HC Deb 25 June 1947 vol 439 cc576-613

There shall be paid by the Central Authority to local authorities, by way of compensation in respect of the severance of their electricity undertakings from their other activities, the sum of five million pounds, and the said sum shall be divided among such of the said local authorities as satisfy the prescribed conditions, and the amounts to be paid to the individual authorities shall be determined in such manner and in accordance with such principles as may be prescribed.—[Mr. Glenvil Hall.]

Brought up, and read the First time.

Mr. Glenvil Hall

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

This is a Clause to which the Committee may perhaps desire to give some consideration. It has created a considerable amount of interest in all quarters of the Committee and among local authorities outside. It proposes to set aside £5 million to compensate local authorities for the severance of the electricity undertakings which, under this Bill, are to be taken from them and vested in the Central Electricity Authority. It also provides for the promulgation later on of regulations which will deal with distribution. Right hon. and hon. Members may ask why we want to make this provision. It arises partly out of a promise given by my right hon. Friend the Minister of Fuel and Power when we dealt with this matter in Committee upstairs. The question was raised by hon. Members on the other side of the Committee, as well as on this side, and local authorities have represented to them and to my right hon. Friend that when they lose their electricity undertakings, some of them will be involved in losses of one kind or another. It is their suggestion that provision should be made for what might be described as legitimate losses for which compensation should be paid. These losses, I think, can be listed under five heads. First, loss to the rates; that is, the loss of right to use the profits of an undertaking in the relief of rates. Secondly, loss of the benefit of income tax set-off—a new loss which, in the case of local authorities, has only accrued in recent years. Thirdly, there is loss of contributions towards central establishment charges and other overheads, and then, to a lesser degree, there is the loss that may result from the unbalancing of superannuation funds owing to loss of staff the taking away of an electricity undertaking. Then there has been a loss —or so some of them say—resulting from local authorities being left to bear management expenses on loans raised for their electricity undertakings.

Before I come to the main items let me say that so far as the last two items are concerned they are adequately covered in the Bill or by Amendments made by my right hon. Friend during the passage of the Bill through the House. Superannuation is covered under Clause 48, which deals with the provision of pension rights. Clause 19 deals with the compensation to local authorities to cover loan charges as, of course, the Committee know very well, because we dealt with it and argued about it half an hour ago. Now what about the others ? First of all, there is the contribution to rates. It is true that, within limits, a local authority which has an electricity undertaking can so arrange its affairs that its electricity undertaking can make a contribution, and sometimes a substantial contribution, in aid of the local rates. Some authorities, we find, do this regularly, others occasionally and many, not at all. Some in fact, instead of helping the rates by paying over yearly a part of the profits made on their electricity undertaking, actually have to receive a subvention from the rates to assist their electricity undertaking, I have figures here which, I hope, will interest the Committee and which give a good picture of just what is involved under this particular head. There are 74 who are assisting the rates to the tune of £309,000 and, on the other side, there are 10 who receive aid from the rates to the tune of £230,000. They do not, of course, actually balance but when you take one from the other the difference is only a matter of £80,000.

Sir P. Hannon

I assume these are aggregate figures covering the whole 188, one way or the other?

Mr. Glenvil Hall

The point I am making—and I think the Committee would like to be quite clear about this— is that when it comes to the question of the rates being helped by the municipally owned electricity undertakings, the vast majority of them do not get anything out of it at all. In 10 cases the rates have to go to the aid of the electricity undertaking to the extent, in bulk, in 1942–43 of £230,000. On the other hand, to be quite fair, there were 74 local authorities who did assist the local rates to the tune of £309,000 and it is not to be wondered at, at first blush, that those who have been enjoying that help should feel that something should be done if we are to take the electricity undertaking from them and that help to the rates is to come to an end. It is the Government's view that, whatever other help should be given, it is quite impossible, on grounds of policy apart from anything else that we should assist local authorities who, when this transfer takes place, are going to lose help from the rates. In the last analysis, when one authority regulates its activities so closely that it either ploughs back what it makes into the electricity undertaking or passes the profit on to the consumer of electricity, it would be wrong for us when dividing up any sum which may be provided by Parliament, to take into account the fact that other authorities are charging their consumers more than they need and assisting the rate's. We should only be helping the ratepayers at the expense of the consumer, and I hope that the Committee will share that view and agree with us that, whatever else should be compensated for when severance takes place, we cannot compensate for loss of aid to the rates.

10.45 p.m.

Now what about the Income Tax setoff? It is only in the last year or two that local authorities have been able to enjoy what all individuals have enjoyed for quite a long time, the setting off of any interest which they pay on loans against Income Tax which, year by year, they pay to the Inland Revenue. The fact that this concession has now been broadened out and may be applied to local authorities has meant that certain local authorities now say that, when they come to lose their electricity undertaking, their inability in future to make this set off against their other trading activities will entail a loss. This obviously comes into a slightly different category from that in which we put the direct loss to the rates; and although we do not recognise it as of prime importance in the claims put forward on behalf of local authorities, we agree that, in some instances at any rate, there will definitely be a loss. It is true that where there are local authorities with many trading activities, this question of the set off of Income Tax can make a considerable difference in the course of the year.

Now for a few moments let me deal with what we think is the main grounds upon which local authorities should be assessed when severance takes place, and that is the loss of contribution to central establishment charges which they will undoubtedly suffer. The losses under this head will quite obviously be general, whereas in the previous categories I have spoken about, losses will vary from local authority to local authority. It is obvious that all local authorities that have, at the moment, electricity undertakings, will, when they lose it suffer a loss of contributions from that undertaking to the central establishment charges of the local authority. Trading undertakings make an agreed contribution to the local authorities in respect of legal assistance, house room, office accommodation, and of help given by the engineering department. Usually the finance office also assists the electricity undertaking, which pays to the local authority to which it belongs a sum to cover overheads of that kind, and legitimately so. Severance will mean that these overheads will have to be spread over a smaller number of departments and activities carried on by the local authority and, as I say, we do feel that there is legitimate ground for complaint and for compensation. Now, as we see it, and I hope I carry right hon. and hon. Gentlemen opposite with me, this loss of overheads, in respect of establishment charges, will not be a permanent loss—in our view it is a loss which can be tapered off gradually. Accommodation, for instance, if it is not wanted, can be given up to other people who can use it, who will, undoubtedly, pay rent for it. But we have made inquiries and we have found that the estimated loss by local authorities 'Under this particular head is between half a million and one million pounds per year. That would be the rate of loss at present. But as staff is transferred, office accommodation is given up, and other arrangements are made, the loss would be a diminishing one.

We have assumed that the loss is something between half a million and a million pounds a year. What my right hon. Friend has done is this: he has taken the figure presented to him on behalf of the Association of Municipal Corporations and suggested that the round figure of £5 million—roughly five years at one million pounds a year, taking the basic figure as one million, not the lower of half a million in respect of severance charges under this particular head—would be doing justice to the local authorities.

Mr. Lipson (Cheltenham)

May I ask the right hon. Gentleman a question? He is not making the point, is he, that the sum of £5 million for severance is acceptable to the Association of Municipal Corporations?

Mr. R. S. Hudson

I was just about to ask the same question. The sum suggested by the Association of Municipal Corporations, I take it, is the half million and the million pounds and not the £5 million?

Mr. Glenvil Hall

I am very happy to be corrected. I am very sorry. So far as we can gather amongst municipalities the present loss from severance under this head would be approximately from half to a million pounds a year and I was taking that figure and that was the sense in which I meant to use the phrase. I was not suggesting for a moment that we carried the whole of the municipalities of this country with us in our suggestion that the compensation to be divided between those who are to lose their electricity undertakings should be a sum of £5 million. I was trying to explain that on a rough and ready basis we were assuming that over the period' of five years most of these undertakings could so readjust their activities as to absorb their staff. And I may say, by way of parenthesis, some of the staff, at any rate, will pass with the electricity undertaking to the Central Electricity Authority.

Sir P. Hannon

Will the right hon. Gentleman forgive me for one moment? I apologise for having to interrupt him. What was the scope of the inquiry which was made here? Did consultations take place in arriving at this sum and were the Association of Municipal Corporations excluded from that inquiry?

