ELECTRICITY BILL

HC Deb 30 June 1947 vol 439 cc968-1081

Order for Third Reading read.

3.54 P.m.

The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Gaitskell)

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

The right hon. Gentleman the Member for Southport (Mr. R. S. Hudson], at the beginning of the proceedings in Committee on this Bill, addressing the Chairman, said: Quite clearly, we regard this as a bad Bill, but it is going to be passed into law in some shape or form and, therefore, we conceive it to be our duty, as the Opposition, to put forward Amendments which we think will improve it. I would assure you that we, on this side have no desire to be obstructive, and, even if we had, it would be useless."— [OFFICIAL REPORT. Standing Committee E, 25th February, 1947; c. 8.] I think we can all agree that the right hon. Gentleman was as good as his word, that the Opposition, did not obstruct in Committee, and that the proceedings as a whole were businesslike and reasonably harmonious. From time to time strong disagreements were revealed, but that was in the nature of things. For our part, I think we can claim that we have done our best to help by being forthcoming when we felt that no serious damage was being done to the Bill, and by adopting a generally unprejudiced attitude and readiness to accept anything which we really thought would improve the Bill. Naturally, we had to scrutinise the Opposition Amendments with some care, because Opposition Amendments are like what classical writers have described as "gifts from the Greeks." With them one has to be particularly careful to see whether there is a bomb in the bouquet. If there is one lurking in the bouquet, one must be careful not to pick it up at all, or at any rate be careful to remove the bomb.

In the course of 24 days' proceedings in Standing Committee, over 600 Amendments were put down, and most of them were discussed, although, of course, not all of them individually. Of these, 197 were accepted. Needless to say, most of these acceptances by the Committee were of Government Amendments; we did however, accept 30 from the Opposition. On the Report and recommittal stages, 254 Amendments were put on the Order Paper, and 155 were accepted. Most of these, too, were Government Amendments, but many sprang from points which had been made earlier by the Opposition. So I think nobody will deny that this Bill has been thoroughly examined Clause by Clause and line by line. It is also a fact that more time has been spent on this Bill, and far more Amendments have been discussed, than on the Bill to nationalise the coal industry, which the House passed last year.

Important changes have been made. For instance, there is the new procedure for payment of compensation, and for identifying authorised undertakers. There is the changed definition of a holding company; there is the new treatment of non-statutory and composite undertakings; there are changes in the precise functions of the consultative councils, in the position of directors as affected by those Clauses dealing with the control of dividends and the prevention of the dissipation of assets. But when all these are taken into account, together with the many drafting Amendments which have been made, the Bill remains substantially the same as it was when it was introduced into the House. This we do not view with surprise, because we have always considered that the Bill was a good one and that—more than the Opposition have sometimes admitted—it is fundamentally non-controversial. The Third Reading is not the occasion on which to argue the principle of the Bill, and certainly not the occasion to go into great detail; one has to try to steer a course between these two extremes, and what I would like to do briefly, as I know there are many others who want to join in the Debate, is to pick out a few central issues in the Bill and make some comments upon them.

First, generation. We set up in this Bill a Central Authority, the British Electricity Authority, and part of its functions is to take over and run the generation of electricity in this country. This part of the Central Authority's functions is unquestionably the logical sequence to the 1926 Act. I think few would deny that the system of selected stations and dual control which has existed for the past 21 years is now out of date, that it involves much waste of time on complex financial arguments, that it does not involve the use of labour and technicians to the best advantage for the country as a whole, and that it does not give rise to the best planning and construction of power stations. I do not say that this is a major change, but I think that it is a valuable one. I can confidently say that it has hardly been challenged by anyone in the course of all our rather long discussions of the Bill.

It is the duty of the British Electricity Authority to promote the use of all. economical methods of generating, transmitting and distributing electricity. We all of us know the problem with which we are faced in the shortage of power station capacity today. We know, too, that this difficulty cannot be overcome in a matter of months. It will take two or three years before sufficient power station capacity is available to carry the load. Many people feel—I have knowledge of this from letters which I have received from Members of Parliament and others —that water power is the solution, and as the Bill refers to "all economical methods of generation," perhaps it will not be out of place if I say one word on that subject.

It is quite clear that the British Electricity Authority would be very remiss if it did not take full advantage of any natural resources it may possess, but I ask the House not to exaggerate the prospects. At present, the total generating capacity operated by water power and in action is about 373,000 kilowatts. The generating capacity now being developed from water power is another 394,000 kilowatts, and, in addition, about 400,000 kilowatts have been surveyed, although the work has not been started. There is, also, the great project of the Severn Barrage which, if it were carried through, would add another 800,000 kilowatts capacity. When all this is added up, it amounts to only a small proportion of our need—some two million out of the present installed capacity of 12— million kilowatts, which will be rising in the course of the next few years to 15 million and even more.

While we shall certainly press on with water power, there is no question but that it will help us only in a limited way and, moreover, although water power saves coal, it has much higher capital costs than steam plant, and the time taken for building is very long. The Severn Barrage, by far the largest single scheme contemplated, will take at least eight years to complete, although, in the end, it will save close on one million tons of coal. Therefore, since these schemes necessarily take time and cannot bring results in a short period, I think that it will be agreed that they must be looked at on the usual basis of comparative cost of water power as compared with steam power. In the case of the Severn Barrage, had that project been carried into effect in the 'thirties, I think that no one could doubt that it would now, in the light of present prices and increased capital costs, have been a tremendous success, but that does not mean that it would be appropriate immediately to press on with it. What has been done is to authorise the construction of an elaborate model, which is the first step to ensure that no ill-consequences befall the Newport Docks, which would be a very serious matter.

Apart from water power, there is over the horizon, or perhaps a little nearer, the question of atomic energy. No one can doubt that here we have something with immense possibilities, or that considerable strides have been made in its development; but, as far as we are advised, there are still many technical difficulties to be overcome before full advantage can be taken of atomic energy as a source of power. Research in this field is proceeding actively under the Minister of Supply, but I think it would be wise not to assume any very early application of atomic energy to power for industry. For some considerable time to come, therefore, we must continue to rely on coal and steam power.

Now may I turn to the area boards? I think that here there is a fundamental basis of agreement. We all, surely, agree on the need for larger areas. One might say that there was general agreement on this nearly 30 years ago when the 1919 Act was passed, and more recently the case has been presented in full in the McGowan Report. The difficulty in the way of achieving the large areas, I think we must frankly say, has been largely political. There has been an unwillingness on the part of the companies to be absorbed by the municipalities, and unwillingness on the part of the municipalities to be absorbed by the companies; and no one up to now has had the courage to say "A plague on both your houses," and to carry on and set up what we regard as the only possible form of organisation, namely, the area boards. The number of the boards and the size of the proposed areas as set out in the Bill have been generally accepted. I think that the Opposition will agree, although they have never committed themselves to this, that they have let it pass without severe criticism, and that is as it should be because, undoubtedly, in the industry itself there has been general acceptance. We have, of course, to provide for modifications when necessary, and, indeed, the actual details of the areas have yet to be finally settled, but that there should be a number of areas of this kind and with this sort of sphere of activity is, I think, not really in dispute.

The next point is this—if we are to have areas of that size, then they cannot be elected bodies. The right hon. and gallant Member for the Scottish Universities (Lieut.-Colonel Elliot), from time to time in the course of these Debates, has twitted the Government about their cavalier attitude to such an elected form of authority, but he knows perfectly well that this is inevitable once we agree that the existing areas are too small and that control must pass from the ordinary municipal undertaking. It that is the case, then I suggest that there are only two alternatives—the area boards must be appointed either by the Central Authority or by the Minister. It is the view of the Government, and I think that it was shared by practically all hon. Members of the Committee, that it would be a mistake for the Central Authority to appoint the area boards, as it would involve too much domination of the areas by the Central Authority, and, therefore. Ministerial appointment was desirable because it would provide a more autonomous form of organisation in the areas. The Opposition have not challenged that point. They have made suggestions as to how the appointments should or should not be made, but they have not, I think, challenged the essential point that the Minister must make the appointments.

Nor have we provided in the Bill for anything in the form of statutory organisations to be set up below the area boards. Some form of decentralisation will obviously be necessary, but that we shall leave to the area boards. Proposals to introduce at the lower level, below the area boards, some additional form of elected committees have had to be rejected by the Government for, as I think, the very good reason that they would prove unworkable in practice. We cannot have a divided loyalty with officials responsible, on the one hand, to a locally elected committee, and, on the other hand, to an area board. Our view, therefore, is that the right place for the local interest, though of course, some members of area boards may well be persons of local government experience, is on the consultative councils.

I refer again to the fact that in the course of our proceedings we have made two changes here; we have, as it were, brought the consultative councils and the areas nearer the consumer by making it mandatory upon them to appoint district committees, and at the same time we have brought them into closer touch with the Minister by giving them the right of appeal to him against decisions by the area boards or by the Central Authority. One further word on this; do not let us start with the assumption that the consultative councils and the area boards are going to be at loggerheads. If one conceives of the consultative councils as being policemen, all the time waiting to catch out the area boards, then I am sure we shall get nowhere. At least we shall get friction and constant difficulties, whereas what we want is that they should work harmoniously together. One of the provisions which should assist is to the effect that the chairman of the consultative council should be a member of the area board. By that I mean that the chairman, as chairman, is a member of the area board, and not that one member of the area board becomes chairman of the consultative council.

It may be asked why there should be any central control on distribution at all, even granted that generation should be nationalised. It may be asked, why should not distribution be left as a purely local function? I think the answer to that is fairly clear. There are certain functions connected with distribution which should, at any rate, be supervised centrally; for example, research, capital development, finance and labour relations—all these to a certain extent require central handling, and those are the reasons why we consider that it is necessary to have some central organisation over and above the area boards. I hasten to add that it is neither our intention nor our desire that the Central Authority shall continually interfere with the area boards. We have arranged for the four chairmen of the regional boards to serve in rotation on the Central Authority, and I venture to believe that this is a most valuable provision in the Bill, because it will give a unity which would otherwise not exist in the new set-up. Again, it can be said that, granted that you have a Central Authority, granted that the Minister is to be the man who appoints the area boards, it is nevertheless desirable that the area boards should go through the Central Authority, rather than be directly responsible to the Minister. I apologise to the House that what may seem to some to be rather dreary and dull details of administration have been gone into so thoroughly, but these are really extremely important matters, and upon the tightness or otherwise of our judgment on these administrative questions may largely depend the success of the whole organisation.

The next subject on which I want to say a word is consumers' protection. The Opposition have argued, not once but many times, that the consumers under this Bill are less well off than they were previously. They base this argument on the theory that certain statutory provisions, which we have repealed in this Bill, provided more protection for consumers than we have given in the Bill itself. I do not think that view is consistent with the facts. In the first place, it cannot be overlooked that we are now setting up an organisation which is entirely non-profit-making, whereas, over a part of the industry up to now, electricity has been supplied by profit-making bodies. I do not mean to say that in no circumstances can there possibly be a conflict of interest between the consumers and the public authority which we are setting up. That, of course, would be absurd. The public authority might get into the habit of having officials who were extremely rude to consumers about complaints so that there would be a conflict between them, and provision must be made for it. Nevertheless, there is surely this difference, and I do not think hon. Members opposite can really challenge it. The profit-making body is, ex hypothesi, in itself anxious to make profits;there is a clash of financial interest between it and the consumers on funda- mental issues. I see the hon. Member for Stockport (Sir A. Gridley) shaking his head, but there is, though it may be nullified in some cases by the fact that, in the main, it suits both consumers and managements to have an expanded demand and an expanded supply. I agree that this is an industry where, owing to the nature of the costs and the high overheads, such is the case, but the fact remains that there was the danger of that fundamental clash of interest, which has now gone. It has gone because one has removed the private profit element.

In the second place, what we have repealed in the old legislation is simply what is out of date and has been out of date in many cases for years, or what is useless, or what is replaced by new provisions in the Bill. I will not, at this stage, start going into details, but that is our sole motive and that is all we have done. I have already referred to the consultative councils, and I am certain that they will be far more effective in looking after the interests of consumers in the more limited sense which will now be required, than the statutory provisions hitherto in operation, which were never effective and were seldom used.

What is the position of the Minister under this Bill? Very similar, I think we may reply, to his position under the Coal Act. He will not intervene in matters of detail; he has the power to give general directions on matters affecting the national interest, and special emphasis is laid on capital development, training, education and research. He has the right to demand information, to supervise the presentation of accounts, and so on. Here again, once granted the principle, I do not think the Opposition disagree with us that, in this matter of the relation between the Minister and the public authority, this happy mean is the right thing to go for. I think we both now discard the idea of the Minister running an industry of this kind as he runs a Department. Equally, I should imagine, we both agree that he must have some powers of general control. I want to emphasise that, if that be accepted —and, if it is not, perhaps it would be interesting to know what the Opposition do think on this matter—the Opposition cannot have it both ways. If the Minister has powers only of a general character and is not intended to intervene in detail, he cannot be held responsible for detailed matters, for happenings which go on inside the industry, and it will be no good pressing him continually to answer questions on matters of that kind. If they want answers on questions of that kind, then the Bill should have been different, and should have given him the power with the due responsibility.

I only want to say one other word on this matter of the Minister's relationship with the nationalised undertakings. I do not know what attitude the Opposition will adopt towards this Bill once it becomes an Act. I do not know whether it will be on their list for chucking out, or revision, or acceptance; so far as I know, quite possibly they have not yet made up their minds. In their latest publication no reference is made to it. But I would put this to them, if they decide to accept the fact of the nationalisation of electricity, as I hope and believe they will do, they will then have to ask themselves this question; are they continually going to adopt an attitude of extreme hostility to the nationalised boards, the Central Authority and the area boards? It is natural enough, I know, that they should do so to start with, when those boards are the product of a piece of Socialist legislation to which they are opposed, but will it not get them into a very difficult position if, as may happen in the dim and distant future, they should by any chance return to power? What will be the position of the right hon. Gentleman opposite, for example, if he happens to be Minister of Fuel and Power? [An HON. MEMBER: "Wait and see."] We shall probably have to wait and see a long time, but, nevertheless, the subject is an interesting one. What will be. his position if there is this continual hostility on the part of the Conservative Party to the nationalised undertakings?

I would suggest to hon. Members opposite that the time is coming—they cannot face it yet—when it will be wise to adopt a far more impartial and unbiased attitude to these new organisations. Naturally, we would not expect that attitude where the Minister is issuing directions and where it is clearly a matter of Government policy, to which they are entitled to object, and where he will be willing, because he has the power, to take the responsibility. I might say, too, that the same thing applies to our side of the House. We have got to adopt a non-party attitude to these organisations. We shall want to scrutinise them from the point of efficiency, because in the last resort that is what we want them to be. If they continue to be the cockpit of party politics, for my part I think it will be regrettable.

Apart from one or two gibes, there has not been a lot of opposition to the structure of the new organisation. Where feeling has run high on the Bill is on the subject of compensation. The arguments on both sides have been repeated several times, not only in the Debates on this Bill, but also in the Debates in the Transport Bill, and, therefore, I want to make only a few comments. The excuse for my remarks is that, personally, I have said very little up to now on the subject. One thing about which I am glad is that the Opposition arguments—that the compensation provisions for shareholders are unfair, because they involve the shareholders in a lowering of income—have, substantially, been dropped.

Colonel Crosthwaite-Eyre (New Forest and Christchurch)

No.

Mr. Gaitskell

The hon. and gallant Member will no doubt have an opportunity later of returning to the subject, but I am sorry if what he says is correct, because one of the weakest arguments put by the other side was their claim that, as the shareholders were deprived of their equity dividends, they should be given the same dividends in perpetuity and have them guaranteed by law. Nobody could seriously argue that that would be anything other than a gross Overpayment to the shareholders. However, whether they adopt the lower income argument or not, they have introduced a new one. As far as I know it is a new one, or, at any rate, it was brought up only at a late stage in the discussions on this Bill. They have argued that it is all wrong for us to compensate the shareholders in the manner we are doing when we are taking the assets of the companies.

The hon. and gallant Member for New Forest and Christchurch (Colonel Crosthwaite-Eyre), certainly, put this forward and others supported him. 1 cannot myself see the point of that argument at all. My hon. and learned Friend the Member for Llandaff and Barry (Mr. Ungoed-Thomas) disposed of it very neatly the other night when he intervened in a speech which was being made by the hon. and learned Member for the Combined English Universities (Mr. H. Strauss). After all, there would not be the slightest difficulty if the Government wanted to, in buying out the shareholders, compensating them, getting control of the companies, and then allowing the companies to go into liquidation. Under that scheme we would get the same result as we would get under the Bill, though it would take rather longer and it would be a little more clumsy way of doing it. Here we are short-circuiting an unnecessary stage in the proceedings, and, as far as the directors are concerned, under our proposals they retain their position rather longer than they would under the alternative method.

Mr. R. S. Hudson (Southport)

The hon. Gentleman is not suggesting that under the procedure he has indicated, the Government would get the whole of the undertakings at the cost at which they are now going to get them?

Mr. Gaitskell

What I was saying was that we could compensate the shareholders by simply obtaining their shares, and proceeding to liquidate the companies. There is no difficulty about that. That is quite a different issue from the issue of compensating the shareholders as we propose doing under the Bill.

Mr. Hudson

The hon. Gentleman has inadvertently said two things which are entirely opposite. He suggested an alternative to buying the shares, and when challenged by me he said if the Government acquired the shares on the same basis, they would be doing two entirely different things. Is he going to suggest that if the Government went into the open market and attempted to buy up the shares, they would get them for the niggardly price which they are now proposing to pay?

Mr. Gaitskell

I said buying the shares, but not at any price. Under either arrangement it is merely a difference in buying. However, I am about to deal with the point, because one hon. Member in the course of the Report stage, said he thought this very unfair inasmuch as it took a "willing buyer—willing seller" transaction to achieve such a result, and obviously that was impossible if the sellers were not willing. It is quite true the sellers are not always willing, but if the Opposition recommend that the shareholders should be allowed to hold the Government to ransom in this matter and put any price they choose on their shares, there is no possible hope of agreement with them.

The only remaining argument left to the Opposition has been the argument about the actual prices which were to be fixed by the Bill, an argument put forward by the hon. Member for Flint (Mr. Birch). He argued that these prices were unfair because, between the first series of prices, on which there was an option, and the later prices, there were important changes taking place on the Stock Exchange. In the course of those changes there was a general rise in industrial prices in which these electricity shares did not participate. The facts are, however, that that is not so. If one compares the relative yield of these shares with the yield of Consols between the two dates of the Bill, one would find that very much the same change took place in the case of electricity shares as in the case of industrial shares.

There is very little difference, but, even if it were greater, I would still argue that these electricity shares were naturally affected by uncertainty about the future. The electricity supply industry was unquestionably one on which any Government was bound to take some action, and, even had it not been nationalised, it is certain that some more effective measure of price control—and even hon. Members opposite would not deny their intention and desire to do this —would have been introduced. The fact is that, in our opinion—although I have very little hope of convincing the Opposition of this, I was genuinely surprised at the extreme agitation on this matter—the Stock Exchange values are the fairest form of settling the compensation. If the Opposition do not agree with that I would put to them the query: Is the method of settling Death Duties fair or unfair? The Stock Exchange values are accepted for Death Duty purposes as being a fair method of valuing an estate, and, if they are accepted for that purpose, then they are, in our opinion, fairly accepted for compensation.

Mr. Pickthorn (Cambridge University)

The Stock Exchange prices are a fair indication of what a man's estate is worth at that particular moment, but that is not a fair indication of what the whole estate is worth generally.

Mr. Gaitskell

I have already explained our attitude to compensation for the ordinary shareholder. We could have bought the shares first and then proceeded to take over the companies, but we felt it to be more convenient to do it in the way we have laid down under the Bill.

May I say one word also on local authority compensation? This is sometimes contrasted with compensation for the companies. It is said, for example, that in the one case—a point which, I believe was made by the hon. Member for Cheltenham (Mr. Lipson) last week —you receive market value, and, in the other case, nothing at all. This approach is completely fallacious. The fact is that in one case we are dealing with a number of private individuals who own shares and receive dividends and interest, whereas, in the other, we are dealing with public authorities providing services at cost. In the case of the company you convert the capital value of the shares into stock and you service the stock, both the interest and dividends becoming equivalent to the interest on the compensation. In the case of the local authorities, you take the concerns over as they are and continue to run them. You take their assets and their liabilities and you service their debts, but in this case no compensation is paid in respect of profits because we do not conceive these concerns as profit-making undertakings.

That is the essential difference. It is true, of course, that some authorities who regularly subsidise rates are losing by this and no one has ever attempted to deny it, but it would be quite impossible to justify a perpetual subsidy to their rates at the expense of consumers in contrast with other authorities who have deliberately made no profit at all or have put their profits to reserve. These arguments are accepted by the local authorities. They have never claimed either more compensation in a general sense, or that compensation should be paid in respect of subsidies to the rates. The whole discussion with them has been on the basis of incidental losses. Some of those are taken care of under the Bill; superannuation, for example, is covered by Clause 55, and, with regard to debt management, it has now been agreed that the Government shall pay. In fact, one is left with the two issues of severance and Income Tax. On severance we conceded their point and have given them what is undoubtedly a generous sum of money for pure severance. On Income Tax, however, we do not accept their argument, and, therefore no specific provision is made. I could argue the question on those lines at some length, but I wish to say only one other thing. All these matters of fairness or unfairness to the extent of a few thousands one way or the other between local authorities are completely dwarfed by the general arrangements which are to be made in the block grant system, and, in our view, it is idle to get really excited about them. The case for a Bill of this kind dealing with electricity supply is not disputed. On Second Reading my right hon. Friend and others argued —as I think absolutely convincingly— that nationalisation was the only sensible and expeditious solution of this problem. The structure of the Bill has not really been criticised. The dispute has been primarily on compensation, but let the Opposition remember, as I imagine they would wish us to remember, that the Government have a responsibility to see that fair play is done not merely to the shareholders, but also to the future consumers in this business. J need not emphasise the immense importance of electrical development both in the domestic and industrial spheres. With an industrial population becoming smaller, and the working population falling, it is essential that our horsepower per head should be rapidly increased. It is also necessary that we should have further applications of electrical processes in industry, and it is no less necessary that there should be additional electric power available in our homes.

We have had no developments during the war, and inevitably there is an enormous leeway to make up. All this is bound to take some time so that this Bill will not produce speedy results. What it does, however, is to put the industry on a sound foundation and to provide the right statutory and legislative framework for the expansion which will undoubtedly come in the next 10 to 20 years. The Bill may not be very sensational, dramatic or even revolutionary; indeed, in some ways, it is typically Eng- lish in being merely the latest stage in a series of developments. It may not produce very quick results because the generation, transmission and distribution of electricity require immense capital expenditure and time, but I do not doubt that when the economic and industrial history of these years comes to be written, this Measure will be recognised as being among the most far-seeing and valuable of all the Measures passed by this historic Parliament.

4.36 p.m.

Mr. R. S. Hudson (Southport)

I beg to move to leave out "now," and at the end of the Question to add "upon this day three months."

The Parliamentary Secretary began his speech with a very fair description of the course which the discussions of this Bill had taken. As a reasonably old Parliamentary hand, I think that both sides of the House may take credit for having shown that a Bill of this nature, on which there is naturally a profound cleavage of opinion between them, can nevertheless be carried through its various stages under the old-established procedure of the House and without recourse to the modern methods of the Guillotine. In that respect I think that both sides of the House are to be congratulated. I think that we can claim, as the Parliamentary Secretary pointed out, that we carried out our promise not to obstruct, and, equally, the Government side can claim that they attempted to meet our arguments with argument even though, necessarily, they did not always convince us, and even though they had at the back of their minds, the overwhelming argument of numbers which they also occasionally used.

We have discussed this Bill in considerable detail, and I think that it is true to say that a number of minor Amendments have been made which have, in our view, improved it in those places where they were made, but, as the Parliamentary Secretary said, the Bill we are discussing today remains substantially the same Measure that was originally introduced and discussed in February, and very few if any concessions affecting its main structure have been agreed to by the Government. Before I go on, I should like to take advantage of the opportunity and the invitation offered to me so generously by the hon. Gentleman to say what I should do if I were to become Minister of Fuel and Power in some succeeding Government. First of all, I hope that I shall not; I do not much like the prospect of cleaning up Augean stables, nor am I prepared to say in detail at this stage in what particulars we should alter the Bill as it finally passes into law. What I can say, however, is that I am perfectly certain that almost any one of my right hon. or hon. Friends on this side—when he becomes Minister of Fuel and Power at some comparatively not too remote date—will certainly administer the Department with a great deal more efficiency and less bungling than the right hon. Gentleman opposite has done, and we shall be prepared to make the best of the situation which he then hands on to us.

