit, as it were, as a jury. They hear the evidence of the rival experts of the different sides and try to come to their conclusions and to judge in accordance with those conclusions. The hon. Member for Wigan (Mr. Parkinson) claimed that this is a step towards nationalisation. That claim should be viewed with very grave disquiet on the Conservative benches. I am not in the least prepared to believe that a majority of the Government on this occasion know anything much about the Bill, or have examined it very closely, or would be prepared to support the Bill if they only knew what it contained. It is clear that the support which the Bill has obtained from the Socialist benches is derived from one motive, and that is the 1108 belief that it is one further step towards nationalisation.
Bills of this nature may be discussed on the Floor of the House, if there is time, but we have many important Measures to consider during the present Session in connection with social reform as well as the Government of India Bill. This is a Bill of a very technical nature, and after it has received a Second Reading should go upstairs to a committee of experts. It is quite possible that they will come to different conclusions, and it may be that when the Bill does come back to us we shall not be able to realise the full implications, of the Measure. The hon. Member for Wigan, who supports the Bill, declaimed against the opponents of the Measure on the ground that they represent vested and private interests. What does the hon. Member represent? What do many hon. Members on the Opposition benches represent? They represent vested interests. They represent the trade unions.
It is all very well for them to talk about private companies who are opposing the Bill because they feel that their existence or their pockets are threatened; they also represent private interests. A trade union is only the sum of the individuals who compose the trade union, and a trade union acts in a manner which it considers to be in the best interests of its individuals. Is not that private interest? If a small accumulation of individuals composing a private company are able to start a company and distribute electricity, if they have been able to work up a little business, why should they not be able to state their case, when they are threatened, in the same way as hon. Members on the Opposition benches? I do not profess to know anything about electricity, I am speaking purely as a private Member of the House who, on Bills of this kind, endeavours to act as a jury, to weigh the evidence and come to a conclusion on the evidence as presented to him.
On this particular question I have no personal interest one side or the other, and I am quite prepared to accept what I believe to be in the best interests of the country. I have not yet had sufficient evidence presented to me which will enable me to form an opinion for supporting the Government in this Measure. In the Bill we are invited to 1109 pass an Act of indemnity, to say that illegal agreements which have been made by the Central Electricity Board shall be deemed to have been legal. No one doubts the sovereign power of the King in Parliament. Those who study constitutional history and law know that the King in Parliament is supreme. It can make a constitution, do anything in the way of passing laws, it can pass a Bill of Attainder condemning a man to death, it indeed can do everything, except as was said on one occasion make a man a woman and a woman a man. Such is my respect for Parliament that even that may not be impossible for it. Parliament can do anything. But we have to be very careful what measures we do, in fact, take. The Bill is of such a highly technical nature that Parliament is not really capable of dealing with it on the Floor of the House. It should be committed to a committee of experts, and we can then take their evidence and accept it or not as we like.
There are wide implications in the Bill. Hon. Members who know a great deal about the subject have grave misgivings as to the financial stability of the Central Electricity Board and their methods of working. We should have a Royal Commission to examine not only the proposals submitted in the Bill but the working of electricity undertakings throughout the country. It is a wide subject and so profoundly affects not only the life of individuals but also the industrial undertakings of the country that it is unwise to take a step like this, however small it may be, without any further examination except that which will be given to the Bill in the ordinary course of Committee and Report stages. It may have implications and ramifications of which most of us have no conception. I have discussed the Measure with some of my hon. friends and it appears that there are much wider issues involved than any which the ordinary non-technical, non-vested-interest back bencher imagines.
I am surprised that one thing has been included in the Bill. In Clause 1 the Board, in conjunction with the undertakers, may make certain arrangements for the supply of electricity, but when they have done so they have to submit it to the electricity commissioners. By whom are the electricity commissioners 1110 appointed? They are appointed, I understand, by the Minister of Transport. No one doubts the good faith of the present Minister of Transport. Only to-day he indicated that he had made an admirable appointment to the Electricity Board. But the hon. and learned Member for Bristol East (Sir S. Cripps) has repeatedly declared that his first object if he were returned to power would be to substitute the existing Civil Service by Socialists, that he would appoint Socialists to all the administrative and technical positions in the Civil Service throughout the country. What happens then? Obviously if the hon. and learned Gentleman were called upon, as Minister of Transport, to fill the positions, he would appoint Socialists as members of the Electricity Board. In those circumstances what chance would the private undertakers have? I do not think they would have any chance at all. Therefore it is illogical. You are trying in this Bill to protect the interests of the private undertakers in the country, and at the same time you are making it at least possible for a Socialist Minister to make certain that those private interests could not possibly have any consideration given to them.
I confess that this may seem a small matter, but I am somewhat alarmed about it. I believe that this is largely a departmental Bill. I do not believe that the great majority of those who sit on the Government front bench are either interested in it or know anything about it. Consequently what is the conclusion to which a large number of ordinary back-bench Members, without technical knowledge, must come? It is surely that before we go any further after the Second Reading the whole case should be examined by experts. If Parliament is not satisfied with the Bill after it is sent down from the Select Committee, Parliament can take one of two courses. It can either refuse to go any further, in which case the Bill is dead, or it can still carry on and pass the Bill into law. But if the Bill passes into law it seems to me that we have not even then heard the last of it. There are such wide implications in the Measure, there are interests and issues involved in the whole of the electricity organisation of the country, issues so wide and great, that even in this period of transition we should be very unwise to advance even 1111 a small step without being certain where we are going.
After the Second Reading is passed I think that the Bill should be sent to a Select Committee, and in any case, whether or not the Select Committee reports in favour of the Government's proposals, a Royal Commission should be set up, consisting not only of experts on the one side or the other, but also of those who have a judicial outlook and are prepared to examine the matter in a judicial way, and in the report of that commission there should be a policy which the Government should seriously consider. We shall pass the Second Reading to-night no doubt, because the Whips are to be put on, but our first step then should be to send the Bill upstairs to a Select Committee so that the whole case may be examined.
§ 9 p.m.
§ Mr. H. WILLIAMS
The point of view which I hold is very largely the point of view so admirably expressed by my hon. Friend the Member for Penryn and Falmouth (Mr. Petherick). But I differ from him in one respect. He spoke as a back-bencher without any interest in electricity. I have an indirect interest, because I have associations with the electricty supply industry, and it happens that those with whom I am connected do not take a unanimous view of this matter. Therefore, any views that I express are those which I hold personally, and I am not speaking, as so many railway directors have spoken, on behalf of the railway companies. It is a matter of significance that every person in this House who is a supporter of the Government and has spoken on this Bill, has been against it, or at least has desired that the Bill be referred to a Select Committee—all except the railway directors, and the hon. and learned Gentleman the Member for Bridgwater (Mr. Croom-Johnson), who happens to be indirectly interested, from the constituency point of view, for the reasons he mentioned.
