HC Deb 25 June 1947 vol 439 cc623-8

(1) This section applies to any person, not being a body to whom Part II of this Act applies, who at the passing of this Act is engaged in supplying electricity to the general public and who, at any time after the nineteenth day of November, nineteen hundred and forty-five, has incurred or incurs, in respect of works approved by the Minister for the purposes of this section (whether before or after the execution of the works) expenditure properly chargeable to capital account; and in this section any such person is referred to as "the undertakers," and his business, so far as it consists of the supply of electricity to the general public, is referred to as "the electricity undertaking."

(2) The undertakers may, at any time before the expiration of the period of twelve months beginning with the date of the passing of this Act, serve on the Central Authority a notice requiring that the electricity undertaking shall be transferred under this section, and thereupon the following provisions of this section shall have effect.

(3) On such date, not being later than six months after the service of the notice, as may be agreed between the undertakers and the Central Authority or, in default of agreement, determined by the Minister (which date is hereafter in this section referred to as "the date of transfer "), all property of the undertakers which was, immediately before the date of transfer, wholly or mainly used for the purposes of the electricity undertaking shall, by virtue of this Act, vest in the Area Board whose area comprised the whole or the main part of the area of supply of the undertakers, and shall vest free of any mortgage or other incumbrance.

(4) For the purpose of transferring to the said Area Board agreements to which the undertakers were a party immediately before the date of transfer and which they entered into for the purposes of the electricity undertaking, so far as those agreements remain to be performed after the date of transfer, every such agreement, whether in writing or not, and whether or not of such a nature that rights, liabilities and obligations thereunder could be assigned by the undertakers shall unless its terms or subject matter make it impossible, have effect, as from the date of transfer, subject to the like modifications (with the substitution of references to the date of transfer for references to the vesting date) as agreements of bodies to whom Part II applies which are transferred to the Area Board under that Part.

(5) The provisions of Part II of this Act relating to the disclaimer of agreements and leases shall apply to any agreements or leases which are transferred to the said Area Board under this section in like manner as they apply to agrements and leases of bodies to whom that Part applies, subject to the modification that for references to the vesting date there shall be substituted references to the date of transfer.

(6) Subject to the provisions of this section, there shall be paid by the Central Authority to the undertakers, by way of compensation for the transfer of the electricity undertaking, such amount as the undertaking might have been expected to realise if—

  1. (a) it had been sold as a going concern on the date of transfer in the open market market by a willing seller to a willing buyer;
  2. (b) the effect of the sale had been to transfer to the buyer the property, rights liabilities and obligations which are transferred or granted to the Area Board by or under this section, except any property or rights, which are transferred or granted on terms agreed or determined in accordance with regulations made under this section: and
  3. (c) this Act had not been passed.

(7) Any question arising under this section as to—

  1. (a) whether a particular person is a per son to whom this section applies;
  2. (b) what property of the undertakers vests in the Area Board under subsection (3) of this section;
  3. (c) what agreements of the undertakers are to have effect in accordance with sub section (4) of this section;
  4. (d) what compensation is to paid under subsection (6) of this section;
shall, in default of agreement between the undertakers and the Central Authority, be determined by arbitration under this Act, and the provisions of Part II of this Act relating to the arbitration tribunal shall apply for the purpose of determining questions under this section and any questions which, under regulations made under this section, are to be determined by arbitration under this Act, as they apply for the purpose of determining questions under the provisions of Part II of this Act or any regulations made thereunder.

(8) Subsections (2) and () of section fourteen of this Act shall apply to the undertakers in like manner as they apply to a local authority subject to the modifications that for references to property held or used by the local authority in their capacity as authorized undertakers there shall be substituted references to property held or used by the undertakers for the purposes of the electricity undertaking and for references to the Minister of Health there shall be substituted references to the Minister.

(9) Regulations may make provision, in a case where property vested in an Area Board under this section was, immediately before the date of transfer, subject to a mortgage or other incumbrance, for the payment to the mortgagee or incumbrancer of the compensation or any part of the compensation payable in respect of that property, or may make other provision for the protection of mortgagees and incumbrancers of any such property.

(10) Where at the date of transfer any legal proceedings or any application to any authority under any enactment are pending by or against the undertakers in connection with any property, rights, liabilities or obligations which are vested in or transferred to an Area Board under this section, the Board, if the circumstances so require, may be added as a party to the proceedings or application or may be substituted for the undertakers as a party to the proceedings or application.

(11) Nothing in this section shall operate to transfer any cash or investments of the undertakers to an Area Board, and nothing in this section shall affect—

  1. (a) any right, liability or obligation with respect to the borrowing of money by the undertakers or to the raising of money by the undertakers by the issue of securities;
  2. (b) any right, liability or obligation (if the undertakers are a company) under any agreement for the rendering by any person of services to the undertakers, as a director (other than a managing director or a director whose functions are substantially those of an employee);
  3. (c) any right to, or liability to pay, any debt which became due before, or was in respect of a consideration wholly executed before, the date of transfer; or
  4. (d) any right to, or liability to pay, any damages which accrued before the date of transfer.