Most of the objections which we raised on Second Reading remain. The Bill was defended by the right hon. Gentleman in his Second Reading speech on the ground that it was necessary to reduce the excessive number of separate undertakings, and that the existing areas of distribution were too small. We believe that these objects could be attained without the drawbacks of the present Bill. We believe that the main defect of the Bill is its over-centralisation. There may have been anomalies. No one would deny it. There are anomalies, due very largely to the way in which the industry has grown up. The Bill goes to the other extreme of over-centralisation.

The Parliamentary Secretary made a very ingenious, new defence of the method of appointing area boards. Unfortunately, as in not a few other cases, his argument loses force when one looks at the Coal Act. If the method of adopting and appointing area boards under the Coal Act is sound it should be equally right for this Bill, and vice versa. We believe the real reason for the alteration of method adopted in the Bill is that it provides infinitely greater patronage. I gave figures the other day on the Second Reading, and I am not going to repeat them now. The effect was to show that the Bill will not only provide jobs for the boys, but will also provide cake for the boys in very great quantity indeed. When the Parliamentary Secretary looks at his remarks about area boards he will find that he came down to the pure milk of the totalitarian doctrine. [Laughter.]The right hon. Gentleman laughs. He had better read those remarks in HANSARD, and he will see for himself.

The existing system has been attacked, but the right hon. Gentleman will see that the existing system, both company and municipal, can claim that it presents an overall picture of enterprise and initiative. Surely the test of enterprise in respect of a great industry like this is the increase in the number of consumers and the amount of electricity sold. Equally, the test of efficiency is the relation of cost of production to prices of the raw materials and labour going into the manufacture. By either of those tests the industry, despite anomalies, comes out well. In regard to prices, there has been, as the House is aware, a steady fall over the years, and even during the last 10 years, despite a steady rise in the cost of raw materials especially in the cost of coal and labour.

The Parliamentary Secretary said, in defending the new set-up, that there would be no conflict between the Central Authority, the area boards and the consumers, because the Central Authority was a non-profit-making body. He went on to say that the essence of a profit-making body was that the interests of the consumers and of the concern must necessarily be divergent because the concern wanted to make profit, while the interests of the consumer must fundamentally be to get an abundant supply of whatever commodity they required, to get the lowest possible price and to get a reasonably good service. In fact it is a matter of relative unconcern to the consumer, so long as he gets a steadily increasing supply and a steadily diminishing cost, whether, as a concomitant, the body providing the supply is making a profit or not. Indeed, his real interest is that the body should make a profit because otherwise the body will not be efficient. The drawback to the new set-up is that the Central Authority will have no incentive at all, in the ordinary usage of the word, to increase supplies or to cheapen the product. To the extent to which it falls short of those aims, the consumer will definitely suffer.

The Minister and the Parliamentary Secretary have talked about the consultative councils and about the area boards. They suggested that the Bill itself provides in some way new and better safe- guards for the consumer than exist under the present statutory conditions. They have advanced no proof of that. All they have asked of us and of the country is that we should accept their word that that will happen. There is no reason in logic or in human experience why it should happen. Let us see of what the consultative councils on which the right hon. Gentleman lays such stress are going to consist. The Parliamentary Secretary himself says that there are to be no elective elements in them. Broadly speaking, the consultative councils—

Mr. Gaitskell

I must correct the right hon. Gentleman. I said that the area boards would not be elected. As he knows, at least half of the consultative councils have to be representative of local authorities.

Mr. Hudson

Yes, but they are not going to be elected. Neither the area boards nor the consultative councils will be elected. They are all to be nominated. Nominated by whom? By the Minister, and the Minister will be entitled to, and no doubt will, take steps to nominate his "stooges." [HON. MEMBERS: "No."] Why not? That is the sort of thing the right hon. Gentleman is doing. Who will be a better '' stooge '' than the man who, we hear, is to be the chairman of the Central Authority, the man who virtually failed as a member of the Coal Board and who has to be satisfied with this job?

The Minister went out of his way to pour scorn on a very large body of men on whom the industry has depended, and as a result of whose efforts the efficiency of the private side of the industry has arisen. The Minister went out of his way to say that he would not appoint to these bodies a man who had been a director and who had expressed himself as violently opposed to nationalisation. That is in effect saying that the right hon. Gentleman is providing "stooges." The right hon. Gentleman is going to discriminate. He is going to make his appointments. He has announced openly that when he considers an appointment to the Central Authority he is going to take account of people's political opinions. He announced, in other words and by definition, that he is going to exclude from nomination to these boards individuals who have shown themselves to be among the most efficient producers and distributors of electricity, in steadily increasing quantity and at steadily reduced prices. The result will be that he will appoint "stooges." Who on earth is going to stand up to the Minister effectively when he knows that his appointment on these boards is at the Minister's discretion and at the Minister's wish?

The Parliamentary Secretary said that we on the Conservative side of the House had to make up our minds on which leg we stood on the question of responsibilities. He said that either one should say that the Minister should give directions only in the important matters, in which case one must not ask him questions about the unimportant matters, or else one might say that he should keep the power to intervene and then one could question him. That is not the real alternative. The actual method which has been adopted in the Bill—to a great extent its effect can be seen in the working of the Coal Act—is to prevent this House having any opportunity of a real check on the Minister's action, because whenever it suits the Minister he says that it is a matter for the National Coal Board, and whenever it does not, he disclaims the responsibility. The Minister cannot have it both ways. The Minister laughs—

The Minister of Fuel and Power (Mr. Shinwell)

What else can the right hon. Gentleman expect me to do?

Mr. Hudson

The right hon. Gentleman can go on laughing, but the day will come fairly soon when the consumer will realise the truth of what we have been saying— that this set-up provides him with no security at all. He has no means of making his views known.

Mr. Edward Porter (Warrington)

of course he has.

Mr. Hudson

He has not under the setup of this Bill. If the hon. Member wants proof, he had better read some of the speeches made by the more independent of his own leaders of local authorities. There was Alderman Herdman of Barrow who got the sack as a result of speaking his mind.

Mr. Porter

He asked for it.

Mr. Hudson

So much for the question of consumer control. I have said that, taking it by and large, the existing machinery which has not done too badly is being destroyed. Everyone will agree that 95 per cent. of the houses of this country would have had electricity available by now but for the war. I wonder if the right hon. Gentleman can give any assurance that a similar state of affairs will occur in any measurable period of time. He has been at pains upstairs, and his Parliamentary Secretary has been at pains down here, to damp down the high expectations which he and his friends raised in the minds of people at the General Election. The Lord President of the Council on more than one occasion said that any scheme of nationalization must be defended on its merits. The history of this scheme is that, what everits merits are, they have certainly not been exposed to this House.

Take the cheapening of electricity— one of the most important matters from the point of view of the ordinary consumer. The right hon. Gentleman has been at pains to protect himself against any future charge by saying that he does not guarantee under this Bill that electricity will be any cheaper than it is today. I would go much further. I predict that under this Bill we shall see a steady rise in the cost of electricity and that the days of efficiency shown in steadily reduced costs of electricity will be over, as soon as this Bill becomes law and the vesting date has passed. The hon. Member for Wimbledon (Mr. Palmer) shakes his head. Let us compare, merely for analogy, what happened with coal. We have had two years now of the right hon. Gentleman's administration of coal. We have had six months, all but a day or two, of nationalisation. I had a look at the figures, and I compared the figures for the first 24 weeks—

Mr. Shin well

On a point of Order, Mr. Deputy-Speaker.

Viscount Hinchingbrooke (Dorset, Southern)

Frightened?

Mr. Shinwell

As hon. Members know, I am not in the least afraid of them at any time. My point, Mr. Deputy-Speaker, is that if the right hon. Gentleman is to be permitted to raise the coal issue and the administration of my Department relating to coal and the National Coal Board, shall I be permitted to reply?

Mr. Deputy-Speaker (Major Milner)

As I understand it, the right hon. Gentleman is merely, in passing, making a comparison.

Mr. Shinwell

But shall I be able to reply to that comparison?

Mr. Deputy-Speaker

I must remind both sides of the House that we are on the Third Reading of this Bill, and it is only permissible to deal with points arising on the Bill.

Mr. R. S. Hudson

I am aware of that, Mr. Deputy-Speaker, but this Bill has been and is being defended as being in the interests of the consumers, as one of the nationalisation Measures. All I want to suggest—I am not going into any detail but merely wish very briefly to quote some figures—is that on the analogy of coal, the expectation of the consumer of getting cheaper electricity will not be carried out. These are the figures I will quote. Take the first 24 weeks of coal under nationalisation—

Mr. Scollan (Renfrew, Western)

On a point of Order. Is it in Order either to quote or discuss relative figures with regard to promises made and what has actually been supplied in relation to another industry. We are discussing the Electricity Bill and not the Coal Act.

Mr. W. J. Brown (Rugby)

Further to that point of Order. If it is claimed in respect of a given Measure that the method to be applied will produce a certain result, is it not perfectly in Order to argue by analogy—

Mr. Scollan

There is no analogy.

Mr. Brown

I submit that it ought to be in Order to discuss experience in another industry, and I submit that that is. all that the right hon. Member for Southport (Mr. R. S. Hudson) has done up to now.

Mr. Deputy-Speaker

It is a question of how far one goes. The right hon. Gentleman may be entitled to draw that analogy but he is not entitled to go into details.

Mr. R. S. Hudson

I do not propose to go into detail but only to give the figures—

Mr. Shinwell

On a point of Order. With great respect, I submit that if the right hon. Gentleman furnishes figures about coal production for the first six months of this year, I am entitled to deal with those figures. I further submit that that is an appropriate matter for a Supply Debate and not for this occasion.

Mr. Deputy-Speaker

The right hon. Gentleman must not go into any further details than he has done. He has made his point.

Mr. R. S. Hudson

No, Sir I have not.

Mr. Deputy-Speaker

The right hon. Gentleman is not entitled to launch into details about another industry. He has made his point in general terms, and that is all he can do on the Third Reading of this Bill, which is concerned with another matter.

Mr. Hudson

I do not take any objection to those points of Order, which merely indicate how sensitive hon. and right hon. Members opposite are at being shown up. I would remind you, Mr. Deputy-Speaker, that the Parliamentary Secretary talked about atomic energy without being called to Order, and I was on the point of suggesting that it was out of Order. At any rate, as far as coal is concerned, as the right hon. Gentleman seems so worried about the actual figures, I will make my point this way. The result of our experience of the nationalisation of coal—perhaps this is sufficiently vague for the right hon. Gentleman—is that, compared with the last year of private enterprise, the consumer is paying 'a great deal more for a smaller quantity of coal although at the same time the numbers of men employed are much greater. That is the fact.

The final point on which the consumer will not be any better off is not a question of price. Up till now the consumer has had statutory protection, although some hon. Members may argue that that did not go very far, but under the Bill he will have no protection at all. The person who will have the final say on the question of tariffs is the Minister, and no independent tribunal will be set up to which the consumer can appeal. Therefore, definitely, the consumer of electricity will be worse off even than the consumer under the transport monopoly which is also under consideration, to which, I suppose, even the right hon. Gentleman will not object to reference being made.

I turn for a moment to compensation. Nothing which has been said in the Debate on the Government side has disproved our contention that compensation, both for the companies and for municipalities, is, in effect, a measure of confiscation. The Parliamentary Secretary tried to justify it again today when he said, "If you object to taking Stock Exchange prices for this, why not also object to taking them for Death Duties? "What I would like to ask him is, does he suggest that the Chancellor would take for Death Duty payment today the Stock Exchange prices of two years ago? Of course, the answer is, "No." The fact of the matter is that on the much smaller point of composite undertakings and so forth, the Minister has given way and taken the assessment of the value of assets as the basis of compensation, which we believe ought to have been done over the whole field. Hon. Members opposite may perhaps think that local authorities' compensation is fair—

Mr. Hobson (Wembley, North) indicated assent.

Mr. Hudson

I am glad the hon. Member for North Wembley (Mr. Hobson) thinks that the compensation given to local authorities for the taking over of their undertakings is fair. All I venture to say is that, before many local elections are over, hon. Members may have cause to realise that the consumers in those local authorities do not think so. Anyway I am quite sure, speaking for my own constituency, that the chances of the Labour candidate, which have never been rosy, will be less rosy than ever they have been in the past.

Finally, our objection to this Bill is that its timing is as inappropriate as could possibly be devised. It is engaged in sweeping away a machine which, as I said, whatever are its drawbacks, has on the whole done well. The large electricity undertakings have continually reduced the price—

Mr. E. Porter indicated dissent.

Mr. Hudson

It is idle for the hon. Member for Warrington (Mr. E. Porter) to shake his head because the Parliamentary Secretary himself has paid tribute to these undertakings. Taken as a whole, the machine has worked quite well, but the result of this Bill is bound to be some measure of dislocation. It is bound to break up the machinery in municipalities. Their staffs will be redistributed. New men will be doing new jobs in parts of the country where hitherto there has been no interference and, above all, by the Minister's own self-denying ordinance he will deprive himself of some of the men who have shown themselves to be the ablest in the industry. New machinery, we believe of doubtful value, is to be substituted and there can be no question in our view of the disadvantages to the country as a whole. During these next critical months and years the dislocation which must ensue is bound far to outweigh any possible advantages that may accrue in the future, more especially as those advantages are bound to be theoretical at best.

Abundant and cheap supplies of electricity and power are fundamental, not only to our prosperity but to our continued existence as a great Power, not only at home but also abroad. The Foreign Secretary bore testimony the other day to the disastrous results abroad of the right hon. Gentleman's failure to produce coal for export. We had an example last winter in the dislocation of the electricity supply industry of the results of his disastrous failure to produce coal at home, and electricity—

Mr. Hobson

Will the right hon. Gentleman allow me to interrupt? Is he aware that the Central Electricity Board on three occasions during the war, as early as 1942, when the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) was Minister of Production, drew attention to the shortage which would undoubtedly occur if new power stations were not built?

Mr. Hudson

Yes, I am aware of that. I am also quite aware that both the companies and the Central Electricity Board continually warned the right hon. Gentleman of what would happen if he did not take certain steps—[An HON. MEMBER: "The then Minister of Production."] — No, the present Minister of Fuel and Power and there is great fear today that what happened last winter will be repeated this winter. It is because we believe that to his failure in coal this Bill will add failure in electricity; it is because we believe that under it the nation will not secure that fair play for consumers which the Parliamentary Secre- tary said was to essential, and that they will procure neither the cheapest nor the most abundant supplies of electricity which it is humanly possible to get; it is because we believe the nation will not get those things that I have moved that this Bill be read a Third time three months today.

5.8 p.m.

Mr. Ernest Davies (Enfield)

I listened very carefully to the speech of the right hon. Member for Southport (Mr. R. S. Hudson), waiting for him to explain to us the alternative to this Bill which hon. Gentlemen opposite would put forward. Also I waited patiently for him to answer the questions put to him by the Parliamentary Secretary requesting him to state what he would do were he in the shoes of the Minister of Fuel and Power today.

Mr. Hudson

It would have been grossly out of Order to have gone beyond what I said.

Mr. Davies

And it would be grossly unusual if the right hon. Gentleman conscientiously stayed within the Rules of Order. All the right hon. Gentleman did was, first, to prophesy dislocation and disorder as a result of the passing of this Bill and, secondly, to continue that sneering campaign against the Minister and his proposals which has been characteristic of the Opposition to this Bill in Committee and during the Report stage on the Floor of the House. The tactics of the Opposition appear to me to have been to put up improbable propositions to the Minister during the Committee stage suggesting that certain abuses would be carried out and then, because those propositions were rejected by the Minister, to intimate that the Minister condoned those abuses. They did it in suggesting that directors should not be paid tax-free. They did it in suggesting that there should not be victimisation, and so on.

The right hon. Gentleman suggested, and repeated in the Debate this afternoon, that there would be patronage. It hardly becomes hon. Members opposite to suggest that there will be patronage from this side of the House. If they were to look at the records of the public boards appointed by them during their time of office, it would be very difficult— in fact, impossible—to find anybody on those boards who was a known Socialist. We would also find that they preferred, in the legislation they passed in those days, to set up forms of public companies to which Government directors were appointed, free of responsibility to this House, rather than to set up public corporations responsible to this House.

I think that this Bill is the most satisfactory of the nationalisation Measures which have so far come before the House. I say that because, in the first place, it is a more comprehensive Measure for a single industry than any yet laid before this Chamber. No section of the industry is excluded. In the case of transport, for instance, certain sections are left to private enterprise, whereas in this Bill the whole process of the generation of electricity to its actual distribution comes under public ownership and control. The second reason is that in this Bill there is provision for the full co-ordinaton of the industry. Not only does the first Clause impose that as a duty upon the Central Authority and the boards, but it provides full liaison and co-ordination between the Central Authorty and the area boards by instituting what I consider to be a very useful precedent, the serving on the Central Authority of the chairmen of the area boards in rotation. Now that the Transport Commission is to be enlarged, if an Amendment carried in another place is accepted by this House, I think the Minister of Transport ought to consider following that precedent in the case of the Transport Executives. That is by way of comparison.

A third reason why this is the most satisfactory of the nationalising Measures, is because the consultative councils are not appointed solely to receive representations from disgruntled consumers—they are consultative councils, and not merely consumers' councils. In other words, they are appointed to bring the community as a whole into close relationship with the executive body, and to participate in formulating policy and planning. That is a distinct advance in the policy of administration of nationalised industries. The fourth good point about this Bill is the greater provision that is made for the consideration of the workers in the industry. In Clause 2 (2), there is introduced for the first time in a nationalising Measure, provision for the training and education of the workers in the industry, which is a considerable advance. Then, in Clause 53 (16), there is provision, as in some other nationalisation Measures, for full consultation with the staff on all matters concerning the welfare, safety and efficiency of the industry. This Bill makes possible what should be one of the aims of nationalised industry—a partnership between the administration and the consumer, that is, the community, and the workers of the industry. If we bring those three sections together in the operating of a publicly-owned enterprise, we are likely to have a realization amongst the workers of the industry that they are participating in ownership and are sharing responsibility for the administration of the industry. That is essential to the success of a nationalised industry.

Much has been said, during the progress of this Bill through its various stages, on the question of compensation. It was raised this afternoon by the right hon. Member for Southport. It seems to me that his argument that there is an element of confiscation in the proposals put forward to purchase the undertakings on the basis of prices of Stock Exchange values, does not hold any substance in truth. Arguments which have been put forward from the other side cannot be substantiated. The hon. and gallant Member for New Forest and Christchurch (Colonel Crosthwaite-Eyre) put forward the suggestion the other night, on the Report stage, that the prices of Stock Exchange shares are governed largely by the dividend which those shares are paying and by the dividend yield of those shares.

Colonel Crosthwaite-Eyre indicated assent.

Mr. Davies

The hon. and gallant Member assents. Surely, as a financial pundit who fires questions vigorously at the Chancellor of the Exchequer, he is aware that the institutional investor, who makes up the mass of the investors in the City, judges shares not by the current yield—by the dividend paid at that particular time—but upon earnings which are being received, and by potential earnings, and the extent to which they are retained and the extent to which they are distributed. He then compares them with the earnings yields of other companies. On the basis of the hon. and gallant Member's argument, if shares were judged entirely by dividend yield, all comparable shares would yield approximately the same income. But, if we compare Woolworths with Marks and Spencers, we find a difference in dividend yield. It is largely a question of whether a larger amount of earnings is distributed or not. The argument that Stock Exchange values means that the prudent are handicapped at the expense of those not so prudent—those who distribute up to the hilt—is not sound, because share prices are based on the intrinsic value of the company as judged by its earnings, and not by the amount it distributes.

This afternoon, the Parliamentary Secretary referred to acceptance of Stock Exchange values for Death Duties, and the right hon. Member for Southport said in reply that no one would take the valuation of Death Duties on the basis of share prices two years old. The hon. Member the Senior Burgess for Cambridge University (Mr. Pickthorn) used precisely the same argument the other night when he asked -if anyone would sell electricity shares today at prices prevailing in November, 1946, which is the date when valuation of the shares for compensation takes place. The fallacy of that argument is that the shares of the electricity companies which are being taken over at prices then prevailing are still quoted on the Stock Exchange. There is still a free market—

Colonel Crosthwaite-Eyre rose—

Mr. Davies

Will the hon. and gallant Member wait a minute?—because it is known what these shares are to receive in substitution as compensation, namely, Government stock. Therefore, electricity shares have risen in proportion to Government stocks. The rise in value of those shares is in exact proportion to the rise in Government stock, and it is not a question of the price in November, 1946, but the price of Government stocks now. The hon. Member for Cambridge University suggested, during the Report stage, as also did the hon. Member for Flint (Mr. Birch) that shareholders should receive Consols or Government stock at the prices as at the same date November, 1946. That is precisely the position, because the value of the shares today is equivalent to the value of Consols today, which includes, of course, their rise in value since November, 1946.

Finally, on this question of valuation, when a person buys an equity share or any other share, it is bought on the basis of Stock Exchange values. If that person sells that share, he obtains the Stock Exchange price. If it is acquired by the Government, he is paid on precisely the same basis; he is compensated at the Stock Exchange price, which is an exactly comparable basis. If we departed from that principle and decided to buy the assets— and the only argument put forward from the other side of the House in favour of an asset value price was that the shareholders would receive more—and it resulted in more being paid, the people who received that compensation would be especially favourably treated. They would be having favourable treatment as against those people who hold other Stock Exchange, shares, in concerns not subject to nationalisation. The taking of Stock Exchange values offers a simple basis. To depart from it, and to suggest that because the undertakings are to be nationalised the shareholders should receive special treatment, is not justice, so far as we on this side of the House are concerned.

What has to be considered in relation to compensation is whether the State is taking over the industry at a price which is fair both to the person being bought out, and to the State itself. In this case compensation is fair, because the burden imposed on the industry, which will now be publicly owned, is no greater burden than that industry can bear. The interest reduction of roughly £4,750,000 will enable the nationalised industry to start off at a financial advantage as compared with the industry at the present time. The reduction in the interest is fully justified, firstly, because of the excessive profits which have been distributed in the past in the industry, through high dividends and bonus shares, and secondly, in the case of the Central Electricity Board, because of the financial policy which was followed by that board in being too proud to take advantage of the Treasury guarantee. It could have issued stocks at a far lower rate of interest than it did had it had a Treasury guarantee. If one looks back over the history of the Central Electricity Board one finds that in 1934, and earlier, stocks were issued just before War Loan conversions took place, when at that time the chairman of the Central Electricity Board, a very able one, who now sits for the Scottish Universities, was a director of the Bank of England, as was another member of the Board. It was pointed out in the "Economist" at the time that the Central Electricity Board was paying in interest a sum of £750,000 a year more than it need have done had it borrowed more prudently.

Lieut.-Colonel Elliot (Scottish Universities)

To whom exactly is the hon. Member referring? I think he has certainly made a mistake in the name he has just mentioned.

Mr. Davies

I beg the right hon. and gallant Gentleman's pardon. I am referring to the right hon. Gentleman the senior Member for the City of London (Sir A. Duncan).

This Bill gives an opportunity to the Minister of Fuel and Power, through the more extensive Clauses covering his responsibility, to redeem to a certain extent the mistake he has made, to which the right hon. Gentleman referred, in refusing to take this House into his confidence as regards the operation of these public corporations. One of the main advantages of nationalisation is that it provides public accountability; that the Minister is responsible for the success of the public corporations; that he has certain duties and responsibilities imposed upon him, mainly in the sphere of the direction of general policy and on the question of planning; and that having the responsibility he should be prepared to answer in this House for the success or failure of these boards. The Parliamentary Secretary this afternoon referred to the fact that the Minister could not answer on matters of detail, and no one wants him to do so, but but I would put it to him that it is a grave mistake to refuse to give information on matters except in a matter of high policy where to give that information might be undesirable. It is highly important that if questions are put to him in this House on matters regarding which there is suspicion that things are going wrong, he shall answer those questions so that those suspicions shall be laid at rest. The Parliamentary Secretary suggested that we do not want these boards to become the cockpit of party politics. We certainly do not, but I warn the Parliamentary Secretary and the Minister that there is a danger, if the Minister refuses to give information, and suspicions do arise that things are wrong in any respect, that those boards will become a matter for party politics.