§ Mr. WILLIAMS
An adjoining constituency, because the hon. and learned Member was one of the backers of their Bill, My hon. and learned Friend, who is a very intelligent counsel, said that 1112 everybody should understand what this Bill means.
§ Mr. WILLIAMS
Therefore, because everybody ought to be able to understand my hon. and learned Friend said it was foolish to delay the Bill any further. My hon. and learned Friend backed the Taunton Bill. That Bill was rejected for a variety of reasons. One of them was that we did not know the terms of the contract that was to be validated. Will my hon. and learned Friend tell me the terms? Surely it is not unreasonable that we should know what is the nature of these contracts that we are to be asked to validate. Is it quite clear without inquiry? Would it not have been helpful to us if the Taunton Corporation had come before a Select Committee upstairs and said: "This is the contract we want to enter into; this is the contract which it will be possible for us to enter into if the Bill becomes law." I do not think it is unreasonable that the House and the public should be aware of the terms. There may be in some contracts occasionally terms which should not be disclosed, but when a contract is between two public authorities the case for secrecy must of necessity be a small one. I have listened to-day to a great many speeches by a great many hon. Gentlemen who, having delivered their speeches, have naturally gone away. I do not blame them, because we all need a certain amount of rest and refreshment. But I very much regret that all the railway directors have gone away—all but one hon. Gentleman opposite, and he, much as I admire him, has only a watching brief and never addresses us.
§ Mr. MACMILLAN
The hon. Gentleman has made many misstatements in the course of a very short speech, and I shall he happy to correct him if I have the good fortune to catch Mr. Speaker's eye.
§ Mr. WILLIAMS
I do not know what misstatement I have made, except that I did not realise that the railway companies are as largely represented in this House as is apparently the case. I did not realise that nearly everyone who wants to speak is a railway director. That is the only mistake I have made so far.
§ Mr. MACMILLAN
I do not wish to delay the House, but the hon. Gentle- 1113 man commented on the fact that certain hon. Members had left the House after having spoken—a very common practice, perhaps a too common practice. If there are any particular points on which I can be of assistance to the hon. Member, I shall be prepared to answer him and to give him any information I have.
§ Mr. WILLIAMS
It is clear that I did not make any misstatement except that I did not realise that there were still two railway directors present in the House, I was not speaking about the hon. Member for Stockton (Mr. Macmillan). I did not know he had yet risen to the eminence of a director. I was referring to an hon. Friend opposite who looks so much more like a director and whom we all admire so much.
§ Mr. WILLIAMS
If the hon. Gentleman will come and sit on this side of the House he will be able to see. The right hon. Gentleman the Member for Hillhead (Sir R. Horne) asked us to approve of Clause 4 on the ground that the Weir Report said that we ought to do something on those lines, and he read the pertinent paragraph from the report. That paragraph consisted in my judgment of a series of assertions without any evidence in support of them. I am not surprised that the Railway Companies' Association—I think that is what they call themselves—passed a resolution in favour of Clause 4, because the net effect of that Clause is that they will be able to buy electricity rather more cheaply than they would be able to do otherwise. What they save, other people will have to pay. I do not know how much they will save. Perhaps they know but they have not informed us. Surely we are entitled to know what is likely to be the financial effect on the bulk of the consumers in this country.
The hon. Member for Stockton-on-Tees has offered to supply us with information. Will he tell us what is going to be the financial effect, for instance, on the West Ham Corporation? The hon. Member for Silvertown (Mr. J. Jones) has left us after making a speech which indicated that he had not read the Bill. The West Ham corporation owns a progressive electricity undertaking. I am not certain, but I imagine that it supplies current to 1114 the Stratford Works of the London and North-Eastern Railway Company. That would be the natural arrangement unless the railway company have their own generating station. Under Clause 4 there is no limitation imposed on the right of the Minister of Transport to take any decision that he wishes, irrespective of the merits of the case, and there is not the slightest reason why the Central Electricity Board should not step in and propose to make an arrangement with the London and North Eastern Railway Company for the supply of current to the Stratford Works and turn out the West Ham corporation. I do not see that any public advantage would be served by such a course. I see no reason why the municipalised undertaking in West Ham should be pushed out by the Central Electricity Board and I hope the hon. Member for Stockton-on-Tees will explain why it is desirable that such a power should exist.
I also imagine that the corporation of Swindon—a town which is represented here by a distinguished right hon. Gentleman—supplies current to the Great Western Railway works. Why should that corporation suddenly find themselves faced with the possibility of being turned out by the Central Electricity Board? If it is the case that the local electricity undertaking supplies the whole or part of the current used in the railway company's locomotive works or carriage works at Swindon the Central Electricity Board can come along and enter into an arrangement with the railway company. If the Minister of Transport is, for some reason, inclined to favour that kind of an agreement and he may ignore the representations made against it and authorise the supply of electricity direct by the board to the Great Western Railway works at Swindon. The Swindon Corporation would then lose that load which is most important from the point of view of their distributive net-work and the rest of it, and the net result would be that the inhabitants of Swindon would have to pay more for their domestic current. I hope that the hon. Member for Stockton-on-Tees who has undertaken to answer my question will answer that point.
If the Government have their way to-night and this Bill is referred not to a Select Committee, not to a Standing Committee but to a Committee of the Whole House for Wednesday next, what 1115 possible chance will there be of examining the technicalities of the Bill with that full knowledge which we ought to possess? After all, the Minister of Transport, for whose energy we have the profoundest respect, is not the author of this Bill. He is only a sort of foster mother. He inherited it. When he took office he found it there. Then the last Session came to an end and he has had to take it over. From what we were told at Question Time to-day it would appear that none of our arguments here will have any effect. We may prove conclusively that this Bill ought to go to a Select Committee but the Chief Whip has announced that on Wednesday next the Committee stage will be taken on the Floor of the House. Presumably, that is a Cabinet decision—the decision of a Cabinet which has not been represented on the Front Bench all this afternoon. Whatever arguments we produce, the Minister is not able to meet our point of view because he has not the authority. The Cabinet has decided and the Chief Whip has made the announcement that on Wednesday we take the Committee stage of the Bill here without those proper opportunities for information which we ought to possess.