Mr. Glenvil Hall

Very much otherwise. We have been very closely in touch with the Association. I would like to take this opportunity—I intended to do this at a later stage but the hon. Gentleman has given me the opportunity now—on behalf of His Majesty's Government to pay a tribute to the officials and representatives of the Association who have been most co-operative and helpful in this matter. We are anxious to see that justice is done, and we have been in very close touch with that body. Far from excluding them, the actual reverse has been the case. I do not want to mislead the Committee by pretending that the Association agreed to this sum. It is the sum we suggested, and in our view, if the agreed basic figure is taken over a period of five years, the resultant sum is adequate to compensate for most of the losses which the authorities will suffer, not taking account of losses in aid to the rates.

It might be convenient if I dealt here with how this sum is to be distributed. In the Clause we leave that to regulations to be made by my right hon. Friend the Minister. The reason why it is left for regulations to be made later is in the hope that we can come to some arrangement with the Association of Municipal Corporations. I freely confess to the Committee that we have not yet been able to find a formula which entirely meets their wishes. Various bases have been explored. Should we adopt units sold as the basis, or revenue earned, or a combination of the two, or management expenses that is charges allowed by the Inland Revenue under Rule 36, which, I am sure, are familiar to everyone here who is also interested in municipal life.

Unfortunately—I am sorry to say this —although every effort has been made by both sides, agreement has not yet been reached as to the best formula by which this money can be distributed amongst those who will be entitled to it. The fact is that regulations have to be made. They can be and will be made, but my right hon. Friend does for the moment leave the matter open. I can assure the Committee that we shall lose no time in our efforts to try and reach agreement with the local authorities.

To sum up—it seems to us a hopeless task to try to apportion, adequately, absolutely and exactly, compensation according to the precise degree of loss resulting from severance. We can only do rough justice and take what we think are legitimate claims, assess them and then distribute an equitable sum according to-a formula yet to be devised. There are some 350 separate cases and if we had to fight each one of them through the often-suggested method of an independent tribunal it would take a very long time. It would be much better, if we possibly can, to fix a sum and -then agree, if we can, on the method by which it should be distributed. One thing I would ask the Committee to remember in all seriousness, in the discussion that will follow the introduction of this new Clause, is that there is to be a revision of the block grant. There will be new block grant proposals partly as the result of the transference of the health services under the Act familiar to us all. Many authorities will benefit very greatly at the expense of the Exchequer by the changes that these proposals will bring and so the general level of rates throughout the country will appreciably be reduced. This new block grant will take all sorts of things into calculation, though not, as such, the loss from severance. But when severance has taken place the new block grant will even out the rate level between authorities whatever the reason for the differences may be.

If the Committee would remember that and realise that my right hon. Friend has done his best on the information available, I think we can give, at any rate, rough justice to the local authorities who are losing these undertakings. If they realise that, and agree to this Clause, I am sure local authorities will in the end realise we have done our best, and will accept the Committee's decision.

11.0 p.m.

Mr. Hobson

I fully appreciate the representations that have been made by the Association of Municipal Corporations and it is true to say that £5 million divided among the 350 local authorities is not going to allow them very much. It is not always appreciated that many local authorities have paid the charges on such things as their library services from their lighting funds. Great play has been made about authorities which subsidise their rates through electricity undertakings, but those which have subsidised to the greatest extent are those authorities which possess selective stations and are able to take advantage of Sections 12 and 13 of the 1926 Act—which are repealed in the Schedule to this Bill—and have been able to exploit the authorities which have not got selective stations. That is where they have got the surplus revenue to subsidise their rates.

A further point which has been overlooked is this. Electricity consumers and ratepayers are not necessarily synonymous. Therefore, I think the Government are being exceedingly generous. But I would far rather they had left the Bill in its original form. I am rather surprised that the Minister has been persuaded by the representations that have been made, because I know there are people who argue that because compensation was given to stock holders compensation should be given to the local authorities. But these people fail to realise the fact that under the Act of 1882 and the Act of 1896 it was presupposed that electricity would be publicly owned and that the local authorities did not enter the electricity business for the sake of making profit. Why, therefore, do they at this late hour wish to make a profit? I am very surprised that the Minister has seen fit to pay £5 million. I appreciate this is an unpopular view but, nevertheless, the fact remains that it is the consumer who is going to pay the extra charges. Therefore I would much rather have seen the Bill in its original form.

Mr. R. S. Hudson

I do not know whether it would be for the convenience of the House if I move my Amendment formally at this stage, because the Whole thing could then be discussed in one instead of leaving it to two discussions.

The Chairman

That may he done if the Clause is read a Second time.

Mr. R. S. Hudson

I beg to move, as an Amendment to the proposed Clause, in line 3, to leave out from "activities," to the end of Clause, and to add. such respective sums as may be agreed or, in default of agreement, determined by arbitration under this Act, as fair compensation for the net losses likely to be suffered by those local authorities respectively by way of overhead expenses or establishment charges in consequence of the passing of this Act. The right hon. Gentleman in introducing this new Clause said that it had been received with considerable interest by local authorities. I think he is a master of under-statement. I should have said it was received with considerable indignation by a large number of local authorities. We have two objections to the Clause as it stands. In the first place, the amount is, in our view, inadequate. The right hon. Gentleman described it as being rough justice. He went on to say that he thought the full figure of the loss by severance at the present moment might be somewhere between half a million and one million sterling a year and that that loss was not likely to continue for very long. But he gave no substantial grounds for that and I do not think it necessarily follows.

The hon. Member for Wimbledon (Mr. Palmer) in a book he wrote a little while ago called "The Future of Electricity Supply" pointed out very cogently the results that would be likely to accrue to local authorities. He pointed out that the borough electrical engineer often performed a number of supplementary functions, and that if that particular official was to be taken away, it did not mean that these other functions did not have to be performed, but only that another official had to be appointed by the local authority to perform them. That seems to me largely to weaken the point made by the Financial Secretary. These functions are not necessarily going to disappear. Oh the contrary, a certain number—not perhaps all—are bound to continue, and to that extent the expenditure by the local authority is going to continue. It may not continue to the extent of £1 million a year, but it is going to continue at a substantial level, and to say that the whole of the expenditure is going to come to an end, or can be absorbed, in five years does not represent the state of affairs as we know them now or as they are likely to develop.

He talked about the fact that a certain number of local authorities, 74 I think, help the rates from their electricity undertakings, and that 10 help the electricity undertakings from the rates, and he seemed to think it was unnecessary to take into account the potential help to the rates which was going to come to an end. That may sound all right here, where none of us are immediately concerned, but it is not going to be much consolation to the ratepayers in the 74 authorities who have seen their rates reduced to the extent of £300,000 a year. Over 20 years that amounts to a sum of the order of £6 million.

I merely quote those two figures to show how inadequate the sum of £5 million is. As far as the Income Tax set off is concerned it is quite true that this has only been enjoyed of recent years, but it would have been enjoyed on an ever-expanding scale in years to come, and again this is a very definite loss to the rates. Therefore, it is not surprising that the local authorities are not pleased with the situation. I am bound to say that I heard with the greatest surprise the right hon. Gentleman say that the Government had been very closely in touch with the Association of Municipal Corporations. My information is very different. The right hon. Gentleman said, in answer to an inquiry by myself and my hon. Friend the Member for Cheltenham (Mr. Lipson), that it was only the figure of £500,000 to £1 million a year that the association set before them. But there has been, so far as we can gather, no discussion at all.

Mr. Shinwell

Nonsense. Where does the right hon. Gentleman get his information from?

Mr. Hudson

The right hon. Gentleman with his normal courtesy, says, "nonsense"

Mr. Shinwell

It is nonsense. I say it is nonsense.

Hon. Members

Get up and say it.

Mr. Gallacher

Shut up.

Mr. Hudson

Perhaps the Committee, since the right hon. Gentleman makes this statement, will bear with me while I read a letter from the secretary of the Association of Municipal Corporations. I am not usually in the habit of making statements without documentary proof.

He says: I would like to give some further information on the subject of the £5 million now to be included for further compensation to local authorities. You will remember that the Minister made a statement in Standing Committee on 17th April. This was made without any prior consultation, with my association. On 17th April the right hon. Gentleman made his statement without any prior consultations with the Association of Municipal Corporations. We were given no opportunity of expressing our views as to the suitability of the amount proposed to be included in the Bill. This is what the right hon. Gentleman calls full discussion and consultation. An appropriate Government amendment now stands on the Order Paper in the name of Mr. Shinwell. In the interval my Association have had no opportunity of expressing their views on the adequacy of this sum to the Minister. This is what the right hon. Gentleman calls full discussion and consultation.