These are public boards. The Central Authority and the area boards are public corporations. They are to be owned by the State. We, as Members of this House, are the watchdogs for the community, and the Minister is responsible to us. He should answer to us on question which we put to him regarding these boards—and in the case of the Coal Board he has failed to do that on many occasions. I suggest to him that in the case of the electricity boards he should start off on a different foot and set a new precedent. There is full provision in the Bill for the Minister to obtain information from the boards. The Parliamentary Secretary suggested that because the Minister had not the power, therefore he had not the responsibility, and he should not answer questions. But as the Minister has, in the Bill, the right to go to the boards and ask for information, he can come to this House and give an answer to the hon. Member who has put a question, and if he prefers he can say that the answer has been received from the board. That does not imply acceptance of that great power and that great responsibility. It is not right that the Minister should, as it were, stand with sealed lips before this iron curtain, which is dropped down in front of the Coal Board. Some Ministers do not know when to seal their lips or when to unseal them. In this case I urge the Minister to unseal his lips as regards the Coal Board, and, in the future, as regards these electricity boards.

Mr. R. S. Hudson

i wonder it the Minister, had he been present, would have claimed a right to reply to the powerful argument which is being produced from his own side of the House?

Mr. Deputy-Speaker

1 was listening to the hon. Member and hoping that he was going no further in that direction.

Mr. Davies

I had made my point, and I did not intend to pursue it any further. This Bill is a good one. I congratulate the Minister on the blueprint he has drawn. The success of the carrying out of this Bill, after it has received the Royal Assent, depends upon the possibility of establishing a partnership between the three sections concerned— the administration, the workers, and the community; and equally 'upon the extent to which the Minister himself takes responsibility for watching over the Central Authority and the area boards and directing their policy. I hope he will then come here willingly to answer to this House for the success of this Socialist Measure.

5.29 p.m

Sir Arnold Gridley (Stockport)

In rising to address the House for the last time on this nationalisation Bill, I think it will be understood in all quarters that I have anything but a cheerful song in my heart. As a member of a democratically elected institution, I realise that this Government have the power to nationalise this industry, but I am convinced, and I think the great majority of those who, like myself, have been engaged in the industry for very many years will be equally convinced, that if the industry had to be nationalised a far better, simpler and sounder Bill than this could have been devised. In Committee, as the Parliamentary Secretary has generously recognised, my colleagues and I in a spirit of hopefulness did what we could to remedy some of the defects in the Bill. I am bound to give expression, however, to my opinion that, nevertheless, it remains a gravely defective structure. I will endeavour in a short speech to deal with some of the major defects that still exist.

I affirm, and I think my affirmation cannot be contradicted, that there is nothing whatever in this Measure which gives any hope to consumers, either domestic or industrial, and that, when all the assets of existing undertakings have been handed over to the Central Authority, there is no prospect whatever of electricity supplies being made cheaper in the near or, so far as I can see, the distant future. The coal industry has been nationalised. Coal is one of the essential raw materials for the production of cheap electricity. We are today paying more than twice the prewar price for coal, and if what we have heard is correct high as the prices are today, we are to be told that in the next few days the price of coal is again to be raised. What price do we expect to have to pay for coal in the future? Who can answer that question other than by saying that they fear it is going to be very much higher in the future than we have known in the past. That itself will be a tremendous drag against the cheapening of the generation of electric power.

It is true that the Central Authority will start off with a nest egg, but until we know what interest is to be paid on the British Electricity Stock when the time comes to issue it we cannot estimate accurately. If we assume that it is to be what is now looked upon as the standard 2½ per cent., then, so far as can be estimated, the present holders of stocks and shares will find their income reduced in the aggregate by a sum of somewhere between £4 million and £5 million a year. That, of course, will be a credit to costs of the new Authority and the area boards. But why should the stock and share holders in these undertakings suffer this grave injustice? When all is said and done, and I am sure the Minister and the Parliamentary Secretary could not and would not deny that if there is an industry in the country today enjoying an assured and ever-growing annual income and a long-established number of years of safe dividend, it is this industry. That has been the case for many years. If one may make a comparison, there is no argument here, as conceivably there might be in the case of the transport undertakings and their stockholders that their revenues are subject to violent fluctuations depending upon whether trade is good or bad.

Here there is an absolutely assured income, and every stockholder and shareholder had every reason to look forward to receiving a certain definite annual income for years. Many of these concerns have been paying a steady 6 per cent. A few have paid 7 or 8 per cent. That was an income which the holders of the scrip might look forward to for many years to come. Now they are to receive in exchange for one piece of paper bringing them in somewhere around 3¾ per cent. to 4 per cent. at Stock Exchange prices, another piece of paper which will bring in 2½per cent. I do not know how any reasonably minded man can say that that is other than a gross and grave injustice to the holders of these stocks and shares.

I pass to one or two other defects which I ask the House to consider. The British Electricity Authority, as I understand it, is to take over complete financial responsibility for its own Board and for the 14 area boards. The area boards, important organisations as they are, with responsible members—I will not call them directors, because obviously so much seems to attach to that word in some quarters—are to be appointed by the Minister. Yet they are not to be of sufficient calibre to be entrusted with any capital or cash except working capital. The ownership of all the assets throughout the country is to be vested in the British Electricity Authority. What is the Authority going to acquire? It will acquire the power stations, the extra high tension mains. the sub-stations and transformers, and the distributing mains, the meters in millions of household premises, and all the hired or hire purchase apparatus. In what manner will that be divided up? Presumably the Central Authority will be allocated the power stations, the high tension transmission mains, and all the other equipment and apparatus I have mentioned will be allocated to the area boards.

As I see it, we reach this dilemma. First, how are these assets to be subdivided? Second, how are they to be valued? We had considerable discussion on the question of valuation on Report stage. I said then that the matter would have to come up again because the amount of British Electricity Stock issued in payment on the Stock Exchange basis for these assets that are to be taken over will vary very widely from the present day-book values of those assets. In some cases, the new stock issued will be in excess of the written-down value of these assets; in other cases, it may be considerably below that value. I think we ought to have been told, before we part with this Bill, if we are to judge how these areas compare in efficiency one with another, how those assets are to be subdivided and how they are to be valued. It would have been far simpler if all the area boards had taken over all the assets inside their own very large areas, but we do not know, and the Bill is quite silent, as to how this sub-division and valuation is to be carried out.

My next point is that the Central Authority are to have the power to run all the power stations, and put up new ones as rapidly as circumstances will permit, and to decide the bulk supply terms for each of these 14 areas. The area boards have no say in the matter. It is true that they can sit down and argue across the table about the terms suggested by the Central Authority, but what we would like to know is, if there is any difference of view, how it is going to be adjusted. There is nothing in the Bill, which provides for that. There is one Clause in the Bill, Clause 1 (4, a)in which the area boards are given powers to give bulk supplies to one another and exchange current, but it seems to me that this provision conflicts with the other part of the scheme. 1 can see advantages if the area boards interchange supplies, but there is nothing in the Bill to suggest how that arrangement is going to be effected and upon what terms. If a dispute arises between one area board and another, I suppose the Central Board at the top would decide what the terms of exchange of current should be.

Now I come to what I consider to be one of the most fundamental defects in the Bill. I am not looking at it from the financial point of view, but purely from the technical and administrative point of view. I think it is a profound mistake to divorce the power stations from the ownership of the area boards, and I will tell the House why. The Parliamentary' Secretary, in his speech, stated that, when the Central Electricity Board was set up, it followed logically from that arrangement that they ought to have been given the ownership of the stations. If it had been thought right, when the Act of 1926 was passed, that the Central Electricity Board ought to be the owners of the power stations. Parliament in its wisdom would have said so then, but that was not so.

The House must realise that two-thirds of the supply of electricity throughout the country is used by productive industry. It will be a very different matter getting industrial firms to take current in the future, because there is to be competition between them and these area boards. It will not exist between the area boards and domestic consumers, but the industrial user could put down his own plant if he was not satisfied with the area board's terms, and could use either oil, coal or gas. How is this competition going to be met? How is the board going to compete for this business, if some areas have to pay a higher price for their bulk supply, or charge a higher price to their consumers in order that cheaper current may be given to thinner or more rural areas. The Minister looks a little puzzled about that, but it is a very real point, which the area boards will have to meet. There are many specialised industries, more, perhaps, than some hon. Members think, who require current on very special and finely cut terms. Take the case of a great business in iron and steel, with blast furnaces, gas plant, coke ovens and all the rest of it. I have found from experience how difficult it is to weigh up all the pros and cons in a case of that kind where, in future, the area boards may be asked to put down a local generating plant to supply such works from their stations at certain times of the day, supplemented by current from the area board at other times. It becomes a very complicated proposition, and special cases of this kind, where load arid power factors are so important, may have a most profound effect on this system of power stations—

Mr. Scollan

Would the hon. Gentleman explain the point? Would he tell us exactly how nationalisation would alter that?

Sir A. Gridley

A proposition of that kind has to be settled promptly. It is complicated enough in itself, but, before reaching a final conclusion on a proposition of that kind, it will have to go from the area board to the—[Interruption.]It is all very well for hon. Members to pooh-pooh that suggestion, but they do not know any more about 'it than I do until the machine is at work.

My last point on this particular problem is this. How many Parliamentary committees have there been which have reported on the need for the re-organisation of this industry? Five or six in the last few years, and not one of them has ever advocated the separation of generation and transmission from distribution. It is only this Government that is ignoring all the experience of the past and has decided, in its wisdom or unwisdom, to do so. I say that, in this respect, this Bill will perpetrate a most serious technical and administrative blunder.

I want to say one word about the Clause which gives power to the Central Authority to manufacture plant and fittings. The Minister may say that the power companies have had such powers in their private Acts of Parliament. That is true, but they have never found it necessary to use them. Why was that? Because the manufacturers in this country have always given the purchasers a fair deal. If proof of that were needed, it lies in the fact that power is produced as efficiently and cheaply in Great Britain as in any other country in the world where circumstances are similar. While it might be conceded to the Government and their supporters that they may have had a mandate for nationalising the electricity supply industry, I doubt very much whether anybody could claim that they had a mandate for embarking on the manufacture of electrical plant and fittings.

With regard to the consultative committees, I think, perhaps, that I am sometimes in disagreement with some of my hon. Friends on this point. I have taken up a line which I feel bound to take up. I recognise, of course, that one of the designs of this provision is to satisfy the local authorities—so far as that is possible—who are being dispossessed of their undertakings. I hold the view that this will be a most cumbersome piece of delaying machinery. It will delay progress and will inevitably add unnecessarily to the cost of current. What are these consultative committees to do? They are to consider distribution tariffs, they are to be informed of area board plans, and they are to have the right to make representations upon them. They can refer matters passed to area boards to the Central Board, who can vary area board plans. Each and every council is to submit a scheme for the establishment of committees in the 14 areas. These committees are to consider local requirements, and each of these 14 councils to be set up may appoint officers to enable them to perform their functions Those officers will have to be paid salaries, and office accommodation will have to be provided.

Does not everyone appreciate that this piece of cumbersome machinery must inevitably delay progress? Surely, it would have been far simpler to have relied, so far as domestic consumers are concerned, upon the protection they already enjoy under existing Statutes. As far as the local authorities are concerned, does anybody suppose that important local authorities like, say, Manchester and Sheffield, if they were dissatisfied with what the area boards were proposing to do in their own particular cities and towns, could not raise that dissatisfaction either directly with the area board or directly with this House through their own Members of Parliament? I consider that these consultative committees will be a drag upon the progress of these nationalised undertakings. I hope that before the Bill is finally placed upon the Statute Book it may be possible for the Minister and his advisers to think again and see whether they cannot cut out some of this delaying procedure. Why is it that the General Post Office, in respect of its postal, telegraph, telephone and parcel services which, after all, are in some respects analogous to this, has never found it necessary to set up consultative councils?

I have been anxious today to avoid inflicting on the House a speech of the length of that which I am sorry to say I inflicted on it in the Second Reading Debate. Therefore, may I conclude by saying this. For exactly 50 years I have had some part in building up this great, efficient and successful industry. During the first world war, I was the controller of the industry at the Ministry of Munitions. My part in it must now come to an end. It hurts me, after so long, and, I hope, not dishonourable a service, that under Clause 54 of this Bill a director is assumed to be guilty of offences unless he can prove his innocence. My friends and colleagues in this industry—and they are many—have all been honourable men. It is to be profoundly regretted that a Clause should be put into a Bill by any British Government which casts unmerited aspersions on a body of honourable men.

This is my "swan song." I now see, with Kipling, the things that I have given my life to, broken, and it is too late now for me to stoop and build them up again with worn-out tools. While I think that nationalisation is a mistake, and that, if it had to be, it could have been carried through under a far sounder and more wisely constructed Bill than this, I do not wish to see this great industry, which has rendered such magnificent service to British industry in the past, failing to repeat or enhance those services in the future. I can only hope—as I profoundly do—that in the years that remain to me I shall not see it fail.

5.58 p.m.

Mr. Palmer (Wimbledon)

I am sure that we all agree with the hon. Gentleman the Senior Member for Stockport (Sir A. Gridley) when he speaks of his very long association with the British electricity supply industry. I had the pleasure some little time ago of Debating this question of the nationalisation of the industry with the hon. Gentleman, and I know that he will understand me when I say that though we disagree with him, many of us understand and respect his views. Incidentally, I should like to say from my own experience of his work in Committee how we appreciate some of the constructive ideas he has put forward for improving this Bill. I hope he is not going to be too serious about his pessimism over the future of this industry. I thought the hon. Gentleman raised a number of technical bogies, if I may call them such, which arc likely, in my view, to vanish before the natural ingenuity of the engineers and administrators in the electricity supply industry. I do not think that they should be taken too seriously by the House.

The hon. Member for Southport (Mr. R. S. Hudson) paid a tribute to the efficiency of the industry I do not think it has ever been suggested—by either side —in our Debates on this Bill, either on Second Reading or in Committee upstairs, that the industry was in any way inefficient. If it is good public policy to take over an industry, and it happens to be an efficient industry, that is all to the good. I do not see why it should be left to public enterprise to confine its activities always to broken down industries. Like my hon Friend the Parliamentary Secretary, I have been struck by the fact that the Opposition have done very little indeed to demolish by their arguments the main structure of the organisation to be set up. They have said very little, for instance, about the proposal in the Bill to complete the work of the 1926 Act by a closer unification of generation and bulk transmission. They grumbled a little about the size of the distribution areas, but they certainly produced no evidence to suggest that those distribution areas are- the wrong areas. In any case, they can be varied under the terms of the Bill. Their size is not fixed for all time.

Hon. Members opposite have certainly not quarrelled with the principle of the regionalisation of distribution. When it has suited hon. Members opposite, they have pleaded the cause of the publicly owned undertaking. On other occasions they have spoken as if the success of this industry, two-thirds of which is already under public ownership, was a tribute to private enterprise. I have noticed—and some of us, perhaps, have felt—the strength of the lobbying of the Incorporated Municipal Electrical Association which, in the last few months, has brought out proposals for district executives as an alternative to the system of area boards and consultative councils. It is interesting to note, however, that hon. Members opposite have not thought fit to give any support to the idea of district executives controlled by the local authorities alone, and I think that is some tribute to the essential soundness of the technical organisation proposed in this Bill.

Before the war there was a great deal of controversy and discussion in the electricity supply industry and, for that matter, outside it, about the future organisation of the industry. There were quite a number of reports including the famous McGowan Committee Report of 1936, and there were a number of White Papers. But if one considers all the various proposals for the organisation of the supply industry and boils them down to a few essentials, I suggest there were about three essentials which had the support of the majority of disinterested people with a knowledge of the electricity supply industry. They were, first, a reduction in the number of distribution undertakings. That was the main proposal of the McGowan Committee's report. Secondly, I submit—and this is where I join issue with the hon. Member for Stockport— that progressive technical opinion in the industry is in favour of centralised ownership and operation of major power stations.

Sir A. Gridley

No.

Mr. Palmer

Oh, yes. I would not wish to embarrass the engineers of, at least, one important semi-public authority by quoting their names in this House, but I might refer the hon. Member for Stockport to the memorandum of the I.M.E.A. published in 1943, which was in favour of power stations being under the direct control of the Central Electricity Board. I think the quite famous paper read by the President of the Institution of Electrical Engineers, Mr. Beard, in 1940 or 1941, before the Institution, was also in favour of the idea of centralised control and operation of major power stations. I have little doubt that the Central Electricity Board would be very much in favour of it, if they were free to express their opinions, but that is purely a personal view of mine.

The third essential was the creation of an effective national planning authority. If these are the essentials, as I believe them to be, for electrical progress, measured in terms of improved service, greater availability and lower prices, how far does this Bill satisfy them? Area grouping is accomplished by the setting up of the 14 area boards to replace the great number of separate undertakings which exist at the moment. It is proposed also to transfer the organisation of the Central Electricity Board to the new Central Authority, where it will become the national generation and bulk transmission department of this new Central Authority. To satisfy the third essential, the new Central Authority is to have those wide planning powers which the sponsors of the 1919 Act intended to give the Electricity Commissioners but which were never given to them in fact. That was a great defect in that 1919 Act. Therefore, in those main essentials, agreed by disinterested opinion in the industry itself, this Bill satisfied requirements.

What are the practical advantages likely to spring from the application of these essentials to the electricity supply industry when the Bill becomes law? I do not think anyone will suggest that the Bill as such, or its operation as an Act, will have much effect on load shedding in the coming winter or for several winters to come. These cuts are inevitable, nationalisation or no nationalisation. It is true, as the Parliamentary Secretary-said, that the benefits which will spring from this legislation are relatively long-term benefits. But because these benefits are long-term, it would be wrong for the House to suppose that they are in any kind of doubt. They will lead, first, to a progressive reduction of varying voltages, eccentric tariffs and uneven prices; second, the placing for the first time of the urban and rural dwellers on approximately an equal footing in regard to the availability of electricity; and third, I believe that in the long run we shall get cheaper electricity from the operation of this Measure as the result of the more efficient working of the larger distribution units.

Hon. Members opposite have spoken a great deal on this Bill, both here and in Committee upstairs,' but they have not in any way upset the main argument on which the Bill rests. Indeed, hon. Members opposite have preferred to concentrate their heaviest fire—as usual, of course—on the compensation Clauses.

Mr. Sidney Marshall (Sutton and Cheam)

Why not?

Mr. Palmer

In that matter the Conservatives, as usual, ran true to form. They then turned their attention to the alleged lack of protection for the consumer—a most worthy object, of course. We are all anxious to protect the consumer. Then, in more recent days, particularly on the Report stage, they have concerned themselves with purely political issues such as the dangers of ministerial patronage—I have no doubt that my right hon. Friend the Minister is quite familiar with those arguments—and also the advantages of appointing anti-nationalisers to the boards of nationalised industries. They are keen to stress those advantages. I want quite shortly to deal with those points in order.

As to the companies' compensation, I do not propose to go into details. I am not a financial expert. I am an amateur reader of the "Financial Times," but I should not like to go into the details of the financial side of the electricity supply industry; and I am certainly not going to enter into the controversy about taking the Stock Exchange value, as against the other ways of valuing assets. But the main complaint of the Opposition, as I understand it—and I have listened with great care to the contributions made to our Debates by the hon. and gallant Gentleman the Member for the New Forest and Christ-church (Colonel Crosthwaite-Eyre) and the hon. Member for Flint (Mr. Birch), who is not here—the main complaint of the Opposition is that the electricity supply investor will have a smaller income in the future. That is the main complaint, as I understand it; and if it the case—and let us assume it is—I do not think it is a particularly unhealthy matter. I do not think it is socially undesirable to transfer income from the investor to the producer, or, by reducing prices, to the consumer, if. at the same time, we are able in a satisfactory manner to capitalise the industry. I want to turn to the question of the protection of the consumer. In the past that has been achieved by local authority ownership where there has been local authority ownership. Protection has also been secured by a series of complicated and obscure provisions in various electricity supply Acts. The protection afforded when the consumer was also a ratepayer and able to appeal to his local councillor was a most real and valuable protection. But did that protection exist in company areas? Of course, it did not. And those company areas extended over many thousands of square miles. Then, as to the protection afforded by the provisions of existing legislation, how many small consumers having a grievance against an electricity supply company could take the grievance to the processes of law? How many, in fact, did so? How many could afford to do so? I think that that protection, in fact, was most unreal. But the present Bill does propose to establish a real and living link between the consumer and his electricity supply authority. It will establish everywhere, locally and regionally, consultative councils, and to these bodies the consumers—organised or otherwise—can bring their complaints.

On the matter of appointments to the various boards to be set up by the Bill, I hope that my right hon. Friend is not going to be deflected from his intentions by the propaganda of the Opposition. We had an extra instalment today from the right hon. Member for Southport (Mr. R. S. Hudson), who has now gone out. They are making fantastic charges of patronage and worse, which, in my view, make slight reading, against the realities of the everyday commercial world. I hope that my right hon. Friend is going to appoint to the boards men whose sole qualification will be expert knowledge of electricity supply and its real problem, and then the question of their opinions on the political principle of ownership as such need not and will not arise: their sole desire will be to serve the industry in the years ahead as well and effectively as they served it in the past. As for those who work in the industry, the technical, administrative and manual workers, they, through all stages of this Bill, have studied it and made suggestions for improving it, and I do want to pay a tribute to my right hon. Friend for the way he has received the representatives of employees who have been to see him from time to time. Of course, they are going to scrutinise with great care the various regu- lations to be made under the superannuation and other Clauses, but they are, at the same time, I understand, appreciative of the way in which their representations have been received so far.

Hon. Gentlemen on the other side will not object very much if, in conclusion, I quote to them some words of Joseph Chamberlain, who was an electricity supply administrator in his day. He said: The State is justified in passing any law or doing any single act which, in its ultimate consequence, adds to the sum of human happiness. I believe that this present legislation which concerns electricity will add in its practical effect a great deal to the sum of human happiness by abolishing dirt and darkness and needless physical toil during our lives. I believe that this legislation will add a little to the possibilities, at least, of human happiness. Therefore I have great pleasure and enthusiasm in recommending the Third Reading of this Bill to the House.

6.18 p.m.

Mr. Sidney Marshall (Sutton and Cheam)

I am very glad to follow the hon. Member for Wimbledon (Mr. Palmer) because I know that he is an expert in electricity. But it was not so pleasant to hear him spend a quarter of an hour trying to prove that the Bill showers benefits upon the community, without pointing out in any way a single benefit which the Bill will bring to the people of this country.

Mr. Palmer

It will bring cheaper electricity.

Mr. Marshall

That has yet to be proved. One can say already, from the relationship between this industry which we are discussing today and the coal industry, that it is very probable that we shall see no benefits from this nationalisation Bill for many years to come. I think that the probability is that we shall see, not cheaper supplies of electricity but, on the contrary, great increases in cost to the consumer.

I have risen principally to deal with two points which are in the Bill. One is the appointment of the consultative councils, and the other the compensation to be paid—or, rather, which is not to be paid—to the local authorities. The ap- pointment of consultative councils in this class of legislation is becoming quite common. I have had considerable experience of them in many ways, and I have come to the conclusion that these consultative councils and advisory councils are, very frequently, nothing less—or nothing more—than a blind and pretence. These councils very often appear in legislation today in order to make the legislation seem more democratic, and for making it seem to the man in the street that he is going to have a finger in the pie of the management of these things.

It is plain from the composition of these consultative councils that they will have no executive powers whatever. These bodies — committees, advisory councils, call them what you will.—are very attractive when first set up. but then there is the problem of getting the large number of people required to serve on them. In this instance, the local councils will nominate half the members, and the Minister will nominate the remaining half. From my experience, these councils begin their job with a great deal of enthusiasm, but after a short period of service, when they find they have no executive powers, although it may appear on paper, as it does here, that they have very vast powers indeed—they have a very different outlook on the whole position and are not very anxious to serve. I am quite sure that the Minister, in appointing these councils, knows very well that he is not doing so because he is desirous that these people shall really share in the administration of this Bill, but rather so that it might appear that he is giving them some opportunity of sharing in it In actual practice, they will have nothing to do except make recommendations, which they can do to the area boards.