I am sorry that the right hon. Gentleman the Member for Hillhead who explained the railway side of the case, was not here when I raised the problem of railway workshops. It is a more important problem than that of main line electrification, because that is probably a long way off, whereas this railway workshop load is in existence to-day and it is a load of which electricity undertakers may be deprived. The right hon. Gentleman indulged in a somewhat elaborate explanation of how the railway companies might have to pay twice if instead of buying all their current from the board, they got it from a number of undertakers along the electrified line. I did not understand his explanation and, honestly, I do not think the right hon. Gentleman could have understood it himself. He said that if there was a failure of current in one area and the railway had to get current during that period of failure from another area, it would have to pay twice. It is a new idea that you should pay for what has not been delivered to you. I do not know 1116 whether that is a modern system of double entry in which railway companies indulge, but it seems extraordinary to me.
Then the hon. Baronet the Member for Southampton (Sir C. Barrie) who is, I understand, also a railway director said, "Look at the trouble of negotiating with 200 or 300 undertakers." I challenged that statement, which he supported on the ground that there were 600 undertakings in the country. But there are not 600 undertakings on a particular railway line that is going to be electrified. His argument was based on the assumption that if the railway track ran through the territories of 50 undertakers the railway company would have to buy current from all 50 undertakers. But the railway company could take current in at one point and use it on any part of its line. It does not matter what electricity authorities prevail at various points of consumption but at the points where the current is imported by the railway company they must, under the existing law, buy from the electricity undertaker for that area. But because an electricity undertaking's area happens to run for half-a-mile along a railway track, it does not mean that the company has to buy the current used over that half mile from that undertaking. The current which has been taken in at a point 10 miles away may be used for operating the railway service over that half mile of track.
§ Sir R. HORNE
Does the hon. Member suggest that a railway company could, by taking electricity from one station, say, between London and York, get away with that and that it would have to take no more?
§ Sir R. HORNE
Then the hon. Member must apply his mind to this question: with how many undertakings will the company have to deal?
§ Mr. WILLIAMS
I was dealing with the point raised by the hon. Member for Southampton who envisaged the possibility of having to negotiate with 200 or 300 undertakings. I was first addressing myself to proving that that is not the case. It depends on what distance apart you have your sub-stations. What the practice would be in the case of main 1117 line electrification in this country I do not know but it would not be 200 stations between here and York.
§ Sir R. HORNE
I said you would have to deal with at least 10, and that is quite enough for my proposition.
§ Mr. WILLIAMS
Suppose you have to deal with 10. What is the difficulty? Is it beyond the capacity of the railway companies to negotiate with 10 suppliers of electricity, when week in and week out they have to negotiate with 100 suppliers of all sorts of commodities? Really, it is not too serious a difficulty to approach the authorised undertakers in those areas, having decided where are your strategic points for taking current, and say: "We want current; what are your terms?" After all, they need not go too far, because the terms will be found in Section 12 of the Act of 1926. They are the cost at which the board supplies it to the authorised undertaker, plus whatever is worked out as the fair share of the transmission charges which the undertaker has to bear. There is no profit element in that, except to the extent that making use of existing networks may spread the cost of those networks over a larger business, and, therefore, since the railway company must pay their share of that user, the rest of the consumers will pay rather less and the current to the other consumers will be cheaper to that extent. If you cut the authorised undertaker out, that relief will not exist, and the net proposal is that the railway companies should buy more economically, and the rest of the community more dearly, than otherwise would be the case.
§ Mr. WILLIAMS
If that is not the case, what is the advantage to the railway companies? The railway companies only see in this an opportunity of buying more economically.
§ Sir R. HORNE
I made no point with regard to the cost to the railway companies, but on the difficulty of any proper estimate being made beforehand as to what it would cost.
§ Mr. WILLIAMS
In those circumstances, I gather it would meet the right hon. Gentleman's position if we put a Clause in the Bill that they were to go on buying from the various undertakers, whether municipalities or companies, provided that the Central Electricity Board should be responsible for undertaking the general negotiations. It does not seem to be beyond the wit of man that a railway company should go to the Electricity Board and say, "We are thinking of electrifying our line from London to Birmingham. Who are the authorised undertakers a long that line? Let us all get together and find out where are the right points at which to take current, and make a consolidated agreement." That is not very difficult. The right hon. Gentleman is so skilful in negotiations that he could handle a deal like that without any trouble and without the necessity of a Bill.
§ Sir R. HORNE
I cannot be perpetually interfering, but the hon. Gentleman shows complete ignorance of how these things are situated at the present time.
§ Mr. WILLIAMS
I do not know where my ignorance is. I have not undertaken any of these negotiations, and, as far as I am aware, neither has the right hon. Gentleman. Therefore, we start level, because he has not electrified his line, and I do not think he is likely to do it for a long time to come. We have heard some reference to the Southern Railway. So far as I am aware, the date of the opening of the Southern Railway to Brighton was not delayed by one minute, and the only disadvantageous effect of the electrification of that railway up to now that. I am aware of is that the cooling tower in my constituency was so overloaded that a pillar of cloud stood perpetually over the roofs of my constituents and the women could not dry their washing. That was not anything to do with the difficulties of negotiation, but because the big station at Battersea of the London Power Company had not been completed. Honestly, this alleged difficulty of negotiation leaves me rather cold. To suggest that the thing is impossible because you have to negotiate simultaneously, in respect of terms already prescribed in general, with seven or eight people before you can electrify a line—which in any event must take you three or four years to carry out, and where obviously in ad- 1119 vance you can make a fairly close estimation of what your current will cost you—does not seem quite fair to the House.
But Clause 4 is not the only Clause in the Bill. It would not have received as much attention as it has but for the fact that so many people interested in its passing have joined in the Debate. Some of us want to know more about Clause 2, and the hon. Member who spoke for the Liberal party wanted to know how Clause 3 would operate. Can the Minister tell me what will be the financial effect of Clause 1? I am certain he cannot. I am equally certain he will not, in the course of these proceedings, reveal to us what will be the financial effect of Clause 1 on the stability of the finances of the grid. Some of us, frankly, are rather nervous about the finances of the grid. What is the position? We divided the electricity undertakings of this country into two groups, those who own selected stations and those who do not. Those who do, will buy their current back from the grid on the terms laid down either in Section 7 of the Act of 1926 or in Section 13, I think it is, and in Section 13 if they prove that that is more favourable.
