HC Deb 24 June 1947 vol 439 cc377-82
Sir A. Gridley

I beg to move, in page 44, line 38, to leave out from "Act," to "as" in line 39.

If it meets with the approval of the House, I propose to discuss along, with this Amendment the two following Amendments, namely:

In page 44, line 43, to leave out from "account," to end of Subsection, and insert: (including without prejudice to the generality of that expression provisions in respect of their obligations under Section thirty-eight of this Act) In line 43, at end, insert: (2) It shall be the duty of each Area Board so to exercise and perform their functions under this Act as to secure that taking one year with another the revenues of the Area Board are not less than sufficient to meet their outgoings properly chargeable to revenue account (including without prejudice to the generality of that expression provisions in respect of their obligations under Section thirty-eight of this Act). They all deal with the same subject. and can be discussed together. If necessary, they can be put separately later on.

Mr. Speaker

I think it would be more convenient if the hon. Member discussed the three of them together, as they are all on the same subject.

Sir A. Gridley

The purpose of these three Amendments is to meet the objections which we discussed when we were dealing with these matters in the Standing Committee. The first Amendment proposes to strike out the words: including their functions in relation to Area Boards. The objection which we have to the Clause is that it provides that the combined revenues of the Central Authority and the area boards together are not less than sufficient to meet their combined outgoings. I am not now dealing with accounts. That was a misunderstanding in the Standing Committee. It was thought we were referring to separate accounts. We quite understood that there would be separate accounts, but what we object to is the revenues of the boards being lumped together, and then, when taken together, they are not to be less than sufficient to meet the combined outgoings. Our view is that provision should be made by which each board should balance its revenue and expenditure, its expenditure, of course, including the necessary reserves for depreciation, plus any reserve fund for which there is authorisation.

Under this Clause, unless this Amendment is adopted, there will be no possible comparison between the areas, and we will not be able to compare the efficient working of one with the other. I think the country expects that if it is eventually decided that there shall be 14 areas of supply throughout the country, the working of those areas shall be shown in such a fashion that we shall be able to judge whether the North of England is doing better than the South of England, or whether the East is doing better than the West. If all these figures are lumped together, there is no possibility of making any comparison. In the past it was possible to make comparisons because the figures were published. As everyone knows, before the war the Electricity Commissioners published the most voluminous figures of all undertakings in the country, and, perhaps even more important, the performance of the great power stations of the country were all tabled. There was a great deal of emulation provoked between the owners of different stations to see which would produce energy at the lowest possible cost. All these points of past experience are of extreme value, and the country does not desire that we should lose the benefit of those former comparisons when we set up a new type of organisation for the industry. Therefore, we ask that there shall be, not only separate accounts, but separate balancing of income and expenditure.

Supposing we look for a moment at the central authority standing in the relation of a holding company to its 14 subsidiary undertakings in these 14 areas. No holding company with 14 subsidiaries, under private enterprise, would be satisfied if some of those subsidiaries paid handsome dividends and others made losses. All would have to stand on their own feet. Each one would have to produce satisfactory results; if not, those responsible for the management of the unsuccessful undertakings would have to make other arrangements. In the same way here, the Central Authority is to be a parent, or father, or supervisor, or whatever you like to call it, of all these 14 area undertakings, and the Central Authority ought to satisfy itself that each undertaking is working on a proper and sound commercial basis.

Colonel Ropner (Barkston Ash)

I beg to second the Amendment.

Mr. Gaitskeil

As the hon. Member for Stockport (Sir A. Gridley) has said, we discussed this matter in Committee, and I am afraid that the Government have not changed their mind on this matter any more than he has. I want to emphasise that we are dealing here simply with the statutory provisions about the area boards, and the balancing of their accounts. We are not saying here that the area boards must not balance their accounts. We are merely discussing whether we should put in the Bill a specific provision to show that they must always balance their revenue and their expenditure. Nobody disagrees that the Central Authority which is, after all, financially responsible under the Bill for the whole organisation, has to balance its accounts taking one year with another. That is the phrase we have used. The question is, therefore, simply limited to the position of the area boards.