Mr. McKinlay (Dumbartonshire)

Will the right hon. Gentleman say if the letter he quotes was sent to him in his capacity as a member of this House, and was a similar letter sent to other members drawing attention to the Minister's conduct?

11.15 p.m.

Mr. R. S. Hudson

I am merely responsible for this letter which was sent to my hon. Friend the Member for Wavertree (Mr. Raikes) in his capacity as a member of the Association of Municipal Corporations. No views have been presented by my Association because, although they have asked for an opportunity to discuss the £5 million and the method by which it is ascertained, this request has not been granted. Nothing could be more categorical than that and nothing could destroy more the statement of the right hon. Gentleman that he was in close touch with the Association of Municipal Corporation and I venture to say it backs up my statement which he challenges that no effective discussions have taken place. It is clear that, in fact, the Association have neither had any discussion as to the adequacy of the amount nor as to the method of its distribution.

Now I come to the other objection we have to this Clause and that is to its form. The form of the Clause, it will be realised, is The said sum shall be divided among such of the said local authorities as satisfy the prescribed conditions, and the amounts to be paid to the individual authority shall be determined in such manner and in accordance with such principles as may be prescribed. The right hon. Gentleman earlier today had occasion to reprove us, saying that a little knowledge was a dangerous thing. It is a little unfortunate he chooses to do that today, for how little knowledge he had when speaking in Committee. I will now read to the right hon. Gentleman what he said in Committee on 17th April. The Committee will remember that the right hon. Gentleman, the Financial Secretary, explained that it was impossible to provide any other wording than this because they had failed to find a formula satisfactory for the distribution of this money. What does the Minister say on 17th April? Does he remember? He says: I do not anticipate any difficulty about finding the Board … on the question of severance … I have had to consider, before the Bill becomes an Act of Parliament, the nature of the organisation to be set up. We have to use as much of the existing organisation, administrative and technical, as if possible when the change is effected. He went on to refer to the question of the £5 million: As to its distribution, basis of payment, etc., these are matters which will have to be considered in consultation with the local authorities. I do not anticipate any difficulty about that."—[OFFICIAL REPORT, Standing Committee E, 17th April 1947, c. 647–649.] In other words, in April he said that he would have no difficulty, that he did not anticipate any difficulty, in providing a formula; and yet, two months later, he comes to the House and asks us to pass a Clause which, in effect, confesses that he has not been able to find a formula; that he has not been able to reach agreement with the local authorities, and that the whole thing is to be left in the air.

Mr. Shinwell

Just wait and see.

Mr. Hudson

Just wait and see, says the right hon. Gentleman. I am going to wait and see. What I suggest is that this shows a gross incompetence on his part. We have put forward an alternative. We believe that if we are to deprive the local authorities of these resources, the proper way is to compensate them; and if the only way to secure justice is to compensate them one by one. then that is the procedure which should be followed, even though it may involve some delay. As I said when we were discussing compensation for shareholders. I am certain that if we put the choice to the local authorities whether they preferred the Clause as it stands—not knowing what share they were going to get of what everyone admits is an inadequate sum, namely, £5 million—or whether they would prefer to wait a short time in order to receive eventually a sum based on an accurate assessment of the losses they are going to sustain, there can be no question which any sensible local authorities would choose. Every time they would choose our Amendment rather than the Clause as it now stands.

Mr. Blyton (Houghton-le-Spring)

From the information I have, the Association of Municipal Corporations would have been quite satisfied had they received £10 million for seven years. But never at any time have they argued that they should have any compensation for the loss of capital assets. It was known by the Association of Municipal Corporations that £15 million was the figure to be asked for; but eventually it was got down to £10 million, and therefore the difference between the Association of Municipal Corporations and the Government is not a question of compensation for capital assets, but the question of a sum of money for what they term the severance because of the loss of their undertakings.

I want to disagree entirely with the hon. Member for North Wembley (Mr. Hobson), who has now left the House. The Bill provides that the local authority can, out of its surplus, take I½ per cent. of its profit so long as its reserve is one-twentieth of its capital expenditure. It is no use winking at the fact that there are local authorities—and Socialist local authorities—who have taken from their surplus, most particularly in the distressed areas of the North-East, where the rates are very high. Therefore, no charge can be levelled against those of us who have had to face difficult obligations in relation to finance in trying to keep the rates down, by saying we have no regard for the electricity consumers of our areas. In my constituency they have as cheap electricity as there is in any part of this country for lighting, heating and power, and they have been able last year to contribute to their rates 8½d. in the pound. That is no mean figure when one considers that the area has a rate of nearly 20s. in the pound.

It is all right to talk of wealthy areas where the rate is about 11S. in the pound, but it is quite a different matter when the rate is nearly 20s. This town has been able to help its rates, but the biggest help has been the Income Tax set-off. It was a terrific fight against the Treasury, a fight which finished in the House of Lords. In Sunderland last year over £16,000 was contributed to the rates from Income Tax set-off alone. While local authorities are not complaining of the loss of their selected stations, they are concerned about the next financial year when they will lose this income which would help their rates. Therefore, in supporting the new Clause, I shall do so purely because, with the £5 million, which is a considerable advance on what was to be given during the Second Reading of this Bill, and which was asked for in the Committee stage, we shall be largely helped. We are getting £5 million and, with the promise of the revision of the block grant next year, there will be an easing of the financial burden which we face in our areas. I shall be satisfied to go into the Division Lobby tonight to support the new Clause, knowing that what we have lost in respect of the Income Tax set-off will be more than equalled by the block grant next year.

Mr. Carmichael

I would like to say a word about local authorities meeting certain charges, and I would refer to Glasgow Corporation, which has one of the largest electricity undertakings in the country. At no time was any of the revenue directed towards the reducing of the rates. They ploughed the money back into the concern and likewise aided the consumers of electricity in that area; and I think the Financial Secretary made a fair statement on the position in regard to certain authorities that when they are taken over a loss will result. In the case of pensions, in Glasgow alone the sum is in the region of £4,000. The total figure for Glasgow will be in the region of £112,000 per annum. It is quite true that for certain of these charges it will be a reduced sum in succeeding years, but £112,000 is, I think, a formidable figure. I want to make that, clear because the statement has been made tonight that Glasgow was looking for a sum of something like £12 million.

At no time to my knowledge did Glasgow make any representations of any kind. Glasgow Corporation was of opinion from the very beginning that if the Government decided to take their electricity undertaking under a nationalisation scheme, it was going to serve the community in Glasgow as well as it did under the local authority. They went further and held the view that the undertaking would in the long run be more beneficial under the Government than under the local authority because it would spread the financial responsibility over a greater number of heads. I have no idea how the £5 million has been arrived at. I have no knowledge of the consultations.

I cannot agree that- the figure is good or bad. Apparently, some of my hon. Friends are satisfied that they could give a better figure but they give no reason. Therefore, I am satisfied that the figure was not blindly got out. For something like two years, in common with other Members of this House, I have watched the activities of the Government, and I have no reason to believe that their conduct, up to now, has been such that I have to disbelieve any statement they make.

It should be understood that my opposition, if I have any, is not with the desire to gain any political capital, but I would like to know what methods have been adopted up to now to get a proper understanding of the requirements of local authorities? What have been the approaches to local authorities in Scotland? Are they involved in this general scheme? I ask that because I do not think we can get any clarity while some hon. Members think in terms of assessing the rating problem. I agree that if you can get 8½d. off the rates as a result of the revenue from an electricity undertaking, that that is constantly in mind when compensation is discussed. It is quite impossible to arrive at a reasonable figure with all the undertakings because of their varying claims and I feel—I do not make a parochial request of this—that the representations of the Scottish authorities cannot succeed because their rate problems are entirely different. It should be possible to get some understanding quickly as to the sum involved without involving them with all the municipalities up and down the country.

11.30 p.m.