Therefore, in a great many cases, the selected owners will not make much contribution to the general cost of the grid, as I see it, but I am not quite certain. The rest of the people, the people who do not own selected stations, the people who are not allowed, through the action of the Electricity Commissioners, to expand the magnitude of their undertakings and who, therefore, must ultimately all fall into the grid—those people pay on grid terms, which have been worked out so that after a series of years—seven, I think—the revenue will meet the expenditure, an estimated deficit in the earlier years being compensated by a profit in excess of the average in the later years, and on balance they come out square. The bulk of that revenue, as far as I can see it—but I may be wrong, and an inquiry by a Select Committee would tell me whether I was wrong—would come in that way to pay for this great enterprise, an enterprise for which the Central Electricity Board were not responsible. Parliament passed the Act which brought them into being, and said, "Here is the scheme; do your best with it." I am 1120 criticising not the board, but the possibilities which may arise.
This board, whose revenue is primarily to come, in my judgment, from the non-selected stations, is now being given the power to sell the current to those non-selected stations at prices lower than those that the Act of Parliament laid down. I want to know why it is proposed that certain people should get it cheaper than the Act prescribed. It seems to me a strange thing. It may be that by coming to that arrangement they will get a load sooner than otherwise, and that may be the answer, but where are the facts and figures? I do not know them, and I doubt whether the Minister will disclose them to us to-night. What will be the effect on the financial stability of the grid of Clause 1? Equally, what will be the effect on it of Clause 2? Is it anticipated that there will be a great many of these exceptional arrangements? I think we are entitled to know.
As many as 89 electricity companies have used the only power open to them by presenting petitions to this House asking—and it does affect their business—that they might give evidence here and be represented by counsel and have a chance of their case being stated with all the full information that is at their disposal. The decision of the Cabinet is that that appeal is to be ignored. Ninety-six Members of this House put their names to a Motion, which has appeared on the Order Paper on several days, that the Bill should be sent to a Select Committee. I suggest that that is not an unreasonable plea. I am not speaking in opposition to the Bill. I do not know whether I favour it or whether I am against it. I cannot discover whether I ought to be in favour of or against it, until a careful examination has revealed to me what the financial implications of the Bill will be.
We have had some attacks on private enterprise. I have always stood up for private enterprise, and the hon. Member for North Hammersmith (Mr. West), by a judicious selection, tried to prove that private enterprise charges higher prices for electricity than municipalities charge. I would ask the hon. Member to consult the last annual report of the Electricity Commissioners, where he can find out what was the average price of private enterprise and of the municipalities. He will find that private enterprise was 1121 much cheaper than the municipalities, taking the whole country. There he will find that for each pound of coal burnt the companies produced more electricity. Their operation as a whole was more efficient, in spite of the fact that the municipalities have the best areas, the dense populations, and the companies the more scattered and difficult areas.
The hon. Member deplored our lack of progress, and contrasted us with the United States and Canada. In the United States electrical enterprise has been almost entirely private enterprise. It is true that there have been associated with it certain financial features that we do not wish to imitate; but it has been very successful. In Canada, in the province of Toronto, they have got a great utility, and it is publicly owned. In Quebec, it is privately owned. If you compare the two utilities you will find that that in Quebec is the more efficient. At least, it was when I took up the figures two or three years ago. He said that we have not made progress. Two minutes later he said that two-thirds of the electric supply was in the hands of the municipalities. It is a condemnation of the fact that electrical generation in this country has been in the hand of the municipalities, and therefore semi-Socialised, to a greater extent than any other utility. That was not a very good example in support of his case. Then we had from the hon. Member for East Fulham (Mr. Wilmot), who is the great financial expert of the Labour party, the statement that the board had been extremely incompetent in their finances. It is not my business to defend the board, but he said that they had an issue a few weeks ago and that they had misjudged the market so enormously that they had presented £9 on each £100 of nominal to the people who bought it. He was referring to the price of one stock five weeks ago and another yesterday. Instead of the new stock having gone up from 93 to 102 there has been a rise to 96⅞, and during the same period old Consols have gone up from 81½ to 90. This happened for reasons outside this country and the condemnation of the board with regard to that aspect of the finance was most unfair and based on inaccurate information.
§ Mr. PETHERICK
I take it that the hon. Gentleman is not defending the 1122 Central Electricity Board on the ground that it, is entirely private enterprise?
§ Mr. WILLIAMS
No, but there were remarks which were based on totally inaccurate information, and it seems worth while to correct them. The hon. Member for Wigan (Mr. Parkinson) made an interesting speech and spoke of the need to eliminate the unprofitable station. I do not quite know what he had in mind. It may be the case that he was thinking that under Clause 1, as a result of these agreements, the unprofitable stations would be eliminated a little earlier than otherwise could be the case. My own impression is that the main object of that Clause is not to shut these stations down at once, but to run them for the time being as if they were temporary selected stations. I can see that in a good many cases the effect of these agreements might be, instead of leading to the shutting down of stations, to lead to expansion of a station which it was intended should automatically shut itself down. I really wonder whether the hon. Gentleman has studied the full implications of the problem. Then he went on to say that in this matter we must place public interest above private interest. That was the main feature of his speech, and, having devoted a good deal of time to that, he got on to a special right of private interests—the private interests of a particular group of employés. Why should that particular group of private employés have their private interest placed before the public interest? I know no reason, if the principle which he has enunciated is right, why his special pals should be allowed to invalidate that great principle. On the other hand, if you say that somebody who is adversely affected is to be compensated you are not entitled to limit that to those whom you think are your political supporters.
§ Mr. PARKINSON
I did mean it to apply to everybody. I did not specially select workers alone. I think the pioneers of the electricity movement ought to be so treated.
§ Mr. WILLIAMS
Mr. Gatti, the proprietor of the restaurant at Charing Cross, was one of the pioneers. He started the first electricity undertaking in this country. That was a long time ago. But there are people who, having saved a bit of money, bought a share in an electricity company. Is that a legitimate 1123 right? I think that it is, and if you do something which makes it less valuable you ought to compensate those people, and equally if by an Act of Parliament you upset the employment of workpeople. But I do not understand why the hon. Gentleman discriminates.
§ Mr. PARKINSON
If the hon. Gentleman will give the statements I made fairly, he will not make the statements which he is making now. I said that in the Debates which had taken place on the Bill in another place there was a lot of differing on questions of compensation for stations, and I followed that by saying that if compensation were necessary and ought to be paid, it ought to be paid in the case of workmen who were discharged for redundancy.