As my hon. Friend the Member for Stockport (Sir A. Gridley) said, the consultative councils can by-pass the area boards and make representations on behalf of the consumers, and such people, as laid down in the Bill, direct to the Central Authority. But the Bill does not say that the Central Authority or the area boards are to take any notice of the recommendations made by the councils if they do not agree with them. From that it would appear that a consultative council may go on for years making certain recommendations and suggestions about these things to the area boards or the Central Authority without the slightest notice being taken of them. Therefore, I am sure that the appointing of the consultative councils in this fashion, without any executive powers whatsoever, is purely a blind, and will certainly achieve nothing for consumers in the administration of electricity.

Much stress has been laid upon the receipt of complaints, and so on. I am quite sure the consumer who has a complaint to make today can nearly always make his complaint direct to the authority about whom he wishes to complain. But under this Bill that consumer apparently has to lay his complaint before the consultative council, who will then consider whether it is a justifiable complaint which is worth dealing with and passing on to the area board. If the consultative council do not think it comes within that category, the poor consumer is left with no means of redress. He may go on making complaints year after year without getting any satisfaction, and certainly no redress. That is another reason why I say that these consultaive councils, as set up, are purely a blind.

The very method of setting up these councils points to the fact that they are a blind. If I thought they were to be composed wholly of elected representatives of the people of the areas in which they will operate and function—I know half of them are to be—if they all were to be subject to the democratic system of election, then I could understand the reason for setting them up, because then they would be responsible bodies, and in that case I imagine the Minister would be bound to give them some executive functions. But that is not so. Moreover, in Clause 7 of the Bill there is the extraordinary provision that these people are to have the ability to exercise a wide and impartial judgment on the matters to be dealt with by the Council generally. I think that covers the second half of the consultative councils, those appointed by the Minister. But it does not say in whose eyes these qualities are to be judged. From what we have already heard during the discussions on this Bill it appears to us that the Minister has it in mind to appoint to these consultative councils, so far as his half is concerned, only such people as are recommended to him as having great sympathy with the nationalisation of electricity, and not perhaps so much interest in serving the nation by obtaining cheap and plentiful supplies of electricity.

These consultative councils are certainly not the sort of bodies which should be set up in connection with this type of legislation. We are suffering too much from ministerial appointments in many fields of legislation at the present time. In this fashion we are fast becoming totalitarian. I suggest it is the very antithesis of democracy to have all these appointments made directly by the Minister. Of course, I can well understand hon. Members opposite viewing that with some degree of pleasure when they themselves might possibly fill the bill in some of these nominations. From what has been said, there will be very few nominations from among those people who share the views of hon. Members on this side of the House. In this way we see democracy disappearing, and what remains of democratic government in this country being represented entirely by hon. Members of the party to which I belong. I almost included the present remnants of the Liberal Party. It will become very clear, in a very few years now, that the only true democratic people are those—

Mr. Deputy-Speaker (Mr. Hubert Beaumont)

The hon. Member has got very wide of the Bill.

Mr. Marshall

I apologise, Mr. Deputy-Speaker. I was pointing out that the Minister's method of selecting the members of these consultative councils will undoubtedly lead to the situation I have already indicated. I am sorry if I have transgressed the rules of Order in that regard. I am quite sure that the method of appointing the members of these consultative councils will be open to very serious question in many ways.

The other point I wish to make is in regard to the compensation of local authorities for their undertakings. The hon. Member for Wimbledon said that it was very natural for hon. Members on this side of the House to be interested only, or mainly, in the question of compensation, referring to the compensation to be paid to public utility companies whose stocks are held by the public. The reason we are interested in that is because we still believe in the commandment: "Thou shalt not steal." The borough in the constituency of the hon. Member for Wimbledon has a very fine electricity undertaking, which no one knows better than the hon. Member himself. There is a case in point, which I dare say he brought to the attention of the Standing Committee. Under the compensation or severance terms provided for local authorities, that authority will be a very big loser indeed. In past years they have built up a very successful and profitable electricity undertaking, by means of which they have not only supplied the residents of the borough with very cheap electricity, and paid something towards the rates, but have at the same time reduced the loan on their undertaking to such a small figure that the amount they are presumably receiving is infinitesimal compared with the value of the undertaking had it been commercially owned.

That applies also to many undertakings in this country where, through the skill, care and assiduity of the members of local authorities, they have been able to create and build up very fine electricity undertakings, supplying electricity at very low costs indeed. They are to lose their undertakings. The ratepayers of those districts have, with their own money, created these undertakings, and it is right and proper that they should continue to receive—as they would have done had it not been for this Bill—recompense in the alleviation of rates and in the provision of cheaper electric current. That all goes by the board, and they are to receive practically nothing in exchange.

The Minister, when talking about the amount to be devoted for compensating the local authorities, mentioned the sum of £5 million. He knows very well that this sum was not brought into the picture until very late. When he was asked whether the local authorities had been consulted at any time in regard to the selection of this sum of £5 million, he said that the local authorities had been consulted, and he produced a letter showing that they had been consulted. I quite agree that they had been consulted, and that he possessed such a letter. He said that the local authorities had more or less agreed that the sum of £5 million would be entirely satisfactory to them, but he added that if it were not, he was not going to bargain with them. I cannot conceive any more clear case of dictatorship than that. The Minister, with little ideas about the valuation of the undertakings to be compensated in this way, assumed a round figure of £5 million, and he laughed when it was suggested that £10 million might be nearer the mark. I suggest that those who put forward the figure of £10 million have just as much information on the valuation as the Minister, and that they may be just as right with their figure.

The Bill is a deplorable attempt- to filch property from the people under the guise of nationalisation. It is the most simple thing in the world to relieve people of their property with the means the Government are employing at the present time. It is obvious that people have no means whereby they can resist the predatory hands of the Government, and apparently they are obliged at the moment to accept the position. Whether or not this is one of the items on the list for denationalisation, I suggest that we shall see the Minister hoist by his own petard. He will achieve nothing he sets out to do, nor shall we see the garden of Eden which the Parliamentary Secretary said was bound to follow, when this Bill becomes an Act.

6.34 p.m.

Mr. Hobson (Wembley, North)

We were all impressed by the speech of the hon. Member for Stockport (Sir A. Gridley), and particularly by his final remarks. One appreciates that the hon. Member has given a lifetime of service to the industry, and that he has always been particularly concerned with the efficiency of the company with which he is connected, and incidentally, Kearsley, one of his stations, has the highest thermal efficiency in Britain. As one who is also engaged in the industry, I would point out that there is another side to the picture. I hope to show that undoubted advantages will accrue to the workpeople, whether they are manual, administrative, or technical, as a result of this Measure.

The main thing I like about this Bill is its commendable simplicity. For instance, a Central Authority is put in charge of generation. That is no great departure from the situation existing at present. Hon. Members opposite produced the 1926 Act, which brought about national control and production of electricity. The only thing we objected to in that Act, so far as generation was concerned, was that many workers, particularly technicians, had to serve two masters. On the one hand, they had to serve the local authority and the company, and, on the other hand, the Central Electricity Board. That was an impossible and invidious situation, and it gave rise to all sorts of difficulties in the operation of power stations. I have known boilers banked when the load had been shed, due to various breakdowns in the messages sent, or due to difference of opinion on whether certain plant was available.

Then there are to be 14 areas. How far does that depart from the recommendations of the 1926 Act and the White Paper? It has always been recommended that there should be a considerable amount of rationalisation in the number of undertakings. They are to be responsible for distribution and sale, and it seems to me to be a very sound policy, which has the support of the McGowan Report and the White Paper. Then there are the consumers' councils. Many people talk about them as if they were a sort of barrage to be put up against the consumers' legitimate complaints. As has been pointed out, the consumers have had no redress at all so far as companies are concerned. The hon. Member for Sutton and Cheam (Mr. S. Marshall) is entirely wrong when he says that we can do nothing to make representations. Clause 8 (5) says that representations must be made to the Central Authority, and then, if there is no satisfaction, the consumers' council can make representations direct to the Minister, which is a great advantage compared with the position which obtains at the moment. If the local authority electricity committee have any difficulties with the Central Electricity Board, or the Commissioners, it is very difficult indeed to get an interview in regard to them.

The consumers' councils are the answer to those people who say that nationalisation means red tape and bureaucracy. These councils have been set up to answer that charge, and to make the machine work. In these days of hire-purchase and rental wiring, and with the tremendous amount of domestic apparatus on the market, it is only natural that the consumers' councils will want to make representations to the area boards with regard to tariffs and other matters. It seems to me to be a highly desirable feature. I am surprised and pained that hon. Members opposite are continually attacking this Bill. I admired their pertinacity, both on Second Reading and during the Committee and Report stages. This Bill is really no new departure at all. The 1882 Act, which was the first lighting Act, presupposed public ownership of electricity. Local authorities had the right to purchase a company within 21 years. The 1888 Act amended the previous Act, and made the period 42 years instead of 21. That has been a welcome feature, because it has enabled local authorities to force down the prices charged by companies. I remember particularly the case of Littlehampton, where the mere threat of the use of that provision resulted in a substantial reduction in prices.

The 1926 Act, which arose from the Report of the Weir Committee, has been of great help to the Ministry of Fuel and Power, especially during the war, when we had as many as four power stations bombed in one night in London. The McGowan Report, which came from the Committee which was set up by hon. Members opposite, was opposed by us. We did not oppose rationalisation, but we criticised the fact that there were to be two forms of organisation, two forms of monopoly, local authority and company. We criticised the method of compensation. Local authorities were to be compensated as they are now, on the basis of their standing debt, and companies were to be compensated on the basis of future profit. We had some of that kind of compensation in the - London Passenger Transport Bill, which is one of the reasons the L.P.T.B. is over-capitalised and has not been able to meet its interest commitments.

The compensation provisions of this Bill are fair. The hon. Member for Sutton and Cheam questioned the compensation to be paid to local authorities. I criticise the Minister for his Right Wing deviation, for giving £5 million to the local authorities. The local authorities did not enter into the electricity supply industry for the purpose of making a profit. They entered it to give service to the community. If we pay compensation we merely increase the capital charges of the undertaking and the interest com- mitments, so that the consumer has to pay twice. There is this further point, which I would like to drive home with all the sincerity I command: ratepayers are not, of necessity, electricity consumers. There is no borough where there are 100 per cent. ratepayers and 100 per cent. electricity consumers.

With regard to payment for severance, the electricity accounts of local authorities have long been the milch cow. I had to fight this matter as chairman of an electricity committee for many years. The amount paid for the electrical energy in lighting is often infinitesimal, and there are high maintenance charges low charges to hospitals for maintenance, and some borough officials have had part of their salaries charged to electricity undertakings. I know one borough, not far from here, where the charges from their electricity fund this year have been increased from £4,000 to £11,000. It is true that in places there has been relief of rates, but that has come about through overcharging, which cannot occur under this Bill. At the risk of wearying the House, I would cite this instance. In Liverpool, the cost per unit, of generating and distributing electrical energy in 1943—this is the last available figure—was 46d., and it was sold to consumers at 1.38d As a result of that over-charging, which is nearly three times the initial price, Liverpool was able to contribute to the rates some £15,000. In other words, the electricity consumers of Liverpool were fleeced to that extent.

I welcome particularly Clause 53, which deals with conditions of employment. It has been generally said that employers in electricity undertakings and conditions are good. But that needs qualifying considerably. It may be true of local authorities, but it is not so of private companies. There is only one company in the whole of the Metropolitan area which was willing to abide by the conciliation machinery in 1938. When war became imminent others came scurrying for the protection of the Joint Industrial Council, and still remain under its protection, doubtless because of the political complexion of the present Government. One large electricity supply group refused to recognise trade unions and shop stewards until two years ago. That is no longer possible, as a result of this Bill There is great need for improvement of safety conditions in power stations. Regulations have been too lax, and in some of these stations it has been dangerous to work. This has been brought about by putting new plant into old buildings, so that fumes were emitted which caused considerable illness among workers. It would be interesting to investigate the incidence of cancer among power station employees due to irritation from these fumes. I am, however, not satisfied with Clause 55. On the Report stage, my right hon. Friend said that there would be a wide interpretation of the provisions with regard to people who lost their employment as a result of his rationalisation. I appreciate that the financial position and conditions of officers in the undertakings should not be worsened, but I am concerned whether their loss of status is to be taken into consideration as a basis for compensation. Surely, we are not going to have a large number of chief engineers, many from small undertakings, claiming compensation, solely for loss of status.

The hon. Member for Stockport criticised the Bill because it made provision for manufacturing electrical plant. I welcome that provision. As a member of the A.E.U., I know of no other industry where the making of generating plant has been in the hands of a monopoly. It is just as well that there should be healthy competition. There are only six firms in Britain making turbine generators, and only two which can cast the large turbine cases. That is one of the reasons for the shortage of plant at the present time, and seeing that the Ruhr has been smashed, there is not much chance of importing them from there—

Viscount Hinchingbrooke

As the hon. Gentleman is so violently opposed to monopoly, why does he vote for the nationalisation of electricity undertakings?

Mr. Hobson

Because they will be publicly owned and controlled. I am surprised at the hon. Member, with his long experience of the political game, asking that question. I welcome this smashing of monopoly. We shall have the competition which will accrue from the alteration made by this provision in the Bill. I also welcome the Clause, inserted on the Report stage, by which non-statutory undertakings—I believe as a result of their representations—come within the scope of the Bill. I hope that one of the first people to make representation to come in will be the Ministry of Transport, who are to control the railway generating stations. It seems wrong that there should be two forms of control of generating stations by two different Ministers, particularly in view of the fact that the Electricity Commissioners have made a grant for new turbines for the railway generating stations in the London area. There is standardisation of frequency, and it seems to me that there should be a considerable inter-locking of supplies which would help us when it is necessary to shed loads. I am sure that for off-peak loads there is plenty of plant available.

Sections 12 and 13 of the 1926 Act have been repealed. These Sections have been one of the most important factors in keeping the price of electrical energy dear. The selective station generating costs would have been lower had it not been for the grid which is enabled to buy electrical energy at a hypothetical cost. It is interesting to note that in 1942 and 1943, the Central Electricity Board got 504 pence per unit from local authorities and 545 pence per unit from companies, whereas local authorities with their own generating plant had to buy back from the grid at 7 pence per unit, and there were considerable profits for the owners of selective stations. This is one of the reasons there has been a considerable amount of rebate given by municipalities with selective stations. It seems unfair that, apart from the selective stations, it should be necessary for non-selected stations and distributors to bear the whole of the transmission costs and establishment charges of the Central Electricity Board.

I welcome the Bill, and I think that it will be for the benefit of the industry. I am sure that no one in this House would attempt to defend an industry in which there are 635 separate undertakings, including 65 in London, working under 225 different Acts of Parliament or Statutory Orders. No one could defend such a situation. Therefore, something had to be done, and hon. Members opposite had anticipated doing something. If there is to be rationalisation, as there is to be, there is no better means of doing it than by this Bill— namely by the nationalisation of electri- city, thereby putting it under public control.

6.54 p.m.

Sir Peter Bennett (Birmingham, Edg-baston)

I was not on the Standing Committee which dealt with this Bill and, therefore, I have no experience of what took place at those gatherings, but I cannot allow the Third Reading to pass without putting on record the grave misgiving which is felt by the industry generally at what is now being done. I approach this matter from an entirely different point of view from that of the hon. Member for Stockport (Sir A. Gridley), to whom hon. Gentlemen opposite paid a deserved compliment. He has put his life into producing electricity; I have spent my life in consuming it. Electricity is the life-blood of a great part of the industrial world. If an example is required, we have only to think of what happened in February, when we had the current cut off on a Friday night, and we were at a complete standstill for two, and, in some cases, three weeks. That meant unemployment, and where men had not a guaranteed wage, it meant a smaller pay packet. It meant also losses to business firms, and a great loss of exports in the consequences of which the Chancellor of the Exchequer will have to share. Therefore, it can be understood how gravely we are concerned at the present action.

I will not follow the arugments of the hon. Member for North Wembley (Mr. Hobson) and compare what he said with what was said by hon. Members on this side—the hon. Member for Sutton and Cheam (Mr. S. Marshall) and the hon. Member for Stockport. I am not at the moment concerned with whether nationalisation is right or wrong; I have my own ideas on that subject, and there are no prizes for guessing what they are. I suggest that the timing of this Bill is absolutely wrong. I have come back from conferences on the Continent at which we have discussed international business problems with American and continental people, and I have attended conferences at Geneva and discussed these matters with people there. I find that there is in their minds an absolute state of mystery as to why, confronted as we are with the problems and difficulties that surround us, we have chosen this particular moment to indulge in what they call "experi- ments." I have had to say to them, "Do not ask me."

Let us look at the position today. We have been warned by Ministers, by economists and others, that we are approaching the gravest crisis in our industrial history. The present Government have agreed that what we need is maximum effort. That merits, in my view, the minimum interference until we are on an even keel. It seems to me that we are suffering today from the craze for uniformity. I am a heretic myself, and I never worry about uniformity, although I am a great believer in unity. In an effort to gain uniformity, unity is often lost. Here we have an organisation which has been laboriously built up over the years, and the Minister now proposes to break it up and redistribute it. The hon. Member for North Wembley has given reasons why something has to be done, but a complete upheaval, as now suggested, runs entirely contrary to any experience which I have had in such matters.

It has been my lot to be concerned with quite a number of rationalisation schemes. I never believe in scrapping what we have, before we know where we are. People say that there have been anomalies. Of course, there have been anomalies. There always have been and there always will be anomalies in the business world and in life generally. I say, leave them, and let them straighten themselves out; direct them, but do not have anything in the nature of an earthquake because we are bound to suffer, and at present we cannot afford to suffer. Why are these industries being tackled? There are not derelict industries, or decayed industries. There has been no quarrel between the parties concerned in the industries. It has not been necessary for the Board of Trade or the Minister of Fuel and Power to appoint working parties to see what is wrong with them. Their record, as I have said before, is an excellent one. In spite of the rise in the cost of coal and the increased cost of plant, there has been a steady drop in their prices, which is not exactly what we were given to understand happened in monopolistic organisation.

Mr. Hobson

Is the hon. Member aware that under the 1926 Act the profit in generating companies was limited to 12½ per cent?

Sir P. Bennett

Yes, but I have seen organisations in which that happened where people eased up and did not worry, and let the costs take care of themselves. This industry has a record, in spite of that, of steadily reducing the costs to the consumer. I am certain that the hon. Member, who is engaged in the industry, will acknowledge that. I have heard complaints in this House about rural electricity supplies as compared with city supplies. I think that is very unfair, because, after all, the cities got off the mark first. The municipalities have done a splendid job, but they had, as is generally admitted, the easier job to do.

I have had a friendly argument at a public meeting with one of my colleagues who sits on the Front Bench and represents a Birmingham Division, and he tried to suggest how much better Birmingham had done than another body outside. I had to remind him that in Birmingham there is a nice compact population of a million people, and as I have argued on other production questions, it is quantity which counts. Cheaper electricity in the cities as compared with rural areas is due, of course, to the density of the population, but I have considered, as I have gone round the country and talked with farmers and seen what is happening, that up to the outbreak of war the record of rural development was an excellent one, and I believe it would have been very much better today but for the fact that the war set back all the problems.

The municipalities and the companies have filled their different roles and have filled them well. There was a crisis in February, but I am certain that nobody would blame the companies or the municipalities for that, because we all know that the advice they gave four years ago was over-ruled. It was over-ruled in the national interest; we had tanks, guns and other things made in the factories instead of generating plant. The position was known all along, and as the hon. Member for Wembley knows, we are not out of trouble by a long way. During the next two or three years we shall have to pay for that decision made during the war to make sacrifices on behalf of the war effort, and I look forward with a good deal of disquiet to what will happen next winter and the winter after that.

The country's development is bound to be delayed by this operation. I do not believe that the patient will be stronger in the long run; what I am quite certain of is that during the period of recovery from the shock of this operation he will be weaker, and at this moment we cannot afford any weakening whatever of the national effort. We are up against it. The present difficulties in industry—in this industry as well as others—will remain in spite of this Bill. The right hon. Gentleman the Minister of Fuel and Power, I read in one of the reports of a meeting of the Standing Committee, has hinted that physical factors cannot be ignored. They remain and will remain under any system, whether private or State-owned. We have an old saying in our organisation that we all work under the same set of natural lows; we all work also under the same economic laws.

Here there is a clash between politics and practical affairs. I was discussing this with one of the Labour Members for Birmingham and he said to me, "You must not blame our people; they promised this at the Election, so they have to keep their promise." I have made a good many promises in my life to shareholders and others, and I have sometimes found it wise afterwards to break those promises. If I told them why, I never got into trouble; and I believe that if the country were honestly told at the present moment that we ought not to go ahead with these experiments until we are again on an even keel, that our economy was more important than dogmas and theories, the country would say, "Here we have strong men who have seen the right course and have taken it, even if it is unpopular and even if some people will throw stones at them." All I am concerned with is results. If the Minister succeeds, I will take off my hat to him, but I think the age of miracles is past and so, speaking with a sense of responsibility as representing a good many industries, I must say that I entirely disapprove of this Measure being introduced at the present time, and I shall feel in duty bound to vote against it.

7.6 p.m.

Mr. Goodrich (Hackney, North)

I am glad to have an opportunity of saying a few words on this matter, because, like many of those who have spoken before me, I have a certain amount of knowledge and experience of electricity undertakings. I was very interested in what was said by the hon. Member for Edgbaston (Sir P. Bennett) about his anxiety over the introduction of this Bill at the present moment in view of the probable shortage of fuel this winter. He rather gave me the impression that he anticipated that this Bill would become an Act, and would be operative, before the winter sets in. That strange attitude of mind rather confuses the issue before us and one wonders what sincerity there is in it. I also listened with great interest to the right hon. Member for Southport (Mr. R. S. Hudson). One of the things he said was that neither the Minister nor anybody else on this side of the House had given him any tangible reason for the introduction of this Measure. He went on to say that he was very pleased that he had introduced the question of consumer needs and that his advice had since been followed. We have heard so much about the stockholders; right through the Committee and Report stages it has been the prime job of the Opposition to look after those peculiar interests, and now at the very last moment the consumers are getting a deal from the Opposition.

Mr. R. S. Hudson

I do not want to interrupt the hon. Member, but as he quoted me I would much prefer that he should quote me correctly, because his last remark is completely and absolutely devoid of truth.

Mr. Goodrich

That is my opinion. If I am wrong, I am entitled to be wrong, and others are entitled to be right. The right hon. Gentleman said he could not understand why we should introduce this Measure and give no reason for it. I am sorry he has not understood that this Measure will provide something which the consumers have never had under the present system.

I join with my hon. Friends on this side who, have expressed a deal of feeling about the hon. Member for Stockport (Sir A. Gridley). He impressed me, as he impresses a good many more, with his sincerity in this matter, and I agree with all the things which have been said about him. I am sure that he must feel it very badly indeed. One of the things he said in his remarks was, that the Government in their wisdom did protect the interest of the undertakers under the 1926 Act. I should also like to point out that that Act gave further protection to the private enterprise undertakers in so far as it gave them a further 40 years' lease against the purchase rights by the local authority. That applies in the county of London, but what is interesting to note is that the purchase rights of the smaller companies were still vested in the local authorities.

I venture to suggest that if there had not been a Labour Government or the introduction of a nationalised Bill for electricity, those purchase rights would have been exercised. I was actually engaged in that matter before the last General Election. It is right to say that the company undertakers would, in the course of a comparatively few years have been taken over by the local authorities without a general nationalised scheme. It is obvious in the face of everything, that the Opposition would oppose a scheme such as this, but I would point out again that it. had to come, unless, of course, the Opposition secure power again and prolong the system for another 40-odd years. These purchase rights under this Bill will become an accomplished fact and we welcome it. I have had to do with local authorities and their powers under the Acts of 1882 and 1888, but this Bill deals with them in a much broader and quicker way.