I understand that this £5 million will be allocated after a formula has been worked out and issued in regulations. Surely at this hour it would be possible to have some kind of discussion with the municipalities prior to the making of regulations. From the point of view of administration, I think that you might consider at least discussing the financial position with the Scottish local authorities by themselves. I do not press this unduly because I do not know the machinery involved, but from past experience in other matters it has been quite useful. I am supporting the Clause and I would go further and say I am satisfied—and I hope the right hon. and gallant Member for the Scottish Universities (Lieut.-Colonel Elliot) will note— that I have the backing of the Socialist municipality of Glasgow. It is necessary to say that because there is a great danger that the right hon. and gallant Gentleman is leaving a wrong impression with the House about the position of Glasgow.

The Deputy-Chairman

Mr. Raikes.

Mr. McKinlay

On a point of Order. The right hon. Member who moved this Amendment drew the attention of the Committee to the fact that the hon. Member for Wavertree (Mr. Raikes) was an officer of the Municipal Corporations Association. If the hon. Gentleman is an officer of the association, is he going to declare his interest?

The Deputy-Chairman

The hon. Member must wait and hear what the hon. Member says.

Mr. McKinlay

Further to that point of Order. This is not the first stage of the proceedings of this Bill. I am informed that no declaration has been made in Committee.

The Deputy-Chairman

I am concerned only with the proceedings now and not what happened before.

Dr. Morgan (Rochdale)

With due respect, Mr. Beaumont, am I to understand from you that on a point of great importance involving a Member's interest in a Bill, you are ruling definitely on proceedings tonight, not having regard to the fact that it is alleged that in previous discussions on the Bill the hon. Member has spoken and not disclosed his interest?

The Deputy-Chairman

It is quite impossible for me to judge that matter because I am not aware of what occurred before. We must wait and see.

Mr. Gallacher

If I committed anything which was suspected of being an offence, what a howl there would be from the other side. If there is any question at all that the hon. Member has acted in a way that is not in keeping with the recognised rules and procedure of the House, if there is any doubt, he should not be allowed to speak further on the Bill until that doubt has been effectively settled.

The Deputy-Chairman

So far, the hon. Member for Wavertree (Mr. Raikes) has not said anything at all and, therefore, he is completely in Order. I now call upon the hon. Member for Wavertree to speak.

Mr. James Hudson (Ealing, West)

With great respect, I was a member of the Committee and heard the speeches, being quite a regular attendant, and, as you say, Mr. Beaumont, we have not had information upon the point. I want to assure you that there has been no revealing up to this stage of the point which has only come out in the House tonight regarding the hon. Member's special connection with the organisation that we are now discussing. I put it to you that the hon. Gentleman has discussed this matter in Committee without any knowledge being given of his special interest.

The Deputy-Chairman

The one thing that seems to be very well known to hon. Members is the interest of the hon. Member for Wavertree. I have no knowledge of this, but even if he does not declare his interest, he is still entitled to speak.

Mr. Raikes (Liverpool, Wavertree)

After all this discussion, I am afraid I shall have to dispel the anxieties and fears of certain hon. Members opposite. It is a duty that any Member discussing any Measure in which he has any financial connection should disclose that financial interest. I have no financial interest whatever. My connection with this particular organisation simply amounts to this, that I was made a vice-president of the association of Municipal Corporations, Liverpool branch, as a local M.P. Indeed, until I received the letter referred to I did not even realise that I was a vice-president.

Hon. Members


Mr. McKinlay

I want to say quite frankly that I have no ill-will against my hon. Friend. I was simply quoting a statement made with regard to his being an officer of the association.

An Hon. Member

That is not a financial interest.

The Deputy-Chairman

May I clarify the position by quoting Erskine May on this point: Members interested may propose a motion or amendment. Although a member interested is disqualified from voting he is not restrained by any existing rule of the House from proposing a motion or amendment.

Lieut.-Colonel Elliot

Further to that point of Order. Is it not clear that Erskine May had in consideration financial matters, that the interest in question should be a financial interest, that it is a financial interest which an hon. Member is required to disclose and that it is in connection with a financial interest that he would be disqualified from voting?

The Deputy-Chairman

The right hon. and gallant Gentleman's interpretation is correct. I think we can now go on with the Debate.

Mr. Dodds-Parker (Banbury)

Is it in Order for any hon. Member opposite who votes for any of these Amendments or for the Bill to accept a job afterwards under the authority?

The Deputy-Chairman

In answer to that point of Order, I am concerned only with what is happening at present. I cannot deal with nor anticipate what may happen in the future.

Mr. Raikes

Perhaps at this stage I may get on. I will only say in passing that I feel no pain or ill-feeling on the point raised by hon. Members opposite. They had a right to know what my position was and I have explained it. I wish to say a word about this Amendment especially as my right hon. Friend quite properly referred to the letter which had been written to me by the Association of Municipal Corporations. The date of that letter is 23rd June of this year. I understood from the speech of the Financial Secretary that there had been close touch between the Government and the Association of Municipal Corporations. I do not think I have misrepresented him. If I have he will of course pull me up. But what is the actual position? I do not think he was suggesting that there had been discussions with the association as to the figure of £5 million. That figure, of course, did not exist at the time of the Second Reading, but was introduced suddenly in the Committee stage on 17th April. At that time certain objections were taken to it as being a figure which seemed to be based on nothing at all. I do not think we have been given very much more of an explanation tonight than we were given on 17th April.

What has happened between 17th April and this Debate tonight? As I understand it, neither the Secretary of the association nor any of its officials have met any Minister for the purpose of discussing the question of the £5 million. I believe it is correct that certain officers of that association went to the Ministry and that at the Ministry they were unable for some reason or other to meet the Minister. That is rather unfortunate, in view of the importance of that association in the work which lies before the Government. Indeed, the Financial Secretary has emphasised the importance of their co-operation in certain parts of that work. It seems rather curious that no Minister took the opportunity of seeing them and discussing their case directly with them between the time that this proposal was put forward and tonight. I am not denying that the Minister, no doubt as a result of these gentlemen coming to his Ministry, received a report of their objections to this £5 million. I think, therefore, that my right hon. Friend was perfectly justified in making the point that the question of the £5 million had never been discussed beforehand with the association, and that it had never been discussed between the Minister and the association since the figure was produced. My right hon. Friend would not deny, any more than I propose for a moment to deny, that no doubt the Minister, as a result of the discussions which his officials had during the visit, had a note of what the objections were. I think it is possible to clear up a point which might conceivably have led to some completely unnecessary heat.

There is considerable doubt whether the £5 million is a suitable figure. It seems to me to be a figure which has not been really worked out completely in any form. That is why we on this side, in the Amendment we have put down, have suggested that there should be no precise figure laid down at this stage, but that after consultation between the Government and the local authorities efforts should be made to pay what appeared on full consideration to be a reasonable sum to the different local authorities taking them as far as we can—we may not be able to do it entirely—one by one. The £5 million may not be a sufficiently ample figure, and if we are tied down to it, and it proves to be wrong, everyone will get less than their due.

It was the view of the Minister that local authorities should not wish to make a profit out of this matter. It is equally important that they should not make any loss. The Financial Secretary said quite frankly that he did not know how long it would take to effect reorganisation, and quite obviously neither he nor the Minister really know how long it will be for that time to come: that is a very strong argument in favour of not being pinned down to £5 million as a maximum figure at the present time.

11.45 p.m.

In regard to rates it seems a little hard that you are treating all the municipalities on exactly the same basis. Take a municipality, which, over a period of time, has not only provided an electricity supply but has also contributed to the rates, perhaps a sum of two million pounds—as with Liverpool. It is to be treated exactly the same as another municipality which has had to take money from the rates in order to help its municipal electricity supply. That is an example of penalising the efficient by means of the inefficient. [HON. MEMBERS: "No".] I am taking an extreme case. There are many municipalities who do use the profits from the electricity supply in order to relieve the rates. I very strongly support the Amendment, for I think we should wait until there is a fairer allocation. I also believe that there' is a great deal to be said for extending the application of the principle of a tribunal to deal with a matter authoritatively, because the Financial Secretary admitted my last point and made it quite plain that he had been looking for the help of the Association of Municipal Corporations. He has not succeeded up to the present time in getting their support or co-operation either in regard to distribution or to the amount of money involved. It seems to me it might not be an impossible task to have a proper independent tribunal to decide as between local authority and local authority.