(12) Regulations may require any person who is or may be a person to whom this section applies to produce such books of account, records and documents, to supply copies of and extracts from such books, records and documents, and to furnish such other information as may reasonably be required—

  1. (a) by the Minister for the purpose of ascertaining whether or not this section applies to that person, or for other purposes arising out of the provisions of this section; or
  2. (b) by any Electricity Board for the purpose of facilitating the taking over of the electricity undertaking of that person by them on the date of transfer;
and to provide facilities for the examination of any such books, records and documents, and the taking of copies thereof and extracts there from and facilities for the verification of other information furnished under the regulations; and such regulations may make provision as to the manner, time and place in or on which any requirement under the regulations is to be complied with and shall provide for the payment to any such person of expenses reasonably incurred by him in complying with any requirements made by or under the regulations.

(13) For the purposes of this section, a person, shall, when supplying electricity to any other person, be deemed to be supplying electricity to the general public unless the electricity is supplied for the purposes of a trade or business and the relationship between the person giving the supply and the person supplied is that of a holding company and a subsidiary company, or vice versa, or either of the said persons is in some other way, able to exercise a substantial measure of control over the carrying on of the trade or business of the other person, and any question as to whether a supply of electricity to any person is a supply to the general public shall, in default of agreement between the undertakers and the Central Authority, be determined by arbitration under this Act.

(14) The foregoing provisions of this section shall, in their application to any undertakers whose area of supply is wholly or mainly comprised in the North of Scotland District, have effect with the substitution for references to the Minister of references to the Secretary of State, and for references to the Central Authority or to an Area Board of references to the North of Scotland Board.—[Mr. Gaitskell.]

Brought up, and read the First time.

Mr. Gaitskell

I beg to move, "That the Clause be read a Second time."

In the Bill as originally drafted, no mention was made of these undertakings. We did not propose that they should be touched in any way by the changes that have been made. We took that view because we did not consider that, in the main, nationalisation affected their position, and we envisaged that they would continue much as in the past, and would compete, as far as they were able to do so, with, the area boards in the same way as they had competed in the past with municipal undertakings or companies. But in the course of our discussions in Committee—this is not a matter on which we have ever felt very strongly—and as a result of further consideration, we have come to the conclusion that, in certain conditions, it is desirable that non-statutory undertakings should be given the option of being taken over under the Bill. The conditions which we propose in this new Clause to lay down are, firstly, that they must be bona fide electricity supply undertakings and, secondly—more important perhaps—that they must have incurred capital expenditure since 19th November, 1935, on works approved by the Minister. The purpose of this second condition is really to ensure that we are getting into the position of statutory undertakings that are of some importance, and that their capital de- velopment is of significance. It would be damaging to consumers if we were to discourage such capital development. My right hon. Friend the Minister explained —I think to meet a point put by hon. Members opposite in Committee—that he proposed to move an Amendment of this kind. I do not think there is anything else I need say in commenting on the Clause, which I hope goes some considerable way towards meeting the views expressed by the Opposition.

Mr. Birch

I would like to say one word on this new Clause. I think it can be generally welcomed, and, in particular, the method of compensation laid down in the Clause is to be welcomed, because it does precisely what we have been asking for—arbitration on the basis of a going concern. But I would like to ask the Parliamentary Secretary a question on the first provision that the companies can only come in if they have incurred capital expenditure approved by the Minister after 19th November, 1945. I would like to know in what sort of proportion the companies are likely to be brought in. What is the Minister's policy about this? The Committee will see the Minister has complete power to exclude any or every company under the wording at present. I would like to know before we part with this Clause how the policy is to be administered?

Colonel Clarke

I would like to support what has been said by my hon. Friend the Member for Flint (Mr. Birch). I feel that, as it stands, this provision is a little bit illogical. At the same time, I congratulate the Minister on having arrived at what I think is a straightforward and equitable solution of the problem in general. If the Minister would consider again the points that we have raised, we would be grateful.

Mr. Gaitskell

I cannot give a detailed and exact answer on how we shall administer this Clause. It really arises out of suggestions and arguments put forward by Members opposite that capital expenditure was being discouraged on account of the fears of non-statutory undertakings that they would encounter difficulties later on in competition with the area boards. Our approach has been that we must be sure that sort of thing does not happen. Therefore, we have had to take account of their position in relation to consumers' demands. I do not think I can really say more than that.

Mr. Hobson

I think it is to be welcomed that non-statutory undertakings can, if they desire, now be acquired; but I rather deplore that the Minister himself has not seen fit to acquire some of the non-statutory undertakings. I refer, in particular, to the railway generating stations. In the London area alone there are three large generating stations with a total capacity of nearly half-a-million kilowatts. The annoying thing is that the Electricity Commissioners have already contributed towards the cost of installation of turbines and the standardisation of frequencies, and they are in a position to export and import current. I think it ought to be done. I can foresee in the future that there will be considerable departmental strife as between the Transport Board and the Electricity Authority, and it seems to me that these non-statutory undertakings, the railway power stations, which are capable of supplying electricity for both domestic and industrial purposes, should have been absorbed. The new Clause should have been framed in such a way as to give the Minister power to acquire non-statutory as well as statutory undertakings.

Clause read a Second time, and added to the Bill.