In conclusion, I want to say a word or two in favour of the Clauses dealing with the manufacture of plant and fittings. Local authorities have experienced many difficulties in relation to the supply of plant, particularly large plant, and this Bill does give the Minister power to manufacture that plant which is so essential, and for which local authorities have been held to ransom whilst it was in the hands of six or eight firms. Not only the local authorities, but any other interest in electricity, have had to pay prices which we felt all along were not genuine prices for the particular article. Thus, I welcome the provision in this Measure, which gives the Minister that power.

I welcome this Bill for I believe that it is the best Bill which has been passed so far in this House. It opens up the prospect of cheap and abundant electricity and, despite all the pessimism of hon. Members opposite, I believe that electricity will be cheaper and in more abundant supply. Further, I see the possibility of electricity getting into those corners of this country where they still burn dirty filthy lamps. If we in the immediate future in the built-up areas have to wait a little while for that cheaper and more aboundant electricity, it will be worth it, if these supplies are transferred to those distant districts of the realm to which I have referred. I believe that the Bill will do the country good.

7.14 p.m.

Colonel Crostbwaite-Eyre (New Forest and Christchurch)

The hon. Member for North Hackney (Mr. Goodrich) made two points if I understood him aright. The first was that the Opposition had only at this last stage realised the importance of the consumer and that they had spent much of their time in previous stages of this Bill talking about compensation for the shareholders. I do not think that that bears the slightest investigation. If he will look at the records of the Standing Committee, of which he was a Member, he will see that the first two main Amendments to Clause 1 of the Bill were designed to afford to the consumer protection in the supply of electricity. The hon. Gentleman and his right hon. Gentleman friends refused to accept either of the Amendments, so that the Government, so far from lack of interest in the consumer being blamed on the Opposition, refused from the beginning to realise the valuableness of the consumer. It was hon. Members opposite who refused to agree at the very beginning to that amelioration which alone in this respect justified the Bill.

He also said that the private companies were afraid that their franchises might not be extended, and that municipal undertakings would take over from private enterprise to a large extent. There again this argument does not bear investigation. The hon. Gentleman has only to look at the last 20 years and see case after case where the municipal authorities have asked the private undertakings to continue their franchise. The best case in point is that of the London Power Company.

Mr. Goodrich

I admit that there is a certain amount in what the hon. and gallant Member says, but it is only a question of deferring the date until we get equalisation of dates between one consumer and another.

Colonel Crosthwaite-Eyre

I do not wish to deal further with that. For I think that the question made by the hon. Gentleman has been met. The Parliamentary Secretary and other Members behind him, including the Member for Enfield (Mr. Ernest Davies) and the hon. Member for Wimbledon (Mr. Palmer) have quoted me when they talked about compensation, and the prime charge, as I understood it was, we were concerned with the dividends the existing shareholders would receive. Whatever the hon. Member for Enfield and the hon. Member for Wimbledon may say in that regard, it was a hard charge from the Parliamentary Secretary, because he must be aware of the Debate where we made it very clear that dividends were not the prime consideration. The consideration is that contractual obligations should be carried out. The Parliamentary Secretary must be well aware of that.

Mr. Gaitskell

I do not recollect having said the things which I am alleged to have said.

Colonel Crosthwaite-Eyre

If I misunderstood the hon. Gentleman I am the first to acknowledge it. I understood he made reference in a considerable part of his speech to the shareholders receiving less dividends than before the introduction of this Bill. I think I am right, but if I am wrong I will be the first to apologise. Other hon. Members behind him did, but I have made it clear we have never defended dividends as such, but rather the fulfilment of the statutory undertakings to undertakers. Hon. Members opposite are apt to talk about dividends as being something bad in themselves. Time and time again I have heard of the iniquities of paying ½ per cent. dividend. Hon. Members think it is practically going to hell when 10 per cent. is paid. If that is true and if hon. Members opposite are going to stand by that, I would ask them one single question, and that is why, in the last few weeks in one of the companies they control, the Anglo-Iranian Petroleum Company, they have increased the dividend from 20 to 30 per cent.

Mr. Ernest Davies rose—

Colonel Crosthwaite-Eyre

May I be allowed to finish my argument?

Mr. Davies

The hon. and gallant Gentleman asked a question.

Colonel Crosthwaite-Eyre

If that is correct it seems to me that much of what they have said this afternoon is completely inapplicable.

Mr. Davies

Surely the hon. and gallant Gentleman is aware that the Anglo-Iranian Oil Company is not controlled by the Government and that there are only two Government-appointed directors on the Board? The Government do not hold the majority of the stock.

Colonel Crosthwaite-Eyre

Actually the Government hold 11,000 out of the 20,000 shares, and therefore controls the company, so that I am afraid that the hon. Member is misinformed. They have complete control over the dividend policy of that company, and for hon. Members opposite to have said what they have today about increased dividends and then to have a 50 per cent. increase in the one of the companies they control shows the complete fallacy of their argument. What we are standing for and will always stand for on this side of the House is that a contractual obligation, whether debentures or otherwise, entered into in all honesty by the investor and the company must be honoured whatever Government is in power.

Regarding compensation, we are told by the Financial Secretary to the Treasury that the Government: lay down one basis and one only; that is, that compensation should be paid, and that compensation should be fair."—[OFFICIAL REPORT, 24th June, 1947; Vol. 439, c. 335.] The compensation under this Bill is not fair by any standard. In the first place, if compensation is to be fair it must be in respect of what is bought. The Parliamentary Secretary advanced certain arguments this afternoon and he said that if he desired he could buy the shares and then liquidate the companies and arrive at the same answer. When he was challenged by my right hon. Friend the Member for Southport (Mr. R. S. Hudson) he admitted that for the verb "buy" he had to substitute the verb "acquire." Once he has done that he has destroyed his whole case, because he knows full well that he could not buy and would be forced to acquire on an arbitrary basis. Once he decided to do that he could no longer say that he was buying shares because he would be taking to himself the power to acquire shares at an arbitrary certain price.

The hon. Gentleman went on to cite the question of Death Duties. Hon Members on this side have already demolished that argument, and if the hon. Gentleman was sincere on that point it can only lead to one thing—that is the price of the shares he wishes to acquire must be based not on the price the time when nationalisation is adumbrated but at the vesting date when the industry passes to Government ownership. It has been made quite clear in the Bill in various Clauses controlling dividends, assets and so on that a free market cannot exist between these two dates, and therefore the hon. Gentleman's whole case falls to the ground. The aged capitalist, for example, who realises that in the future he has to face his account—I do not mean face his account in the Treasury sense—is perfectly entitled if he wishes to shift his money in one form or another of investment, but that is not so at the moment. Having acquired the shares the Government now include in their Bill various Clauses which prevent any alteration in price, and therefore there is no parallel whatsoever between death duties as paid by the individual and the acquisition of shares as it takes place under this Bill.

Many hon. Members on this side have made the point that as the Government propose to acquire this undertaking the thrifty are penalised while those who disregard the national interest benefit. The hon. Member for Enfield quoted me in this connection, and I thank him for the compliment. He said that if two companies earned 10 per cent. and one distributed the whole lot while the other distributed only 5 per cent., the one that distributed 10 per cent. would undoubtedly stand higher. But he went on to say that the dividend was not the only factor taken into consideration. With that I entirely agree. What is taken into account is the policy of the company concerned. If that policy is one of continual expansion and ploughing back dividends and, in fact, making certain that the shareholders will receive only the lowest possible dividend commensurate with the expansion of the company, then the shares will stand far lower than, say, those of the company which distributes every penny The case we are putting to the Parliamentary Secretary is that if that be true—and I do not think that any hon. Member could deny it—which company is to receive more, that which is striving to fulfil the requirements of national interest or that which is distributing every penny it earns?

Mr. Ernest Davies

Would the hon. and gallant Gentleman not admit that where it is known that a company is ploughing back its profits in the way he has just described there is a strong possibility that that company would ultimately issue more capital at a lower market price or have a capital bonus, that that is taken account of in Stock Exchange values, and that in fact people purchase the shares knowing that this may happen?

Colonel Crosthwaite-Eyre

I hate to hear hon. Members behind the Government Front Bench condoning what their right hon. Friends have described as a mortal sin, but we think that that is not so. Without entering into a long argument, our point is that the immediate value of any share on the Stock Exchange is determined by its immediate position vis-d-visits dividend value. We say that if the Government doubt us, or if the hon. Member for Enfield doubts us, why have they consistently refused to submit their case to arbitration? That is all we desire. We have said that we do not believe that this is fair, and if they grant that we have made a case we ask them to submit it to arbitration and to let an independent judge decide. The Government opposite have persistently refused this, and we can only conclude that they are not prepared to put their case to the test.

Let us look for a moment at the actual possibilities of the problem. Only last week the Parliamentary Secretary was forced to admit that the Government did not know the value of the assets they were taking over and, further, that it would take them three years to make such a valuation. What is even more extraordinary, the Parliamentary Secretary asked what good such a valuation would be if it were made. I cannot understand any Government coming before this House with a Bill of this kind which involves the spending of over £700 million of public money and saying that they do not know what it is they are buying and, further, that they do not see what use it would be to know. This seems to me an absolute travesty of what this House is supposed to exist for, and to demonstrate the futility of trying to buy the assets of a company by taking over the shares. The Parliamentary Secretary, aided by the Financial Secretary to the Treasury, made case after case concerning the fact that the Stock Exchange values were a fair quotation and so on, 'but from the point of view of the Government and of hon. Members how can they justify the fact that they do not know what in fact they are taking over?

I would make only one other point. As their last line or refuge the Government say that they would provide two alternative dates. One can choose compensation based either on the pre-election figures—when no one would have thought that a Labour Government would be returned to power—or, alternatively, on a date before the issue. In the first place let us not forget that this country was still at war then, and that no one could foresee the future of any industry. No one was in a position to consider peacetime investment policy, and the prices did not reflect in any sense the peacetime value. It has been said by the Parliamentary Secretary that the indices of the industrial market and the gilt-edged market moved in sympathy between the first and second series of dates. What he has not said, and what I venture to suggest he cannot say is that the indices of these markets have moved in the same relation since November, 1946. Up till then the gilt-edged market was the Government and the gilt-edged market was rigged. It was entirely controlled by the Treasury and by the plunging of public money into it. If one wants present proof of that statement one has only to look at the Rhodesian issue which has destroyed the Chancellor's cheap money policy.

We are asked to approve a Measure which will destroy contractual obligations for the individual, provides no return for the capital of the investor such as he has every right under company law to expect, provides nothing to safeguard the consumer and nothing to benefit the individual. The Parliamentary Secretary said that this was an historic Bill. It is, because it shows more clearly than any Measure this House has yet debated, the absolute chasm between Socialism and justice, between Socialism and the protection of the consumer, and between Socialism and the national interest.

7.33 p.m.

Mr. J. L. Williams (Glasgow, Kelvin-grove)

I desire to intervene in the Debate for the purpose of dealing with one aspect only of the Bill—the compensation to local authorities in respect of severance. This aspect was dealt with in Committee and on the Report stage, but many municipalities in this country are still concerned about their position in the matter. I speak chiefly for the municipality of Glasgow, of which my constituency forms a part. The discontent felt in some quarters concerning the main provisions for compensation, as we have them in Clause 22, has been stressed by hon. Members on the other side of the House, but I can say that that discontent is not shared nearly to the same extent by the municipality to which I have referred. On the other hand, I do not find that they consider the £5 million provided in that Clause to be too much compensation, as my hon. Friend the Member for North Wembley (Mr. Hobson) suggested. They will want to know a great deal more about that £5 million before they will believe that it is sufficient. They are concerned about the method by which that figure was decided upon, and they want to know why it was considered adequate to compensate municipal undertakings. They want to know how it will be distributed and the basis upon which it will be distributed.

We understand that an output unit basis has been considered and has been turned down. Is the next basis to be that of revenue, or is it to be some other basis? But the municipality are not nearly so much concerned about the method by which the sum was arrived at as they are with adequate compensation for losses to be incurred. They want to know what losses are covered. In some cases electricity has never made a contribution to the rates as such, and these municipalities in their plea are not altogether in harmony with the 70-odd undertakings which have made that contribution. But they have other things about which they are very much concerned. There are other losses, and they alone are equivalent to a rate of 2½d. in the pound. I can well understand some of the small municipalities having to suffer an even bigger loss than that.

Another matter about which they are concerned, is that the Minister should consult local authorities adequately, before a regulation to deal with this matter is introduced. It is understood that the Minister has consulted the Incorporated Municipal Electrical Association and the Association of Municipal Corporations. The former body covers the whole of Great Britain, but the latter, I understand, applies only to England and Wales. There is rather a strong feeling that the Minister should consult with the corresponding body in Scotland before such a regulation is made. I hope the Minister will bear these points in mind and will be able to reassure the local authorities who are concerned.

7.37 p.m.

Colonel Lancaster (Fylde)

As one of those who have taken part not only in all the proceedings on this Bill, but in proceedings on the other Bill which the Minister of Fuel and Power introduced, I should like to say a final word or two. It is a melancholy fact that when, five months ago, we first considered the Bill, the occasion should have coincided with the beginning of the fuel crisis, and that today's proceedings should coincide with that very austere statement made by the Chancellor of the Exchequer. We have hot attempted to apply any one yardstick to this Measure. Most of us have been amateurs, so far as the Bill is concerned. Two Members on the Government side showed considerable technical knowledge, while on our side my hon. Friend the Member for Stockport (Sir A. Gridley) has had long administrative experience The majority of us could only hope to apply to the Bill such common sense as we might have.

I find myself, not for the first time, in agreement with my^* hon. Friend the Member for Edgbaston (Sir P. Bennett) in thinking that the Government have not made out their case for the Bill. I was concerned to see whether, on the score of administration or of costs, they would lay before us a case which justified the Bill coming before the House at this moment. Try as I could, I could not see anything on the score of administration which was likely to set up a better, more workmanlike and more practical control than that which had been introduced upon the previous occasion.

So far as costs are Concerned, once again we find ourselves without any facts to go on. We have pressed time after time for some expression, other than generalisations and platitudes, as to what the effect of this Measure might be. Even at this late stage of the Bill I cannot see any tangible facts which would convince me that the consumer is likely to obtain the benefits he has every right to look for. On the Second Reading I said that, as a very large consumer of electricity for a great many years, by and large I had been satisfied with the service given by the electricity industry. I had had the additional safeguard, which will in future be denied to industrialists, that had I not received good service, it would have been open to me to provide my own power by one means or another. I cannot see the Minister of Supply making that possible in the future.

I have, therefore, to fall back on a determination as to whether or not, by the introduction of this Measure, I am likely, as an industrialist, to get better service than I have had in the past, and I say in all sincerity that nothing that has been advanced by Ministers on the Front Bench or their supporters during the various stages of this Bill has convinced me on that point. Therefore, I propose to vote in favour of my right hon. Friend's Amendment.

7.42 p.m.

Mr. Henry Nicholls (Stratford)

I want to join the rather long queue of those who wish to compliment the Parliamentary Secretary on his very able deputising for the Minister throughout this Bill. I also want to compliment the Minister on having achieved this Bill in its present form at this moment. I have sat quietly throughout the deliberations and I would not rise at all except that the Bill will leave us at ten o'clock to run the gauntlet of the legal-minded in another place. Before it goes I want to add at least my meed of appreciation for the Minister. It is always a pleasure to listen to the hon. and gallant Member for Fylde (Colonel Lancaster). I never quarrel with his facts, but only with his inferences. I take a different point of view when it comes to assessing the value of the Bill in its present form. The Bill means to me that we are taking the day by day administration of this vast industry out of the hands of both profit-mongers and politicians.

Viscount Hinchingbrookc

Question.

Mr. Nicholls

That is what it means to me. In future neither the politicians nor the profit-mongers will be able to interfere in the day to day administration. For me this is a streamlined Bill and it has been made possible by giving certain assurances, mainly to the Opposition. The Minister has given a large number of assurances at different stages and I would not say that I am wholly in favour of them all. I think he has been exceedingly generous to the Opposition. The £5million, which, after all, is a concession to the local authorities, is, however, hardly generous enough, and I think it could be improved without difficulty. It is a burden which the industry can well carry since it will shed a good many of-the burdens which it previously carried. The £5million could be improved upon without great loss to the industry.

I am not concerned about the speeches from the Opposition benches because in the main they seen) only to have two objections. One is that appointments are not being made from the Opposition benches, and the other is the fear that the costs of electricity will be greater. On the matter of appointments, the right hon. Member for Southport (Mr. R. S. Hudson) spoke about "stooges," referring to various appointees by that term. It is rather unfortunate that he should say that of any one who has been appointed and has not the opportunity to answer back. So far as I am concerned, if it were a choice between "stooges" appointed by the Minister and "stooges" appointed by members of the Opposition, I should most certainly prefer the "stooges" appointed by the Minister. I am not likely to be one of the appointees or "stooges" and so am not one of the disappointed people, and I therefore speak quite frankly on that point.

If the Bill is streamlined at the moment it is largely due to the concessions that have been made. I hesitate to use the word, except that I want to refer to the fact that the administration proposed by the Minister is also streamlined. If this streamlined administration is to do any good, I suggest it might be jet-propelled as well as streamlined. To do that there must be the ability to take decisions at all levels. I am opposed to over-centralisation. The Minister has given too many assurances so far, but I think I might ask him for one further assurance. I should like an assurance that he will spread the power to make decisions over the widest possible area and to the lowest possible level. If a decision cannot be made without reference to higher authorities, all the way up a long hierarchy, obviously there will be delay. I am concerned about getting the best possible service for the consumer. That,. and not the cost, should be the criterion.

Hon. Members opposite have made attempts, rather wasteful of time, to quote the Coal Board and costs in other industries. The Opposition do not view costs in quite the same light as I do. They are always concerned with financial costs. When I think of costs in an industry, I am more likely to think of the human wastage, which surely is the real cost of an industry to the nation. If we can produce by slightly increased costs in the unit, happiness and safety among the work people, safer methods of transmission and distribution and an abundant supply at a fraction of the cost, the cost in terms of money per unit is rather beside the point. I would prefer to pay the present price of coal than know that human wreckage is continually being thrown on one side as happened for many years. Viewed in that light, the right hon. Gentleman opposite had no case in talking about costs. Now that the Minister is here I would suggest that he can safely give an assurance that he will decentralise to the utmost extent When the Bill comes back from another place, it may be better law, but so far as I am concerned, it cannot be better in principle.

7.50 p.m.

Mr. Hugh Fraser (Stone)

I have seldom listened to a Bill being damned with such faint praise by its own supporters. The hon. Member for Stratford (Mr. H. Nicholls) has made a complaint about the Bill which is to be added to the other things we have heard said about it from that side of the House today. Far more important is the fact that this afternoon we have had one of the gravest statements made by one of His Majesty's Ministers that we have yet listened to in this House. People like myself who are merely consumers and not technicians, question when the benefits from this very large piece of legislation—which, as far as I can see, will be negligible—are likely to be felt. By the admission of the Parliamentary Secretary, the hon. Member for North Wembley (Mr. Hobson) and the hon. Member for Wimbledon -(Mr. Palmer), those benefits are nothing except long-term. In those circumstances the question poses itself whether this country would not be better occupied in getting on with the main job of maximum production, rather than dispersing its interests and wasting its manpower in carrying through this Measure. That is the main consideration this afternoon— whether this Bill and the changes that it necessitates are worth while.

The hon. Member for North Wembley spoke at some length of the advantages that would accrue to the workpeople engaged in this industry. He spoke about the difficulties of stoking and banking boilers. He spoke of trivialities in this moment of crisis, and I wondered whether in his declamation against hon. Members on this side, boiling bankers was not more popular than banking boilers. The points raised by hon. Members opposite have hot been a really serious defence of this Bill so far as the public are concerned. The public will undoubtedly read the Minister's speech with great interest tonight. The Minister has been accused by hon. Members opposite of deviationism, a Marxist term which means to deviate from the main line of the party approach, and I would accuse, him in Marxist phraseology of "tailism."

Mr. Shinwell

What is that?

Mr. Fraser

"Tailism" means the pursuit of an unnecessary objective in times of crisis, when other objectives should be more readily and more purposefully pursued. I accuse the Minister, in Marxist phraseology, of the crime of "tailism" in putting forward this Bill— the pursuit of a principle and method which I seriously believe to be out-of-date. No one can suggest that the electricity supply industry has failed. There are two troubles with the industry. I think the Minister will agree with this. First of all, there is not enough power, and, secondly, there are 543 undertakings, which is too large a number. From the practical man's point of view those are the two outstanding thing a deficiency of generating plant and the fact that there are too large a number of undertakings in the distribution of electricity.

I would remind the Minister when I talk of "tailism," that the past failure, or so-called failure, of electrical legislation has been due to technical methods. If he will look back into the history of the thing he will find that technical trouble has been one of the chief reasons why an ideal basis of legislation has not been produced in the past. Surely, the Minister will realise that the chief thing which upset 19th century legislation was the fact that there was a change from direct current to alternating current. At the moment all that is needed to carry through the necessary changes is a small Bill to see that more generating plant is provided, that greater administrative action is put into practice and that administrative action in the case of some of those 543 companies is concentrated.

The point at issue today in relation to the future of this country's electrical power supply is the future of atomic energy development. If we read the Baruch Report, we find that in the next 10 years it is almost certain that the 10 per cent. rise in the cost of coal will make the use of atomic energy practically certain. Just as in the past the change from direct to alternating current meant the scrapping of many tons of plant, so in the next 10 or 15 years we will see atomic energy being applied. This Bill is unnecessary, and leads, among other things, to great unfairness. Even if hon. Members opposite have not understood the full economic meanings of Marxism they have realised to the full the bitterness of gross egalitarianism, and to no economic purpose whatever. I believe the disadvantages of this Bill enormously outweigh whatever possible advantages it has. I believe it is a dangerous Bill to bring forward when it is going to upset the whole process of electrical distribution and generation at the cost of an enormous compensation when these firms and municipal enterprises may in the next few years become antediluvian. I sugest this is no time to carry -through this change which will mean an immense confusion of personnel and mean that all-important liaison contact between industrial firms and electrical undertakings will be broken and disrupted. The Bill will mean that there is no guarantee of cheaper power. On that I merely quote the Minister himself when he said in Committee, on 25th February: There can be no guarantee that every potential consumer in the country will be supplied with either a cheap or an abundant supply until the physical resources to enable that to be done are available."—[OFFICIAL REPORT, Standing Committee E,25th February, 1947, c. 19] He then went on to speak of the cost in the price of coal and generating plant. In this Bill, as presented to the public, there is no guarantee that there will be cheap electricity, yet this is done at a cost of £700 million in face of the fact that probably in under 20 years' time there will be introduced much more revolutionary methods of development of electricity than those at the present time when the direct current stations had to be scrapped in order to instal alternating current stations the cost of which was borne by the companies. Had they been allowed to carry on, I believe the municipalities and power companies would have carried out those changes, and borne the cost as in the past. As it is, the country is to be faced with bearing the immediate cost of £700 million compensation, and in addition the enormous price of the immediate installation of power plant to carry us over the next two or three years until the industry is fully developed to meet demands of generation. That is why I suggest that this Bill in this day of crisis is unimportant.

There are political disadvantages. The Bill means that a great many of the things which we have fought for for so long are in danger. The hon. Member for Stratford (Mr. Nicholls) said, "If I were in office, I would appoint none of you chaps to my board." That is my point; nor would we appoint Members opposite. This type of legislation leads direct to the American "place" system at its worst. I am not saying this against the Government, but against this type of legislation. When a Government changes this kind of legislation means that there are huge administrative changes made which are detrimental to the country. I believe that for the future development of democracy in this country it is essential that the powers of local government should be maintained as far as possible. We are seeing today an attack on the powers of local government. In our health services powers, and powers dealing with electricity, and now there is a definite and dangerous attack on the powers of local government.

If this Government really mean business for the business communities of workers and employers, and believes in the future prosperity of this country and wants it to succeed—if it really believes in the future of democracy in this country built up on a diversity making a national unity—it would have the sense to withdraw this Bill. This Bill will go out to the country, and will be received with the statement made by the Chancellor of the Exchequer this afternoon, as a Bill which guarantees to achieve nothing over the next two or three years. It will go out to the country, staggering under the blow of the announcement made this afternoon about cuts and further austerity, as a piece of doctrinaire legislation pushed through Parliament by right hon. and hon. Members opposite, with no advantage to the country. I believe the right hon. Gentleman has already blackened his political copybook with many people throughout the country, but I seriously ask him—although I am afraid it is a request to 'which he cannot accede, pressed as he is by this old-fashioned out-of-date Socialism—to withdraw this Bill.