Mr. Shinwell

There has been some excitement in general in this Debate, but it could have been avoided if, instead of the right hon. Member for Southport (Mr. R. S. Hudson), the hon. Member for Wavertree (Mr. Raikes) had spoken earlier because I agree with almost everything he said. I understand the right hon. Member for Southport complained about my absense. Having delivered himself of that homily and having indulged in gross discourtesy, he disclaims being discourteous. Having accused me of being guilty of gross incompetence, hon. Members opposite pretend to be polite when they indulge in statements of that character. Presumably when they describe me as grossly incompetent they intend it to be a form of politeness—as a Tory term of endearment. If having been described as grossly incompetent, and having received their usual castigation, I venture to respond even temperately, they are annoyed. The fact is that they like to give, but they do not like to take. The only other thing I want to say about personalities is this. I have been a long time in this House. [An HON. MEMBER: "Too long."] Nevertheless I intend to remain a little longer. After all, I assisted in keeping some of their friends out, which was something of an achievement and was necessary in the interests of good government. Frequently in the course of our Debates hon. Members opposite say what they like about us, sometimes hitting below the belt, and they really must not squeal if some of us can hit straight from the shoulder. What hitting they can indulge in will not worry me. I can take half a dozen of them on before breakfast.

Let us get down to facts. They are not likely to prove palatable to the right hon. Member for Southport. [Hon. Members: "He is not here."] Perhaps that is why he is absent.

Lieut.-Commander Gurney Braithwaite (Holderness)

Listen to the Greek chorus.

Mr. Shinwell

The hon. and gallant Member for Holderness speaks about a Greek chorus. Better to be associated with a Greek chorus than a beauty chorus. The right hon. Member for Southport said there had been no consultation with the Association of Municipal Corporations, and in order to fortify himself in that remarkable declaration, for which there was no justification, he referred to a letter which had ben sent by the association.

Mr. R. S. Hudson

If the right hon. Gentleman is speaking about me he had better quote me correctly. I said I was surprised to hear the claim of the Financial Secretary, and then I proceeded to quote what the letter said.

Mr. Shinwell

The fact is that the right hon. Gentleman does not know what he is going to say when he gets up and does not know what he has said when he sits down. He read a letter which he said had been sent to the hon. Member for Wavertree (Mr. Raikes), who has explained the position with honesty and fairness, on the basis of the facts.

Mr. Raikes

If the right hon. Gentleman will permit me, he is endeavouring to suggest that my explanation and that of my right hon. Friend were at variance. I bore out what my right hon. Friend said —that there had not been that close touch and personal contact which the Financial Secretary claimed.

Mr. Shinwell

The statement of the ten. Member does him credit. He is doing all he can to rally to the assistance of the right hon. Gentleman. I beg to assure him that he is wasting his time. The right hon. Gentleman is just "a painted ship upon a painted ocean." The right hon. Gentleman read from this letter sent by the Association of Municipal Corporations to the hon. Member. It was sent to a large number of other people. I have received one from one of my hon. Friends. No doubt, if I went over to my office I should find several copies there. What they said was that the sum of £5 million, which it was proposed to divide among the local authorities in respect of the severance of their electricity undertakings, was not arrived at by agreement with the association, and that it was regarded as quite inadequate. That is true, but it does not bear out the allegation that there was no discussion and no consultation.

The fact is that before there was any suggestion of a payment of £5 million in compensation to the local authorities, the Association of Municipal Corporations met the Prime Minister, at their own request. I was present when the deputation was received, and some of my colleagues were there also. The representatives of the association stated their case, and they referred, among other things, to this question of compensation—not the general question of compensation in lieu of losses sustained on rates and the like, but compensation based on severance, and offset in Income Tax, and on other matters. Thereafter, it was decided that we should pay some compensation in respect of severance.

12 m.

We considered what could be done and, I must confess, we found there was great difficulty in arriving at a basis upon which a sum of compensation could be returned. There is no question about that. There was difficulty and there was bound to be difficulty. It is a very complex question but it is true also that during the Committee stage, when I was asked about this formula for the purpose of making payment to the local authorities out of the global figure of £5 million, I was in possession of certain information which resulted from certain discussions that my officials had had not only with the Association of Municipal Corporations but with representatives of the Incorporated Municipal Electrical Association.

As a result, I was in a position of being able to say, based on that information, that we could arrive at a formula which would have regard to the number of units used by municipal electricity undertakings in 1946, and I thought it might be possible to arrive at a satisfactory formula. But, thereafter, the associations concerned made further representations. They had found that there were difficulties associated with this formula and, as a result, we sought to find other formulae and we are still engaged, I say frankly, in a search for a formula which will prove adequate for the purpose. We propose to issue regulations to provide that these discussions can be continued, until we can find a basis upon which these payments to local authorities can be made. The names of the persons whom my officials met were Mr. Daniels, the Secretary of the Association of Municipal Corporations and Mr. Lithgow, the Financial adviser. These gentlemen came and discussed the matter with my officials. It may be said that the Minister did not, see them. The fact is that I saw, on the' general question including compensation for severance, the Incorporated Municipal Association twice and the representatives of the Association of Municipal Corporations on one occasion. Therefore, it cannot be alleged that we ignored these representative bodies. On the contrary, we sought every means to elicit from them the information upon which we could come to a satisfactory conclusion, and, in view of what we did, the suggestion that we are guilty of gross incompetence—all I can say is that this is a characteristic of the right hon. Gentleman.

What are the facts about this matter? The Financial Secretary—I think it is within the recollection of hon. Members who were present on both sides of the House—made a speech which was, in lucidity of expression, one of the best that has been heard. There can be no doubt about his meaning and he dealt with that matter point by point until no one could say there was ambiguity about the position—and I have only to dot the i's and cross the t's. Take the real issue of this question—the compensation to local authorities. If local authorities— and the number was mentioned by my right hon. Friend—were making a contribution to rates out of revenue of electricity undertakings, to that extent they were depriving the electricity consumer of their legitimate rights. It amounted to this; it was a queston of rates versus rights, and therefore, local authorities who were making such a contribution to rate relief were not justified in doing so in view of the claims of the electricity con sumers. In any event, it is certain that, if we were to pay compensation in lieu of rates to any local authorities there would be terrific resentment on the part of other local authorities who had played the game all the way through.

The question is whether the amount of compensation suggested is adequate. I would tell the Committee what the position is as regards the claims of the representatives of the municipal organisation. They have said to us, and I ask members opposite to note it, "£5 million is not enough. Give us £10 million. Give us £10 million and we will call it a deal No questions asked. We will find some method of distributing the amount. There may be difficulties in respect of individual determination of payments, whether this or that authority receives this amount or that, but just leave it to us and it can be arranged." You simply cannot go on indulging in pranks of that kind and, indeed, my hon. Friend the Member for North Wembley (Mr. Hobson) said we have been generous in giving £5 million

Let it not be forgotten that, in asking the Central Authority to provide compensation, we are asking them to increase the burdens on electricity consumers. We must be very careful not to impose burdens on the new Authority. I agree at once that it is very difficult to effect an equitable distribution of £5 million and I can understand why the Opposition has put forward this Amendment. What they are saying in effect is this: would it not be better to have some form of tribunal so that the local authorities, who have claims to present, can go and say, "Here is our claim; we want you to consider it," and, once a claim has been dealt with, receive the amount to which they think they are entitled. There are 370 local authorities and they would all present claims. Some would be very involved and some would be very extravagant and, no doubt, the 370 local authorities would all employ members of the legal profession to state their case, and that would involve the local authorities in expenditure which would have to come out of rates.

It is our view—maybe it is a simple view, but nevertheless it is our view—that it is far better to have a global figure and, in consultation with the local authorities, find some formula which will be more or less satisfactory and see if we cannot reach some happy conclusion in that way. It does not seem to me that we need go beyond that. My hon. Friend the Member for Bridgeton (Mr. Carmichael) asked whether there had been any consultation with local authorities over the Border. The Incorporated Municipal Electrical Association has branches in Scotland. The president of the association. Mr. Pickles, whose presidential address, delivered yesterday, which I have in my possession, indicates they are thorough-going supporters of the nationalisation of electricity supply, is the manager of the Dumfries County Council Electricity undertaking, which is one of the best undertakings in the country. Therefore I would ask my hon. Friends behind me—I know there are differences of opinion—to believe me when I say that we have made every effort to satisfy the local authorities, that on the whole this is a reasonable conclusion at which we have arrived, and that, while some local authorities may be dissatisfied, generally speaking we are endeavouring to meet their claims.