§ Mr. WILLIAMS
I agree, but where there is a case of workmen being so unemployed that is provided for.
§ Mr. WILLIAMS
Clause 4 does not deal with railway companies closing down their stations. It deals with a case where they are going to push out either a private company or the municipality. The only case that was raised in another place was not in respect of prospective business, but whether if they had actually been in the habit of supplying current and the contract were taken away from them by autocratic action on the part of the board, they ought to be entitled to compensation. There is no question there of a station being shut down. There might conceivably be some reduction of staff through a local municipal station or private enterprise station being deprived of part of its load. It would be difficult to know what would happen in this particular case. The hon. Gentleman was making a differentiation in regard to the principle of compensation. He thought that some people were entitled to compensation and that others ought not to be compensated on the grounds that the public interest overrides private rights. I say that if that be your principle you must apply it uniformly, but if it be not your principle you should not profess that it is.
The hon. Member then said he welcomed the Bill because it was leading to 1124 the first nationalised service after the Post Office. He regarded the Bill as a definite step towards a nationalised electricity undertaking. He said that it was a bit of Socialism, and that he supported it as such. I hope the Minister of Transport understands that. I know that the right hon. Gentleman the Member for Hillhead takes the view that in this matter we must bear in mind the old Tory principle of expedience, and that we must not be tied up by phrases or get ourselves so tied up by principles that, like the Liberal party, we lose all our support.
§ Mr. WILLIAMS
One thing is certain, that each operation which transfers from private employment to public employment of one kind and another one human being is a step in the direction of Socialism. You have to go a long way before you get to the Socialist State, but with every step you take the nearer you get to it and to that condition of society in which all liberty comes to an end because nobody is allowed to own anything individually. You would not be able to own a house because the State would own them all and control your hours of labour, and you would not have any liberty. I am one of those who do not like that system of society, and therefore, when I see a step towards it, I resist it. I have been assured by the Labour party spokesman that this Bill is definitely a step in the direction of Socialism and that that is why he supports it. It is significant that the Minister of Transport has had no support to-night in the form of speech, apart from the hon. Member for Bridgwater (Mr. Croom-Johnson)—in whose case there was special reasons—from any supporter of the Government who is not a railway director. What about the public interest? I do not claim that these gentlemen have not been perfectly frank and honest and that they are not entitled to state their position.
§ Mr. WILLIAMS
The right hon. Gentleman used to be. The tradition remains, although the responsibility has departed. He is free, but the others will, of course, if we have a Division, be debarred from voting. I suppose that 1125 that is clearly understood. They have an interest in this matter which the rest of us have not. As far as I know, my interest is sufficiently remote and very indirect, and I am not debarred from voting. I take it, however, that if we have a Division, these right hon. Gentlemen and hon. Gentlemen will not be allowed to vote, because it is a well-established tradition, which has not been too clearly understood in the past, that the railway companies are not in a position different from that of other interests, although it has been a practice to regard them as if they were. When we had the right hon. Gentleman the Member for Derby (Mr. J. H. Thomas) on one side and Lord Banbury on the other, there used to be deals, and I thought it was a pity that the House should be turned into a strike auction room. With all this talk about private and public interest we ought to know exactly where we are. I make a final appeal to the Minister to try and please those who normally wish to support him by permitting this Bill to go to a Select Committee instead of forcing it through on the Floor of the House next Wednesday when Members will not have in their possession the information that they ought to have, and will not be in a position to give a judgment; and when, as I predict, the Minister himself will be unable to reveal to us those financial considerations of which we ought to be aware before the Bill becomes an Act of Parliament.
§ 9.40 p.m.
§ Mr. MACMILLAN
I would not have ventured to detain the House were it not for the inaccuracies which were contained in the speech of the hon. Member for South Croydon (Mr. H. Williams). I do not understand what his grievance is against hon. Members who happen to be railway directors. He blames us when we are absent, and he blames us when we are present. He blames us when we speak, and he blames us when we are silent. This is a, matter about which I feel a certain degree of sensibility, as all other Members do when matters arise which may affect their private interests. It is a well-known tradition in this House that Members with special knowledge should, where necessary and desirable, give the House the benefit of that knowledge, but it is 1126 also a tradition of the House that such interest should be declared, that it should be straightforward and known. Every Member who addressed the House on this question and who spoke as a railway director was attempting to assist the House by putting forward some information which was available to him in that capacity. If it be said that the House of Commons should consist entirely of professional politicians and that nobody who holds a position in any kind of great public undertaking should be a member of it, I do not quite see how the ideal state of private enterprise, which the hon. Gentleman wishes to continue, is likely to be kept alive. The hon. Member's great crowning inaccuracy was that he said he was not in opposition to this Bill. Anybody listening to his speech must have come to the conclusion that he was.
There are two specific points to which I should like to refer because they arc important. He devoted that part of his speech which affected Clause 4 to showing the great danger to the legitimate interests of the undertakers if the railways should turn on to the direct use of the grid for their power, lighting, shops and so forth. He pointed out that in the case of most of the railways there was little likelihood of great advance being made as regards electrification for haulage, but he made great play about Swindon and other places and about the possibility of the rights and interests of undertakers in that area being endangered by railways applying under this Clause for the purpose of obtaining their supplies direct from the grid. The only defect about that argument is that this Clause does not give them the right to do it. It only gives them the right to do it where they also have the use of electricity direct from the grid for the purpose of electrification for haulage. Therefore, the whole of that argument completely falls to the ground. I only quote it as an interesting example of the inaccuracy which ran throughout the hon. Gentleman's speech.
The hon. Member then made an attack upon my right hon. Friend the Member for Hillhead (Sir R. Horne) who is well able to look after himself. The hon. Gentleman contested the argument put forward by the right hon. Gentleman that in certain circumstances under the 1127 present working of the system a railway might be called upon to pay twice for service instead of a single payment. He said it was possible but that he had never heard of such a thing—that if there was a breakdown of the supply in one area the fact of switching the railway company over to another area for its supply did not mean a double payment. There, again, he is wrong. It is a slightly complicated matter to explain why he was wrong, but the House should know that the system of payment falls under two heads, being calculated partly on the actual number of units of electricity used and partly upon the highest load during the period. It is clear that if there were a breakdown in the area of one undertaking which necessitated a switching over to an enterprise in another area that that would raise the "peak" load in the second area to an abnormally high level, which would have the effect of increasing that part of the annual charge which is calculated upon the "peak" load. I think it is right to say that about 55 per cent. of the total charge falls under the category of the "peak" load charge, and not of the units used, and therefore the House will see that there is a very serious consideration to be taken into account.