8.1 p.m.

Mr. Edward Porter (Warrington)

Alderman Sir William Walker, chairman of the Manchester electricity undertaking, in his presidential speech at the I.M.E.A. last year, stated that if the municipalities of this country had carried out their obligations to establish municipal electrical undertakings, there would have been no private electricity companies in this country and no need for this nationalisation Bill. I happen to have been connected with a local electricity department for over 30 years. I ask hon Members opposite to try to appreciate how a municipality attempts to carry out its duties in establishing huge trading concerns when composed of Liberals and Tories with, up to two years ago, a sprinkling of Labour members. The electrical engineer brings forward a scheme to do a job by direct labour, but though he can prove that he could do it cheaper than by private enterprise, on principle the Liberals and Tories strongly object, saying that this is an interference with private enterprise.

In my own town, during the war we had the experience of Government Departments coming into the area where private firms had submitted schemes to our department and we were given alternative schemes. In the main we have accepted our own schemes, and carried them out by direct labour. But many local authorities have not taken advantage of that, and have not had a showroom in which to display electrical appliances. Nor have they engaged professional men and women to give exhibitions and lessons on how electrical cookers and appliances can be used, which is a great benefit to the consumer. They have said, "Leave that to the private contractor; let him get all the benefit, and never mind your ratepayers." That has gone on ever since local authorities had the right to generate electricity and deal directly with the people. Local authorities controlled by Labour majorities have had their own electrical departments. By dealing directly with the consumer and selling appliances even at trade prices, they have saved the ratepayers' money and have proved beyond doubt that the municipality is every time a far better servant of the consumer than the private contractor ever could be The municipality has also always been ahead in wage agreements and working conditions.

Hon. Members opposite, including the right hon. Member for Southport (Mr. R. S. Hudson), have complained that when the Bill becomes an Act the consumer will have very little chance of complaining if he has complaints to make. From my own practical experience, I say very definitely that this will be almost an impossibility. The explanation is very simple. In some towns domestic consumers homes are visited at least once in every three months in order to see that all the electrical appliances in the home are in working order and to render any assistance necessary. The result is that we do not know what particular complaint the housewife may have. The large power consumer is visited at least once a fortnight for the purpose of giving service.

In many towns also there is an assisted-wiring scheme. Some undertakings have provided this by direct labour, but some have been prevented from doing so, and the local authority has had to give the work out to private contractors to wire the houses. The local authority has had to send its inspectors to see that the work was done in accordance with estimates given. Assisted wiring schemes were introduced by municipalities. If the municipalities had not introduced such schemes thousands of working class homes in this country would never have received the benefit of electricity. In several towns arrangements have had to be made with a private contractor, who has pleaded that he had not the money, to find the money so that he could carry out his contract; that is being done today. I am expecting further developments in that particular line to take place under this Measure.

Reference has been made about compensation to local authorities. Let me described what is taking place in my own town. We have the services of the town clerk and the borough treasurer in financial matters connected with such things as the scheme we are now carrying out to the value of £5 million; but where we used to pay only about £1,000 per annum for their services we have to pay over £11,000 per annum out of the income of the electricity department. This sort of thing is taking place in a number of towns throughout the country. In other words, electricity departments all over the country are being bled white to pay their supposed portion of the upkeep of town clerks, borough treasurers, and their staffs.

I would like to put this point of view to the hon. Member for Stone (Mr. H. Fraser) in relation to what he said about the number of local authorities in this country: The kind of thing he still believes in is illustrated by the fact that within 14 miles of Manchester town hall there are no fewer than 30 separate electricity undertakings. If one assumes that there are 11 members on each committee, there is a scandalous waste of manpower of 330 people trying to look after those 30 undertakings. Experts believe that not more than two qualified electrical engineers are needed to do the whole of that work, without the aid of any committee. It is said, "How will the consumer be able to complain effectively?" Since I came into this House, I have found that one of the simplest and most effective methods I know of, when deal- ing with any particular complaint, is to get in touch with the head of the Government Department concerned and that complaint, so far as my experience goes, is soon rectified. Therefore, I sincerely believe that to be the best and most effective method that will be available.

I wish to show another side of this picture. Hon. Members know that in various parts of the country housing schemes are in progress. I am not here to claim that the local authority is responsible for these huge housing schemes, nor am I here to plead that the Government are directing firms into areas that are in need of development because of our aim to abolish poverty and distressed areas in the future. This is how it is working out, and I am sorry that one of the directors of the Clyde Valley Company is not present, but the right hon. and gallant Member for the Scottish Universities (Lieut.-Colonel Elliot) can give him this information: the last annual report issued by the company, which was sent to me by the secretary, shows this position, so far as new industries and housing schemes are concerned: We are at present unable to forecast the demands of our existing consumers, both power and domestic. On the other hand, demands are extensive. There are at present under construction in our area seven new industrial estates and approximately 100 housing sites of varying magnitude ranging from 10 to 100 houses on each site. Who connected with the Clyde Valley Electricity Company is responsible for these seven industrial estates or for these houses? Both sides of the House must admit that here is public money being invested in private houses and in taking industries to those derelict districts. Because a company happens to be situated there it is to reap the rich reward for all the electricity used for domestic or industrial purposes. I will put it in another way. A town near to my own, the town of Accrington, has permission to erect a new generating station. This is the way in which the system operates. It is estimated that the station will cost £5 million. Consultations will take no less than £200,000 in fees, whilst at the same time carrying out other schemes in various parts of the country. This Bill will mark the end of the system of milking the electricity industry by charging exorbitant fees.

Hon. Members opposite try to make out a case that electricity is not a nationalised industry in other countries and that the industry is not a success. I believe that if the right hon. and gallant Gentleman the Member for Scottish Universities desired to rebut that, he could recall the statement he made after a visit abroad— I think it was to Nigeria—when he told a Parliamentary Committee of the benefits of nationalisation in various industries and said how surprised he was at the result. I think he could put an end to any bogy raised by the Opposition—

Lieut.-Colonel Elliot

Does the hon. Member know what the wages of a miner were at that time in Nigeria?

Mr. Porter

I have not the slightest idea what they were then or now. That does not affect my point. Just as local authorities who have had the care of electricity undertakings have always been able to generate electricity, and sell it to the consumer at a rate cheaper than that of the cheapest private company, I am confident that a nationalised industry will do the same. Just as the nationalisation of the electricity industry in South Africa, which is not controlled by a Socialist Government, is a huge financial success, as is the transport industry there, I feel confident that this Measure will be a blessing to the working people of the country and the mainstay of industry. I would remind hon. Members that in 1932 a Bill of this description was presented to the annual conference of the Labour Party. The structure proposed in 1932 is contained in the present Bill. I hope that this Measure will soon be on the Statute Book to bring comfort to the masses of the people.

8.18 p.m.

Mr. Emrys Roberts (Merioneth)

We on this bench welcome this Measure. On the whole, we think it is a good Bill which will make for cheaper and more widespread use of electricity. One thing about which I am sorry is that it has not been found possible to make the consultative councils elective bodies. As the Parliamentary Secretary rightly said, it would be wrong to think that these councils would always be in friction with the area boards. At the same time, it is important that they should be independent bodies and not dependent on ministerial appointment. Their position would be stronger. I appreciate the difficulty of making them elective because they represent a rather artificial kind of area. Although one recognises the Minister's difficulties—the areas cut across so many county boundaries—nevertheless, it would be far better if they were independent bodies. I am also sorry that it was not found possible to make Wales one entity for the purpose of the area boards. In spite of all that, on the whole, I think that public ownership of electricity in this country is an essential condition of bringing electricity at a cheap rate into the rural areas., We have heard quite a lot today about the great municipalities, and not so much about the extension of electricity into the rural areas, but it is because of the possibilities of its extension into the rural areas that we on this bench welcome this Bill.

I would like the Minister to say something about the price policy which will be pursued by the Central Electricity Authority. I have always believed that there is really no reason in the world why a man living in a remote valley in Wales, Scotland or England should pay more for his electricity than a man living, say, in the middle of Birmingham or one of our larger cities. We think that electricity should be brought into every home in the land, and that no house or housewife should be without it. Now that we are bringing all the resources for making electricity —both coal and hydro-electric resources —under one ownership, I ask the Government to regard it as a national obligation to supply the homes of the people at the same rate wherever they live. There is no other thing, except perhaps water, which is required so much in the country districts as electricity. It is the means of reviving those areas which are at present being denuded of their populations.

That is the goal and aim of public ownership, as we see it, and I should like the Minister, when he replies to the Debate to give us an assurance that it will be regarded as a national obligation under national ownership to bring electricity to every home in the country on the same terms and conditions, and without those conditions concerning the cost of carrying the lines and so forth which limited the extension of electricity under private ownership. Unless that fresh approach is made, and unless electricity is regarded as essential in every home, the real benefits of public ownership will not be achieved.

8.23 p.m.

Viscount Hinchingbrooke (Dorset, Southern)

I have promised to speak by the clock, otherwise, I would have liked to trample upon some of the red herrings which the Parliamentary Secretary let fall in his otherwise competent and able speech this afternoon. The hop. Gentleman spoke, in particular both at the beginning and the end of his speech, about expansion of electricity, and he said that we should, somehow, find expansion provided for in this Measure. I cannot find any promise of expansion in this Bill at all, or rather I should say I cannot find any concrete proposals for expansion. There are promises enough contained both in the Bill and in the speech of the Parliamentary Secretary, promises like those which his party gave to the country at the time of the General Election and which have never been fulfilled.

The hon. Gentleman went on to a little homily on profit seeking and community service, and he said that the Bill was, in some way, replacing the profit motive by community service in giving the benefits of electricity to all. All I can point out in that respect is that if, as a result of the great transposition that has taken place in coal, the mining industry has become really impressed with the idea of community service. I do not think we are seeing it in the production of coal at the present time. Finally, the hon. Gentleman went on to talk about compensation, and sought to justify the Stock Exchange price system by the analogy of Death Duties. I do not know whether the hon. Gentleman has ever experienced or suffered from Death Duties. All I know is that I have. I can assure him that if he wants an analogy, Death Duties are much nearer to net maintainable revenue and a proper valuation based upon an investigation of the business such as we on this side have demanded than is the Stock Exchange system of prices.

In my view, this Bill effectively deprives the community of the power of change and improvement in the field of electricity. I believe the trend to have been already established. Nationalisa-of coal is producing less, coal; nationalisation of transport will produce less transport, and nationalisation of electricity the same. Why is that? I cannot go into the reasons in detail because I should be out of Order, but I should like to say that it is a question of the, size of the organisation. We all know that every industrial organisation, however small, has its defects. These defects are partly administrative and partly sociological. It is my belief that when the organisation gets to a certain size, the cumulative effect of these defects frustrates any attempt to improve the efficiency of the administration.

Mr. Edward Evans (Lowestoft)

What about the I.C.I.?

Viscount Hinchingbrooke

There are grave signs of it in the I.C.I. When that point is reached, decay sets in. I hope that one day we in this House will be able to debate dispassionately upon the mechanics and ethics of large-scale organisation. All I can say now is that, in my view, the British Electricity Authority and its attendant boards is a piece of organisation far beyond the optimum size. I believe it will be proved to be quite impossible to handle it efficiently, and that from this day forward public dissatisfaction with it will grow. The hon. Gentleman the Parliamentary Secretary talked about denationalisation and what our party would do if the electricity authority proved to be a failure. If it proved to be a failure, we should denationalise it.

Mr. Frank Byers (Dorset, Northern)

If that is so, who is going to buy it?

Viscount Hinchingbrooke

If the public can sell to the State, then the public can buy from the State. I would like further to say—

Mr. Mitchison (Kettering)

Are we to understand—

Viscount Hinchingbrooke

I am afraid that I cannot give way again. I think that this Bill will kill competition and emulation, which are the royal and only known roads to progress. It substitutes nothing for competition except feeble grievance-voicing devices called the consultative councils. Those councils will, to my way of thinking, be quite ineffective. Indeed, I think that the Minister means them to be ineffective. They are sops to Cerberus. I have always thought that in his heart the right hon. Gentleman was a syndicalist. If he has any political aim at all, it is to create the syndicalist State. We know that the prime duty of the ardent syndicalist is to see that the mouths of the consumers are gagged and stifled as far as possible. That is effectively done by appointing the consultative councils, and not allowing them to be elected. We will see if they will function. I believe they will not.

The generation of all electric power is centred in the Electricity Authority. By what standards is its work to be judged? Are they to be American, French or Scandinavian standards? This is not like civil aviation where the machines of one nationality are flying against those of another. There one has competition and standards set up on each side. This is a monopoly of an internal product which is not in competition with the world outside. Who will ensure that the Central Authority keeps up to date and modernises and improves its plant? Is the Minister or Parliament going to ensure that it does? How are we, knowing nothing about the technicalities of this great industry to be able to ginger them up and to criticise them effectively?

They are the competent authorities. They are the people with all the knowledge. They are the one great Central Authority with all the power and with no competition from anywhere to stimulate them. In those circumstances, the technicians will have the laugh over Parliament and the people. Hon. Members opposite seem to like the idea of centralisation and co-ordination, and to detest competition. Co-ordination, co-operation, partnership are precious and affectionate' words to them. But can we not look at them in this sense: can you not co-ordinate to maintain the status quo? Can you not co-operate to resist all change and improvement? Can you not become co-partners in an undertaking where a vast inertia prevails? I believe this Central Authority, uncompetitive, not stimulated effectively from technical sources, will embrace a vast field of inertia in its operation.

Second only to the Transport Bill, this Bill, in my view, is the worst of the nationalisation Measures. Hon. Members come along and, in one act of burning, destroy a history book of 80 years of growth in the electrical world. Look at the Schedule to this Bill—page after page of details of companies and local authorities which are to be taken over—454 of them, each a separate chapter of pride and achievement, of struggle and of reward, all of them to be transmuted, controlled and dispossessed. Is it any wonder that disillusionment and cynicism grow as practical men and women in this country day by day are faced with this kind of thing? The hon. Member for Wimbledon (Mr. Palmer) thought there was enshrined in this Bill the sum of human happiness. I say, on the other hand, let the Government beware. They are heaping coals of fire upon their heads, and destroying the faith of thousands of people in this country in the Christian and social foundations of their own cause.

8.32 p.m.

Colonel Clarke (East Grinstead)

I wish to preface my remarks by saying, as I said in the Second Reading Debate, that I have a certain interest in this industry. Tonight we enter on the last stage of the proceedings on this Bill, one on which for many months the minds of a number of us have been concentrated. On Second Reading, I and others expressed a reasoned dislike in no uncertain terms. During the Report and Committee stages, we did our best, though we disliked its principles, to make the Bill more workable, conscious that we would have to live with it in the future. I think we have combed it thoroughly, and substantially improved its machinery. I think we have modified its incidence on those people who will be compulsorily transferred to State service. I believe we have also tidied up a considerable amount of clumsy drafting. The Government met us on a number of points, and I believe they were wise to do so. By doing so, they may postpone the introduction of that amending Bill which I think will follow this and other nationalisation Bills very shortly.

Parts of the Bill are still not really satisfactory, and no work on the Report and Committee stages can make them satisfactory because some of then principles are unsound. In particular the principles laid down in Clause 17 with regard to compensation are thoroughly unsound, and because of that unsoundness the very debatable Clauses 22 to 26 are rendered necessary. If those principles could have been avoided, the Bill would have been shorter and very much simpler. After all, the Stock Exchange valuation is just a valuation of financial prospects, and nothing else. The proper valuation would have been that of a going concern, the valuation that has been used in the past on nearly every occasion when industries were taken over by the State or by municipalities or when one industry absorbed another. If this method, well known to accountants, and long recognised as an effective method, had been used, we should not have had this difficulty. There is at present available no certain knowledge of the real value of the assets being taken over. It is, as someone said earlier in the Debate, ridiculous that, in a great transaction of this kind, the State should have no idea—and that it refuses to obtain any idea in the first two years—of what the value is of the concern it is taking over. That will lead to immense complication in accounting, and in arranging for amortisation, and so on, and is most unsatisfactory for those who want to know how the country stands in this matter. But though we gained some points in Committee and on Report, in real matters of principle no change was really conceded.

Before I say a word or two about some of these principles I should once more briefly like to voice my objection to the Bill as a whole—my main objection. I want to know whether this Bill is going to pass the test that the Government, or the party that put them in power, demands for any other industry. I take this from a book well known to them on the other side, "Let Us Face The Future." On page 6 it says: Each industry must have applied to it the test of national service. If it serves the nation, well and good. If it is inefficient and falls down on its job the nation must see things are put right.' I presume that this applies not only to an industry before it is nationalised, but to it when it is nationalised, too. I do not believe that taking either the long view or the short view the nationalised industry will pass that test.

We must consider the short view first, because the present position is such that, with the vital economic crisis which faces us, we must get through the short period. If we cannot get through that, the long view is really academic. The root cause of all our present industrial crisis today is the shortage of power and fuel; and electricity supply is in the forefront of the battle. It is already hampered by a number of factors—the shortage of fuel, indifferent fuel, shortage of plant, and, above all—the gravest shortage of all— the shortage of generating plant. Yet the demand continues to increase. In the first five months of this year it was up 6.2 per cent. on the corresponding period for 1946; and that was in a period when it was rationed and often unobtainable. The trouble of the shortage of generating plant is that there is no alternative source of power. We replace coal with oil. We cannot replace generating plant with anything else. The only way is to make the fullest use of what we have got, taking advantage of the experience and the correct policy developed over a period of years by the present organisation, and that is being done at present by boards and by municipal committees who look after electricity undertakings. In that crisis quick decisions have to be made; the technical staff must have someone to whom they can refer for an immediate decision, somebody who will take the responsibility.

Mr. Hobson

Is not the hon. and gallant Member aware that the decision to unstal new generating plant at the present moment, as things are, can only be taken with the permission of the Central Electricity Board or the Commissioners, and that the Bill simplifies the procedure?

Colonel Clarke

I did not make it clear. I was really speaking of much smaller decisions than that; the decisions that have to be taken with regard to day to day matters of supplying power, and so on. At the present the administration works as a team, and can obtain quick decisions. I ask: After the vesting date, when the present boards and committees have to give way to a completely new organisation, will that same situation exist? I cannot believe the Minister can shatter that organisation to bits on one night, and the following day build it up anew nearer to his heart's desires. There will be infinite complications in the interim period, when managers and technicians must struggle on as best they can in new teams, and with the new boards hardly knowing each other by sight. I view that time with great alarm. In those circumstances, I do not believe that the nationalised industry will serve the nation. I believe it will fall down on its job in that interim period.

I promised not to speak for long, and I will not now touch on a number of other points to which I wished to refer. By and large, in the interests of the industry and those other industries which are dependent upon it, I deplore this Bill. Apart from the immediate danger, I feel that it has a great many weak points, and, above all, it gives no adequate protection to the consumer, no guarantee of cheapness, and no real fairness of compensation. For these reasons, I shall resist this Bill, for the last time, in the Lobby tonight.

8.43 p.m.

Mr. Blyton (Houghton-le-Spring)

I have interested myself in this Bill in the House ever since the Second Reading. I welcome the Third Reading tonight, because this Bill fulfils the intentions of the Electric Lighting Act, 1882, which laid down that municipalities could set up their electrical undertakings, and would have the right to purchase within 25 years. The intentions of that Act were that the whole of the electrical supply industry should be owned by the local people in any given area of supply. It was the Tories themselves who in the 'twenties, put the generating of electricity under national control under the Central Electricity Board. They did that in the face of terrific fights against the interested parties —the private companies in the electrical supply industry.

Having left distribution alone at that time, there followed the McGowan Report. If ever there was a condemnatory report in relation to the chaotic distribution of electricity in this country, it will be found in the McGowan Report. What did Lord McGowan report? He reported that there ought to be an amalgamation of the distribution of electrical supplies in this country; and he recommended that private companies should swallow the great municipal enterprises. A Bill was already prepared by the Opposition, who were then in office, to give effect to the recommendations of the McGowan Report, but because of the hostility of the municipalities against being swallowed up by the private companies, the Tories had to shelve it. Since that day, it has been impossible to reconcile the varying interests as between the municipalities and the private companies, and because of that dispute, which cannot be denied, we have had the chaotic position of different standards of voltages, and so on. I am pleased that this Bill will put an end to all that.

I still ask, even at this late hour, whether under Clause 7, when the scheme for districts is settled, the Minister will not allow the district councils to select their own representatives. In the districts there is a relationship between the consumer and the councils, the councils ought to be able to select their own representatives. I was a little disturbed about the compensation figure which was being offered, but when the statement was made by the Financial Secretary to the Treasury that next year there will be a revision of the block grants to local authorities, I became content to accept it although my area—and I am speaking for my area— is a highly-rated area. The financial loss from our electricity undertaking will be more than offset by the new block grants to distressed areas. With these words, I welcome the Third Reading of the Bill as bringing into operation the intentions of the 1882 Act.

8.49 p.m.

Sir Stanley Reed (Aylesbury)

I will not touch tonight on the general features of this Bill, but on the two points referred to by the Parliamentary Secretary. He warned the House and the country not to expect quick results from this Measure. I think he was very wise in doing that. Everyone knows that the passing of this Bill will not quicken our productive power by one day, because every company is pledged for years with plant and orders. It may result in a certain amalgamation of companies which are now too scattered, but all that could have been done by a simple amendment of the Electricity Act, and without this vast and cumbersome Bill. There will not be a quickening by one day of the extension of electricity supply to rural areas, for that is a question of material and labour, and the supply of current. For those municipalities and local bodies which have been so proud of their public-spirited work in the development of electricity supply there will be a substantial loss, for which even the £5 million provided for in the Bill will give no effective return. The Parliamentary Secretary should realise that his admission that we cannot expect quick returns from this Bill is the most devastating condemnation of this Measure which has ever been made in these Debates. We all listened today, with feelings of profound anxiety, to the words which fell from the Chancellor of the Exchequer. Everybody who knows the history knows that these events were bound to occur—

Mr. Deputy-Speaker (Major Milner)

I must remind the hon. Member that what he is saying now does not arise on the Third Reading of this Bill.

Sir S. Reed

I was merely following a point that was raised by my hon. Friend the Member for Edgbaston (Sir P. Bennett), and trying to reinforce it. However, I will pass from that, and ask the Parliamentary Secretary to refresh his memory about the tremendous delays which have occurred in connection with one of the most beneficial projects for the supply of electricity—the Severn barrage. For years this question' was. examined by the Brabazon Committee, which produced an admirable report. The matter was allowed to lapse, and then we had another committee, which stated that the Severn barrage would provide one of the cheapest sources of electricity supply in the world. It has taken two years to prod the Government into getting a tidal model set up at Teddington. I do not want to look that gift too much in the mouth, but it has been a rather weary job to persuade the Government to that end.

I ask the Minister and the Parliamentary Secretary not to be too indifferent to the growth of tidal power. It is true that the capital cost is high, and that the period of construction may be long, but once the works are going the contract rate for power can be fixed for years and years ahead, in the knowledge that it will not vary. Although we have not got a great deal of water power in the ordinary sense of the term, we have a vast potential of tidal power, of which the Severn barrage is only one example. I ask the Minister not to be led astray by the harbour and dock authorities, who are fearful of the silting up of their channel. I ask him to realise that we may have here a source of power which would be of incalculable benefit in the face of our declining coal output and the enormous cost we are paying for fuel.

8.54 p.m.

Mr. Beverley Baxter (Wood Green)

In the few moments I have to address the House I would like to remind the Govern- ment that within the last few days they have been highly praised in the newspapers of this country, not only by Lord Beaverbrook but by Lord Rothermere and even Lord Kemsley. Why? That is a natural question to ask. Because of their constructive proposal to spend £100 million on the Colonies—

Mr. Hobson

What has this got to do with the Third Reading of the Bill?