As for the Amendment, I ask the Committee to reject it on the grounds that it is obstructive, that it would prolong the agony, and is, at any rate, not an indication that Members opposite are anxious to support the local authorities. It 1s rank hypocrisy for them to say that they support the local authorities when some of those which they claim to support happen to be Socialist authorities. What is more, I say that it is a clear indication, as has been clear to us all along the line, that Members opposite will do anything open to them in order to defeat this proposition of nationalisation.

Mr. Lipson

I am afraid that the local authorities will get very little satisfaction when they read the speech, of the Minister. I think many of them will be hurt, and I must say, justifiably hurt, at the way in which he has referred to them. To suggest that a responsible body like the Association of Municipal Corporations would go to him and want to do a deal of about ten million pounds, with no questions asked, 01 something of that kind, is, if I may say so, unworthy of a Minister of the Crown On reflection, I hope that fee Minister will realise that this is not the correct method of approach to local authorities, or the way to speak of a body of men who are rendering very great service to the people of this country. The Financial Secretary himself said of the proposals in the new Clause, that they represent rough justice. That is not a very extravagant claim to make: and, personally, I would emphasise the rough side and say that the justice side, as I see it, is very little in evidence.

The local authorities say that they are getting a very raw deal under this Bill They are being treated worse than the companies are being treated, because the companies at least are being bought out at the market value of their securities Therefore, the local authorities say that the ratepayers whom they represent will have their burdens increased as a result of the passing of this Measure, and that it is only right that they should be compensated for the loss. This loss falls under three heads: the loss under severance, which the new Clause recognises; the loss of the set-off against Income Tax; and the loss with regard to the assistance which has been given to the rates from the electricity undertakings. I submit that there is nothing wrong in a local authority receiving aid for the rates from the profits of an electricity undertaking.

12.15 a.m.

It is not fair to say that this has been done at the expense of the consumers unless facts can be given to prove it; unless you can prove that the consumers in those areas where the rates have benefited have been overcharged for their electricity. In point of fact, those undertakings which have been able to subsidise the rates are those whose undertakings have been most efficiently run. That is the reason why they have been able to do it. In my constituency, in spite of the assistance which the rate gets from the three sources I have indicated, the rates are 20s. in the pound and they will be much more than that as a result of this Bill. Where there is a difference of opinion between representatives of a local authority and the Government I cannot see how the Minister can, in justice, deny that this whole thing should be subject to arbitration. The local authorities are equally convinced that the sum is inadequate just as the right hon. Gentleman thinks it is, adequate.

Mr. Shinwell

The local authorities have never once asked for this to be put to arbitration.

Mr. Lipson

The Amendment suggests that arbitration should be used so far as the distribution of the amount is concerned. But there is a difference of opinion between the Association of Municipal Corporations and the Government as to the amount to be paid. I submit that the only way in which it could be settled satisfactorily would be to use the method of arbitration. Any way, whether the Association have asked for it or not, the Minister is not sure that the live million pounds is a reasonable amount. He is not so sure that he is ready to submit it to arbitration. If he is confident, he should be prepared to do so. Of course, it might be that the arbitrator would say "This is too much." That has been suggested by an hon. Member, but it has to be remembered that if one goes to arbitration one has to accept the result. Arbitration is the proper way of dealing with this, and if the maximum is five millions I am sure there will be a very grave feeling of dissatisfaction among the local authorities of this country.

If there had been no local authority undertakings it would have cost the Government much more than the sum which the local authorities are getting. That is a factor in this argument. I would appeal to the Minister, even at this stage, to give further consideration to the representations of the local authorities and try to arrive at an amount, not to be fixed tonight, but one which can be given to this House later on for further discussion. I do put it to the Minister that this is the only just way of dealing with this matter

Mr. David Eccles (Chippenham)

The substance of the Minister's argument appeared, to be that a proper assessment would take so much time and trouble that it was better to have a shot in the dark and that that is good enough. I do not think he will get anywhere near a right decision. Is there any difference between the consumers and the ratepayers? Are they not mostly the same people?

If it is a case of rates versus rights the argument does not hold water. It may be a good thing to say on the platform, but let us examine what the Financial Secretary has said. He put it forward that 74 authorities helped the rates to the tune of £309,000. But that is not the whole story. That is the proportion of the profits which they chose to transfer to the relief of the rates. Of course, they made very much more profit than that and, no doubt, with the far greater sums which they retained in their undertakings, they paid off some of that debt and increased the value of the assets which belonged to the municipalities concerned. It must be true that different municipalities pursued different financial policies in regard to their reserve allocations and the amount of help they gave to the rates and, therefore, it is not an easy matter to decide what is really the loss to any given municipality under some general formula.

Now as I understood the Minister, he said it was wrong for them to have made profits out of the sale of electricity. He said that was depriving the consumers of their rights. He said that the price of electricity should have been so adjusted downwards that the accounts balanced. That was the substance of his argument. What will now happen under the compensation as proposed? In the cases where rates have been aided by profits from the electricity undertaking, those rates will have to go up. When they go up the consumers of electricity who were also ratepayers—and I claim that a great many of them were—will be in a worse position unless the price of electricity is reduced after nationalisation takes place. Have we any assurance that in these cases the price of electricity is going to be reduced? If we have no assurance on that point, then it is quite obvious that these particular people will suffer a loss as a result of the undertaking being nationalised. Then we have this extraordinary contradiction; that one Minister of the Crown says it is wrong to make a profit out of selling electricity, in which case no compensation ought to be paid at any time, and the other Minister of the Crown says, "We are going to compensate these particular people for the loss of rates when we readjust the block grants."

Mr. Glenvil Hall

Obviously the hon. Gentleman has got my argument wrong. If I may say so, as far as I know, local authorities have never pressed for compensation because of the effect on rates. They have almost universally realised the position. Although it may be, as he says, that rates may go up because of this loss—they never have put in a serious claim that they should be compensated because one particular authority aided the rates with the profits made from an electricity undertaking.

Mr. R. S. Hudson

What I said was that the proposition was put up at a meeting of the Municipal Corporations. That proposition was defeated on purely political grounds by the majority who were Socialists.

Mr. Glenvil Hall

If I may put it this way, what I was trying to do was to show that losses do arise through the fact that some local authorities would now no longer be able to aid the rates. But I wanted to do justice to the local authorities.

Mr. Eccles

I think the hon. Member for Houghton-le-Spring (Mr. Blyton) pointed out that certain local authorities suffered very much. I consider it to be the duty of hon. Members to look into this matter and, if we think that local authorities or anybody else have a claim which they might not have put forward, it is up to us to put it forward. I cannot see how the Government can get out of the position that in certain circumstances some consumer-ratepayers will be worse off under nationalisation, and I cannot see why that should not be a matter for compensation.

The Government's case is that they cannot find a formula. They say, "Let us have this five million pounds sum and see how it goes." I agree with the right hon. Member for Southport that it would be better to do justice even if it takes a little more time. Can the Government assure us that the local authorities would reject our proposal? I do not think they can say that. I am sure if they put it to the representatives of the local authorities that the figures of loss will be properly worked out, they would prefer it. Perhaps after all it would turn out that the sum would be less. It would depend upon the terms of reference to the Tribunal. I am not prepared to say that five or ten million pounds is right. We will not get justice under the Clause as it stands, but under the Amendment, if accepted, we shall get justice.

Mr. Boyd-Carpenter

The question it seems to me is not whether agreement has been or could have been come to between the local authorities and the Government; surely the question, and the only material question, is whether proper compensation is being paid and being paid in the right way. As I understand it, all hon. Members with the possible exception of the hon. Member for West Fife (Mr. Gallacher) concede that compensation should be paid when property is taken over. That necessarily involves an assessment of compensation by reference to some outside factor, and I think that our proposal does meet that. I think I am right in saying that this is the first occasion on which property has been taken over under a nationalisation Bill without the compensation to be paid being assessed by reference to some outside authority or to some outside—

Mr. Hobson

The principle of which the hon. Gentleman complains has been applied in other cases; for example, the East and West Ham tramways were taken over by hon. Members opposite on precisely the same basis as is contemplated for the electricity undertakings in this Bill.