It is not possible for me to go through all the arguments which have been adduced, but I thought it necessary to point out those inaccuracies, because I do not think the House does altogether appreciate the realities of the case. Let me take these two points. In the case of the Southern Railway electrification scheme, in no single instance does any authorised undertaker supply power to that railway. That answers the very important point raised from the Opposition front bench. No man will be displaced as the result of Clause 4, because no man is being employed by the undertakers at the present time. There will be no physical change of any kind whatever. At no point along the line is the Southern Railway taking its power from any of the local undertakers, and no bolt, no screw, no wire will be different. It will be merely a matter of bookkeeping.
How then is it beneficial to the railway? It is beneficial in two respects. First, as was explained by the right hon. Member for Hillhead, there will be a 1128 simplification of their negotiations, and secondly, there will be the benefit, which he also explained to the House, that by operating the principle of the maximum load over a larger area it will operate more beneficially than when it is split up into a number of smaller areas; and it is really upon that fact that the material benefit, the financial benefit, will arise. I only ventured to intervene because it does seem desirable, after a speech which was so powerful, as the speeches of my hon. Friend the Member for South Croydon are always powerful, and which showed great research and detailed knowledge, and a great appearance and, indeed, reality of careful study, the House should not be misled into thinking the statements he made were accurate. They were faced with a formidable appearance of being true, but in all those cases which I have explained they were wrong.
§ 9.50 p.m.
§ Mr. DAVID REID
I am not a director of an electricity company or of a railway company, and I wish only to say a few words on the Motion which is on the Paper that the Bill should be sent to a Select Committee; and I only venture to deal with that point as one who has had a certain amount of experience in dealing with private Bills upstairs in the last few years. It seems to me that this is pre-eminently the kind of Bill which ought to go before a Select Committee. The railways had a powerful advocate in the right hon. Member for Hillhead (Sir R. Horne) and have made out an excellent case, and why should they object to their case going before a Select Committee We have had arguments bandied backwards and forwards on the question whether this is a Socialist measure or not. I have sat on a great many private Bill committees, and worked there, naturally, with Members of all parties, and it is my experience that I have never yet seen a Bill considered there on party lines. I have always found that every member of the Committee dealt with the subject before us on its merits.
The real difficulty about this Bill concerns Clauses 1 and 2. I have listened to nearly the whole of the Debate to-day, and I am still very doubtful indeed as to the object of those Clauses. I may tell the House that there are a great many people outside who are saying that 1129 the object of those Clauses is to try to correct the financial position of the Electricity Board. I left the House to go to dinner, and I was told that by a very experienced City man, and it seems that that kind of remark is going about. I know nothing about the technical details of this Bill, but I do say that we ought to send it to a. Select Committee. That would not entail any delay. The solicitors of the power companies, the advisers of the Electricity Board, and the solicitors for the railway companies all have these things at their finger-ends. No doubt they have all the material ready for the promotion of a number of private Bills. If a Select Committee were set up when we came back in February then, judging from what I have seen of private Bill committees, which deal with analogous matters, I should say that the committee would probably report inside a fortnight. The procedure would probably be much more expeditious than to take the Committee stage on the Floor of this House. In the circumstances I cannot see what objection the Government have to allowing the Bill to go to such a committee.
I feel that the bulk of hon. Members do not understand it, and I say that because I have talked to a number and did not know the whole inwardness of Clauses 1 and 2 myself. In a Select Committee we can get the whole thing threshed out. Witnesses will be produced and examined and cross-examined, and the committee will report to the House. The House is not bound by the report of the committee, but as the outcome of its proceedings the House will at least be well informed. I support very strongly the strong case made on behalf of the railway companies and I should have no objection to Clause 3 being passed, but if the railway companies have a good case then they ought not to have any hesitation about the Bill going before a Select Committee. As to the rest of the Bill, it will certainly clear the minds of hon. Members very much if they have the advantage of the report from a committee in which the whole question has been thoroughly threshed out, and therefore I should support the sending of the Bill to a Select Committee.
§ 9.54 p.m.
§ Dr. ADDISON
The Motion before the House is that the Bill should be read a Second time, and we have not under 1130 consideration the precise point to which the hon. Member for Down (Mr. D. Reid) was referring. For once I can associate myself with what the right hon. Member for Hillhead (Sir R. Horne) said. I was concerned with the very beginnings of the Electricity Commission. It arose out of a committee of eminent engineers, appointed during the War, who reported to me as Minister of Reconstruction, and although I cannot profess to have made any inquiry into the political views of the members of any committees, so far as I am aware, there was not a single Socialist on that committee. They reported to me at the time on certain matters, solely as to what was the best way of dealing with the technical questions involved—technicalities of electricity supply and all the rest of it. That appears to me to be the sole question that we have to ask ourselves this evening.
I confess that I am not very impressed with the visions which the hon. Member for South Croydon (Mr. H. Williams) and others seem to have about the things which the Socialist party will do if ever they get into power. We have heard that so many times that I think it is like water on the traditional duck's back with many of us. None of these things which have occurred have been due to a Socialist Government; they have come from a very strong Conservative administration and have been worked in accordance with the provisions of the Act by an extraordinarily capable set of men, both on the Electricity Commission and on the Central Electricity Board. I know nothing whatever about their politics, but I think it is very unlikely that any of them are Socialists. They clearly understand this business, and they have carried out their duties, especially in view of the magnitude of their undertakings, with considerable success. While we associate ourselves with the general idea of the Bill and with the necessity for it being read a Second time, we reserve our right to press for certain Amendments, particularly as the Bill affects municipal corporations, some of which were mentioned by the hon. Member for Wigan (Mr. Parkinson), and for safeguards in regard to the financial provisions that may be required in the Bill. Subject to that, so far as the Opposition are concerned we support the Measure in general.
1131 We have heard a good deal as to the points that may affect this or that particular locality, but electrification of railways is clearly much needed in the neighbourhood of many large centres of population, entirely apart from main line electrification. Wherever it has been undertaken it is fair to say that it has been proved to be a financial success, and I do not think they will approach the question with any other consideration except: "Is this an economical and sound thing to do?" It clearly is economical and sound that we should have much further railway electrification in the neighbourhood of many crowded centres. It is all to the good, in connection with the planning for which many of us hope, and which will perhaps arise as the result of the appointment of commissioners for the distressed areas. It will be necessary if we are to deal effectively with the housing problem.