First, I do not think that whatever we do about this will necessarily prevent comparisons between area boards. These accounts will be published, as the hon. Member pointed out, and the publication of the accounts will enable a comparison to be made. Secondly, comparisons can be made, and may be extremely valuable, on the basis of the cost of distribution of electricity, but that, if I may say so, does not necessarily mean in all circumstances that each area board must match its outgoings with its receipts. What we feel about it is this: we do not want to lay down that in all circumstances, an area board must 'balance its outgoings and its receipts. We conceive that there may be circumstances in which it would be reasonable for a time for an area board to work on a deficit. There are, of course, in the Bill much larger areas than we have hitherto had, and it is one of the purposes to provide a balance—a geographical unit—but we cannot be sure that some of these units may not be involved in disproportionately heavy expenditure on rural electrification. It would be perfectly sensible. There would be nothing wrong in it if they made a deficit on that account for a time. All we say is, "Let that happen; the Central Authority no doubt will have to give its approval; let it happen if it is necessary; do not rule it out altogether." On those grounds I must ask the House to reject the Amendment.

12.30 a.m.

Major P. Roberts

I wish to ask one question for the purpose of clarification. There was a suggestion by my hon. Friend, in moving this Amendment, that under this Clause as it now stands there may be some question of subsidising one area by another. I would like to be quite clear what the Government's intention in principle is. Is it their intention that they are going to ask the highly industrial areas to subsidise the rural areas—in other words, to put up the charges? In the case of Sheffield, as effecting their exports, it might have the effect of increasing the cost which they would have to charge to the people who purchase their goods abroad. It is right that we should know what is the Government's principle. Is it that in order that the rural areas may have electricity, the industrial areas will have to subsidise them, and have their costs put up? I am asking that in order that we may know in future.

Colonel Crosthwaite-Eyre

I would like to support what has been said by the hon. and gallant Member for Ecclesall (Major P. Roberts). It appears that what the Parliamentary Secretary has said simply means that he will not accept this Amendment because he is perfectly aware that certain area boards are going to make a loss and, therefore, other associations will have to subsidise them. All that this Amendment is designed to do is to ensure that, where that happens, the results of this particular procedure should be shown. If the Minister will not accept this Amendment, he is declaring that he is unwilling to show the expenditure for rural electrification. One of the points deals with reserve funds. Why are the Government unwilling to accept something that will show the contributions of the area boards, and cause them to take this particular matter into consideration when they make up their accounts? I can only conceive that this is due to what we stated in Committee, that the reserve funds are to be used for purposes other than those really desired. I can only feel, if these Amendments are not accepted, that it is because the Government are not willing to divulge the expenditure that may occur in any one area for one or other reason, and because the Government are not willing to enable the House—and through the House, the country—to understand and comprehend what exactly is the expenditure in any particular area. I ask someone on the Government Front Bench to make this position clear, since as the Clause stands it would seem that the Government simply want to get away with one consolidated fund which will give the least possible information. That is something to be deprecated.

Mr. R. S. Hudson

I hope that there is not a very great deal between the two sides of the House on this matter. I think we can reasonably believe that individual areas, although in the long run they ought to be regarded as balancing their accounts, in the short run obviously can have either a profit or a deficit. It is clear that as the area boards are to buy their supplies of electricity from the Central Authority, in effect their expenditure is the revenue of the Central Authority, and as the Clause stands I think the Parliamentary Secretary will admit there is nothing to prevent area boards from subsidising each other or subsidising the Central Authority. All we want to be assured is that, broadly speaking, the Government accept the proposition that the Central Authority and each of the area boards stand on their own feet over a period of years. If the Minister can give us an assurance that that is their desire and intention—possibly the actual wording of our Amendment does not secure that—the matter could be reconsidered.

Mr. Gaitskell

Our position is, I think, perfectly clear on this Clause. We do not want to put into a statute any provision saying that area board accounts must balance year by year. I would not, personally, dissent from the view that it is desirable that accounts over a period of years should be balanced. Very likely the Central Authority will insist upon this, but as the right hon. Gentleman has pointed out, that is a different matter from the question of whether they are subsidised by tariffs charged by the Central Authority being high or low. I pointed out in Committee that even if we were to make a provision of the kind asked for, in fact it might be evaded very easily by the Central Authority charging different tariffs.

Mr. R. S. Hudson

What we really want to get at is that the accounts shall show the true state of affairs and that there shall be no hidden subsidy as between one area board and another. If an area board is to make a loss for a year or two because of development, it would have a good case, but there is no reason why that case should not be made in public.

Mr. Gaitskell

I accept that. There is no difference between us.

Colonel Crosthwaite-Eyre

In regard to the second of the three Amendments, how does the Parliamentary Secretary square what was just said with the question of reserve funds?

Amendment negatived.