Mr. Boyd-Carpenter

I do not think for one moment that the hon. Member is right in saying that that principle was followed in the case of the East and West Ham trams of simply voting a lump sum. The question is: is this a proper compensation proposal to pass the House of Commons or not? My first and principal objection to it is that there is no specific proposal included in the Bill. I think the Committee is entitled to be told why there is no full and detailed proposition put up in the Bill. Let me remind the Committee of what the right hon. Gentleman the Minister of Fuel and Power himself said upstairs in Committee on 17th of April when he announced the proposal. I quote from col. 646 of the OFFICIAL REPORT. The Minister then stated: What I am saying is that if we should decide compensation we have to devise a formula and get a basis on which it is to be paid and that whatever is decided can easily be expressed in the Bill. There is no difficulty about that."—[OFFICIAL REPORT, Standing Committee E, 17th April, 1947, c. 646.] 12.30 a.m.

That was over two months ago and yet no such formulae, no such proposals, have yet been put forward into this Bill. I think we are entitled to be told why. Was the reason gross incompetence? Or were there some other reasons why it has been found inconvenient to include it. The point surely is—and it is the only material point—whether this is a method of compensation which can be allowed to go from this committee. We are given a figure which the Financial Secretary himself said might be over generous. I should be entirely opposed to giving compensation which was over generous. We are not told in any way whatever how it is to be allocated and sub-allocated among the 370 local authorities concerned Surely we are entitled to be told that. What is proposed is apparently simply this—

Mr. Gallacher

On a point of Order. Is it in Order that some points which have been put by a Front bench Member and which were answered by the Minister should be repeated? The Minister explained the formula which they had agreed upon and which had then, because of this or that, to be discarded. He explained it arising out of the argument of the right hon. Gentleman. This is complete repetition.

Mr. Boyd-Carpenter

If the hon. Member for West Fife has had the good fortune to be let into the secret of the Government's formula—

Mr. House (St. Pancras, North)

On a point of Order. Can we have this point of Order met, please.

The Chairman

Tedious repetition is not permissible. But I do not think we have quite reached that point yet.

Mr. Gallacher

But the Minister answered the point.

The Chairman

That may be, and I hope hon. Members will forebear to use repetitive arguments.

Mr. Boyd-Carpenter

If the hon. Member for West Fife has been let into the secret of the Government's formula, and also let into the secret of why there has not been included a provision which the Minister said more than two months ago could easily be included, he is in a somewhat monopolistic position. If that explanation is available, it should have been divulged, not in secret to the hon. Member for West Fife, but to this Committee. If there is to be any suggestion of repetition may I say this: perfectly reasonable questions were put to the Minister by several hon. and right hon. Gentlemen who spoke before me. The right hon. Gentleman did not answer any of them. I submit that Members of the Committee are entitled to demand of the Government that these highly pertinent and highly material questions shall be answered. Some of us are not prepared simply to vote £5 million to be handed over to the Minister to be distributed as the Minister thinks fit, scattered like chicken feed to a flock of chickens by the Minister. For many reasons not only do we think that inexpedient, but we are not prepared to entrust such a vital function to a Minister who might well think that such compensation should only be paid to—if I may adopt his own phraseology—intelligent municipalities of a non-Tory character.

Mr. Wilkins (Bristol, South)

I only want to take up one point which has been put before the Committee from the other side, and which I think is a complete fallacy. I have been associated with probably one of the largest if not the largest municipal electricity undertakings in the country. I think my hon. Friend the Member for Stockport (Sir A. Gridley) was also a member on one occasion. I believe it is true to say that the Act governing the electricity industry lays down there must be 5 per cent. of the capital value of the undertaking in the reserve fund before any authority may distribute money to the rates. Therefore, it is clear that very few authorities in this country have built up sufficient reserves to enable them to make contributions towards the relief of the rates.

I hope the Minister will not listen to the argument that compensation for these authorities should help their rates funds, because the more progressive authorities have taken the view that it was their business to help consumers who had helped to build up the undertaking. We have done so by making available to the consumers of Bristol electrical labour-saving appliances at very low charges for hire. Consequently, if the Minister does listen to the plea now being made that he should compensate for rate-aids, he will fall foul of those authorities who have distributed their surpluses for the benefit of the consumers who built up the undertakings by their support. I hope the Minister will stand firm on this point. I am as anxious as any Member to see that local authorities are justly treated in this matter. I think they have a claim on the basis of their Income-tax set-offs and for stock management expenses towards which the Government may well pay, but on rate-aids they have no claim at all.

Lieut.-Colonel Elliot

The Debate, with its two contributions from the Minister and the arguments brought forward by the right hon. Gentleman on the justice of the claim, seems to recall the eminent judge, whose views will no doubt be familiar to-the Solicitor-General—the judge who reflected on one occasion, "many murderers have escaped, but, on the other hand, a number of innocent men have been hanged, so on balance justice has been done." That is the sort of average which the Government are attempting to strike, for the Minister seems to fail to understand with whom his quarrel is. His quarrel is with the local authorities.

Mr. Gallacher

There is not a quarrel with anybody.

Lieut.-Colonel Elliot

The Minister's quarrel is with the Association of Municipal Corporations and with other bodies of local authorities. The points in regard to the Association of Municipal Corporations have been brought out very clearly and it is necessary to point out again what was said: The Minister's statement was made with out any prior consultation with my Association. We were given no opportunity of expressing our views of the suitability of the amounts proposed to be included in the Bill. An appropriate Government Amendment now stands on the Order Paper in the name of Mr. Shinwell. In the interval my Association have had no opportunity of expressing their views as to the adequacy of this sum to the Minister. That is not a statement of any Member on this side of the House; that is a statement of the Association of Municipal Corporations. It is a statement which the Minister has to deal with—but this is not the only statement the Minister has to deal with. The Association of Urban District Councils has also expressed its views. I do not happen to be an officer of this Association and I have no interest of any kind or description in it. They wrote: You may like to know the views of the urban district councils, 112 in number, who own electricity undertakings, and I am sending herewith copies of two letters I wrote the Prime Minister. They enclose letters which say that on 14th March We desire respectfully to protest against these terms inasmuch as, apart from the loss which the urban district councils will incur through being deprived of their right under the Electricity Supply Act, 1926, to transfer profits in relief of current rates … we will also suffer serious loss by the severance of the electricity undertakings from the functions which they carry on. In letters on 14th March and 6th June, they protest again, saying that the Association protest at what they regard as the inadequacy of the global sum for compensation of £5 million, which on 17th April the Minister of Fuel and Power announced as the compensation proposed to be made to meet substantially the claims of the local authorities. They would earnestly ask that the amount of the global sum should not be determined without consultation with the local authorities. They say on the 23rd June: I am informed by the Secretary of the Association of Municipal Corporations that the Ministry of Fuel and Power have not acceded to the suggestions which that Association and the Urban Districts Councils' Association both made that the question of the global sum should be discussed with the Associations.

Mr. Glenvil Hall

A tribunal or arbitration was never suggested.

Lieut.-Colonel Elliot

The Minister can always be trusted when the chance comes of putting his foot into it, to put it in up to the thigh. He now repeats the statement he has made once or twice—I did not intend to be harsh—that they have never suggested that there should be a tribunal and that it was never suggested there should be arbitration. How then does he explain the Amendment drafted by them to Clause 14, page 20, line 48: Provided that if any local authorities are dissatisfied with the determination of the Minister under this Section, they shall be entitled to have the question determined by an arbitration tribunal"?

Mr. Shinwell

That relates to compensation on severance.

Lieut.-Colonel Elliot

The fact of the matter is that the local authorities, as is well known, have been in consultation with each other and have repeatedly stated their dissatisfaction with the size of the sum. They desire to have further discussion with the Minister on the size of the sum. Quite clearly, the distribution of the sum is also a matter on which they are dissatisfied. Here the Minister 'himself, I think, cannot be held guiltless, because he held out the hope in Com- mittee that he would be able to put something down on the Paper which would deal with the question of distribution. It is well known that on Friday morning the Clause the Minister had been brooding over did appear on the Paper. It stated that the Minister would distribute the sum in accordance with any ideas the Minister might have. He could have put that on the Paper without two months' delay and avoided the complicated and cumbersome procedure of Report stage and the recommittal of a new Clause at the end. It derives directly from the inability of the Minister to arrive at a clear and simple method of distribution which he held out hopes that he would be able to do. If the Minister has taken so long and has not yet found a suitable formula, what guarantee is there that he will find a suitable formula at all? All the arguments tonight are against that. There are still 370 local authorities, and it will take a long time, he says, under a tribunal to inquire into their claims.