Under the terms of the Bill, railway companies can conduct their negotiations with a single responsible authority, and it is inconceivable that it should be better for them to conduct those negotiations with a number of different companies, each one wanting to have different terms inserted in its agreement. For that reason, it seems to me that the procedure projected in the Bill is clearly a sensible one. Whether we call it Socialism or private enterprise or anything else, it is a sensible way of doing the job. For that reason we support the Bill.
§ 10.0 p.m.
§ Mr. HORE-BELISHA
I have already addressed the House at some length and in some particularity as to the merits of this Bill, but I trust that I may venture to sum up the Debate, and follow the very excellent example of Front Bench brevity set me by the right hon. Member for Swindon (Dr. Addison). While the Measure has met with much support, and reasoned arguments have been added to those which I have tried to deliver in moving the Second Reading, I am not insensible of the very general fears and forebodings which have inspired the speeches of some of my hon. Friends. It is not quite true to say, as was said by my hon. Friend the Member for South Croydon (Mr. H. Williams), that the only encouragement I have received has 1132 come from the railway companies. It would be truer to say that there has been no opposition from any one speaker, so far as I can recollect, although there has been a confession of some ignorance which, in the minds of those who took that view, would justify the reference of this Bill to a Select Committee.
It is surely inherent in the philosophy of instituting great public boards to administer public utilities that we should give those boards something approximating to the business latitude which is allowed to ordinary boards in conducting private business. If every step that they take is to be looked on with lack of confidence, and if it is to be suggested that their day-to-day transactions are to be closely scrutinised and put under examination by learned counsel, their capacity to bring about the public good for which we look to them will be severely hampered. The Central Electricity Board is not a profit-making concern. It has a single-minded purpose and a sole duty of guarding the common interest. Agreements which it has made, and which it will, I hope, continue to make under Clause 1, are in accordance with ordinary business practice. Arrangements which it has entered into under Clause 2, and will still, I hope, enter into, are also in accordance with ordinary business practice. Even the phraseology of the Clauses which confer those powers upon the Board are copied wherever appropriate from the ordinary contracts made by authorised undertakers in this country. Therefore my hon. Friend the Member for Gorton (Mr. Bailey), who spoke as a simple layman professing a complete incapacity to master any phrase or sentence in the Bill and concluded with a most reasoned denunciation of it, will forgive me if I remind him that the phrase "special circumstances," like the phrase "exceptional nature," which he said was one of the most peculiar phrases that he had ever noted in a Bill, is taken from the ordinary contracts made by authorised undertakers with their great customers.
We are asking for neither more nor less for this Board than what is the common procedure in the electricity industry. No contract is broken; no monopoly is infringed. We have heard much of private rights in this Debate, but, if there is any Socialism at stake, it is in the constitution and existence of these 1133 companies who have been pleading their case through hon. Friends of mine to-day. They are monopolists, only practising by virtue of the special protective powers which Parliament has given to them. I would assure my hon. Friend the Member for Winchester (Sir G. Ellis), and those who share his apprehension, that there is no Clause, Sub-section or phrase in the Bill which interferes with the monopoly of power companies in the areas which Parliament has given them to supply. Perhaps that assurance is the most conclusive answer that I can make on the Debate. When my hon. Friend the Member for South Croydon (Mr. H. Williams) asks me what is the Precise financial effect of these Clauses upon the finances of the Board, I can only answer him by saying that the Conservative Government of 1926, in establishing this Board entrusted it with administering a great industry, and presumably took the view that it was capable of judging what sound finance was and would take proper advice. All I can tell my hon. Friend is that the Board has undertaken a task under the aegis of Parliament, and should be given the necessary trust which Parliament ought to repose in a board of its own creation. In determining its tariff it has taken into account these agreements, and that, I think, ought to satisfy my hon. Friend.
The House, I think, is ready to regard the case of railway electrification as quite a special one, resting on arguments of great force which do not apply in any other case. It is admitted that the national railway system is in many senses analogous to the national electricity system. It is admitted that it would be a matter of convenience if the railway companies could acquire their supplies direct from the Central Electricity Board. It is admitted that the price which should be offered to them should be a good one. In these circumstances, are we to be told that the great system of national traction in this country is to be deprived of these advantages because of some private interest which might stand in the way? No private interest, so far as I can understand the position, does stand in the way. At this time, of all other times, when every step which can advance our economic recovery is of paramount importance, I cannot think that Parliament would allow theoretical consideration to stand in the way. I do not 1134 desire to see any injustice done, and I shall not be a party to seeing any injustice done. I say to my hon. Friends who have made detailed criticisms that, if within the purpose and spirit of the Act of 1926, as amended by this Measure, they can, during the Committee stage, make any suggestions to me which will remove any injustice which they can properly show to exist, they will meet with the most sympathetic consideration that I can give.
Hon. and right hon. Gentlemen opposite have feared that the closing down of some generating stations on the railways may displace workmen, and they wish to know whether the compensation Clause will apply. There is a compensation Clause in the Bill, and I think it has been clearly shown by my right hon. Friend the Member for Hillhead (Sir R. Horne), my right hon. Friend the Member for Sparkbrook (Mr. Amery), and my hon. Friend the Member for Stockton-on-Tees (Mr. Macmillan), that there is no generating station on a railway that is likely to be closed down, so that their apprehensions may be set at rest. My right hon. and gallant Friend the Member for Ripon (Major Hills) wished to safeguard the interests of the municipalities. I repeat to him the general offer which I have made. My hon. Friend the Member for Wrexham (Mr. Aled Roberts), in a most helpful speech, felt that the grid should take over the lines belonging to private power companies, in order that they might he charged less for their electricity coming from the Central Board. I say to him that that proposition is likely to be resisted by the power companies, but if within the ambit of the Clause he can devise an Amendment which would commend itself to the House, I shall be most happy to view it with favour.
The object of the Bill is merely to implement the purpose which Parliament had in view in 1926. It is not justifiable to say, as my hon. Friend the Member for Winchester said, that we shall have to come back year after year to Parliament for Amendments of these Clauses unless we have a. Royal Commission, or at any rate some inquiry. Eight years have passed since the Electricity Supply Act of 1926, and no Amendment has hitherto been asked for of Parliament. This is the first time, and it is only because doubt 1135 has been thrown on the validity of these agreements, not by the Central Electricity Board or by the Government, but by the advisers of one or two undertakings who were anxious to enter into them. They are business men, and they know what the interests of their own concerns are. The board also is a body of business men, and is not likely to put its name to any transaction which will injure the Board. If this House feels, as I am sure it must feel, that no injury is done to anyone, but that the day is advanced when electricity can be more readily placed at the disposal of the
§ Bill accordingly committed to a Committee of the Whole House for Monday next.1136
§ household consumer and of one of the greatest industries in the country, it will, with a clear conscience and in accordance with its ordinary procedure in connection with legislation, give a Second Reading to the Bill.