Mr. Baxter

Mr. Deputy-Speaker is in charge of the Debate, not the hon. Gentleman opposite. Why was this action of the Government praised? Because it was something constructive to meet the prevailing situation. If I am asked what this has to do with the Third Reading of this Bill, I say that this Bill is one more of the 39 steps which the Government are taking to perdition, accompanied every fourth step, by the Liberal Party, whose representatives have now gone out like a fused electric light. This is a doomed and damned Government. It came into power to deal with urgent problems. [An HON. MEMBER: "This is one."] This has nothing to do with that at all. What is going to happen under this Bill? Still more centralisation, still more bureaucrats -and the bureaucrat by his very training cannot decentralise; more and more patronage.

Mr. Hobson rose—

Mr. Baxter

I will not give way. Look at the Minister of Fuel and Power. I am going to tell the truth about him in a minute. Surely the job of getting coal out of the mines of this country—

Mr. Deputy-Speaker

The hon Member cannot go into that question.

Mr. Baxter

I was pointing out, Mr. Deputy-Speaker, that the Minister now becomes a dual personality. Not only will he be Minister of Coal but Minister of Electricity. What is going to happen? This dual personality—these two Ministers in one will get into trouble. There may be a demand for shorter hours and more pay in the coal industry, and the Minister of Coal will have to go to the Minister of Electricity and say, "You will have to pay more for your coal." This is an endless chain. Then the Minister of Electricity will have to charge the Minister of Coal more for electricity. Hon. Members have talked in this House today as if the price might come down. There has never been a nationalised industry in our history that has brought a price down. I will tell the House where it does come down, and that is in America, where everything is privately owned. The Americans bring a price down because they want to make profits, and the only way to make profits is to give service. Now there will be none of that.

There is one question which I would put to the right hon. Gentleman before I sit down. The other day, in the course of the Debate, he said that he would not put on any of his boards a man who had taken a stand against nationalisation. There was a time in this country when a statement like that would have aroused such an outcry that he would have been driven from office This country, which as Shakespeare says in "Richard II": was wont to conquer others has not conquered herself. This country has lost the power to be angry. When the electrical industry is nationalised, there will have to be contracts to private industry, and if the head of a private firm has had the courage to stand up on a public platform and denounce nationalisation, will there be a boycott' in giving Government contracts? If this threat is carried out logically, this process of blackmail and boycott must be carried on throughout the country. I am gravely disturbed by the building up of this Tammany patronage.

Mr. Hobson

Substantiate those charges.

Mr. Baxter

I was referring to Tammany patronage. It was a democratic party in New York in the old days and Tammany Hall was the party headquarters. No man could be appointed a judge or to any such position unless he was in the party.

Colonel Wigg (Dudley)

Private enterprise.

Mr. Baxter

It was all done through the party caucus and that is what is happening here today. The element of corruption is not far off. There cannot be such patronage without corruption setting in. Even today the standard of morality and honesty in this country is definitely and tragically worse than it was 10 years ago, because we have all this pressure for jobs. I want to repeat the statement that the Government are introducing another Bill, which will not do one thing to assist the economic position of the country. It is the most irrelevant Government which unfortunately has ever been brought into power. First it was the nationalisation of the Bank of England then Cable and Wireless, then one thing after another, and now this. Nero has been out-fiddled completely. The right hon. Gentleman will be Minister of Coal and Minister of Electricity This has been a tragic day in this House, starting with the announcement by the Chancellor of the Exchequer dealing with a situation that could have been foreseen long ago. This is another of the 39 steps to perdition on which hon. Members opposite can take the Liberal Party.

9.2 p.m.

Lieut.-Colonel Elliot (Scottish Universities)

As we now approach the end of the stages of the Bill in this House, those who have lived with it so long feel, in a way, a certain sense of sadness. The Debates, as the Parliamentary Secretary said, have been long, and I think creditable to both sides, for we have done our best to argue out a case on which we were deeply divided. It is true that one or two of the familiar faces seem to be absent. The Minister, in his long supervision of the Bill, played at times the part of an emollient and at times the part of a hand grenade. The Parliamentary Secretary always played the part of an emollient. We miss the Solicitor-General, who shared with us the heat and burden of the day, and I do not see with us tonight the Lord Advocate, who might be described in our Committee as "the cup that cheered," although it certainly did not inebriate.

At the end of so long a Debate it' is impossible to suppose that we are about to change any opinions by our speeches. However, what we can and should do at this stage is to do our best to set out clearly the differences between the two sides. The difference between the two sides is not, as hon. Members opposite seem to think, that we believe simply that the compensation is unjust in the nationalisation of the private companies, nor even that this great industry is passing under public control, because this is an industry of which more than two-thirds is under control at the present time. It is that we cannot see the advantage to the country of this gigantic new machine, and these gigantic new administrative units which are to be set up. We feel that the Government have failed completely to make out their case that these vast increases in the size of the administrative units are going to bring about the advantages which are claimed for them by hon. Members opposite.

As my hon. Friend the Member for Wood. Green (Mr. Baxter) said, all that it will achieve is that the Minister will be Minister of Electricity as well as Minister of Coal. He will be able to say, with a great deal more assurance than Louis XIV said, "L'Etat, c'est moi" —"electricity, that is me." In the numerous proper names which cover units of electricity, like ohm, watt, ampere and volt, there will be added Shinwell, which I think will go down as a negative unit of electricity rather than a positive one. This centralisation is being defended largely because of complaints that there are too many undertakings in the industry today. A great many of those figures which have been given are illusory The great bulk of electricity distribution is controlled by a relatively small number of units. The fact that these are at present autonomous units seems to us to be an advantage and not a disadvantage.

The destruction of these seems to be a bad thing and not a good thing. We cannot understand why hon. and right hon. Gentlemen opposite stress with such vehemence the necessity for the extermination of this reasonable number of autonomous units. This is not going to be an advantage either to present efficiency or to the future development of this industry. Roughly speaking, about 75 local authorities and 30 companies handle 90 per cent. of the distribution of electricity. There are a large number of smaller units, but these smaller units could be handled in a less drastic way than is proposed under the Bill. What we see here is a picture of an industry in which there are not more than 100 or so large autonomous units.

Mr. Scollan

How many directors are there?

Lieut.-Colonel Elliot

I will come to the hon. Member's remark in a minute. He may be sorry if he continues to provoke me, because there are one or two things about which I will remind him. I am speaking of the 100 odd units which make and handle 90 per cent. of the electricity industry. Their achievement has been considerable. In 20 years the price has fallen from ¾d. per unit to Id. a unit; consumers were increased prewar at the rate of 800,000 a year; and there has been a tenfold increase in consumption since 1920. In these circumstances, the onus of proof is on those who desire to make a change. The suggestion that all this is to be greatly improved by the substitution of 14' authorities—or 15 counting the North of Scotland Board—for the 100 or so now existing is, I suggest, one for which a case has not been made out either on Second Reading, in Committee, on Report stage, or on Third Reading. It has been said for instance that there are a great number of electricity undertakings— 20 or 30 I believe—within 14 miles of the town hall of Manchester, and the hon. Member for Warrington (Mr. E. Porter) said that there were some 300 people sitting on electricity committees within that range. But I have been told again and again that within 14 miles of the town hall at Manchester there is a population greater than the whole population of Egypt.

The hon. Member said, "We shall sweep away all these committees, and we believe that they could be replaced by two engineers." I do not believe that two engineers will give to that community that sense of being in touch with their industry or of being able to remedy grievances that is provided by the democratically-elected authorities under which the industry are working now. The record of the industry is one which can compare favourably with that of the most highly-electrified nation in the world, the United States. Roughly speaking, 80 per cent. of the houses in the United States have electricity. Even with the disadvantages of the war, 70 per cent. of the houses in the United Kingdom have it, and nearly 90 per cent. are within range of an available supply, so that it is only a matter of equipment and labour to connect them to it.

These are not facts upon which the Minister can reasonably assume that to halt this advance which has been made on a broad front—and to bottleneck new progress through 14 authorities—will solve the problem which the country has before it. The existing autonomous units have raised and expended over £340 million in capital for the local authorities and £275 million in the companies. The 14 new authorities are supposed to be going to raise and expend more than £700 million. I certainly ask the Minister whether he is not here creating units too unwieldy for this purpose. Each of these boards is to handle something like 2,000 million units as compared with some 200 million average for the local authorities and 400 million average for the companies. Each of them will have to employ some 7,000 men as against an. average of well under 1,000 in the present enterprises. All this is to be supervised by 14 or—if we take in the North of Scotland Board—15 consultative councils appointed by the Minister. These are to replace not merely the 30 companies but the 75 elected local authorities.

This is the set-up advocated by hon. and right hon. Gentlemen opposite and described by the hon Member for Houghton-le-Spring (Mr. Blyton) as fulfilling the hopes of the 1880's of municipalising the electricity industry. If anything could be called the de-municipalising of the industry, I should have thought it would be this ejection of the municipalities, the sweeping away of all the publicly-elected authorities and their replacement by 15 consultative councils. I was surprised when I heard the hon. Member for North Wembley (Mr. Hob-son), the hon. Member for Stratford (Mr. Nicholls), and the hon. Member for Warrington, all of whom won their spurs on electricity committees of various kinds, saying, "These advantages we have enjoyed, but they are to be denied to our successors." The popular election under which the local people in this country fought their way up and learned the handling of great enterprises is to be removed, and in its place is to come appointment by the Minister.

Mr. E. Porter

Hear, hear.

Lieut.-Colonel Elliot

The hon. Member for Warrington says "Hear, hear" because he hopes it will always be his Minister who will appoint. But suppose the two sides of the House change, as has often happened, and the Minister of Fuel and Power is drawn from hon. and right hon. Gentlemen on this side, and he begins to apply the sort of principle which has been pressed upon our attention by the present Minister of Fuel and Power? 1 doubt whether the hon. Mem- ber for Warrington would be so enthusiastic about the prospect which would then open in front of him. The Minister of Fuel and Power applies very rigid tests; he seemed to show some signs of restiveness when my right hon. Friend, in most mild and gentle language, described those who were to be appointed to the boards as people who thoroughly agreed with the Minister's political opinions—"stooges"was, I think, the actual phrase used. The Minister even took some exception to references which my right hon. Friend made to the chairman-designate of the Central Electricity Board. But my. right hon. Friend referred to him with the utmost mildness compared with the references which were made to him by some of his colleagues on the Front Bench. Perhaps the Minister has not consulted the views of his right hon. Friend the Minister of Health on the subject of the chairman-designate of the Central Electricity Board? The Minister of Health has in the past said things about him compared to which the references of my right hon. Friend were the mere beginnings of love talk. May I remind the Minister of one such reference which was published, I believe, in a paper for which an appeal was made this afternoon by an hon. Lady describing it as one of the opinion-making journals of this country. Referring to the chairman-elect of the Electricity Board, the Minister of Health said: Divested of authority his opinions are those of a political illiterate. He should confine himself to his filing system. I am told"— said he— that he is good at that. The Minister of Fuel and Power said that there was the danger of politics being drawn into this business, that hard language might be used, and that the high standard which the Minister considers he has set himself and has consistently maintained—with an occasional falling away as may happen to any of us—might be impinged upon. If this system of appointments conducted under the Minister's patronage is to spread and be applied to all the great enterprises of this country, as is suggested, the bringing of these things into politics—the introduction of the spoils system, as my hon. Friend the Member for Wood Green said—is absolutely inevitable.

The local authorities were elected. It was possible to refer these appointments to a higher arbiter, a higher court. The hon. Member for West Fife (Mr. Gallacher) has said, "I would not put anybody on that side of the House on a committee for compensating electricity companies any more than they would put me on a committee for compensating landlords. That is true, but the nation put him on a committee which has to do with compensating landlords and the nation put us on a committee which has to do with compensating electricity companies. Only the nation, and not any single Minister can, at the end of the day, select those persons.

On the question of compensation, the Minister does not seem to grasp the point which we have repeatedly been trying to make. Let me try again. It is that if there is one class of persons against whom the other side has consistently inveighed, it is the rentier, the man who draws dividends without hazarding his capital, without taking his risk in the world's affairs. The Bill will produce a great addition to the rentier class. It will expropriate from the active conduct of business, wherein risks are taken, over £100 million of capital, ordinary share capital, risk-taking capital, to which the usual accusation of rente cannot be applied. It will turn those shareholders deliberately and specifically into rentiers. This the Minister brings forward as a great social advance. A Bill to take all these enterprises away from the municipalities and to produce £100 million of new rentiers is not bad business for one night. It is what the Minister is asking us to do tonight in regard to electricity.

The Minister buttresses his argument in regard to compensation in a way which can scarcely appeal to the nation. He claims that Stock Exchange values are not only a, but the only, fair test. Those arguments did not appeal to his colleagues when they were handling the problem of the purchase of the Argentine railways. As my hon. Friend the Member for Flint (Mr. Birch) has pointed out, they did not take the Stock Exchange valuation. They said that the Stock Exchange valuation was not a fair one to take and they demanded and insisted that Senor Peron and the Argentine Government should agree to more than the Stock Exchange valuation. The Government will find it very difficult indeed to bring forward that argument again when any future representative from another country tries to obtain British investments in his country. He can well point to the Stock Exchange prices, which he may very easily have hammered down for that purpose, and say, "These are the values which I will pay, and it will be on your own showing unjust to ask us to pay more."

The arguments which have been brought forward are admittedly those which hon. and right hon. Gentlemen opposite seem to feel keenly. They seem to feel that this evening a great advance is being made. [HON. MEMBERS: "Hear, hear."] Well, I acknowledge their views. I consider they are deeply mistaken. If it is an advance anywhere, it is towards the totalitarian state. The hon. Member for West Renfrew (Mr. Scollan) interrupted me a moment ago. On another occasion, let me remind him, he said something about nominated councils, in connection with another Bill which was before this House.

Mr. Deputy-Speaker

The right hon. and gallant Member must not develop his argument along those lines, but must confine himself to what is relevant upon the Third Reading of the Bill.

Lieut.-Colonel Elliot

I hope that I was sticking very closely to that point. I have only said—and I am perfectly willing to leave it at that—that the hon. Member for West Renfrew has commended to other hon. Members upon another occasion the great advantage of having nominated people who were not subject to the whims of the electorate every two or three years. That is the language which Ministers are using tonight. That is the language of totalitarian States.

Finally, whatever else we can bring forward in favour of this Bill, nobody can bring forward the suggestion that it will be of any immediate advantage in remedying our present difficulties. The Parliamentary Secretary and the hon. Gentleman who followed him on that side of the House said it will be a matter of many winters before any advantage to the people of this country can result. Again, we say that to produce the dislocation which this Bill must inevitably produce; to re-organise the industry in 14 gigantic units each from five to 10 times as large as units already in existence, in employees and in capital, with the task before them of spending in a few years a sum greater than the whole sum put into the electrical industry from the day it was brought into existence until the present; to put this new machine in charge of that gigantic job is the road to ruin and chaos, and not the road to the proper organisation of the industry. For these reasons, we shall without any hesitation vote against the Third Reading of the Bill, and we say that it will be a bad day for this country and this House if the Bill tonight advances one more stage towards the statute book.

9.22 p.m.

The Minister of Fuel and Power (Mr. Shinwell)

The Debate on the Third Reading of this Bill has disclosed the amazing weakness of the Opposition. After the criticism of the past few weeks in the House and in the newspapers associated with the Tory Party—

Wing-Commander Millington (Chelmsford)

Dissociated.

Mr. Shinwell

—I expected a devastating attack. We have witnessed a feeble, malicious exhibition characteristic of the Opposition. It is obvious that the Opposition have not got their hearts into this so-called attack. No fundamental opposition has been expressed against the principle embodied in the Bill. There have been minor objections about detail on the matter of administration, but that is all, and, indeed, I am not surprised. The right hon. and gallant Member for the Scottish Universities (Lieut.-Colonel Elliot) asked where were the old familiar faces on the Government bench. He referred to my colleagues the Solicitor-General, the Financial Secretary to the Treasury and the Lord Advocate. Those colleagues, with my hon. Friend the Parliamentary Secretary, have rendered me and, I think, the House and the country, material service in the passage of this Bill. But where are the old familiar faces on the other side?

The right hon. Gentleman the Member for Southport (Mr. R. S. Hudson), true to character, made his almost weekly attack on me. I am now familiar with the language. Let me quote him just to show I am unafraid. He regards me— wait for the applause—as an inefficient Minister of Fuel and Power. [HON. MEMBER: "Hear, hear."] There was never any question about the efficiency of the right hon. Gentleman. Indeed, so efficient was he regarded by his leaders and colleagues that, when an agricultural Bill is before the House, although he was Minister of Agriculture for several years, the task of dealing with it is transferred to the right hon. and gallant Member for Gainsborough (Captain Crookshank)

Mr. R. S. Hudson

On a point of Order, Mr. Speaker, I should be loth, from a personal point of view, to deprive the House of further examples of the right hon. Gentleman's tact, but may I respect-, fully ask, in view of what he said during my speech, whether this is in Order?

Mr. Speaker

I have only just come into the Chair and, therefore, have not heard the previous speeches. I must confess that I thought we were getting a little far from the Third Reading.

Mr. Shinwell

Sir, with the highest respect, may I say we listened to some observations from the other side that were far from complimentary and indeed irrelevant and I was just responding. If they were not irrelevant, then I am in Order. I look for the old familiar faces on the other side. The right hon. and gallant Member for Pembroke (Major Lloyd George) who was Minister of Fuel and Power during the reign of the Coalition Government is absent. I wonder what his views are on the subject of electricity nationalisation? It would be interesting to know. He has not yet disclosed himself in the House. We can arrive at our own conclusions. Where is the right hon. Gentleman the Senior Member for the Scottish Universities (Sir J. Anderson)? He said in Glasgow some time ago: I would support, too, the nationalisation of the distribution of electricity.

Lieut.-Colonel Elliot

Voluntary absentees.

Mr. Shinwell

The right hon. and gallant Gentleman says, "Voluntary absentees"—because their presence here would have exposed the incompetence and ineptitude of the Opposition.

What is the case of the other side insofar as there is a case? They complain to begin with about the amount of compensation. We would hardly expect it to be otherwise. Their primary in- terest is, How much can our friends get out of it? "To which I venture to say that compensation in respect of the transfer of electricity assets from private owners to the British electricity authorities is more than generous. We have had it out before in the House, and it is about time that hon. and right hon. Gentlemen opposite realised that in the transfer of assets to the State we must ensure that the ultimate consumer is not overburdened. Their second line of attack is the alleged treatment of directors of privately-owned electricity undertakings. Here I would pause for a moment to say what I think ought to be said in the circumstances. I regret the disappearance of the hon. Member for Stockport (Sir A. Gridley) from a scene where he has resided for many a long year and where he has undoubtedly rendered valuable service according to his lights and inclinations. At any rate, he is much more honest than some hon. Members on the other side, and certainly much more knowledgeable on this subject than ever they can pretend to be. There is no offensive treatment of directors contemplated in the Bill. So far as managing directors are concerned, so far as executive directors are concerned, so far as working directors are concerned or directors who are substantially employed by the undertaking, they come within the ambit of compensation, but your namby-pamby come-day, go-day director who is here today and gone to-morrow—

Colonel Gomme-Duncan (Perth and Kinross, Perth)

Soapbox.

Mr. Shinwell

—these persons render little or no service to the community. The third line of attack is that we contemplate over-centralisation. The structure of the Bill is intended to avoid over-centralisation. I shall say a word about that before I sit down.

I come to the gravamen of the charge against us. We have just listened to part of it. We heard a great deal about it from the right hon. Member for South-port. What is it? It is a repetition of the malicious—I speak deliberately and the language may be strong but I am not apologising for it—and lying propaganda indulged in by the right hon. Member for Bromley (Mr. H. Macmillan) the other day when he attacked us with charges of corruption levelled against the Government. Not a single one of those charges can be substantiated by the other side. The right hon. Gentleman attacked me on the grounds that I was about to appoint or had appointed—I use his elegant language—"stooges."I am not quite familiar with the term, but I should imagine it is rather more associated with the Tory Party than with this side of the House. I gather that it means a person who is ready and willing to subordinate himself for payment to some other person. When I appointed Lord Hyndley as Chairman of the National Coal Board, was he regarded as a "stooge"?

Commander Noble (Chelsea)

On a point of Order. May I ask what Lord Hyndley has to do with the Electricity Bill?

Mr. Speaker

I assumed that the Minister was giving an example of appointments under the Electricity Bill.

Mr. Shinwell

Reference was made by the right hon. and hon. Members opposite more than once in the course of Debate to this matter of "stooges" being appointed by the Government. I am responding. I repeat that when I appointed Lord Hyndley as Chairman of the National Coal Board, was he regarded as a "stooge"? Do hon. Members regard the author of the Reid Report, Sir Charles Reid as a "stooge," or that eminent scientist, Sir Charles Ellis?

Mr. R. S. Hudson

Or Sir Ben Smith?

Mr. Shinwell

Unfortunately for the right hon. Gentleman's argument, I did not appoint Sir Ben Smith. [HON. MEMBERS: "Who did"?] Reference has been made to the selection of Lord Citrine as the Chairman-Designate of the British Electricity Authority. Only a moment or two ago the right hon. Gentleman accused the Minister of Health of having criticised Lord Citrine some years ago. During 'the war Lord. Citrine was made a member of His Majesty's Privy Council by the Coalition Government. A person who has been made a member of His Majesty's Privy Council, while not a Member of Parliament and not actively engaged in politics, who is honoured in that way by His Majesty, is hardly the sort of person one would regard as a "stooge." This Government at which I am a member, appointed a certain person to a high position—

Colonel Gomme-Duncan

Sir Ben Smith.

Mr. Shinwell

—to the position of Chairman of the Port of London Authority. We appointed the right hon. Gentleman the Senior Member for the Scottish Universities (Sir J. Anderson). Is that the kind of "stooge" we appoint? [An HON. MEMBER: "Why not?"] Let hon. Gentlemen answer that. [An HON. MEMBER: "Who appointed Sir Ben Smith?"]

I shall tell hon. Members in all quarters of the House about the characteristic procedure of the other side of the House. They prefer the system of the electricity supply undertakings being under private ownership so that whenever anybody is wanted for a particular post they can look round their circle of acquaintances or school friends and relations—for a son-in-law, a father-in-law or a brother-in-law—without regard to qualifications. That is the method of private ownership. If it had not been so there are hon. Members on the other side and their friends who would never have been able to earn a living. Some hon. Members opposite do, of course, think it is sound because they know the history of this business. They can recall the McGowan Report, which advocated centralisation in the sphere of generation, and ultimately national ownership. Presumably all hon. Members opposite are not familiar with the McGowan Report.

But they say that even if the Bill is sound the timing is wrong. That was the tenor of the speech of the hon. Member for Edgbaston (Sir P. Bennett), and, I think, of the hon. Member for Aylesbury Sir S. Reed) for whom I have a very high regard, and to whom I always listen with respect. But let us consider this question of timing. Do hon. Members ealise that this question of the time factor was not one for the Government? It was in the hands of the local authorities. Under the old electricity statutes, the local authorities could, under what is known as the franchise, exercise their right to have privately owned electricity undertakings transferred to the local authorities, and in many cases they did.

One of my problems in the past two years has been to restrain many of those local authorities, including some Tory local authorities, from exercising the rights of franchise. Therefore, it is not a matter that rests entirely in the hands of the Government. It was a matter of timing the introduction of the Bill in order to avoid more chaos and further complications which would only have endangered the position of electricity supply in this country. There is another point in this connection. Right hon. and hon. Members opposite are always saying that we ought not to nationalise because the country is in a bad way. The fact is that we have to nationalise because they have put it in a bad way.

I am well aware that we are not entitled to discuss the coal industry, although right hon. and hon. Members opposite did raise the matter and I was very much tempted to reply. I do not want to transgress the rules of Order, but what a story to tell about the mining industry. What horrible disclosures about the ineptitude and inefficiency of some hon. Members opposite. Incidentally, there are some people around who may not be regarded as stooges but who have succeeded automatically to patronage arising out of contractual obligations imposed on the National Coal Board and who are doing very well out of it. They were not appointed by me. They were appointed by the coalowners of the past and, until their contracts expire, they are doing very well indeed. Perhaps the less said by hon. Members opposite the better, although one of these days there may have to be full disclosures on this matter. [HON. MEMBERS: Get back to the Bill."] All in good time.