The Minister's proposals will not be a saving of time. All they mean is that compensation, admittedly inadequate, is to be distributed along lines the Minister is unable to disclose. I do not think that is a reputable record. I do not think it is an adequate way to deal with compensation. The proposal we make for a tribunal is one of obvious and simple justice, which could be easily written into the Bill now and would work satisfactorily in the future. More than that, it would tend to resolve the quarrel between the municipal corporations, the urban districts, the great local authorities of this country, and the Government, which is the real difficulty with which we are faced and with which the Minister and the Financial Secretary have struggled so long tonight, and wholly in vain.

Question put, "That the words proposed to be left out stand part of the proposed Clause."

The Committee divided: Ayes, 182; Noes, 69.

Division No. 287 AYES 12.46 a.m
Adams, Richard (Balham) Edelman, M. Longden, F
Adams, W. T. (Hammersmith, South) Evans, John (Ogmore) Mack, J. D.
Allen, A. C. (Bosworth) Evans, S. N. (Wednesbury) Mackay, R. W. G (Hull, N.W)
Anderson, A. (Motherwell) Fairhurst, F. McKinlay, A. S.
Attewell, H C Field, Captain W J. McLeavy, F
Baird, J. Fletcher, E G M (Islington, E.) Mallalieu, J P W.
Bechervaise, A E For man, J C Manning. Mrs L (Epping)
Bing, G H C Freeman, Maj J. (Watford) Mathers, G
Blackburn. A. R Gaitskell, H. T. N. Mellish, R J
Blenkinsop, A. Gallacher, W Mikardo, Ian
Blyton, W R. Ganley, Mrs C S MillingK, Wing-Comdr E. R
Bowden, Flg.-Offr. H W Gibbins, J. Mitchison, G. R
Bowles, F G. (Nuneaton) Gibson, C W. Monslow, W
Braddock, Mrs. E. M (L'pl, Exch'ge) Gilzean, A. Morris, P (Swansea, W.)
Bramall, E. A Glanville, J. E. (Consett) Murray, J D
Brook, D. (Halifax) Greenwood, A. W J (Heywood) Nally, W
Brown, T J. (Ince) Grey, C. F Neal, H (Claycross)
Buchanan, G Griffiths, D. (Rother Valley) Nichol, Mrs. M. E. (Bradford, N.)
Burke, W. A Griffiths, W D. (Moss Side) Nicholls, H. R. (Stratford)
Butler, H. W (Hackney, S.) Haire. John E (Wycombe) Noel-Baker. Capt F E. (Brentford)
Carmichael, James Hale, Leslie Noel-Baker, Rt. Hon. P. J. (Derby)
Castle, Mrs B. A Hall, W. G Oliver, G. H
Champion, A J Hamilton, Lieut.-Col R Orbach, M.
Chelwynd, G R Hannan, W. (Maryhill) Paling, Will T (Dewsbury)
Cocks, F. S. Herbison, Miss M. Palmer, A. M. F.
Collindridge, F Hobson, C. R. Pargiter, G A
Collins, V J Holman, P Paton, J (Norwich)
Caiman, Miss G. M House, G Pearson, A
Comyns, Dr. L. Hoy, J. Peart, Thomas F.
Corbet, Mrs. F. K. (Camb'well, N.W.) Hubbard, T Plans-Mills, J F F
Corlett. Dr. J Hutchinson, H, L. (Rusholme) Popplewell, E
Crawley, A. Hynd, H (Hackney, C.) Porter, G. (Leeds)
Crossman, R H Janner, B. Price, M. Philips
Daggar, G Jeger, G (Winchester) Pritt, D N
Dairies, P Jeger, Dr S. W. (St. Pancras, S.E.) Proctor, W. T
Davies, Edward (Burslem) Jones, D. T. (Hartlepools) Pryde, D J
Davies, Harold (Leek) Jones, Elwyn (Plaistow) Pursey Cmdr H
Davies. Hayden (St. Pancras, S W) Jones, P. Asterley (Hitchin) Randall, H E.
Deer, G. Keenan, W Ranger, J
de Freitas, Geoffrey Kendall, W. D Reid T (Swindon)
Delargy, H. J. King, E. M. Robens, A.
Diamond, J Lang, G Roberts, Goronwy (Caernarvonshire)
Driberg, T. E. N. Leonard, W Pobertson, J. J (Berwick)
Dugdale, J. (W. Bromwich) Lewis, A. W. J. (Upton) Rogers, G
Dumpleton, C. W Logan, D. G Ross, William (Kilmarnock)
Royle, C. Stubbs, A.E. West, D. G.
Scollan, T. Sylvester, G. O. Whiteley, Rt. Hon. W.
Segal, Dr. S. Symonds, A. L. Wigg, Col. G. E.
Shackleton, E. A. [...] Taylor, H. B. (Mansfield) Wilcock, Group-Capt. C. A. B.
Sharp, Granville Taylor, R. J. (Morpeth) Wilkins, W. A.
Shawcross, C. N. (Widnes) Taylor Dr. S. (Barnet) Willey, F. T. (Sunderland)
Shinwell, Rt. Hon. E. Thomas, I. O. (Wrekin) Williams, J. (Kelvingrove)
Skeffington, A. M. Thomas, George (Cardiff) Williams, W. R. (Heston)
Skeffington-Lodge, T. C. Thorneycroft, Harry (Clayton) Willis, E.
Skinnard, F. W. Tiffany, S. Wills, Mrs. E. A.
Smith, C. (Colchester) Tolley, L. Woodburn, A.
Snow, Capt. J. W. Ungoed-Thomas, L. Yates, V. F.
Sorensen, R. W. Walkden, E. Younger, Hon. Kenneth
Soskice, Maj. Sir F. Wallace, H. W. (Walthamstow, E.)
Stewart, Michael (Fulham E.) Watkins, T. E. TELLERS FOR THE AYES
Stokes R. R. Watson, W. M. Mr. Joseph Henderson and
Stross, Dr. B. Weitzman, D. Mr. Simmons.
Astor, Hon. M. Fraser, H. C P.'(Stone)' Molson, A. H. E.
Baldwin, A E. Gage, C. Neven-Spence, Sir B
Birch, Nigel Galbraith, Cmdr. T D Nield, B. (Chester)
Boles, Lt.-Col. D. C (Wells) Gridley, Sir A. Noble, Comdr A H. P.
Bossom, A. C. Haughion, S. G. Osborne, C.
Bower, N Henderson, John (Cathcart) Peto, Brig. C. H. M.
Boyd-Carpenter, J. A. Hinchingbrooke, Viscount Prescott, Stanley
Bracken, Rt. Hon. Brendan Hollis, M. C Prior-Palmer, Brig. O
Bromley-Davenport, Lt.-Col. W Hudson, Rt. Hon. R. S. (Southport) Raikes, H. V.
Channon, H. Hurd, A Roberts, Maj P. G (Ecclesall)
Clarke, Col R. S. Hutchison, Col. J. R. (Glasgow, C.) Robinson, Wing-Comdr. Roland
Clifton-Brown, Lt.-Col. G Jarvis, Sir J. Ropner, Col L.
Conant, Maj. R. J. E Lambert, Hon G Sanderson, Sir F
Crosthwaite-Eyre, Col O. E Lancaster, Col. C G Scott, Lord W.
Cuthbert, W. N. Langford-Holt, J. Spearman, A C M.
Digby, S. W. Legge-Bourke, Maj. E. A. H. Spence, H. R.
Dodds-Parker, A. D. Lipson, D. L. Stanley, Rt Hon. O
Dower, E. [...] G. (Caithness) Lucas-Tooth Sir H. Sutcliffe, H.
Drayson, G. B. Mackeson, Brig. H. R. Vane, W M. F.
Drewe, C Macpherson, N. (Dumfries) Williams, Gerald (Tonbridge)
Eccles, D. M. Maitland, Comdr. J W. York, C
Eden, Rt. Hon. A. Marshall, D. (Bodmin)
Elliot, Rt. Hon. Walter, Marshall, S. H. (Sutton) TELLERS FOR THE NOES
Foster, J. G. (Northwich) Mellor, Sir J Mr. Studholme and
Lieut.-Colonel Thorp

Question put, and agreed to.

Clause added to the Bill.