§ Motion made, and Question put, "That the Bill be committed to a Committee of the Whole House."—[Captain Margesson.]
§ The House divided: Ayes, 113; Noes, 27.1135
|Division No. 5.]||AYES.||[10.15 p.m.|
|Addison, Rt. Hon. Dr. Christopher||Goff, Sir Park||Owen, Major Goronwy|
|Allen, Lt.-Col. J. Sandeman (B'k'nh'd.)||Greaves-Lord, Sir Walter||Parkinson, John Allen|
|Amery, Rt. Hon. Leopold C. M. S.||Greenwood, Rt. Hon. Arthur||Pearson, William G.|
|Aske, Sir Robert William||Grenfell, David Rees (Glamorgan)||Penny, Sir George|
|Assheton, Ralph||Grigg, Sir Edward||Ramsay, Capt. A. H. M. (Midlothian)|
|Baldwin, Rt. Hon. Stanley||Guy, J. C. Morrison||Ramsay, T. B. W. (Western Isles)|
|Blindell, James||Harris, Sir Percy||Rea, Walter Russell|
|Bossom, A. C.||Harvey, George (Lambeth,Kenningt'n)||Reid, William Allan (Derby)|
|Boyce, H. Leslie||Haslam, Henry (Horncastle)||Rickards, George William|
|Briscoe, Capt. Richard George||Henderson, Sir Vivian L. (Chelmsf'd)||Rosbotham, Sir Thomas|
|Brocklebank, C. E. R.||Herbert, Major J. A. (Monmouth)||Ross Taylor, Walter (Woodbridge)|
|Brown, Col. D. C. (N'th'l'd., Hexham)||Hills, Major Rt. Hon. John Waller||Russell, Albert (Kirkcaldy)|
|Buchan-Hepburn, P. G. T.||Hore-Belisha, Leslie||Russell, Alexander West (Tynemouth)|
|Burghley, Lord||Hudson, Capt. A. U. M. (Hackney N.)||Russell, R. J. (Eddisbury)|
|Cadogan, Hon. Edward||Hume, Sir George Hopwood||Salmon, Sir Isidore|
|Campbell, Sir Edward Taswell (Brmly)||James, Wing-Com. A. W. H.||Sinclair, Col. T. (Queen's Unv., Belfast)|
|Caporn, Arthur Cecil||Jones, Morgan (Caerphilly)||Smiles, Lieut.-Col. Sir Walter D.|
|Carver, Major William H.||Ker, J. Campbell||Smith, Sir Robert (Ab'd'n & K'dine.C.)|
|Chamberlain, Rt. Hon. N. (Edgbaston)||Kerr, Lieut.-Col. Charles (Montrose)||Somervell, Sir Donald|
|Copeland, Ida||Leckie, J. A.||Southby, Commander Archibald R. J.|
|Croom-Johnton, R. P.||Leech, Dr. J. W.||Spencer, Captain Richard A.|
|Curry, A. C.||Leonard, William||Spens, William Patrick|
|Daggar, George||Lloyd, Geoffrey||Stanley, Hon. O. F. G. (Westmorland)|
|Dalkeith, Earl of||Loder, Captain J. de Vere||Strauss, Edward A.|
|Davies, Rhys John (Westhoughton)||Lovat-Fraser, James Alexander||Sugden, Sir Wilfrid Hart|
|Dickie, John P.||Mac Andrew, Capt. J. O. (Ayr)||Templeton, William P.|
|Eastwood, John Francis||Maclean, Nell (Glasgow, Govan)||Thomson, Sir Frederick Charles|
|Edwards, Charles||McLean, Dr. W. H. (Tradeston)||Tinker, John Joseph|
|Elliot, Rt. Hon. Walter||Macmillan, Maurice Harold||Ward, Sarah Adelaide (Cannock)|
|Elliston, Captain George Sampson||Magnay, Thomas||Warrender, Sir Victor A. G.|
|Elmley, Viscount||Margesson, Capt. Rt. Hon. H. D. R.||Willoughby de Eresby, Lord|
|Emrys-Evans, P. V.||Milne, Charles||Wills, Wilfrid D.|
|Essenhigh, Reginald Clare||Morris-Jones, Dr. J. H. (Denbigh)||Windsor-Clive, Lieut.-Colonel George|
|Fielden, Edward Brocklehurst||Muirhead, Lieut.-Colonel A. J.||Womersley, Sir Walter|
|Fremantle, Sir Francis||Nation, Brigadier-General J. J. H.||Worthington, Dr. John V.|
|Ganzonl, Sir John||Nunn, William|
|Gardner, Benjamin Walter||O'Donovan, Dr. William James||TELLERS FOR THE AYES.—|
|George, Major G. Lloyd (Pembroke)||Ormsby-Gore, Rt. Hn. William G. A.||Lieut.-Colonel Sir A. Lambert Ward|
|Gluckstein, Louis Halle||Orr Ewing, I. L.||and Major George Davies.|
|Agnew, Lieut.-Com. P. G.||Foot, Dingle (Dundee)||Somerville, Annesley A. (Windsor)|
|Apsley, Lord||Hales, Harold K.||Sotheron-Estcourt, Captain T. E.|
|Bailey, Eric Alfred George||Hannon, Patrick Joseph Henry||Todd, Lt.-Col. A. J. K. (B'wick-on-T.)|
|Blaker, Sir Reginald||Hopkinson, Austin||Whyte, Jardine Bell|
|Broadbent, Colonel John||Law, Richard K. (Hull, S.W.)||Williams, Herbert G. (Croydon, S.)|
|Browne, Captain A. C.||Macquisten, Frederick Alexander||Wilson, Lt.-Col. Sir Arnold (Hertf'd)|
|Clayton, Sir Christopher||Mills, Major J. D. (New Forest)||Wise, Alfred R.|
|Craven-Ellis, William||Morrison, William Shephard|
|Crooke, J. Smedley||Procter, Major Henry Adam||TELLERS FOR THE NOES.—|
|Cruddas, Lieut.-Colonel Bernard||Reid, David D. (County Down)||Mr. Petherick and Mr. Emmott.|
Bill read a Second time.