Then to my surprise hon. Members opposite raised the question of the unfairness of our treatment of the local authorities [An HON. MEMBER:"Why surprise?"] Because we never expect these gifts from hon. Members opposite. They are consumed with anxiety about the financial position of the local authorities. I have never known that they were troubled with these matters before. However, we are very glad to note their interest in the local authorities. Let us consider this question of local authority compensation for a moment, because the matter has been well discussed. First, the local authorities knew very well when this Government were returned to power that, under a decision we took in 1932 when we declared our policy, local authority electricity undertakings when transferred to the State would be transferred on the basis of the acceptance of old liabilities, and no more than that. They were well aware of it. I suggest that in the payment of £5 million for severance and the provision for the payment of debt management costs, the Government have treated the local authorities with exceptional fairness.

It has been suggested that there is no need for the nationalisation of electricity supply in this country because the privately-owned undertakings and the municipal undertakings have done very well by the country. Of course, they have done very well. This is a young industry. This industry was not in the position of the older gas industry, and, therefore, with all the natural and inevitable expansion which has developed in the past 20 or 25 years, this industry was bound to have done well; but it can do better still, and it is because we believe it must do better in the interests of the general body of consumers and of potential consumers that we have brought about this integration.

There is a great body of support for this Bill in the country. There can be no doubt about that. Let me deal, first, with a matter which was raised by the hon. Member who spoke for the Liberal Party —the hon. Member for Merioneth (Mr. Emrys Roberts). He was very rightly concerned about the position of rural consumers. If there is any body of consumers who are likely to benefit at all by this Bill, it is bound to be those in the rural areas. Great strides have been made in the direction of providing electricity supplies for rural consumers, and by whom? By the county councils and the local authorities, who have developed distribution schemes for the past few years and have provided electricity at very cheap cost.

The noble Lord the Member for South Dorset (Viscount Hinchingbrooke) was troubled because he did not detect in the Bill any particular reference to expansion The noble Lord is quite wrong, and he ought to know better, because he was on the Standing Committee when we discussed this question of expansion, particularly in the rural areas, and the cheapening of supplies, over and over again, and it is contained in the first part of the Bill. Indeed, the primary objective of the Bill is to promote expansion, and that is one of the reasons we are providing £700 million, partly for the purposes of generation and partly for the purpose of efficient distribution.

As regards further support, I would like to mention the technicians in the industry. I tell the House—and I speak with the utmost confidence in this regard—that the great body of technicians in the electricity supply industry, even those employed by the private undertakings, are enthusiastically supporting this Bill. The right hon. and gallant Gentleman the Member for the Scottish Universities (Lieut.-Colonel Elliot), who wound up the Debate from the other side was troubled—and this seems to be the only argument he raised that was not irrelevant—because he thought the kind of units that we were envisaging were much too large. We sought to embrace in the area boards—[Interruption.]

Mr. W. R. Williams (Heston and Isleworth)

On a point of Order, Mr. Speaker, May I draw your attention to what I regard as organised noisiness on the other side, and may I ask if it is in accordance with the Rules of the House?

Mr. Speaker

I confess I had some difficulty in hearing what the Minister was saying, but I thought that the right hon. Gentleman was managing to carry on without my intervention.

Mr. Shinwell

I am much obliged, Mr. Speaker. I was, in fact, managing to carry on, in spite of—

Brigadier Mackeson (Hythe)

Further to that point of Order. May I say, quite impartially, that there is a noise, but that it appears to me, sitting here, to be coming from behind the right hon. Gentleman?

Mr. Shinwell

I am an old Member of this House, and when hon. Members opposite indulge in this sort of thing, I regard it as a high compliment. It means that they cannot take it. I was endeavouring to deal with a point which I regarded as of some substance, and which was put by the right hon. and gallant Gentleman the Member for the Scottish Universities. He said that the units were too large. But what are the facts? Let us take the case of the North-Eastern Electric Supply Company, a privately - owned undertaking. That undertaking covers the whole of Durham, the northern part of Yorkshire, and the whole of—

Mr. Walter Fletcher (Bury)

On a point of Order, Mr. Speaker. It was said just now that it was hard to hear what the Minister was saying, but if the right hon. Gentleman deliberately turns his back on us, how can we be expected to hear what he is saying?

Mr. Shinwell

The last think I should ever do would be to turn my back to the other side. I will, for the third time, endeavour to make my point. As it happens to be the only point of substance, I think it ought to be dealt with. I was saying that the North Eastern Electric Supply Company, under private ownership, covers a territory larger than that contemplated in the Bill. That, I think, is a complete answer to the criticism that we are envisaging units that will be unwieldy from the administrative point of view.

I will say why I think the Bill should be accepted by the House. I see opposite the right hon. Gentleman the senior Member for the City of London (Sir A. Duncan) who, I think, would be inclined to support this Bill on many grounds. Incidentally, he was appointed many years ago—he knows that I have the greatest respect for his capacity and for him personally, and what I am about to say is certainly not intended to be offensive to him—as the first chairman of the Central Electricity Board by a Conservative Government, and a very good appointment it was. But it was a nationalised concern to deal with generation. We are merely extending the principle. This is amplification of the principle accepted by a Conservative Government which the right hon. Member for the City of London sought to execute. I venture to say in his presence that this Bill was, in all the circumstances, inevitable. Because of the complexities arising out of the franchise, because of the need for expansion, and, more particularly, because integration is of the highest importance, it is desirable that this Bill should be proceeded with.

There is another factor to which I must direct attention. It will not be denied that, for the most part, this industry is publicly owned. There are, in fact, 370 local authorities with electricity undertakings. Therefore, this is only an extension of the principle. In our integration —and integration is essential—we must conduct it with a minimum of centralisation. Any unbiased person who looks at the structure of the Bill, as presented in the scheme that was before the Standing Committee and is now before the House, must agree that this structure is sound, three-tiered and eminently workable. Let us consider what it means. We set up an authority, and that authority has the determining voice as regards finance—which is quite proper in the circumstances—and as regards policy. Then we set up area boards. In order to maintain an effective liaison between the area boards and the Central Authority, we provide that four of the chairmen of the area boards shall sit on the Central Authority. That is a complete reply to the right hon. Member for Southport who declared that the Central Authority would be able completely to subordinate the area boards, and that the area boards would have no say in the matter of tariffs or expansion, and the like. By providing that four chairmen of the area boards, sitting in rotation, shall be members of the Central Authority, we ensure not only integration but an effective understanding between the Central Authority and all the area boards in respect of the financial activities and the general policy.

Something has been said about prices, and I have been challenged. I have been told that there is nothing in the Bill which indicates whether the price levels will be reduced as a result of the provisions in this Bill. It is quite impossible to tell, and I will tell hon. Members why. Costs may rise—[An HON. MEMBER: "Coal?"] No, I will come to that in a moment. Costs of electric plant may rise, because, in the circumstances, there is a great shortage in the supply of these essential materials, and it is not surprising that costs tend to rise. Indeed they began to rise during the war, and the trend has continued in that direction

Mr. R. S. Hudson

The price of electricity has gone down.

Mr. Shinwell

The right hon. Gentleman has a habit of answering his own questions. It is true that costs will rise and, therefore, no guarantee can be given in respect of prices, but surely, as a result of the integration that is invisaged in the provisions of this Bill, and by the cutting out of the dead wood—by which I mean the cutting out of a lot of these privately-owned undertakings—in spite of the increased costs of electric equipment and plant, we can assist in cheapening the supply of electricity throughout the field. Moreover, one of the advantages provided in this Bill is based on the desirability of promoting the utmost research into electricity expansion, and, since the right hon. Member for Southport complained that my hon. Friend the Parliamentary Secretary had referred to atomic energy, I would add, into the relations between atomic energy and the provision of electricity supply.

In all the circumstances, I ask the House to accept this Bill. From the very beginning of our proceedings, during the many weeks from the Second Reading to the Committee and Report stages no substantial argument has been adduced against the Bill. I imagine that the Opposition will not regard the passing of this Bill with high disfavour. Indeed, we are doing a job which, if they had been in power, they would have had to do, perhaps with some modifications. They could not have avoided it. No doubt, they would have provided more compensation. No doubt, they would have provided employment for some of the discarded directors. We have been unable to satisfy the Opposition as regards compensation, although we believe that we have been exceptionally generous We have not attempted to satisfy them in respect of certain members of boards of directors, but we believe in this Bill, and we are satisfied that it will benefit the consumers.

Question put, "That the word 'now' stand part of the Question."

The House divided: Ayes 321; Noes, 173.

Division NO.289]	AYES.	10.0p.m
Adams, Richard (Balham)	Dugdale, J. (W. Bromwich)	Lewis, A W J (Upton)
Adams, W. T. (Hammersmith, South)	Dumpleton, C. W.	Lindgren, G. S
Allen, A. C. (Bosworth)	Durbin, E. F. M	Lipton, Lt.-Col M
Allen, Scholefield (Crewe)	Dye, S.	Langden, F
Allighan, Garry	Ede Rt. Hon. J. C	Lyne, A W.
Alpass, J. H.	Edelman, M.	McAdam, W.
Anderson, A. (Motherwell)	Edwards, John (Blackburn)	McEntee, V. La T.
Anderson, F. (Whitehaven)	Edwards, W. J. (Whitechapel)	McGhee. H G
Attewell, H. C.	Evans, E. (.Lowestoft)	Mack, J D.
Austin, H. Lewis	Evans, John (Ogmore)	McKay, J (Wallsend)
Awbery, S. S.	Evans, S. N. (Wednesbury)	Mackay, R. W G (Hull, N.W.)
Ayles, W. H	Ewart, R.	McLeavy, F
Ayrton Gould, Mrs. B	Fairhurst, F	Macpherson, T. (Romford)
Bacon, Miss A	Farthing, W. J	Mainwaring, W. H
Baird, J.	Fernyhough, E.	Mallalieu, J P W
Balfour, A.	Field, Capt. W. J.	Mann, Mrs. J.
Barnes, Rt. Hon. A. J	Fletcher, E. G. M. (Islington, E.)	Manning, C (Camberwell, N.)
Barstow, P. G	Follick, M.	Manning, Mrs. L. (Epping)
Battley, J. R.	Foot, M. M.	Marshall, F (Brightside)
Bechervaise, A. E	Freeman, Maj. J. (Watford)	Mayhew, C. P
Belcher, J. W	Freeman, Peter (Newport)	Mellish, R. J
Bellenger, Rt Hon. F. J	Gaitskell, H. T. N.	Messer, F.
Benson G	Ganley, Mrs. C. S	Middleton, Mrs. L
Berry, H.	Gibbins, J.	Mikardo, Ian
Beswick. F.	Gibson, C. W.	Millingten, Wing-Comdr. E. R
Bing, G. H C	Gilzean, A.	Mitchison, G. R
Binns, J.	Glanville, J. E. (Consett)	Monslow, W
Blackburn, A. R	Goodrich, H. E.	Moody, A S
Blenkinsop, A	Gordon-Walker, P. C.	Morgan, Dr. H B.
Blyton, W. R	Greenwood, A. W. J. (Heywood)	Morley, R.
Bowden, Flg.-Offr. H. W	Grenfell, D. R.	Morris, Lt.-Col. H. (Sheffield, C.)
Bowen, R.	Grey, C. F	Morris, P (Swansea, W.)
Bowles, F. G. (Nuneaton)	Grierson, E	Morrison, Rt Hon H (Lewisham, E.)
Braddock, Mrs. E. M. (L'pl. Exch'ge)	Griffiths, D. (Rother Valley)	Moyle, A.
Braddock, T. (Mitcham)	Griffiths, Rt. Hon. J (Llanelly)	Murray, J. D
Bramall, E. A.	Griffiths, W D. (Moss Side)	Nally, W.
Brook, D (Halifax)	Guest, Dr. L. Haden	Naylor, T. E
Brooks, T. J. (Rothwell)	Gunter, R. J	Neal, H. (Claycross)
Brown, George (Belper)	Guy, W. H	Nichol, Mrs. M E. (Bradford, N.)
Brown, T. J. (Ince)	Haire, John E. (Wycombe)	Nicholls, H. R. (Stratford)
Bruce, Maj. D. W. T	Hale, Leslie	Noel-Baker, Capt. E (Bren ford)
Burden T W	Hall, W G.	O'Brien, T.
Burke, W A.	Hamilton, Lieut.-Col. R.	Oldfield, W. H
Butler, H. W. (Hackney, s)	Hannan, W. (Maryhill)	Oliver, G. H
Byers, Frank	Hardman, D R.	Orbach, M.
Caliaghan, James	Harrison, J	Paling. Rt. Hon. Wilfred (Wentworth)
Castle, Mrs. B. A	Hastings, Dr. Somerville	Palmer, A. M. F.
Chamberlain, R. A	Henderson, A (Kingswinford)	Pargiter, G A
Champion, A J	Henderson, Joseph (Ardwick)	Parkin, B T
Chater, D.	Herbison, Miss M.	Paton, J. (Norwich)
Chetwynd, G. J	Hewitson, Capt. M	Pearson, A.
Cluse, W. S.	Hicks G.	Peart, Thomas F.
Cobb, F. A.	Hobson, C. R	Platts-Mills, J. F. F.
Cocks, F. S	Holman, P	Poole, Major Cecil (Lichfield)
Coldrick, W.	Holmes, H. E (Hemsworth)	Poole, O. B. S. (Oswestry)
Collindridge, F	Hudson, J. H. (Ealing, W.)	Portet, E. (Warrington)
Collins, V. J.	Hughes, Hector (Aberdeen, N.)	Price, M. Philips
Colman, Miss G. M	Hughes, H. D. (Wolverhampton, W.)	Proctor, W. T
Comyns, Dr. L.	Hutchinson, H. L. (Rusholme)	Pursey, Cmdr. H
Cooper, Wing-Comdr. G.	Hynd, H. (Hackney, C.)	Randall, H E
Corbet, Mrs. F. K. (Camb'well, N.W.)	Hynd, J. B. (Attercliffe)	Ranger, J.
Corvedale, Viscount	Irving, W. J.	Rankin, J.
Cove, W. G.	Isaacs, Rt. Hon G A	Rees-Williams, D. R
Crawley, A.	Janner, B.	Reid T (Swindon)
Crossman, R. H. S	Jay, D P. T.	Rhodes, H.
Daggar, G.	Jeger, G (Winchester)	Richards, R.
Daines, P.	Jeger, Dr. S. W (St. Pancras, S.E.)	Ridealgh, Mrs. M
Dalton, Rt. Hon. H	Jones, Elwyn (Plaistow)	Robens, A.
Davies, Clement (Montgomery)	Jones, P. Asterley (Hitchin)	Roberts, Emrys (Merioneth)
Davies, Edward (Burslem)	Keenan, W	Roberts, Goronwy (Caernarvonshire)
Davies, Ernest (Enfield)	Kenyon, C	Roberts, W. (Cumberland, N.)
Davies, Harold (Leek)	Key, C. W.	Rogers, G. H. R.
Davies, Hadyn (St. Pancras, S.W.)	King, E. M.	Ross, William (Kilmarnock)
Davies, R. J (Westhoughton)	Kinghorn, Sqn.-Ldr E	Royle, C.
Davies, S. O. (Merthyr)	Kinley, J.	Sargood, R
Deer, G.	Kirby, B. V	Scollan, T.
de Freitas, Geoffrey	Lang, G.	Scott-Elliot, W
Delargy, H. J.	Layers, S.	Segal, Dr. S.
Diamond, J	Lawson, Rt. Hon. J. J	Shackleton, E. A. A
Dobbie, W.	Lee, F. (Hulme)	Sharp, Granville
Dodds, N. N	Lee, Miss J (Cannock)	Shawcross, C. N (Widnes)
Donovan, T.	Leslie, J R.	Shawcross, Rt. Hn. Sir H. (St. Helens)
Driberg, T. E. H.	Lever, N H	Shinwell Rt. Hon E

Shurmer, P	Thomas, D. E. (Aberdare)	Westwood, Rt. Hon J
Silverman, J. (Erdington)	Thomas, Ivor (Keighley)	White, H. (Derbyshire N.E.)
Silverman, S. S. (Nelson)	Thomas, I. O (Wrekin)	Whiteley, Rt. Hon. W.
Simmons, C. J.	Thomas, George (Cardiff)	Wigg, Col. G. E.
Skeffington, A. M	Thomson, Rt. Hon. G. R. (Ed'b'gh, E.)	Wilcock, Group-Capt. C A. B
Skeffington-Lodge, T C	Thorneycroft, Harry (Clayton)	Wilkes, L
Skinnard, F. W.	Thurtle, Ernest	Wilkins, W. A.
Smith, C. (Colchester)	Tiffany, S.	Willey, O. G. (Cleveland)
Solley, L. J.	Timmons, J.	Williams, D. J. (Neath)
Sorenson, R. W.	Titterington, M	Williams, J. L. (Kelvingrove)
Soskice, Maj. Sir F	Turner-Samuels, M.	Williams, Rt. Hon. T. (Don Valley)
Sparks, J. A.	Ungoed-Thomas, L	Williams, W. R. (Heston)
Stamford, W.	Usborne, Henry	Williamson, T
Steele, T.	Vernon, Maj W. F	Willis, E.
Stewart, Michael (Fulham, E.)	Viant, S. P.	Wills, Mrs. E. A
Strachey, J.	Walkden, E.	Wilmot, Rt. Hon.
Strauss, G. R. (Lambeth, N.)	Walker, G. H	Wise, Major F. J
Stross, Dr. B.	Wallace, G. D. (Chislehurst)	Woods, G. S.
Stubbs, A. E.	Wallace, H W. (Walthamstow, E.)	Wyatt, W.
Summerskill, Dr. Edith	Warbey, W. N.	Young, Sir R. (Newton)
Swingler, S.	Watkins, T. E.	Younger, Hon. Kenneth
Sylvester, G. O.	Webb, M. (Bradford, C.)	Zilliacus, K.
Symonds, A. L.	Weitzman, D.
Taylor, H. B. (Mansfield)	Wells P. L. (Faversham)	TELLERS FOR THE AYES:
Taylor, R. J. (Morpeth)	Wells, W. T. (Walsall)	Mr. Snow and Mr. Popplewell.
Taylor, Dr. S. (Barnet)	West, D. G

NOES.
Agnew, Cmdr. P. G.	Hare, Hon. J H (Woodbridge)	Nicholson G.
Amory, D. Heathcoat	Harvey, Air-Cmdre. A. V.	Nield, B. (Chester)
Assheton, Rt. Hon. R	Head, Brig. A. H.	Noble, Comdr. A. H. P
Astor, Hon. M.	Headlam, Lieut.-Col. Rt. Hon. Sir C	Nutting, Anthony
Baldwin, A. E.	Henderson, John (Cathcart)	O'Neill, Rt. Hon Sir H
Barlow, Sir J.	Hinchingbrooke, Viscount	Crr-Ew'mg, I L
Baxter, A. B.	Hogg, Hon. Q.	Osborne, C
Beamish, Maj. T. V. H	Hollis, M. C.	Peake, Rt Hon. O
Bennett, Sir P.	Holmes, Sir J. Stanley (Harwich)	Peto, Brig. C. H. M
Birch, Nigel	Hope, Lord J.	Pickthorn, K
Boles, Lt.-Col. D. C (Wells)	Howard, Hon. A.	Pitman, I J
Bossom, A. C.	Hudson, Rt. Hon. R. S. (Southport)	Ponsonby, Col. C E
Bower, N.	Hulbert, Wing-Cdr. N. J.	Prescott, Stanley
Boyd-Carpenter, J. A.	Hutchison, Lt.-Cm. Clark (E'b'rgh W.)	Price-White, Lt.-Col. D
Bracken, Rt. Hon. Brendan	Jeffreys, General Sir G.	Prior-Palmer, Brig. O.
Braithwaite, Lt.-Comdr. J. G.	Joynson-Hicks, Hon. L. W	Raikes, H. V.
Bromley-Davenport, Lt.-Col W	Keeling, E. H.	Ramsay, Maj. S
Bullock, Capt. M	Kerr, Sir J. Graham	Rayner, Brig. R.
Challen, C.	Lambert, Hon. G.	Reed, Sir S. (Aylesbury)
Channon, H.	Lancaster, Col. C. G	Reid, Rt. Hon. J S C. (Hillhead)
Clarke, Col, R S.	Langford-Holt, J.	Roberts, H. (Handsworth)
Clifton-Brown, Lt.-Col. G.	Law, Rt. Hon. R. K	Roberts, Maj. P G. (Ecclesall)
Cole, T. L.	Legge-Bourke, Maj. E. A H	Robertson, Sir D. (Streatham)
Conant, Maj. R. J. E.	Lennox-Boyd, A. T.	Robinson, Wing-Comdr Roland
Cooper-Key, E. M.	Lindsay, M. (Solihull)	Ropner, Col L.
Crookshank, Capt. Rt. Hon. H. F. C	Linstead, H. N	Ross Sir R. D. (Londonderry)
Crosthwaite-Eyre, Col O. E	Lloyd, Maj. Guy (Renfrew, E.)	Sanderson, Sir F.
Crowder, Capt. John E	Lloyd, Selwyn (Wirral)	Savory, Prof D. L
Cuthbert, W. N.	Low, Brig A, R. W	Shephard, S (Newark)
De la Bère, R	Lucas, Major Sir J	Shepherd, W. S. (Bucklow)
Digby, S. W	Lucas-Tooth, Sir H	Smith, E. P (Ashford)
Dodds-Parker, A. D.	Lyttelton, Rt. Hon. O	Smithers Sir W.
Donner, Sqn.-Ldr. P. W	McCallum, Maj. D.	Spearman, A. C M
Dower, Lt.-Col. A. V. G. (Penrith)	Mackeson, Brig. H. R	Spence, H. R.
Dower, E. L. G. (Caithness)	McKie, J. H (Galloway)	Stanley, Rt. Hon. O
Drayson, G. B.	Maclay, Hon J. S	Stoddart-Scott, Col. M
Dugdale, Maj. Sir T. (Richmond)	MacLeod, J.	Strauss, H G. (English Universities)
Duncan, Rt. Hn. Sir A (City of Lond)	Maitland, Comdr. J. W.	Studholme H. G.
Eccles, D. M.	Manningham-Buller, R. E.	Sutcliffe, H.
Eden, Rt. Hon A.	Marlowe, A. A. H.	Taylor C. S (Eastbourne)
Elliot, Rt. Hon. Walter	Marples, A E	Taylor, Vice-Adm. E A (P'dd'tn, S.)
Fleming, Sqn.-Ldr. E L	Marsden, Capt. A	Teeling, William
Fletcher, W. (Bury)	Marshall, D. (Bodmin)	Thomas, J. P. L. (Hereford)
Foster, J. G (Northwich)	Marshall, S. H. (Sutton)	Thorneyeroft, G. E. P (Monmouth).
Fox, Sir G.	Maude, J. C.	Thornton-Kemsley, C N
Fraser, H. C. P. (Stone)	Melior, Sir J.	Thorp, Lt.-Col. R. A. F
Fraser, Sir [...]. (Lonsdale)		Touche, G. C.
Fyfe, Rt. Hon. Sir D P M	Molson, A. H. E.	Vane, W M. F.
Gage, C.	Moore, Lt.-Col. Sir T.	Wakefield, Sir W. W.
Galbraith, Cmdr. T D	Morris-Jones, Sir H.	Walker-Smith, D
Gammans, L. D.	Morrison, Maj. J. G. (Salisbury)	Ward, Hon. G. R.
Gomme-Duncan, Col. A	Morrison, Rt. Hon. W. S. (Cirencester)	Watt, Sir G. S. Harvie
Grant, Lady	Mott-Radclyffe, C. E	Webbe, Sir H. (Abbey)
Gridley, Sir A.	Mullan, Lt. C. H.	Wheatley, Colonel M. J
Grimston, R. V.	Neill, W. F. (Belfast, N.)	White, Sir D. (Fareham)
Hannon, Sir P. (Moseley)	Neven-Spence, Sir B	White, J. B. (Canterbury)

Williams, C. (Torquay)	Willoughby de Eresby, Lord	TELLERS FOR THE NOES:
Williams, Gerald (Tonbridge)	Winterton, Rt. Hon. Ear	Mr. Buchan-Hepburn and
Willink, Rt. Hon. H. U.	York, C.	Mr. Drewe.

Bill read the Third time, and passed.